Amazon has clearly been leading the way in API-fication by providing a broad range of fundamental software services packaged as APIs. From the basic EC2 compute and S3 storage capabilities, they have expanded to now offer more than 30 services across infrastructure categories of compute, storage, networking, database, deployment/management and messaging. All of these components are incredibly valuable and important, but an application developer still has to construct higher level business processes from these fundamental building blocks. In addition, they have launched the AWS Marketplace, which is a catalog of hundreds of software packages that cover everything from application development to traditional business software. However, this marketplace has only taken the first step in making it easy to install and deploy software applications or stacks as machine images. They haven’t yet enabled third-party companies to provide application components packaged purely as APIs.

We are still in a time of transition. More and more technical organizations are realizing they really don’t want to install and manage software — even if it is running in someone else’s data center. The preferred model is to rely on software service providers who can (and must!) deliver a high quality services. Amazon has proven that developers are quite happy to outsource the data center, and Salesforce.com has proven that end users and IT organizations are content to simply consume a Web-based application — but what about all the layers in between?

Enter business process APIs

Enter the providers of business process APIs.  These APIs have three characteristics that distinguish them from infrastructure-level APIs:

-       They are truly plug-and-go, requiring minimal programming, and thereby approaching the promise of *legofication* that I alluded to in my last post;

-       They are usable by a broader range of developers, beyond the most technical ones, including HTML designers and higher-level coders;

-       By targeting business processes such as payment processing or expense management, they are directly linked to revenue generation.

The following table lists some of the new API services providers (APIsps) who provide packaged business process services. (Note: my company is an investor in Alfresco, Gigya, SmartRecruiters, Rubicon and Viralheat.)

In analyzing some of the data from ProgrammableWeb, it appears the infrastructure services are those getting the most reuse. Not surprisingly, the basic capabilities of mapping, messaging and search are the top three. However, many of these basic services are free (or very cheap), so they might not drive significant revenue. Those involving search and transactions (Amazon eCommerce and eBay would definitely provide more lucrative revenue opportunities. There is a long tail of services, which I simply aggregated under “Other,” but within that group are undoubtedly some high value business processes.

Moving on from packaged software to SaaS

After years of packaged software use and the transition to open source, applications seem to be well down the path of SaaS-ification, with the next wave involving the decomposition of the various application services into APIs. One of the comments (thanks Darren) on the previous article reminded me about the long path we have been on to properly package these APIs. It all started with portable DLLs and shared libs, and then we went through a bad phase with DCOM and then moved onto to XML and SOAP which were unfortunately too prescriptive and constraining. Thankfully, http and RESTful services emerged to provide a Web-style stateless approach. Each of these iterations has made it much easier for developers, but I am sure there are amazing ways to further improve the packaging and consumption of APIs. The LEGO (Lightweight Enterprise Gadget Orchestration) concept was an attempt to push the community to think about what comes next. And the NextStep Interface Builder idea that I mentioned last time is another area that a bunch of young companies seem to be exploring.

We are still early in the APIsp adoption phase. Entrepreneurs and developers should identify the top business services and work to create elegant and simple ways to drive these processes through code and beautiful end-user experiences.

Robin Vasan, managing director at Mayfield, invests in cloud, SaaS and mobile technologies. Some of his current investments include Alfresco, Couchbase, Marketo, Centrify and Webroot. Past successes include Akimbi, Trigo and webMethods. Mayfield has also been involved in such other leading companies as 3Com, 3PAR, Citrix, Concur, Legato, Nuance, Tibco and Vantive.

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Based on the information it collects, your phone will lay out a plan to help you live a healthier life. It will notify you when it’s time for an activity (i.e. taking a pill, going on a walk or taking your blood pressure), and adjust this plan as you go, based on what is and isn’t working. The more it learns about you and others like you, the more effective its guidance will become. There will be a day when the phone will be able to predict if a runner is on a path to overtraining, or tell someone who is trying to lose weight if he would get better results by adding another hour of sleep per night. And this day is coming sooner than you may think.

Many people are up in arms about how much your phone already knows about you. Some feel it’s an invasion of privacy, especially if the data got into the wrong hands. But there’s another side to this coin. If this data is harnessed for the greater good, especially as it relates to your personal health, it could be greatly beneficial. The shift to using the phone as a personal health device could play a big part in making people more accountable for their well-being, and it could have major ramifications for doctors and health insurance companies.

Lots of apps have emerged in the last few years to track all of this health information. Consumers are using apps such as Lose It! to track the food they eat, RunKeeper (my company) to track their runs, walks and bike rides, Zeo to track their sleep, and Instant Heart Rate to track their heart rate on-demand. Now that these apps are getting real traction, the data sets in consumer health are growing quickly. As an example, RunKeeper has more than 12 million users around the world. Our Health Graph API is already seeing several hundred million API calls per month from more than 85 integration partners, which is up 1,500 percent in the last year alone.

Making sense of large data sets has been done in other categories many times before. The missing link in consumer health has been a data set with enough scale to matter. Money is being pumped into digital health companies at a record clip and sensors are continually collecting more interesting data (motion, heart rate, glucose, body temperature, etc.) more accurately, all while getting smaller, lighter and less expensive. In addition to smartphones, sensors are being implanted in all kinds of items, including shoes, bathroom scales, ski goggles, fitness apparel, and even ingestible pills. While we are still in inning one of a long game, for data scientists focusing on big data problems in e-commerce and online advertising, it is time to start giving consumer health some serious attention.

By using your phone as a health monitor, different incentives can be implemented to increase your accountability even further. Services such as GymPact already enable you to make money by sticking with your fitness commitments (and make you pay if you don’t), Earndit lets you accrue rewards for your fitness activities, and RedBrick Health and other corporate wellness platforms help users get credit for making healthy choices. (All three are integrated with RunKeeper, via our Health Graph API.) Now, insurance companies are starting to get involved in this category, too. It is only a matter of time before you’ll be able to get discounted insurance rates based on how well you take care of your health.

Over time, people will come to rely more on their phone to keep them healthy than they do on their actual doctor. Rather than going once a year for a check-up and to get a few basic tests done, you will be monitored day in and day out by your phone. This does not mean that doctors will go away, but it does mean that the role of the doctor will be forever altered. It also means that doctors will be empowered with a lot more data on what their patients are up to between visits, which will help them provide better care.

Game-changing consumer health platforms will emerge in the next few years that make this futuristic vision a reality. In the process, these platforms will not only make the world significantly healthier, but they will also turn traditional healthcare on its head. I feel fortunate to be spending my days trying to build one of them.

Jason Jacobs is the founder and CEO of RunKeeper, a company turning the smartphone into a personal trainer in your pocket. He recently appeared at GigaOM Mobilize.

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As cofounder of Wellsphere, I experienced this firsthand. When we started the company in 2005, our initial plan was to create enterprise communities in which employees would support each other and gain incentives for engaging in healthier behaviors (exercising, eating right, doing yoga). We struggled to find product-market fit, so we changed our focus from enterprises to consumers, and from wellness and lifestyle to general health and medicine. Although the shift in focus from wellness to medicine made sense in terms of finding a larger market (especially given the consumer-focus), I personally have never been passionate about medicine. For whatever reason, I have always been passionate about helping people go from zero to ten, rather than minus ten to zero.

Passions aside, we eventually developed an extremely effective content aggregation and distribution strategy, growing from 100,000 unique visitors a month to 6 million in less than 18 months (which we felt pretty good about in the pre-open-graph virality days). We began talking to most of the major online health companies about partnering to sell ads against our growing inventory, and we started to receive acquisition interest.

At the end of 2008, after four intense, emotional years, we were faced with the choice of selling the company or charging forward toward our next funding milestone. I had to ask myself, “Do I have the energy and the passion to charge ahead?” As individuals and as a team, we all had to answer this question. We ended up deciding to sell the company to IAC-backed The Health Central Network.

Although we had a successful outcome, especially in the face of one of the most challenging acquisition environments in the last decade, we still had a long way to go toward fulfilling the company’s potential as an independent consumer health organization. I think if we had been focused on what we were passionate about rather than product-market fit, things might have played out differently.

Product-team-market fit

Sure, there are those lucky few entrepreneurs who hit it on the first try, chasing their passion and finding a perfectly overlapping market need. But for the rest of us, how do we decide between team passion versus market pragmatism?

I think it’s a false choice that many entrepreneurs make, whether out of convenience, lack of creativity, or simply because they don’t realize that there’s a third option. As if starting a company isn’t hard enough, I recommend you make it even harder — don’t settle for what you’ve discovered the market wants if it doesn’t intersect with what you and your team are passionate about doing. Keep iterating. Think of it as an investment in your future energy and in the long-term potential of your company. Only when you’ve created a product that your team is passionate about and meets the needs of a large market should you move ahead and scale the company. Do not stop at product-market fit, make sure you find product-team-market fit. From there, you’ll find the journey toward scaling a large, successful business more energizing and fun, and your chances of making it through the challenges and speed bumps that lie ahead will increase exponentially. The most important, and most scarce, ingredient to startup success is human energy. Building a product that your team is passionate about will leverage that scarcest of resource, maximize your chances of success, and enrich your life.

Dave Kashen is founder of Quantum Leading, a leadership and culture development firm for startups, and the Unleashed conference series. He writes the awesome culture blog and tweets @awesomeculture.

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And I should know. As a serial Voice-over-IP entrepreneur and the cofounder of Hookflash, I’ve worked with teams that have built plenty of voice and video apps from scratch. WebRTC could take a great deal of heavy lifting out of the equation for developers and end up becoming the common denominator in the new mobile network.

In the wake of this proposed standard, many traditional VoIP  service providers will wither and die. Mobile operators who continue to behave the way they have been will experience a grand exodus as users flee to new innovative providers. Traditional landline sales (phone lines) and traditional mobile voice usage will slow to a halt, and the phone network you know today will be gone for good.

Imagine a world where no matter what we use or where we are we could all communicate via video, hassle-free, for free — native video from Apple devices to Samsung devices, from business phones to the TV in your living room, from your car to your home to a beach in Hawaii. That is what WebRTC can do for us.

When it comes to mobile, Google and Apple own it. If these two giants got on the same page with WebRTC and convinced the mobile operators to play along, consumers everywhere would rejoice.

Google could see some big payoffs via WebRTC. Managing end-user software deployments, such as Google Hangouts, which range in the millions of users equates to real complexity. By reducing or eliminating the need for end-user software, WebRTC will help in a very material and measurable way.

Device manufacturers will also be in a better position. Since Google is a major stakeholder in the WebRTC movement and Google owns Android, we can surmise that Android-powered devices could start shipping with data plans and service offerings with free voice and video. Those services should be interoperable with other services that spring up using the WebRTC open standard. This would surely help Google’s handset and tablet sales.

Apple has been relatively quiet on the WebRTC front, which is somewhat disconcerting. Without Apple’s buy-in, approximately half of the mobile market is inaccessible. Which means that if developers were relying on WebRTC to deliver a voice or video service, they could only deliver service to half of the users that they could if they were to build a native application for both Android and iOS. This would be a major blow to the WebRTC community. On the other hand, Apple could easily take the openly available technology (as could anyone else) and drop it into a new version of iOS at any time, surprising everyone. Everything considered, I would say that  Apple will play along, albeit quite a bit later than everyone else.

In terms of user adoption, Skype is the standard on the Internet. So why won’t Skype dominate on mobile? Skype is an app on a device. It will never win the mobile battle if it’s just a third party application. Even if Microsoft embeds Skype deep in the fabric of its own mobile devices, that only represents a small portion of the market. And I don’t see Apple and Google embedding Skype as the native form of communication anytime soon.

As it turns out, Microsoft and Skype have recently joined the discussion in earnest, creating a bit of a kerfuffle due to their late arrival, which could cost us a six-month delay or more in getting this new proposal approved in the respective standard bodies. At any rate, it’s good to see them getting involved. I just wish it had happened ten months earlier.

The WebRTC open standards project has been in progress for more than a year now, and there are plenty of early demos of WebRTC already. I think we will likely see some production deployments of WebRTC in the next six to nine months, when Firefox and Chrome for Android support it in a production version of their browsers. And Google seems primed to deploy it to their large user base on Hangouts.

As for the rest of us, we will all keep close watch while building our own technology. With some luck and careful coordination, we will all arrive at the same time. It’s a guess, but I expect things will get really interesting near the end of 2013.

Erik Lagerway is a cofounder at Hookflash, creators of Open Peer, a new peer-to-peer network specification, built to enable global P2P communications and services. Open Peer powers the Hookflash mobile apps, enabling free voice and video chat on LinkedIn. You can follow him on twitter at @elagerway and @hookflash.

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But Silicon Valley works because it is stupid. The intelligence is distributed, and the ultimate arbiter of correctness is the market.

Let’s start with the startups. You might think that most successful startups begin with some genius’s brilliant idea. The genius shares this idea with a trusted investor who provides money to hire a team. They work really hard, have a big launch and become a success. But this is not how big companies begin. Companies that start this way tend to be good at spending a lot of money and producing useless products.

Successful startups often begin with no idea at all. They start with some friends who simply enjoy building things together, without any specific idea of what they are going to build or how they are going to make money at it. It sounds silly, but that’s exactly how Hewlett-Packard began. Two nerds in a garage. It took them a few years to find their first really good idea, which was to make cheap, high-quality oscilloscopes. Flickr began by working on something else altogether. Twitter came out of the train wreck of a podcasting startup. If a good team goes through enough ideas, they will eventually figure out how to make something that people want to use. Then, they raise money to bring that product to more people and scale it up.

Okay, so startups are dumb, but what about governments? It’s not that hard to believe that governments are dumb. What’s surprising is when that’s a good thing. The U.S. government is not smart enough to pick winners, so startups are treated like regular companies. When I first traveled to Mexico, I was asked whether the U.S. government paid for all or only part of our office space. The entrepreneurs were astonished to find out that my startup got no help whatsoever from the government. We were on our own. Terrifying. In theory, the Small Business Administration is there to help, but it is irrelevant to startups. It’s structured to help a dry cleaning shop purchase another piece of equipment, not help you hire another iOS developer so you can create Angrier Birds.

But what the U.S. government does do is get the heck out of our way. If you want to start a business, you can just go ahead and do it with no forms at all required. This is called a “sole proprietorship.” At the end of the year when you fill out your personal income taxes, you just attach an appendix that says, “Oh yeah, and I run a business and here’s how much money I made or lost.” If you want to incorporate your business, you can do it in about an hour. The form to create a tax ID takes a minute or two to fill out. Dozens of companies compete to offer cheap and easy payroll tax processing that electronically file everything you need with the state and federal governments for a few bucks a month. The government’s role is infrastructure and facilitation.

If government gave special aid to startups, it would need to ensure those startups were performing well, which would require startups to account for their progress or face punishment for wasting taxpayer money. This regular accounting smells like added paperwork. And overhead. Worst of all, it means bureaucrats are making the call about which startups stay and which go. And when bureaucrats have no incentive to pick longterm winners, they might be persuaded to be more lenient to startups that have friends in high places.

Startups funded by a government cannot, politically, afford to fail. But the real way to create new markets is to do the opposite — reduce the cost of failure by eliminating debtors’ prisons, make bankruptcy straightforward, and allow easy incorporation to shield founders’ personal finances somewhat from the failure of their companies. Even success takes too long for governments. Government programs are managed for the next election cycle, while startups usually take much longer than that to be proven out as a success.

So it’s actually much better if government is “stupid” and delegates the intelligence about which startups should thrive and which should die to others. The government should ensure clear and consistent corporate law and taxation, minimal red tape and overhead, fast and effective infrastructure, easy hiring and firing, and should expose itself as a customer of startup products.

The final dumb contingent of Silicon Valley is our awesome, dumb investors.

In many developing ecosystems, I see angels who describe themselves as “smart money.” They want to take 40 percent or more of the company in a seed round to ensure that the entrepreneur does the right thing, and that if the company is successful, the investor benefits richly. They think they will guide the company to success. They want to have a voice in the day-to-day operations of the company, and when they speak, they expect their entrepreneurs to listen.

But investors who take 40 percent of the company in seed rounds are setting themselves up for failure. If the company does well, it’ll need to raise more financing, and new investors will need substantial percentages of the company. With IPOs taking longer than ever, there may be many of these growth rounds. And if 40 percent of the company is in the hands of a seed investor, there’s not enough room for other investors. A Series A venture capitalist will realize this and simply not invest in a company with this kind of structure, meaning the company will not be able to find financing, even if it is very successful. The “smart” seed investor has effectively doomed the company.

Peter Thiel was the first investor in Facebook. He wrote a check for $500,000 and got a board seat and about 10 percent of the company (not 40 percent), but mostly he just told Zuckerberg to not f**k it up. When the company IPOed years later, poor Peter was left with a mere 2.5 percent stake of the company. But I don’t think he was too upset, because that stake was worth a billion dollars, which makes it the most successful seed investment in history. All for just believing in a smart kid and letting him do his thing. Peter was, brilliantly, not “smart money.”

So the best government defers smarts about which startups to invest in to the investors, the investors defer smarts about how to build the company to the startups, and startups defer the wisdom of what would be a good idea to build to the market. The intelligence is distributed, and it works.

David Weekly is the CEO of Oha.na, which helps users create visual newsletters. He is also a startup mentor and has helped found Hacker Dojo, PBworks, Mexican.VC and SuperHappyDevHouse.

Image courtesy of Flickr user Michiel020.  

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From working at XM Satellite Radio to leading Rhapsody’s music service and later launching the Internet-connected GPS device Dash, I have spent most of my career in pursuit of one goal: to deliver the connected information and entertainment content people want to their driver’s seat. In my my current role leading Aha by Harman, I believe the “connected car” industry’s biggest challenge is to provide the mobile apps and services that consumers want in a way that makes safety the top priority. To do that, we have to look beyond interface design and consider human behavior.

Automobile makers understand people’s desire to be connected. As a result, some of their newer, more technically advanced automotive infotainment systems are starting to resemble smartphones and tablets on wheels, featuring large capacitive touch-screen displays. The problem, of course, is that a car is neither a phone nor a tablet. It’s a two-ton hunk of steel and glass that has to be maneuvered safely through traffic.

Two schools of thought have emerged. One is to ban or severely restrict the use of distractive technology while driving. We all know how well that works. A recent survey found that nearly 40 percent of young drivers admit to texting while driving, and laws requiring drivers to use hands-free mobile phone headsets don’t seem to have had much effect, based on casual observation of cars driving past my office in Palo Alto, Calif.

The other approach is to design new user interfaces — the modern, digital versions of buttons and knobs and dials — that provide the same general functions of smartphones and tablets while minimizing distractions for the driver. There have been promising advances in voice recognition and controls — Apple’s Siri is one emerging example, Dragon from Nuance is another — but the technology is still in the training-wheel stage.

There’s also a huge challenge: If the controls for these new dashboard information centers are either too complex or fail to quickly deliver the information one wants, drivers will simply skip the car’s built-in systems and go back to using their handheld phones and tablets while driving. We’ve got to make the automobile interfaces compelling enough to persuade drivers to put aside their smartphones, but not so compelling as to divert attention away from the road ahead.

Adding to the challenge, the technology in our pockets is advancing faster than a Ferrari down Highway 101. Apple comes out with a new and improved and more alluring iPhone every year, while the information system built into your dashboard is locked in for as long as you own the car, which today is an average of six years. Even if your new car comes with today’s latest whiz-bang technology features, it will seem outdated a few years from now when your new iPhone 10 has a 3D holographic display and a mind-reading interface.

We know what won’t work: millions of drivers hurtling down the road while poking, swiping and typing on touch screens for email, text messages, podcasts, driving directions, global streaming radio, restaurant reservations, social media feeds and the like.

But we also know what has worked in the past. Generations of drivers have managed to stay relatively safe while reaching for the volume knob on a car radio, or pushing a preset button or switching from AM to FM to CD to Sirius/XM satellite radio. Current physical dashboard commands — up arrow, down arrow, right arrow forward, left arrow back and so on — are familiar and easy to operate, and certainly less distracting than a touch-screen display whose user interface requires the driver to slide a finger precisely along a path. The key will be to map a diverse array of new digital services and applications to familiar human behaviors that minimize the distractions for the driver. It’s been exciting to see major car makers such as Acura, Honda and Subaru (disclosure: all are Aha partners) move in this direction with their infotainment systems in 2013 model year vehicles.

Paradoxically, the solution might be to go back to dedicated buttons that don’t require taking one’s eyes off the road. Video game developers learned long ago that when aliens are attacking, a single “Fire!” button works much better than a sequence of CTRL-ALT-whatever keystrokes.

Another design strategy might be to eliminate, or at least limit, interface elements that require the driver to respond immediately, or to retain sequences of information that are cognitively demanding. When the user is sitting at his desk at work, he has no problem tapping out sequences like “Show me reviews for all the three-star Chinese restaurants within five miles,” and “Make a reservation.” “How many people?” “Four.” “What time? Your options are 6:30, 7:15 and 7:45.” When the user is driving in rush hour traffic, such extended interactions are a recipe for an accident.

Above all, the goal of interface design in automobile-based services must be safety. A decade ago, researchers at Harvard estimated that drivers talking on cellphones caused 2,600 fatal accidents and 570,000 other injury accidents the previous year. That was before the iPhone and iPad, before Facebook, before just about all the mobile apps we now can’t imagine living without. The question now is, can we live with them in the car?

In the car of the future, these concerns might not matter. The biggest advance in automobile safety will come from replacing human drivers with radar, LIDAR, GPS, computer vision and robotic chauffeurs. At that point, we’ll all be passengers, free to sit back and touch, swipe and immerse ourselves from here to Grandma’s house. But these are far-off concepts.

Until then, we have to figure out how to design compelling apps that are safe for human drivers to use. We don’t have the answer yet, but we do have a huge opportunity.

Robert Acker has been an entrepreneur in the connected car space for more than 14 years. In his current role with global infotainment company, Harman, Acker and his team are developing and launching Aha, which turns Web content into on-demand radio stations. 

Robert Acker will be discussing the connected-car experience onstage at GigaOM’s Mobilize conference on September 20.

Image courtesy of Flickr user digitaljournal.com.

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Professors once saw the mobile phone as the enemy to productive learning, with students tuning out of lectures to text and call each other. But this massive invasion of smartphones and tablets also provides opportunities for new educational possibilities.

Students now have access to adaptive learning technologies, more robust in-classroom engagement, mobile checkout processes, mobile price comparisons in on-campus stores, and even peer-to-peer resource sharing. These services are collectively used by millions of students, who find them engaging and valuable resources.

Equally important are the types of educational content that students can access, the ability to leverage this content from a wide range of producers (not just traditional publishers), and the institution’s ability to support, deliver and manage that content. Surprisingly, most campuses aren’t doing this well at all.

Current mobile solutions: Are universities doing it wrong?

Universities often have some sort of mobile platform, but too many are doing it all wrong (if they’re doing anything at all). They tend to work from the front end to the back end, taking a piecemeal approach that dumps all of the existing campus information systems (school sports trackers, events boards, educational content, bookstore resources, etc.) into their own separate mobile experiences, sometimes even developing for entirely different operating systems. The result is a disaggregated online experience that’s far from engaging for students. With so many other outside resources available, if students don’t like what the university has to offer, they simply won’t use it.

It’s certainly not an easy task for a university to create a holistic, engaging online experience, and there are plenty of roadblocks. Professors are a notoriously stubborn group and getting them to adopt mobile platforms isn’t simple. Plenty of training, education and practice are necessary. It’s also not cheap. And then there’s the daunting challenge of trying to keep 18- to 21-year-olds engaged for more than a few minutes.

Ultimately, schools must understand that to build a successful online infrastructure, they need to develop an easy-to-use and captivating student experience. Students want, and will best benefit from, a single and complete experience for all the information they need, not a disaggregated clump of independently developed experiences.

Creating a platform to engage and hook students

When universities consider developing a mobile platform, they need to answer four key questions: 1) What apps do students want? 2) What kind of devices need to be supported? 3) What needs to happen to get professors on the platform? and 4) What’s the plan for deployment?

There are some schools that are doing this well. Hult International Business School, which has physical campuses in San Francisco, Boston, London, Dubai and a handful of other locations around the world, has a fantastic online/mobile infrastructure. It was recently recognized by Apple as a “Standout School” for its use of technology, and it’s clear why. Not only has the school given iPads to over 1,600 students and made use of on-demand tutorials and digital textbooks, it’s gone a step or two further to create its own online apps, portals and infrastructure for students and faculty.

Schools are missing a fantastic opportunity here. By meeting students online, they can hang onto those students who would otherwise gravitate towards third-party apps. Universities are in the best position to deliver this new mobile experience — after all, the student is already on the physical campus and enrolled in the school. But if they don’t get it right, they’re in danger of losing students and professors.

Mehdi Maghsoodnia is CEO of Rafter, which provides software tools for cloud-based distribution of course materials. Rafter is also the parent company of textbook rental service Bookrenter.com.

Maghsoodnia will be discussing the development of a unified platform for personalized learning at GigaOM’s Mobilize conference Friday, September 21.

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The marketplace allows AWS customers who no longer require on-demand instances of a particular type and in a particular availability zone to offer reserved instances for sale to other Amazon EC2 cloud users. This much-requested feature now means that paying AWS upfront for heavily discounted usage of on-demand instances is not quite so daunting, as there is now a way of selling reserved instances.

I am a former Morgan Stanley commodities originator, and I’m also the founder and CEO of the cloud broker-dealer, Strategic Blue. In my role at Strategic Blue, I spend much of my time comparing different cloud providers’ pricing models, so I thought I’d give the new AWS marketplace a beta test. I logged into our AWS account, with the intent of selling a spare reserved instance that is no longer being used by our customers. Things started off well — I found the reserved instance I wanted to sell, it was obvious how to take it to the marketplace, and then it asked me for a U.S. bank account. Ah. Strategic Blue is a U.K.-based company, it accepts payments from U.S. customers in U.S. dollars, but it does not have a U.S. bank account. So this isn’t a marketplace that allows international sellers just yet, although anyone can buy from it. It will be interesting to see whether this artificial imbalance between numbers of buyers (global) and sellers (U.S. only) is significant enough to show up in the traded prices, and particularly whether there is a sudden drop in prices when the selling functionality is rolled out globally.

My selling attempts frustrated, I watched the video tutorials and scanned the documentation, and then decided that maybe I didn’t want to sell after all. Amazon takes a hefty 12 percent cut from the sales proceeds, and rounding is applied so that the buyer only gets discounts for a whole number of months. This is necessary to allow like-for-like pricing comparisons, but it does mean that AWS picks up the discounts for those days that don’t make up a full month at the end of the term. Finally, there is no way to “short-sell” — you have to “go long” on your reserved instances before you can sell them. Having to buy first and sell afterwards is a constraint also applied to trading real estate, where housing bubbles are common for exactly this reason. So much as this looks like Amazon making a market, the high transaction costs mean that the only sellers are going to be those people who have accidentally over-bought reserved instances. Although this is a very welcome addition to AWS’s EC2 pricing structures, I would argue that Amazon is running counter to the commodity-style approach of trying to minimize transaction costs to encourage efficient trading. At current AWS transaction costs, there probably won’t be market-making cloud broker-dealers using this new functionality to automate their ability to offer tailored pricing for AWS usage. It is still cheaper to do it outside of this new system.

Where is Amazon intending to take this? Is this a further step towards commoditization of the cloud computing market? This marketplace looks a bit like an exchange, trading discounts on AWS on demand instance usage. Operating an exchange is usually a regulated activity, so this is worth analysing.

Do we have many sellers and many buyers? Absolutely. Is there clearing house functionality? Yes, AWS is the counterparty to all trades, once the price is agreed between buyer and seller.  Does AWS publish a history of traded prices? This remains to be seen. It absolutely should be doing this to provide customers with the information it needs to set rational prices. More importantly, if AWS does not publish this information, and it uses this information to set its own pricing for on-demand and new reserved instances, is it in danger of falling foul of rules put in place to prevent front-running and all sorts of other inappropriate trading practices that are heavily regulated in the professionally traded markets?  That is my perspective as a former commodities originator who was subject to Financial Services Authority regulation. I suspect that Amazon just sees this as a logical extension of how it already lets others sell books, CDs and other goods on its platform. Regulation has not yet reached the trading aspects of cloud computing, and it will be interesting to see how it will be applied.

Many other cloud providers are asking “do we need to do this too”? I would argue no and absolutely not if this becomes a regulated activity. Even before this, the AWS pricing model was pretty complicated and quite daunting to new users. It is certainly a challenge trying to make sure your AWS bill has been calculated correctly, as AWS doesn’t provide its customers with a full hourly history of usage. If every cloud provider creates their own variation of this, it will make like-for-like cloud pricing comparison even more opaque.

Instead, I foresee a world where the day you secure a fixed price for your future cloud usage does not have to be the same day you choose your cloud provider. Managing price certainty separately from physical supplier selection is standard best practice in most other commodities markets, and we are starting to see initiatives in the cloud industry that are finally following this best practice. Independent cloud metering technologies, such as 6fusion and others, are a good start, as they facilitate cloud comparison by using a common unit of measurement. Tools that help companies forecast their future usage, such as Cloudability, are also crucial. A financially settled exchange that relies on a cloud pricing index that is not based on a single cloud provider should appear soon, and that would support implementation of commodities market best practice in cloud computing.

Dr. James Mitchell is CEO and founder of Strategic Blue, the world’s first cloud broker-dealer, which brokers and financially intermediates deals for cloud providers and cloud users. James was formerly a commodities deal originator at Morgan Stanley in London, trading electricity, carbon credits and other commodities. 

Dr. Mitchell will be participating in an onstage discussion about the “the new cloudonomics” at GigaOM Structure:Europe in Amsterdam. The panel will be moderated by Joe Weinman, author of  “Cloudonomics: The Business Value of Cloud Computing.”

Feature photo courtesy of  Flickr user Will Merydith.

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So you wait a week, two weeks … No gold rush for you. You’re app is not taking off. Why can’t all developers find their way and be successful? Why is success limited only limited to a few? You want to blame the Apple’s App Store for not having the right discovery mechanisms built for your app. But the reality is, this is not just Apple’s fault.

Most developers underestimate how hard it is to be successful in Apple’s App Store. And even if Apple is improving things, it’s not going to be enough. Ever since the App Store launched, I’ve been frustrated with app discovery. We all have our obsessions. I’m obsessed with finding great apps, which is why I cofounded Appsfire, a company focused on finding a solution.

But why is this problem so hard to solve? The answer is not straightforward. Let’s look at the various angles.

The developer side

It’s not enough to build a great app with a nice design and a nice user experience. A mobile app is a business, and it has to be managed like one.

If an app doesn’t solve a critical need in a beautiful way, it has little chance of survival in the long run.

The marketing plan, including knowing your own competition, has to be built and implemented before you even launch an app. Remember, apps are displayed in iTunes, which is a content store.

Apps need to be analyzed and optimized based on usage data and lifetime value. Many developers are still obsessed with low CPIs (cost per install) rather than trying to get the best users and keeping them engaged.

Launching an app is not just a design exercise backed with solid code. It’s a real business. Some of app studios have become so big (e.g. Zynga and Outfit7) that they don’t even need any sort of favor from Apple or Google to get massive visibility. They just self-promote their app.

The Apple App Store side

Apple announced 700,000 live iOS apps (close to one million have been created so far) and a newer app store. They also announced that 90% of all apps were downloaded every month. But everyone knows that only those apps in the top ranks or highlighted by Apple get any real traction.

So, is Apple doing enough for your new app?

Well, many developers forget that it is only a store. It’s not a marketing or advertising company.

Yes, Apple released a new version of its App Store. And just like any other online retailer, Apple does not let developers control the majority of the discovery process (even when they feature you).

What can Apple do to make life easier for developers?

A speedier review process would help developers iterate faster. A better interface for app management/analytics would be useful. Separate apps in the games category from non-games to give the other 20-plus categories a better chance. Those would all be nice upgrades but not dramatic changes.

What would be a dramatic change? Killing the top charts.

Rankings are the primary way consumers discover new apps. This is why so many app developers are trying different marketing techniques and bots (before bots were blacklisted by Apple) to get into the top ranks.

Killing the ranking system would force users to be more active in finding apps. And it would give more chances to more developers.

But it’s unlikely to happen.

The consumer side

Most smartphone users have more than 75 apps on their device. Only a few are regularly used. Most are forgotten and sometimes uninstalled. That’s the tough reality.

Consumers have a hard time finding good apps. But, paradoxically, they don’t care enough to read reviews, compare apps or even search for apps. On mobile people are lazy.

People need trusted sources to make quick decisions. This explains the growing popularity of third-party discovery solutions. They provide a good shortcut to decisions, just as shopping engines have done for e-commerce sites.

And trust in app discovery is probably the most important missing brick today. It is hard to build, communicate and maintain, because it requires a consistent effort of transparency, engineering, expertise, relevancy and independence

The App Store is not enough. It is built the same for everyone.

This explains why Facebook has developed the App Center. But that’s far from enough. You can’t trust your friends with every single decision they make. The solution is more about a specific taste graph for apps. And Facebook is not there.

The ad networks’ side

Millions of users find out about apps though advertising or paid discovery. (Something Apple does not include in its $5 billion paid to developers).

But the mobile ad industry is still young, and mobile advertising is not yet very consumer friendly or advertiser friendly. Banners are annoying, intrusive and inefficient. Many times they don’t even look like advertising.

An app developer can easily get lost, and understandably so, in the jungle of ad networks, each claiming billions of impressions per week, with different pricing structures, ad units, tracking technologies (when they work) and little commitment on results.

Paid app discovery is very hard and (to be successful) very expensive. It is not just not enough to buy advertising to succeed — thousands of developers do. It is complex, time consuming and expensive to run an efficient mobile ad campaign.

Bottom line

You can’t attribute the (lack of) success of an app just to one single factor. Building a business with a mobile app is hard, because it involves a long list of parameters very few developers really understand or can control.

We’re in the early days of the mobile app business. There is no “magic recipe” for mobile app success. It is more about experimentation than following a prescribed list of directions.

And everyone can learn how to cook this way. Those who make it will try and fail until they succeed. 

Ouriel Ohayon is the cofounder of Appsfire, a discovery and promotion network for mobile apps. Prior to Appsfire, he founded the French edition of Techcrunch and ran early stage investments for Lightspeed Ventures and Gemini Israel funds.

For more on this topic, attend GigaOM’s Mobilize conference, where Ouriel Ohayon will take part in an onstage conversation about how developers can disrupt the app distribution model. (September 20 – 21, San Francisco)

Image courtesy of Flickr user vikasiamoto.

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Since coming to NEA out of VMware about eight years ago, I have been intensely focused on early-stage enterprise technologies, and my partners and I saw the early promise in PaaS, investing in companies like Engine Yard and Apprenda. The space is getting even more interesting as it evolves, with the rapidly proliferating services-based approach to cloud applications creating a host of new challenges — many of which can best be addressed by PaaS vendors, both public and private.

Developers are increasingly assembling applications in the cloud by tying in APIs provided as a service, rather than coding the applications from scratch or linking in code packaged into libraries. Numerous startups have emerged to provide these APIs to developers, such as Twilio for messaging, SendGrid for email and Stormpath (which NEA invested in earlier this year) for user security management. All of these cloud service providers enable developers to focus on the core logic that makes their application unique, rather than developing functionality that is common across applications. Yet while the explosion of cloud services has clearly been a boon to developers, it presents a new set of challenges in terms of discovery, implementation and management.

If I’m developing a new application, how can I find the most reliable, secure services that are compatible with my run-time environment and data store? Once I’ve implemented these services, how I can be sure I’m using them appropriately and cost-effectively? Furthermore, if I decide to offer the core functionality of my application to the public as a service, how can I ensure this service is discoverable, trusted and usable by other developers?

PaaS vendors, public and private, are in a perfect position to solve these challenges by sifting through the numerous available cloud services, curating those that are the most beneficial and trustworthy, and promoting these services to developers. Thousands of developers are already paying these vendors to help them build, manage and deploy applications, so the “chicken and egg” problem of creating a new marketplace has already been solved. They are a trusted partner. A PaaS also happens to be one of the first decisions a developer makes when building a cloud application, so it’s a natural extension for these PaaS vendors to curate third-party services to increase the value proposition of their platform to developers. Leading public PaaS vendors such as Azure, Engine Yard and Heroku, as well as private PaaS such as Apprenda, have a tremendous opportunity to lead the industry in cloud services curation.

You may ask, what about Amazon? As an Infrastructure-as-a-Service (IaaS) provider, they are primarily motivated to appeal to as broad an audience as possible in order to drive more compute cycles. This has caused them to open up their marketplace for the entire ecosystem, rather than curating an offering suited to a specific category of developer. In addition, it is no secret that third-party software developers are starting to trust them less and less. Amazon has gradually expanded upwards from the IaaS layer, adding on PaaS-like capabilities which compete directly with partners in the Amazon Web Services (AWS) ecosystem. As long as the fear persists that Amazon will take the best services in house, developers will be wary of relying on them as a channel to distribute their cloud services. The truly independent PaaS players who empower rather than compete with their developers will prevail.

The implications of cloud services curation for startups, PaaS vendors and enterprises are significant:

• New companies that sell cloud services will increasingly go to market through PaaS vendors, greatly decreasing sales and marketing expense. As Apple’s App Store is to mobile independent software vendors (ISVs), marketplaces for PaaS vendors’ services will be to cloud service vendors.
• PaaS vendors will offer new services to guarantee security and cleansing to ensure that everything on their platform is compatible, reliable and trustworthy. They will leverage their position as a trusted vendor for developers to make the most of this new way to develop applications.
• Enterprises will win big. They only need to standardize on one trusted PaaS rather than individually certifying each cloud-based service. They can pay and manage numerous cloud services through one vendor. If anything does go wrong, they will have the support of an established partner to ensure the problem gets fixed quickly.

Ultimately, cloud services curation is likely to be provided as an additional offering by the handful of leading PaaS vendors, rather than stand-alone marketplaces or IaaS providers. In a world with an ever-expanding number of cloud services, curation will help developers discover the best services and help the best services achieve broader adoption — thus bringing innovative and secure applications to market faster than ever before. We expect cloud services curation to be one among several rich strategic opportunities on the horizon for PaaS vendors as the PaaS market transitions from nascent to mature.

Peter Sonsini, general partner at NEA, invests in early-stage enterprise software and consumer companies. In addition to the PaaS companies mentioned above — Apprenda, Engine Yard and Stormpath — his current investments include BeachMint, Conviva, Embrane, Eucalytpus Systems, Lithium Technologies, MapR, Splashtop, Tintri and Viddy. Peter’s previous investments include Xensource (acquired by Citrix) and Teracent (acquired by Google).

For more on the evolution of PaaS, attend GigaOM’s Structure:Europe conference in Amsterdam on October 16 – 17.

Image courtesy of Flickr user Materials Aart.

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