What does Google need on mobile?

I generally look at Google as a vast machine learning engine that’s been stuffed with data for a decade and a half. Everything that Google does is about reach for that underlying engine - reach to get data in and reach to surface it out. The legacy web search is just one expression of that, and so is the search advertising, and so are Gmail and Maps -  they’re all built onto that underlying asset. 

Hence, most of the experiments that Google has launched over the years are best seen as tests to see if they fit this model. Can you apply a vast expertise in understanding data, large numbers of computer scientists and data scientists, lots of infrastructure and a model of total automation and get something interesting and useful - can you get massive amounts of new data in, can you do something unique with it, and can you surface it back out? And, for all of these, are you solving hard, important problems with global scale? 

That is, Google tests new opportunities to see if they fit in the same way that a shark bites a surfer to see if they’re a seal. If not, you don’t change Google to fit the opportunity - you spit out the surfer (or what’s left of him). 

Naturally, sometimes it turns out that you need other capabilities - e.g. radio advertising. Sometimes it ought to be a good opportunity but the friction in actually unlocking the data is too great - e.g. Google Health, where there were too many different and reluctant parties involved. Sometimes Google's skills are just a condition of entry and other skills are more important (Google Plus in social), and sometimes the opportunity is just too small - e.g. Google Reader. But equally, there are projects for which Google's core skills and needs have fit very well. Maps had little obvious to do with web search and nothing to do with PageRank, but was a big problem that Google’s assets could be applied to (and of course, a decade later, Maps turned out to have huge strategic leverage in mobile). The same may be true of self-driving cars - this is not a search question, but it is a data and machine intelligence problem where Google is uniquely placed to do things (or at any rate, that’s what Google believes). 

Android embodies all of this. Originally, it was about reach, in the sense of people being able to use Google. It existed to head off domination of mobile by any third party that might shut Google out (first Microsoft, then Apple) and to enable the expansion of the internet from 1.5bn PCs owned by relatively rich people to, in the next few years from now, 4-5bn mobile phones owned by almost every adult on earth. In both of those aims it’s been an enormous success, much more than any other Google side-project. Apple will have a lot of the top 15-20% of the market, but Android will have almost all of the rest and serves to keep Apple honest even on iOS. 

Over time Android has also evolved to provide reach in collecting data as well - you’re always logged in to Google on your Android phone, and it knows where you are when you do that search or open that app, and where everyone else who ever did that search was, and what they did next (this is one reason why retaining control of the Android UI, and heading off forks, matters to Google). There’s an old computer science saying that a computer should never ask a question that it should be able to work out the answer to - the sensors and other capabilities in smartphones in general and Android in particular massively expand the range of things that Google can work out. So, Android transforms Google’s reach both in collecting and surfacing data. 

The interesting part, though, is that there are now lots of different kinds of reach. 

First, as everyone has talked about for years, the way that mobile moves us away from the plain old web as the dominant interaction model of the internet challenges Google’s central ability to understand the structure of online information and to link to it (and sell links to it). Apps cut off Google’s reach, both to get data into its systems, since apps are opaque, and to surface data out to internet users, since any search in Yelp’s specialist app is a search that wasn’t on Google, and such apps are stronger on mobile than on the desktop. Apps reduce Google’s reach in both senses. This of course is why (like Facebook) it has been pursuing deep links, and is probably also one reason why it is keeping Chrome OS warm as a standby mobile platform. But it also means that Google has conflicting incentives - as a provider of services, should it try always to make things as part of the web, or embrace the new experiences that apps and everything else happening on smartphones can provide? What would the web search team say if Hangouts became a development platform, for example? 

Furthermore, ownership of an actual mobile platform creates more basic conflicts - should Google make a new app for iOS first, given that’s where many of the most engaged users are? Should it provide it for ‘forked' devices such as the Kindle Fire, if they have enough users, though that erodes a point of leverage for control of Android? For these kinds of questions it’s easy to see how individual product managers might have incompatible objectives - the Maps PM probably wants Maps to be great on iOS and might well like it on Kindle, but people thinking about maintaining Google’s control over Android clearly would not. 

That is, how much does Google need to pull things to the web, or, alternatively, to Android, and how much should it let the logic of individual product teams prevail - and where there's conflict between product teams, who wins?

These are really classic ‘strategy tax’ questions. A product feature conflicts with the company’s overall strategy, so do you leave out the feature (and so pay the strategy tax) or compromise the strategy? To give examples from other ages of the tech industry, Microsoft's Office for Mac and Apple's iTunes for Windows both in theory undermined those companies' core products, but both were the right thing to do for the broader strategy. The question for Google is to work out which part is the tactic and which is the strategy. What kind of reach do you want, and which sacrifices to you want to make?

This problem reminds me of a book published a few years ago by Pierre Bayard, a French academic, called ‘How to talk about books you haven’t read’ (review). His observation is that the question ‘have you read this book?’ is actually much less binary than it appears: if you compare a book you read as a teenager 20 years ago and half-understood with a book that’s just come out and that you’ve read 3 reviews of, but haven’t actually read, you might know rather more about the latter than the former. There are books you read and understood, books you’ve read and half-remember, books you can’t remember that you’ve read at all, and books that you’ve read half of, or know the key ideas of, or have heard about, or that you know are exactly the same as three others by the same author that you really have read. Reading and knowing about a book are not binary. 

In the same sense, Google needs reach, but mobile means that there are lots of different kinds of reach. Consider someone who has an ‘official’ Android phone, perhaps even a Nexus, and is completely logged in - so Google has ‘perfect’ reach to them as an end-point. But, as I wrote here, suppose they live in a quiet suburb and drive only to work and to a few shops, never use Calendar, open Maps once a month and get a few personal emails in Gmail each week. Now contrast that with a 20-something in a big city who loves their iPhone and is not logged into any Google service - but is on this phone for hours every day, uses Google Maps (or maybe just apps that embed it) and is doing web search all the time. What kind of reach does Google have for these two? 

Then, consider a farmer in rural Myanmar who’s just got their first phone: a $30 Android, with enough spending power to get perhaps 50 megs of cellular data a month, if that. What is that reach worth - what do they search for, what can the information they provide to Google be used for and, to raise the boring, pedantic question, how much are they worth to the advertising industry? Are they a higher priority than extending Google Now to the Apple Watch? 

The key change in all of this, I think, is that Google has gone from a world of almost perfect clarity - a text search box, a web-link index, a middle-class family’s home - to one of perfect complexity - every possible kind of user, device, access and data type. It’s gone from a firehose to a rain storm. But on the other hand, no-one knows water like Google. No-one else has the same lead in building understanding of how to deal with this. Hence, I think, one should think of every app, service, drive and platform from Google not so much as channels that might conflict but as varying end-points to a unified underlying strategy, which one might characterize as ‘know a lot about how to know a lot’. 

Another way to think about this, perhaps, is the comparison with Internet Explorer. Microsoft was entirely successful in ensuring that its own web browser dominated the internet for a decade or so. But really, whatever browser people ran, they were going to run it on a Windows PC anyway, because what other mass-market global platform was there? So too for Google: what matters is to win at 'search', whatever that means and wherever and however far from PageRank that leads you. Nail that and reach will come to you - get it wrong, or find yourself irrelevant in whatever the new new is (as happened eventually to Microsoft), and nothing else will matter. 

Messaging and mobile platforms

 

One of the fundamental things that smartphones changed about the internet is that the smartphone itself is a social platform:

  • Every app can access your address book, getting an instant social graph. The phone number in particular acts as a unique social identifier
  • They can access the photo library and camera directly (and location), making sharing easy 
  • Push notifications mean you don’t need people to keep checking your site (or open emails).  
  • Every app is just two taps away on the home screen, which makes switching services easier, and also drives a trend for focused, single-purpose apps over apps that do everything - it's easier to find a feature as an icon on your home screen than as an option in a sub-menu of the Facebook app

So joining a new service from a different company is much easier than it was on the desktop and, crucially, using more than one at a time is also much easier. People can swap apps in and out for different behaviours or content types or social groups, on top of that underlying platform, and they do it all the time. And so there has been an explosion of apps trying to take advantage of this. Facebook bought two of the biggest, Instagram and WhatsApp, but it can't buy them all. 

Looking at all of these apps, I think there are three threads that we can pull out:

  • More or less plain vanilla person-to-person text messaging, with extras like group chat, pictures, stickers and voice clips etc added on. The big global winner so far has clearly been WhatsApp, which dominates outside the USA and East Asia (and is doing 50% more message volume than the entire global SMS system), but Facebook Messenger is doing pretty well too, mostly in the USA. I'd expect relatively little new innovation to happen here now, and most of it to be in the next two categories:
  • New pieces of psychology - new behaviors or attitudes that an app can enable or ride on. Sitting on that underlying social platform, an app that finds one of these can go viral. Examples include Instagram, Snapchat, Yo, Yik Yak, Secret or Meerkat. The challenge for these is to find a behavior that's different and compelling enough to create that growth, but not weird or specific enough to be a gimmick or a fad and flame out, or at least to evolve beyond that specificity once the growth is there, which one could argue Snapchat is doing
  • Platforms - messaging apps that aim to broaden the UX beyond pure person-to-person messaging into a development environment. WeChat is the big example here, with 500m users, almost all in China, while Line in Japan and Kik in the USA are also significant. 

The potential to turn messaging into a platform is the Trojan Horse that drives a lot of the excitement in the sector. It's one thing to sell stickers and quite another to sell users: can you use social to spread content and acquire users, and to solve the problem of app installation? Can it become the third runtime and the third channel on the phone, after the web and native apps?

The first big success here has been WeChat, which has 500m MAUs, almost all in China. WeChat has built a messaging client that's also a development environment, using web views and APIs so you can build services within the app that can access location, identity, payment and other tools from within the app. You can send money, order a cab, book a restaurant or track and manage an ecommerce order, all within one social app. So, like the web, you don't need to install new apps to access these services, but, unlike the web, they can also use push and messaging and social to spread. This is Facebook's old desktop platform, more or less, but on mobile. 

The common criticism of this approach is that this is 'just a portal', and that integrating lots of different services into one app is doomed in the same way that Yahoo on the desktop was doomed to be replaced by more powerful and focused single-purpose products. The more subtle version of this is that WeChat only works in China because the market structure is different - no vertical category killers (Google, Facebook, Amazon) and instead parallel, horizontal competition by large competing companies. WeChat is providing the 'primitives' that you can't get elsewhere. This may be true - but it may also be that WeChat (and similar products such as Baidu Maps, which also has deep service integration) show us what the rest of the world might look like if the big portals had executed better. That is, is this what Yahoo would have achieved if it hadn't gone to sleep for a decade? *

A lot of people thought that Facebook would clone this, but it's actually done something quite different. Rather than trying to turn Messenger itself into a development environment, it's opened it up to become a channel for anything else on your phone and the web. This means that it's addressing both the platform thread and the viral apps thread outlined above, and that rather than WeChat, it's going after the iOS and Android notifications panel. 

First, if you have an idea for a great type of content for messaging - a new piece of psychology that might go viral - your iPhone or Android app can now insert that directly into a thread inside the Messenger app, and your app can be invoked directly from within the Messenger app. Messenger has a list of featured apps (with links out to the App Store or Google Play) and, crucially, each piece of content posted into a message thread comes with a link to install the app - a viral hook. Facebook has made an API for the 'sticker button', and turned it into an acquisition channel for third party apps, and is now letting the entire internet compete for that slot, with itself as gatekeeper.

 The WeChat model achieves some of this, avoiding the app installation problem itself by putting everything into web views within the WeChat app, but that puts a cap on how sophisticated you can get - it's hard to make video clips with web apps. Facebook is trying to square the circle - rich native code to make cool stuff, yet no need for an app installation for it to spread. 

This is a great jujitsu move, and very seductive. Facebook is trying to co-opt the next Snapchat. Yes, the smartphone is a social platform that makes it easy to use multiple social apps, but you still have to get someone over the hurdle of installing the app in the first place, and they have to get all of their friends to install it too so that they have someone to send to.  Facebook is trying to bypass that - you can drop your content straight into the existing Messenger install base (600m MAUs). Now just one person can get a cool app and send messages to their friends even if their friends don't have it, and if it's cool enough they can tap on the link and install it too.

So acquisition is much easier, but they're Facebook's users, and always will be. And since there will be dozens of apps fighting it out for that slot, Snapchat and any other new stand-alone network will be competing against all of those apps - against the whole app store. This means that Facebook is trying to reset some of the dynamics I described at that beginning of this piece - it's trying to avoid the 'whack-a-mole' problem of having to buy cool new messaging companies (Instagram, WhatsApp) by getting those communication forms to happen inside Messenger instead, using Facebook's own social graph instead of the phone's address book.  And as I said, this is seductive - Facebook removes a major barrier to growth, but owns your users and has a history of ruthlessness in dealing partners who build on its platforms. Join, get growth 'easily' and give Facebook control, or stay out and struggle for installs against Facebook and all its partners as well. 

The second part of the Messenger announcement is just as interesting - Facebook will also let websites send messages directly into Messenger, without having their own apps installed on your phone, if you logged into that website with Facebook when you placed the order. So you can order shoes and get a message in Messenger that they're out of stock and be offered an alternative. This is another attack on email (and Gmail) and another attempt to pull your communications and commerce into the Facebook data platform. And again, if you do this you get richer and more engaging communication with your users, and don't need them to install your app, but your access is entirely controlled by Facebook.  

If you take all of this together, it looks like Facebook is trying not to compete with other messaging apps but to relocate itself within the landscape of both messaging and the broader smartphone interaction model. Facebook Home tried to take over the home screen and lock screen - Messenger is trying to take over the notifications panel, by pulling those notifications inside its own app, and to co-opt large chunks of future communications developments on the phone.  

This makes perfect sense - notifications themselves are becoming that third runtime. That pull-down panel aggregates activity from everything on your phone, and Google and Apple have made notifications actionable and given them payloads. One can already look at an iPhone or Android phone's notification screen and ask - 'where's the algorithm filtering this?' And in a sense, the notification panel fills the 'cross platform compatibility' role that some people would like to see in messaging - all the notifications for all my messaging apps show up there. More and more, one's primary interaction with any app, social messaging or otherwise, is a little pop-up with a button or two. So shouldn't that get a native, messaging-focused UI? Instead of replacing stand-alone apps with light-weight versions built inside a messaging app, is it better for rich, actionable messages from native apps to be aggregated into a notification panel? Once you have that runtime, do you need an actual stand-alone app on the actual phone itself, or can you send those messages - really, little applets, down from the cloud? Do you turn apps into messages and notifications, or messages and notifications into apps?

Meanwhile, smart watches (to the extent that they take off) reinforce a model of atomic units of content with a handful of possible actions, and of glancing at a few key items rather than submerging yourself in a dedicated UI. So after unbundling sites from the web browser into apps, notifications take things further, unbundling each unit of content or action - each verb or noun - into a separate atom. So you can order a car with a flick of your wrist and a tap or two, instead of fishing your phone out of your pocket, unlocking it, loading an app and navigating the UI. 

This obviously leads one to ask what the platform owners themselves are doing. Should this be done by Facebook or the platform owners (the same question as for deep linking last year)? Do Apple or Google introduce an algorithmic filter to manage the flow in the system-wide notification panel, and does that compare to Facebook's lethal power over newsfeed partners? They're some of the way there. Both Apple and Google have perfectly solid mobile messaging apps that are not development platforms in their own right, and have done a lot of work on notifications in their smartphone OSs yet clearly have lots more to do. And Apple already lets websites send push notifications on OS X, while Google is clearly pushing Chrome hard as a development environment and so notifications from the web there would also make sense. 

So we can see some building blocks, but we can also see obstacles. The obvious one is that neither has the kind of desktop social presence that would make it easy for them to drive personalized push motivations for web to mobile - you're not logged into anything from Apple or Google (pace Plus) when you shop on the desktop web. On the other hand, you're always logged in on Android, and Apple has shown plenty of hints that it might see TouchID as a universal identity platform, and of course, they do have your address book. So Apple or Google could easily let an app send a push notification to a friend who doesn't have that app. Meanwhile as mobile devices zoom past half of time spent on commerce sites and a third of the transaction value, a web identity platform might matter less. There are other interesting possibilities too, if one thinks where Now or Passbook might fit. 

The core issue across all of this, I think, is how much is still totally unsettled. We spent 20 years in which the mainstream internet experience was a web browser, mouse and keyboard, and over a decade in which Google was the way you navigated. Smartphones ended all that, but we haven't settled on a new model, and the idea we'll all revert back to the comfortable, simple model of the web seems increasingly remote. Even within messaging, the  model is still in flux. I wrote above about the search for new psychologies, but there are deeper architectural questions than anonymity or filters, which you can see in SnapChat's disappearing messages or Meerkat and Periscope's use of live. What will the next blow-up model be -  synchronous or not? One to one or one to many? Feed based or thread-based? Algorithmic filter or endless stream? Rich client or rich message? Runtime or deep links? That may be the real problem for Facebook - the next messaging thing may not be messaging at all. 

 

* As an aside, it's challenging for anyone outside China to have a firm view on WeChat given that almost no-one has actually used it - the most interesting features only appear if you run the app with Chinese language settings. I don’t read Chinese myself, and I’m always reluctant to have a strong view on a product I’ve not used, though this is a minority position.

Android taxonomies

For reference, and, perhaps, discussion: 'Android' means lots of different things, and there's a lot of confusion about forks, Xiaomi, China and AOSP, as well as 'the next billion'. So this is how I try to think about this. First, there are actually (at least) six types of 'Android' in the market today:

  1. 'Stock' Android, as seen on Google's Nexus devices, complete with Google services (but with tiny unit sales)
  2. 'Modified' Android, as seen on phones from Samsung, Sony, LG etc, complete with Google services - generally, these are modifications that no-one especially likes, but which Google explicitly allows 
  3. 'AOSP' or open Android, as seen in China - essentially these phones are the same as number 2, but with no Google services and apps from the Chinese portals embedded instead. Hence Samsung, Sony etc sell their phones in China without Google services, but few other changes
  4.  (or perhaps 3.1) 'Modified' Android as seen on Xiaomi phones and those of its followers, which people actually seek out, and which comes without Google services in China and with them elsewhere
  5. ROMs and third-party implementations of Android that are available for any handset, such as both Xiaomi's MIUI and Cyanogen (an a16z portfolio company), which may or may not have Google services included or accessible. Again, these contain optimisations and improvements that make people seek them out
  6. Forked Android, such as the Kindle Fire phone: Android heavily modified to produce a different experience, and Google refuses to allow Google services to run on them (other than plain old web search, AKA POWS). Note that Xiaomi and Cyanogen are not forks. 

Th first two or perhaps three I would describe as 'closed' Android and the second three are 'open' Android, certainly from the perspective of device manufacturers. The first two (actually just number 2) have over a billion users outside China (as of the numbers given at IO last summer). Versions 3 and 4 have a further 400-500m users, almost all in China, and there are perhaps 50m users of 5 ( a very rough estimate) both inside and outside China, partly overlapping with the others. Six - well, ask Amazon. 

In parallel, it's worth breaking down Android users in a similar way:

  1. ROM users (very roughly, perhaps 50m people)
  2. People who like to install the kinds of apps that do things Apple doesn't allow on iOS and Google does allow on Android (note that Apple now allows rather more things and Google does not, oddly, allow gambling apps). I had a go at quantifying this here
  3. People with a personal preference for Android, who none-the-less do not actually install ROMs or do many things that are blocked on iOS (the difference between this and 2 is a grey area, obviously)
  4. People who don't actually care very much one way or the other between Android and iOS, and (for example) got a good deal, preferred the handset design or (especially) the larger screen size that used only to be available on Android, and indeed might switch back and forth between iOS and Android 
  5. People who can't afford iPhones or other high-end phones and so got Android as the cheaper option. 
  6. People who actually don't care about smartphones at all, and so just bought a 'cheap phone' (or just a  phone with a good camera, say), and happened to get an Android since it's taken over most of the mid range and low-end, and who don't do much with the ecosystem
  7. People in emerging markets who really can't afford anything other than a $50 or $100 Android phone but are enthusiastically taking advantage of everything it can do.  
  8. As above, but have a relatively expensive data plan, limited 3G coverage and, often, limited access to power to charge their phone (this one is is where the 'next billion' will sit) 

 Some of these categories (but obviously not all) also apply to iOS, of course, but selling phones only at $600 for the latest model creates a more uniform customer base. 

Layered across both of these is huge geographic variation. The must-have phone for teenagers in San Francisco and Jakarta is very different. But the underlying point about both lists is that tech and mobile have grown far past the point that there is really a single market for anything. When you connect everybody you get, well, everybody, and they're not all like you. 

Why is Apple making a gold watch?

As expected, the gold version of Apple’s watch is very expensive by consumer technology standards - $10,000 and up, depending on the band you take. And, also as expected, this made a lot of people’s heads explode. 

There are really two different conversations here: will people buy a $10,000 Apple watch, and why did Apple make one? 

To the first question, Apple is clearly breaking lots of rules with the watch. There are plenty of $10k watches on the market already that sell just fine, but those are normally mechanical ones, and mechanical watches are sold primarily on the complexity of the mechanism, where of course the gold Apple watch is internally identical to the $350 aluminium model. Mechanical watches are also expected to last: no-one quite knows how long an Apple watch will last (the battery is replaceable, but is the screen? And how long will the software be viable?) but it’s probably not something that your grandchildren will own*.

On the other hand, there is no a priori reason why a watch should have to follow those rules. Plenty of other $10,000 luxury items are far more ephemeral, and once you're selling things for other than purely utilitarian reasons questions like 'value' and 'resale' miss the point. Apple is certainly trying something that’s new to both the tech industry and the luxury goods industry, but it's not necessarily outside the bounds of (rich) consumer behaviour. If we only ever bought things that had rational use cases and the best value, we'd all be wearing boiler suits, or hoodies. 

Ultimately, though, how many people buy the gold one is probably immaterial. The Swiss watch industry sells about half a million precious metal watches a year, and though the size of the overall watch market is not a good indicator of the market potential for smart watches, the size of the market for precious metal watches is probably not far off as an indicator for the gold Apple watch. Even a hundred thousand gold Apple watches at (say) $15k each would be ‘only’ $1.5bn a year, or less than one percent of Apple’s 2014 revenue.  

So (and this is the question that actually matters) why bother? One could argue that it’s a vanity project, or that Apple’s doing this just because it can, or that a few hundred million dollars still matters at Apple (as indeed it does). But I think it’s more interesting to compare it with Apple retail. Despite its prominence, this is only about 10% of Apple’s revenue. It’s much more important as marketing. And it's great marketing. 

Apple stores are huge rich-media billboards on every major shopping street in the developed world: I can't think of any other company that has shops as big as that in such premium locations in as many places. Apple retail is a self-funding marketing operation. So too, perhaps, is the gold watch. Apple might only sell a few tens of thousands, but what impression does it create around the $1,000 watch, or the $350 watch? After all, the luxury goods market is full of companies whose most visible products are extremely expensive, but whose revenue really comes from makeup, perfume and accessories. You sell the $50k (or more) couture dress (which may be worn once), but you also sell a lot of lipsticks with the brand halo (and if you think Apple’s margins are high, have a look at the gross margins on perfume). 

Meanwhile, though other companies are already making metal smart watches, I struggle to imagine Samsung making solid gold watches. Apple's brand might or might not work there, but no other CE company's does. That is, if this is marketing, and if it works, it's marketing that no-one else can do. 

On another tack, perhaps the biggest message that this sends is that the Apple watch is not a technology product. It’s a post-‘feeds and speeds’ product. Today we have prices and release dates for the watch but no tech specs at all - because they’re irrelevant to the user experience. This is a product sold on delight, and experience, and on the feel and pleasure of owning and wearing it and looking at it (which of course means Apple retail is a huge advantage). It’s sold on a butterfly, not on the storage capacity. The value of the gold may be just that message - it’s not a geek’s product at all. One might call the gold a marketing detox - an emancipation of tech from the tech industry.

Finally, whatever your opinion of all this, it doesn’t really matter. Apple’s watch is, after all, coming to market at a lower entry price than any previous new category from Apple. So we can go out and buy it for $350 or $1,000 and get on with working out what, beyond delight, it’s good for - how it changes attribution, and user acquisition, and dwell time, and changes how you use your smartphone, and all the shifting metrics of the mobile internet. 

 

* There was some speculation that Apple might have a plan here - that it might buy back the gold watches, or replace the insides, perhaps - because a $10,000 object that's outdated is different to one that's $600. This may well still happen. 

Why do we care about Xiaomi?

'If you have nothing to tell us, but that on the banks of the Oxus and the Jaxartes, one barbarian has been succeeded by another barbarian, in what respect do you benefit the public?' - Voltaire

The Android smartphone business can feel like it's a rerun of the PC business, but compressed into 5 years instead of 20 or 30. The component layer is mostly a commodity, especially below the high end, and so is the operating system layer, and manufacturers are stuck in the middle, all of them using the same basic components and the same software (Windows for PCs, Android for phones), and so unable to differentiate on much beyond than price. The result is a race to the bottom with distribution, marketing and manufacturing scale the bases of competition. 

Today, Samsung's dominance of Android (with close to half of unit sales) appears to have peaked and a wave of companies appear to be able to use the entire Shenzhen manufacturing cluster or ecosystem to achieve many of the benefits of scale without having vast factories themselves. We see this in Chinese companies such as Xiaomi, OnePlus or Gionee, and also in local companies around the world that are having their phones made in China and basing their business on branding and distribution - some examples are Micromax in India, Cherry in the Philippines, Blu in Latin America or Wiko in France, which claims over 10% market share. Many of these are simply picking standard models from the big contractors in China and adding a brand - hence one big OEM told me 'when those guys say they designed it, they mean they went to Foxconn and asked for models 4, 23 and 39'. It's not clear quite how big you can get on this model, nor how like the PC clone business (i.e. eventually consolidated) it will end up. Equally importantly, it's far from clear how global these companies will be, but that may not matter. 

In this environment, just as in the PC business, some companies and some business models do better than others, but that doesn't necessarily matter to anyone else further up the stack. Gateway 2000 disappeared and Dell prospered, but that didn't much matter to PC buyers, let alone software developers or anyone on the web. Equally, Samsung rose to dominance and now slips, Lenovo buys Motorola and invests in mobile, HTC faltered and Sony goes sideways and Chinese OEMs are rising, but the phones keep coming.

(This issue is also one of the problems with Mobile World Congress in Barcelona, from which I've just returned. When I started going to this conference, in 2000, operators and handset makers drove the agenda for the whole consumer experience and the show was the place to see that, but today that agenda is driven at Google IO, Apple's WWDC and, perhaps, Facebook's F8.) 

So these companies, XIaomi included, are interesting to people who are interested in the handset business, then, but why do they matter to anyone else? Xiaomi sold 75m phones last year, yes, but isn't it just another OEM with a new branding and distribution model, and its rise relative to Samsung, say, no more interesting to anyone not in the handset business than the rise of Dell relative to IBM's PC division was? And it's mostly in China, for now  - isn't it just one 'barbarian' defeating another in a far away place

Well, up to a point. Though it's certainly possible to get over-excited about Xiaomi, this sort of dismissal misses several important threads worth pulling on. 

First, PC OEMs mostly failed to differentiate in design, and this has also been true of the Android market (and especially of the biggest OEMs), but the Chinese appear to be learning design, and quickly. Xiaomi, Gionee and several other companies are making phones that are visually appealing, using materials and finishes to differentiate from the run of black plastic rectangles that predominate in Android below the high-end (there are several consultancies composed of former Nokia people serving this market). A couple of these phones look superficially similar to Apple products - most do not. They're nice-looking, interesting, and half the price. (Interestingly, the way this has played out in China so far is that Samsung's share has fallen fast but Apple's has grown: they're selling to different customers.) 

Second, PC OEMs never managed to create any meaningful differentiation in software, and neither again did the Android OEMs, but Xiaomi has, and so have some of its imitators. The difference is that unlike most previous OEM attempts at software, they are not trying to compete with the whole internet. Instead of relying on vertical point solutions (photo editing and music services etc, though it does have some of these too), Xiaomi builds a thin horizontal layer between the commodity AOSP OS and third party applications. It has rebuilt the Android front-end - the whole UI from the launcher and notification panel down to the preference panels - to make it simpler and cleaner, changing the experience of using Android. This sometimes looks superficially rather similar to iOS 7, but this is a little misleading, which is hard to get from screenshots: a big part of the uniqueness is the animation. A Xiaomi phone feels very different from an iPhone or 'stock' Android phone, across the whole experience.

In addition, Xiaomi has packaged together a suite of integrated OS-level services that remix what Google and Apple provide in a similarly integrated way. In this it is of course helped by the fact that those Google services are mostly unavailable inside China and Apple's require you to spend 2-3x more on a phone. People tend to talk a lot about Xiaomi's services as a way to sell the phones at lower prices, but we know from various leaks that the revenue from these is actually immaterial, at  least for now - the point again is the experience that they give. 

It's a common reflex in the USA to call Xiaomi and similar companies copycats, on both a hardware and software level, and there's certainly a lot of design inspiration going on, but dismissing these phones as rip-offs is rather lazy. When you actually hold them and use them you would never mistake them for iPhones, any more than you'd mistake a $500 coat or bag for the $2,000 example that sometimes inspires the colour or trim. You can sometimes see where it came from, but it's not the same, nor is it trying to be. Rather, they deliver a similar approach to the user experience at a lower price in a way that's often been absent from Android so far (it's hard not to look at some of Nokia's beautiful Lumia devices and wonder what impact they might have had on Apple if they'd run Android).   

The result of this is that we now appear to have at least a couple of Chinese companies doing what was supposed not to be possible - low-margin companies using commodity components and a commodity OS, yet achieving differentiation in design, software and services. Looking at China always challenges your assumptions about what's inevitable in technology. Hardware companies doing good software and UI? Commodity box-shifters learning design? How far might that spread? 

Finally, this shift in what handsets might look like also has a broader implication: the spread of new types of Android OEM might change Google's control of Android. 

Historically, Google's lock on Android outside China has therefore been based on three things: 

  • You can't experiment outside very tight constraints: making even one forked device means Google won't allow you to sell a single phone running Google services. And all the OEMs have too much to lose to risk experimenting
  • There's a widespread belief that an Android device without Google services (really, this means Maps and the app store) is unsaleable outside China (I'm not entirely sure about this, as I wrote here)
  • No OEM managed to build a compelling set of services or tools of its own that might offer alternatives to Google, because, well, that was impossible (see above)

These new trends place all of those in question. The growth of smaller operators pursuing different models, with no existing base of sales and hence nothing to fear from  Google ban, may mean more experiments with forks. Xiaomi and its imitators point to a new potential model to differentiate (and note that Xiaomi is not a fork), and Cyanogen (an a16z portfolio company) offers the tools to do it. Smaller OEMs are less powerful than Samsung as a counterpart to Google, but also harder collectively to impose upon - Google can't shout at them all. This isn't to say that I necessarily expect to there to be lots of local attempts at the Kindle Fire, but we may start seeing a lot less uniformity in how Android comes to market, and what it looks like. 

 

Notes on cars

A circular building

A circular building

Apple we are told, is working on cars, and there's enough smoke that some fire somewhere seems likely. Apple has enough cash (over $150bn) to do this, if it wants, and this prompts all sorts of investing questions, but I've been wondering how one should think about the market opportunity it might be able to secure, and how that fits into the other incursions of the tech industry into cars. 

First, can Apple create new value in the industry in the way that it did in phones?  With the iPhone, Apple created a new price segment and (with Android following) made the phone industry's revenue much bigger - the average price of a phone sold has more than doubled since 2007. But cars are, pretty obviously, more expensive than phones. Many people can find $400 for a better phone or, this year, a smart watch, if they're persuaded that they really want one, but rather fewer can find an extra $40,000 for a better car, or to replace their car every two years instead of every 4 or 8.  If you're in the market for a $20,000 car, there is very little that anyone can do to a car that will put you in the market for a $60,000 car. Cars do not come out of discretionary spending.

That is, lots of people never thought they'd spend the extra to get an iPhone or one of its imitators, but they did, and it wasn't actually that much money. A billionaire and a teenager have the same phone. Conversely Jonny Ive could invent a car that flies and makes perfect espresso, but if it costs $60k or $80k then people driving second-hand Corollas aren't going to buy one. 

In addition, Apple created a premium segment in phones, but there's already one in cars - Apple could take share of that, but it's ipso facto too late to create it. 

 So, it seems, at the very least, much harder to increase the overall size of the market than it was for phones.  This isn't necessarily a problem. The major premium brands BMW, Lexus, Audi and Mercedes Benz sold 5.5m units in 2013, and had revenue of around $220bn. (The total market was around 65m cars, with a further 22m commercial vehicles). Taking a share of $220bn a year, even without changing the overall market size at all, would be just fine.

Meanwhile, there's certainly scope to change the product and take market share - indeed, we are now rethinking what a car is for the first time in generations. Electricity leads to different manufacturing economics, allowing (potentially) lower costs and lower maintenance costs. It also allows the car to be reconfigured, at least to some extent, though obviously less than a self-driving car with no manual controls at all. And the experience of driving the car itself about adding more and more software - one wonders what one would do with a dashboard if one started from zero as a software company? It seems that there might be quite a lot that could be done to reinvent the experience. And though we should assume Apple will retain a premium experience, we can make too many assumptions about the price - remember that the iPad was certain to cost $1000.  

However, there are other reasons besides electricity for the reinvention of the car - the rise of on-demand and the possibility of self-driving cars. These do have the potential to change the size of the market, but by making it smaller, not bigger. 

Both on-demand and self-driving cars would appear to drive a reduction in car ownership and certainly car use (which means slower replacement), to the extent that they become a major part of the urban landscape. That obviously means fewer car sales. They also change what cars get bought. If you don't own the car yourself, and don't even see it before it arrives, the brand and styling matter less than efficiency. That effect is probably strengthened if we move to a fleet model (as many taxi systems work) rather than owner-operators - a fleet manager will choose the vehicle based on metrics, not the fit and finish. That is, the car market would be both smaller and might look more like the corporate PC market. It might also start to bifurcate - people buying $15k and $30k cars substitute $20-25k on-demand vehicles, while the high-end is less affected. Or, high-end sales might be affected most, if those people are best able to afford going entirely on-demand. We don't know, but there are lots of moving parts and will be many unanticipated consequences. Who looked at the Model T Ford and predicted Wal-Mart?

On the other hand, self-driving cars might support both an on-demand model and an AirBnB model for cars - does your car drop you off at work and then roll off into the city to earn you some extra money driving other people around? Would people want to do that? Would that reduce the opportunity for 'dedicated' on-demand vehicles? Who knows. Of course, it's also possible that self-driving technology, said to be a decade away now, will remain a decade away indefinitely, as so many other AI projects have done. 

In a sense, all of this is the unbundling of public transport. Instead of large vehicles aggregating passengers on fixed routes, you have many small vehicles, with many different ownerships, on almost infinite routes - packet switching instead of circuit switching, if you like. 

The challenge for Apple and anyone trying to make premium cars in all of these questions is that they are matters of AI and routing and algorithms - they are matters for Google, not Apple. They shift the value away from the hardware to the cloud, and turn the car into a generic commodity - dumb wheels instead of dumb glass.  Apple doesn't really do algorithms (though it does do privacy, which may become a lot more relevant). And meanwhile a shift to self-driving and on-demand is focused precisely on the urban 18-35s who are its best customers. 

There's a counter-argument to all of this, of course, that the correct place for intelligence is in the device you hold in your hand, take everywhere with you and replace every two year, not the large piece of moving metal that you replace every 5 or 10 years. Cars are for car makers, and though Apple could make a nice one with all its design skills and capital, it could also make a nice retail bank, or chain of restaurants. This is especially the case without self-driving. On this view, the car should be dumb glass, with all the intelligence in the smartphone.

This of course is the real problem, which I talked about here - forecasting how the tech will evolve is often easier than how it will be used. Agatha Christie supposedly said that when she was young, she could not imagine being rich enough to have a car or poor enough to have no servants. The ways that both would change in the next half-century were totally opaque. Now we're reinventing the car again, but it's much easier to see what might be possible than what people would choose. 

Ways to think about market size.

When you try to work out the market potential for something fundamentally new, you’re actually trying to resolve two, linked problems.

  • First, you have to look past what it is now, and see how much better and cheaper it might become
  • Second, you need to think about who would buy it now, and who else would buy it once it is better and cheaper, and how it might be used. 

The second problem is actually the hard one. Anyone with a sense of history ought to have been able to look at a phone the size of a brick and say ‘well, this could come down to the size of a pack of cards and cost $100, given time”, just as anyone should have been able to look at the Krieger electric landaulet above and see that it would get much better and much cheaper, just as trains and steamships had done. If you understood technology, that much was pretty easy. But if automobiles had only replaced existing horse-drawn carriages and carts then the market would have been much smaller. The hard part was to forecast Wal-Mart, and Los Angeles. 

That is, it’s easier to predict 'cheaper and better' than to predict the changes in behavior that will come from that. And pricing is only one dynamic - once the price falls below a certain level it stops mattering. Cheaper and better is necessary but insufficient: if billions of people can afford it, it doesn’t follow that billions of people will buy it. You need to have a theory as to why more and more people will care.

Hence, if I’d shown you a 2015 PC in 1975, would you have predicted that there’d be 1.5bn of them on earth 40 years later? Why? If I’d shown you an iPhone or Android smartphone in 1995, would you have predicted that we’d now be on track to have 4bn of them on earth - fourth fifths of all the adults on earth? 

So, to work out market size, really, you have to work out who will care, if it is cheap. To do that, as for any estimation, you look for numbers that might tell you - other, similar products, or the products you'll compete with - something that can act for a proxy for how people might look at what you're making. There's a sliding scale here, I think: there are some markets where you have a lot of data, and others where, really, you're just guessing. 

First, at one end of the scale, there are those people who are entering an existing, fairly mature market, with a superior product or price, expecting to take market share. In that case you already know how the market size works - you know why and how people use these things. For example, the US market for, say, refrigerators is xm units a year, with ym homes having them and replacing them every z years. Prices are low enough that every home already has one and the product lasts for a decade or more, so you only change them when you move or rework your kitchen. So annual sales in the overall market (for the sake of argument) are outside your control, but you can take share. You can get people to buy yours, but not to buy more than they did before, so the question is how much market share you can take with a better operating model.

Second, at the other end of the scale, there are companies that are creating something entirely new. The personal computer was an example: imagine trying to forecast this in 1980. You know what typewriter sales are, you know how many middle class households there are and you can assume that only corporations and middle-class households will be able to afford one for the next few decades. But you don’t know about the internet as the key driver for consumer PC adoption,  and you don’t know how many office typewriters will become PCs, nor that typing pools will disappear and every executive will write his own emails instead of dictating letters to his PA. 

The same problem applied to mobile phones. You could do a bottom-up analysis that counted business travelers, taxi-drivers, fleet dispatch and so on, and get to maybe 10-15% of the population. Lots of people did that in the 1990s. They were all wrong. For phones, as for PCs, you had to make an imaginative leap into the unknown. You had to say ‘I believe’ that this experience will be transformative, and everyone on earth who has the money will get one. Moore’s Law takes care of ‘having the money’ meaning 4-5bn people, but it's the imagination that gets you to teenage girls living in text messages. You could predict that phones might get really cheap, but not what that might mean. 

In that light it’s worth comparing these two mobile phone ads from the early days of the industry in the UK. The first, perfectly rationally,  starts from the mentality ‘how many people will need this?’ This is the '10-15%' argument. The second, from Orange, assumes that everyone will want one and it’s our job to get it to them, because we're changing the world. Phones don't have specific use cases - they're a universal product. Hence, the CEO at the time, Hans Snook, went around saying that the UK would go to 150% penetration and most people thought he was mad (note that the Cellnet ad was made two years later). 

This is the problem with forecasting sales of the Apple Watch. Annual watch sales are a bit over a billion units, and people buy watches at anything from $5 (China exported over 600m watches last year at an average wholesale price of $3) to $500, $5000 and $50,000. But this doesn’t tell us anything useful. The fact that you buy a $10 watch, or a $1,000 or $10,000 watch, or buy no watch at all, tells me nothing about whether an entirely new product that you also wear on your wrist would be appealing. The fact that you bought a watch x years ago and the average replacement rate for watches is y tells me nothing about whether you’d replace it with an Apple watch, tomorrow, if you saw one. 

That is, there are, in principle, hundreds of millions of people available to be persuaded to buy a smart watch, but we cannot draw any firm conclusions about how many will do so from looking at the existing watch market. That's like looking at the typewriter market to forecast PCs. It might be more helpful, perhaps, to look at the broader luxury goods market (how many women buy how many $500-$1,000 handbags each year?), or the camera market before smartphones killed it, or the phone case market. One can look at the high-end segment of the phone case as a proxy. One can triangulate one's guesses. But we're really just going to have to wait and see. We have no data for how many people will find a place for this in their lives, just as, 20 years ago, we had no data to support the idea that almost everyone would find a place for a mobile phone.

Third, you have companies that sit somewhere in the middle - companies that are entering a market in which the top line dynamics are mostly fixed  but there remains plenty of scope to change things. This is where the iPhone and Android came in. The global mobile phone market has somewhere between 3.5bn and 4bn users, growing steadily as a function of macroeconomics and increasing distribution. Apple and Google didn’t change that - they couldn’t. By reinventing what a phone was, Apple did not change how many people bought a phone, or even (really) how often, but it did change what they paid. It converted $200 phone sales to $500 iPhone sales (only partly helped by operator subsidies), and Android followed at lower prices, such that together they now make up about 70% of unit sales.  As a result, the average selling price of a mobile phone more than doubled from 2007 to 2014, from $80 to around $185. 

Everyone likes to quotes the Wayne Gretzky line that he was skating to where the puck was going to be, not where it was, but Apple and Google didn't do that - they changed what the game was. In the same way, saying that you’re aiming for x% of a $ybn industry is unambitious - great companies change the y, not the x. It'll be interesting to see what, if anything, Apple is planning in cars. I'm not entirely sure there is quite the same scope for changing the market size that there was in phones. Watches on the other hand, are wide open. 

App store revenue, and selling to the world.

Last summer, at their developer events, Apple and Google told us that the previous 12m months, Apple paid $10bn to developers and Google $5bn. Now we learn that Google's up to a $7bn run-rate. In December, Apple repeated the number - that might mean flat growth, or (I think more likely) that they were just repeating the same number. We don't (yet) know where Apple's grown to since then (hint, hint). 

If we gross up this new Google number and the most recent Apple number, incidentally, we get to close to $25bn in annual consumer spending on apps.

Google also told us last summer that it had 'over 1bn' users of its version of Android (i.e. not counting China, with China also not counted in the revenue numbers). Since at that time my model (and others) estimated that Apple had about 625-650m live iOS devices, that meant that the average iOS device was generating 3x to 4x more app store revenue than the average Android device ($10bn and 625m users versus $5bn and 1bn). We cannot tell from these numbers if that's changed since then. On one hand, Google has improved monetisation, but on the other, all the new users since then will be on lower incomes with lower propensity to spend, and we know neither the Android user base nor the iOS revenue. 

The other point that Sundar makes is that Android is selling a massive range of devices to a massive range of different people, whereas iOS is selling to people who can buy $600 phones. This is true, and it's inherent in the different models, and both are great models. This is why I've said that both Apple and Google have both won the platform wars, for now. Google got reach and Apple got device profits (which Google doesn't care about) and an ecosystem with sustainable scale. These numbers make it abundantly clear why iOS is not going to lose access to the best apps. But it's also why Android ARPU is lower (and of course this difference is seen in ecommerce spending and traffic as well, not just spending on apps). If you sell to everyone, well, the average user is going to be different to the average of people who buy $600 devices. Again, that's fine, and it's inherent in the model. 

One final observation, too: both Google and Apple have smartphone platforms and ecosystems with massive global scale and stable, sustainable dynamics (though the dynamics of the Android OEM space may be another question). That means that working out the horse race between the two is now pretty irrelevant. Again, they both won, so what's next

In mobile, disruption comes from above

The classical description of disruption in business, and especially technology, is that a new product (method, business model etc) appears that’s not as good as the existing way of doing things, but that’s much cheaper. The existing industry thinks it’s a joke, and certainly not a threat. But over time, it gets better while staying cheaper, and then, sooner or later, it’s not a joke at all. 

You can see this basic story over and over again in the history of the technology industry. The future always comes looking like a toy. But right now the tech industry is being reset by the mobile, and in mobile, disruption tends to work the other way around. The new thing tends to arrive looking like an expensive luxury for rich people, doing far more than any normal person would need. But over time it gets cheaper, and the new, unnecessary characteristics turn out to be very necessary, and the the old, cheaper, less capable model gets squashed. 

That is, in tech the cheap weak product generally gets better quicker than the good expensive product gets cheaper. But in mobile, the good expensive product has generally got cheaper faster than the cheap, weak product got good. Moore’s Law is operating in both cases, but the effects are different. 

As for all theories, there are exceptions and gaps (‘all theories are wrong but many are useful’), but it’s worth looking at those cases where it does hold true. 

The really obvious example is mobile itself. Twenty years ago cellular was an expensive luxury for millionaires and drug dealers - status symbols no normal, sensible person would ever need. You have a telephone already - who needed mobile? But once the devices and networks reached a minimum threshold the appeal of mobility was much greater than the appeal of a landline's price. (Moreover, price turned out to be more nuanced - a prepay phone can look cheaper or more expensive than a landline depending on your point of view.)

At the same time, there was a lot of debate about quite what kind of mobile network was best. Anticipating the ‘wifi is good enough’ argument of the early 2000s, there were several attempts to offer cheaper ‘limited mobility’ services that would only work if you were in a specific place. You can see an (appallingly bad) ad below for one of these in the UK, Rabbit: the PHS networks in Japan were the only, Galapogean survivor of this. It turned out that mobile phones need to be, well, mobile. (An old colleague of mine suggested that the root of all the problems in the USA was calling them ‘cell phones’ instead of the British ‘mobile phones’, but then the Germans call them ‘handys’ so who knows.)

Now, did you notice that little message at the beginning saying 'outgoing calls only'? I'd forgotten that part. 

The contemporary counter to this, of course, is Iridium, which was too expensive and ‘too good’, with global coverage out of the box overshooting customer needs relative to cellular. However, though Iridium could give you a signal in the middle of the ocean or desert, it couldn’t give you a signal inside a car or an office, needing line of sight to a satellite, and the phones needed their own porter, so I’d suggest that actually, Iridium was more expensive and worse than cellular, not better.

Exactly the same thing then happened with the idea that wifi would threaten cellular - 3G got cheap enough and fast enough that ‘free’ wifi data for your phone was irrelevant, while wifi coverage never matched even the ‘good enough’ target of ‘most of a city’. Better and more expensive beat cheaper and good enough.

Arguably, you can see the same thing happening again with projects like Firefox OS. Entry-level Android phones are now well under $50 - the price window between ‘only a feature phone’ and ‘I can’t afford Android but want more’ is moving down fast. It’s tough to compete with the scale effects of the whole Shenzhen ecosystem. Again, the better, expensive product gets cheaper. 

Most recently, of course, the iPhone came in at a very, very high price in the context of the phone market in 2007 (even after Apple realized it needed subsidies after all). It’s certainly valid to say that it disrupted PCs from below, but it did, actually, disrupt mobile phones as well - just ask Nokia, what’s left of it. The new paradigm was a large phone with a multi-touch screen, ‘PC-class’ OS, relative indifference to bandwidth efficiency, target battery life of a day instead of a week, and durability targeted as ‘well, don’t drop it then’. It was also an MVP (no 3G, basic camera, etc, etc). For all these reasons and more the industry laughed at it, but Apple created demand for a $600 phone on a scale that had never existed before and its cousin Android then drove the same model down to much lower prices. The Symbian model, and the feature phone model, didn’t grow to meet the new, expensive challenge - the expensive challenger model took the top of the market at a new, higher price point, and then (incarnated as Android) got cheaper and took the rest. 

The fact that multitouch smartphones make different trade offs to feature phones around durability and battery life does of course blur the question of whether it is 'better' or just different. But I'd suggest 'better' is subjective: what is not in doubt is that the more expensive approach has beaten the cheaper one. 

There are a bunch of different subsets to this story, of course. Another counter-example, stronger than Iridium, is that within the mobile operator industry each country generally has some operators with strong networks (good coverage, high speeds and capacity) and others with weaker networks - the stronger networks generally charge a premium, and some consumers choose to pay the extra and some decide the cheaper one is good enough. Most recently, this is what Iliad/Free is doing in France (helped by heavy regulatory support) and Deutsche Telekom's subsidiary T-Mobile is trying in the USA. But I’m not sure that counts as ‘disruption’ so much as ‘cheaper competition’, which is where I’d put Android as well: a similar product at a lower price, not a different product serving the same needs at a different price.  

I don’t propose a perfect, unified theory to explain why mobile seems so often to work like this, but that's less important than the observation, I think (or, perhaps, I’m just suspicious of unified theories). The tech industry is very used to the idea that incumbents always laugh at disruption because though it’s cheap, it’s also crap, not realizing that history tells us it will get better. But we also have to remember not to laugh at things that are amazing but way too expensive, because history tells us they might get better and cheaper, faster than you can add 'amazing' and put it through a waterfall. 

Podcast: Slack, messaging and institutional memory

You've heard the story: Slack began as a game. But almost exactly 1 year ago today, the internal tool the team built for its own use became a team communication app that anyone (and especially enterprises) can use -- and is now one of the fastest growing ones at that.

It seems like collaboration is "something software should be helping us with” Slack co-founder Stewart Butterfield observes, yet it typically isn't. So what can an app like Slack tell us about how we work today, and how the nature of work will change (fewer meetings? less emails)?

Butterfield is joined in this edition of the a16z podcast by a16z board partner Steven Sinofsky and a16z's Benedict Evans. The trio examines the origins of messaging and task management tools (many of which Sinofsky worked on at Microsoft) -- and how the advent of cloud-based services and mobile in particular have changed the requirements for modern workplace tools and information management.