Reality disappointed: What we actually got was a limited library of not-new games (Homefront, anyone?), many of which you already owned, but even laggier than on your own hardware. Turns out traditional retail, game publisher, and hardware platform companies made it difficult for cloud gaming services to get the best games on the day of release, and even then the gameplay quality was slightly inferior.

But the concept of gaming in the cloud is still an idea worth pursing for a far greater promise: the ability to deliver an entirely new kind of game experience.

Historically, in games as in any other media, new distribution technologies enable new creative experiences. Pong wouldn’t have been possible without a new device plugged in to your TV. Internet-connected computers meant you could play Duke Nukem and Quake with other people online. The evolution of server technology brought massively-multiplayer games. The iPhone brought Angry Birds, a game designed for a touch interface, and so forth.

So why should a cloud gaming service be used to deliver the same old games as before that were built for a $250 machine?

What we should be wondering, then, is what new kinds of games and gaming experiences cloud delivery could inspire? Compared to the gaming hardware you own, a cloud gaming service could access much more computing power—with a limitless capacity to add processing. Consider after all that the most powerful supercomputer in the world, the Titan, is about 70,000 times more powerful than an Xbox 360. Granted the Titan costs a cool $100 million, which cuts out most households, but scaling back to basic and accessible data center prices would still offer many orders of magnitude more computing power than any current or near-future home console . (And this isn’t to say great gaming experiences are limited to powerful hardware—to the contrary mobile phones play compelling games, too. They’re just of a different sort.)

As for content itself, games purpose-built for the cloud do not yet exist — ones that aren’t encumbered by the limits of processing power, that would use the full advantage of many more, and more powerful, CPUs and GPUs. These “supercomputer games” would open up creative possibilities far beyond what games of today are capable.

Imagine supercomputer games with vividly lifelike worlds and characters (and not the almost-real, uncanny valley of current-generation graphics), or a single battlefield with 50,000 other players playing at the same time — or opponent AI on the level of IBM’s Jeopardy!-winning Watson. Supercomputer games could be dramatically different from anything you can play tonight at home. I’m no game designer, but what if we could use real-time traffic data to fill the streets of the next Grand Theft Auto, or step into a computer-generated world that looks as compelling as the Lord of the Rings movies?

Now, there are many reasons, beyond the technological, that these games don’t yet exist: It would be prohibitively expensive to pay artists to create all those detailed graphics, and simple AI is good enough to defeat most any player at most any game. But the record of creative innovators is that eventually they find a way to stretch the available technology to its limit. And some gamemakers are already beginning to probe at the games you can create if you host some of the game in the cloud.

There is a nagging constraint to the cloud, of course — bandwidth, which simply isn’t growing at the pace of Moore’s law. Network latency makes fast-twitch games, in which defeat is determined in microseconds (like with the top console genre, first-person shooters) hard to play over today’s internet. So, at least until the next engineering breakthrough, these supercomputer games might be designed around genres requiring slower player reflexes than, say, Call of Duty or StarCraft.

Best of all, the only hardware you would need at home is a basic input device like a controller and a box to render the graphics, and it could be cross-platform so that you could play from a PC or Mac or any smartphone. As one for-instance, OUYA, the new open, Android-based console I back, could be great for a cloud-delivered game (hear me, developers?), and its notable that Sony bought up Gaikai and certainly has plans.  (Full disclosure:  OUYA also has an announced partnership with the relaunched OnLive.)

Supercomputer games could be extraordinary. Now some intrepid game developers just have to make one.

Roy Bahat is Chairman of the open, Android-based game console company OUYA, and is former president of IGN. He is also on the faculty at UC Berkeley. Follow him on Twitter @roybahat

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Enterprise 2.0 remains one of the best opportunities in the technology market today. The enterprise software incumbents are currently a full generation behind, just now entering the traditional SaaS market through acquisition (for example, Oracle’s $1.5 billion acquisition of RightNow and $1.9 billion acquisition of Taleo, and SAP’s $3.4 billion acquisition of SuccessFactors).

Meanwhile, more forward-looking software companies like Salesforce.com are realizing that the route to the enterprise now goes through the user, not the IT department. Salesforce.com has snapped up several Enterprise 2.0 companies, including Assistly, Rypple, Manymoon and Groupswim (now Chatter).

But Salesforce.com is the exception. It will be another five years before the mainstream enterprise software market wakes up to the fact that Enterprise 2.0 apps are the industry’s future. That’s plenty of time for new companies to establish market leadership and challenge the incumbents, who will either have to adapt or buy Enterprise 2.0 startups to remain competitive.

In my previous article, I described the go-to-market model of a typical Enterprise 2.0 startup in three phases: freemium, inside sales and enterprise sales.

This article is focused on phase one — freemium. In follow-up articles, I will dig into the transition to an inside sales force and then how to add a profitable direct sales force to the model. Almost all Enterprise 2.0 startups employ each of these sales strategies sequentially or in parallel at different points in their maturity.

An effective freemium go-to-market effort depends on product design, distribution and conversion.

Freemium product design 

Enterprise 2.0 starts with the premise that “users” are “consumers” first and foremost, and that they make the software purchase decisions, not the IT department. So how do you attract enterprise users?

1. Make your app fun. Employ game mechanics, from vendors like Badgeville, to drive engagement. Design an app that you’re passionate about — perhaps because it addresses one of your own needs. Give it a personality. SurveyMonkey is a good example of app personality resulting in increased market share. The last thing users are looking for is a boring software experience.

2. Study your active users. The key metric of freemium product design is active users. Instrument your app with analytics tools from vendors like Google Analytics or Flurry. The data your users generate will drive product management and usability decisions, which in turn will drive conversion and revenue. Determine the most popular features, and then remove the least popular ones. As Twitter co-founder Jack Dorsey says, “Simplification is key.”

3. Pre-populate the data. No one likes an undecorated room, and no one likes an app with no data. Incorporate data from outside sources such as Google Apps (email and contacts), Salesforce.com (accounts and status), Facebook or LinkedIn (contacts and relationships). Can you expose anonymized or aggregated data from other users? Is crowd-sourced data an option?

4. Don’t forget the APIs. Users expect freemium Enterprise 2.0 apps to work with their existing systems. Publish your own APIs and let your users build integrations and product extensions, and then publish these back to your user community.

5. Prioritize the platforms. Your app also needs to be available through web browsers, iOS and Android, at a minimum. Depending on your specific application, making it available via desktop downloads, bookmarklets, browser plugins or MS Office plugins may increase your user base. HTML5 and cross-platform development tools such as Appcelerator and Sencha can help with this.

Freemium distribution

The key metric of distribution is downloads, so make your product available everywhere your user is likely to be. In my experience, mobile apps tend to accumulate two to five times more users than web-only offerings. Venture investor Fred Wilson covered this in his blog post, “Mobile First, Web Second.”  The mobile market is much larger too. Smartphones and tablets outsold PCs by almost two times in the fourth quarter of last year.

1. Target the mobile user first. Enterprise 2.0 app developers should target the mobile user via the Apple App Store and Android Market (recently rebranded Google Play). The Amazon.com Appstore for Android is the next place to focus in terms of importance. If you have the resources, you should also consider developing for secondary app stores such as Windows Phone Marketplace or Blackberry AppWorld. Getting ranked and positively reviewed on these sites takes some effort and capital, but it’s worth it.

2. Focus next on the web marketplaces. Remember, your goal is downloads. Google Apps Marketplace is Google’s SMB offering. It promotes apps that are highly integrated with Google Apps (Gmail, Calendar, Sites, Docs) and has a healthy market share among small businesses. Google’s Chrome Store is geared more towards individual users, but it is also a productive distribution channel. Salesforce.com’s AppExchange, one of the original marketplaces for Enterprise 2.0 apps, is being repositioned to serve users, not just system admins, and will be another new channel.

3. Investigate the marketplaces of other leading Enterprise 2.0 apps. Examples include the Intuit Marketplace, LinkedIn Application Directory, MailChimp Integrations Directory, Splunk Partner Portal, FreshBooks Add-Ons, Box Applications, Atlassian Plugin Exchange and Heroku Add-Ons.

Freemium conversion

The key metric here is conversion rate. If you have successfully executed your product design and distribution, you should have a sizable free user base, and in my experience, one to three percent of them will convert to your paid version. Increasing your conversion rate may be the difference between success and failure, so experiment with ways to improve it.

1. Erect a paywall. The most common way to convert free users into paying customers is to erect a paywall that unlocks additional features or capacity. The analytics you collect from your early free users will give you insight into which features are considered most valuable, and thus what you should consider charging for. A single monthly price per user is the most common method of charging.

2. Offer a preview or free trial of additional features. One common way to increase your conversion rate is to entice users to upgrade by offering a preview or free trial of additional features within your app.

3. Remove barriers to conversion. One company, Atlassian, has developed a clever way to increase in-app conversion called Causium. Instead of charging users, Atlassian asks them to donate a small amount to a charity called Room to Read. The fundraising is for a good cause, but the strategy is really designed to get users to input their credit card details, thus removing a crucial barrier when you attempt to convert them to a paid subscription later.

4. Feel the love. Evernote CEO Phil Libin believes in the “NPR model.” Evernote gives users a fully functioning app for free. Libin believes that by developing a deeply loyal and happy user base, some will love the product so much that they will voluntarily pay for the premium edition. Even if your users don’t love your product as much as Libin’s, offering a fully functioning free app and then selling premium add-ons, such as integrations with existing enterprise applications, is an effective conversion strategy.

“Freemium” is an evolving term and startups are constantly experimenting and redefining the model as it applies to Enterprise 2.0. Please let me know what’s working for you. And stay tuned for my next article, which will outline the key metrics and best practices for selling Enterprise 2.0 software using an inside sales force.

Scott Irwin (@scottirwin) is a general partner at Rembrandt Venture Partners, where he focuses on Enterprise 2.0 and SaaS investments. He is very bullish on small startups’ ability to disrupt the stodgy enterprise software market.

Image courtesy of Flickr user bixentro.

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That all makes for great listening, but the real reason Maron’s podcast deserves a listen from digital media and technology execs is because it shows how someone like Maron, who was “in a compromised position and a little desperate” when his terrestrial radio show was canceled by Air America, has been able to resurrect and build a career through the power of Internet distribution and community, as with an increasing number of other artist-entrepreneurs.

I recently took some time to chat with Maron, which you can listen to by clicking below on the big orange “play” button from the embedded SoundCloud player. In our conversation we talk about some of the lessons he has learned since the launch of his podcast. He talks about his experiments with new methods to sell his content (including the launch of his own app), how he views podcasting and new media in the context of the larger new media landscape, and his thoughts on old friends like Louis C.K. as they find ways to disintermediate and disrupt the old guard, among other things.

Marc Maron – GigaOM Podcast by GigaOM

I suggest you give the whole podcast a listen, but below are a few takeaways from my podcast conversation with Maron.

Embracing new models isn’t optional but required

According to Maron, unless you are a megastar, you need to take control of your own career and embrace new distribution models,  because no one else is going to do it for you.

You think your local paper is going to take care of you? The comedy club’s website is going to draw people in? You really have no choice.

While Maron is specifically speaking of comedy, it is true for artists of all stripes. Taking control of your own distribution and monetization through new Internet models is something we are seeing musicians, authors and video artists at all levels do, since, increasingly, they can’t rely on corporate media to promote and monetize for them.

Experiment with monetization models until you get it right

Maron knew that once his library of podcasts grew to a certain size, he could monetize the back catalog. Once he reached 150 podcasts, he used an aggregator and attempted to charge for podcasts through iTunes. However, it proved difficult, so ultimately he shifted gears, embracing an app model with in-app payments for recurring subscriptions. He has found sponsorship revenue growing as he has become more popular, and he is also using a donation platform, which works well because of the intimate nature of the podcast medium.

With podcasting, you’re able to create a genuine, intimate relationship with people because it’s a solo listening experience, so they build a bond with you. It’s a deeper relationship.

New models accepted as part of “the media landscape”

Maron records his show in his garage, welcoming household names such as Conan O’Brien, Ben Stiller and Rainn Wilson into his garage, complete with cat hair from the many strays Maron welcomes into his home. I asked Maron about this, and he said it’s just the way business is done today.

 [In today's media landscape] it’s not unusual to go to someone’s house, sit in their living room, and do a thing.

On Louis C.K.

Maron counts Louis C.K. among his oldest friends in comedy, and when I asked him about what he thought of Louis C.K.’s self-distribution efforts, he had this to say:

It’s spectacular. Anytime someone makes a move in that direction it empowers the artist. . . . What Louis did was a milestone in creative marketing by the creator.

Go ahead and listen to the podcast, and let us know what you think about Maron’s observations as well as the podcast itself. We are looking into doing more podcasts and would love to hear thoughts from our community.

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Jacob, who is also the CTO of Pixar, says that in order to make money on the film he needed to have success showing it in 20 to 24 cities for about a week. To ensure that success, he has paired up with local food banks to promote the movie: folks can learn about the film from food banks and then support them via the purchase of a ticket to the film. When he “dropped a Groupon bomb” using the social buying service to sell tickets, he had a full house on opening night and a theater that was a quarter-full through the rest of the one-week run.

But as he said, “You can’t make money selling tickets at half price,” so he generally sells half of the tickets through Groupon and relies on the food bank partnerships and word of mouth via local blogs and Facebook pages to do the rest. Ultimately he hopes that, in a decade, the distribution market will have changed: there will be better tools to find independent theaters that are willing to run documentaries and larger theater chains will accept that buying expensive TV and print ad spots are not the only way to bring in an audience. Until then, DIY distribution will be a long, difficult slog.

Google is the one with the most to worry about, though, according to a new report (subscription required) posted at GigaOM Pro. Google does have a significant interest in the netbook market, like Microsoft, thanks to its upcoming Google Chrome OS, but that isn’t the reason they need to be scared. The real reason is the demise of the web.

Paul Sweeting, in the GigaOM Pro piece, contends that the reason the iPad poses such a threat to Google is that it rewrites the rules of content delivery, eliminating the avenues through which Google makes money via search and advertising. As I’ve written about elsewhere, Apple’s aim is clearly to control not only the content that appears on its devices, but also the conduits by which that content arrives.

Apple promotes a tunnel vision version of the Internet, with content funneled, separated and kept specific to the app you happen to be using. It’s a cellular model of consuming Internet-based content, and it is attractive to the consumer in the same way a walled Japanese garden is attractive to the appreciator of nature. The garden is safe, predictable, contained and aesthetically pleasing. Raw nature can be all of these things, too, but it isn’t necessarily so all of the time.

My only question, and the one which Sweeting poses without asking directly is, is that something I want to happen as a consumer of media? Do we want to “settle” the web, so to speak, by allowing Apple to pacify it, distill it, and then sell it back to us through tightly controlled channels? It may seem alarmist, but it isn’t. It’s what Apple has to do to grow its consumer base as a mobile device maker.

In an ideal world, from Apple’s perspective, Cupertino would have exclusive control over all major media distribution. The company desires that, or as close as is possible in the real world, because by controlling the distribution of content they can also control which devices consumers have to use to consume it. That, in turn, means hardware sales.

It sounds bleak, but it might not be all bad. Apple seems committed to providing quality content in innovative ways, so maybe handing them more control is the right move. What do you think? Is convenience, ease of use and quality of finish worth the trade-off required in terms of autonomy?

Read the full report over at GigaOM Pro →

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It’s a cute 8-bit-era game with deliciously retro graphics that clones Pacman with a pie-themed twist. Eat the pies, don’t get caught by the cooks, and try to beat your high-score. The game can be installed for free simply by visiting http://mrgan.com/pieguy/ on your iPhone’s browser.

The surprising thing is that all of this was achieved without the App Store. I’ve never come across an iPhone web app that feels so much like a native app. From the install process, to the icon and graphics, the attention to detail is impressive.

Admittedly, Pie Guy is no Rolando, but nevertheless it’s just the sort of 99 cent app I’d expect to find riding high in the App Store charts. Except it’s not in the App Store — Pie Guy is free from the constraints and anguish of Apple approvals and it’s just as polished and professional as we’d expect, but perhaps rarely find, from a native premium app.

What’s amazing is seeing what has been achieved without the App Store. A great user experience and a great product, all without running natively. Plus, it even works offline, despite being a web app. It’s worth noting though Pie Guy is iPhone 3GS only, the app apparently takes advantage of the significant improvements Apple made to WebKit performance on the device.

Of course, iPhone web apps are nothing new. Way back when, before the glorious mess that is the App Store, Jobs announced that developing on iPhone was effectively as simple as creating a web site.

After a rather disgruntled reaction from the dev community, and much purported rushing on Apple’s part, we ended up with the App Store. The very notion of web apps, on the other hand, seemed to get tossed aside in the free-for-all gold-rush that ensued.

Many months later, attention is beginning to swing back around to the untapped potential of web apps. It may be that developers are looking for a route to take their concepts to users without running the rejection gauntlet that is Apple’s app approval process. However, it’s also likely that developers want to take advantage of those handy WebKit performance improvements on the 3GS.

Earlier this week on Twitter, David Kaneda, a WebKit developer, claimed, “I could write a pretty competitive Tweetie clone, pretty quickly.” Loren Brichter, developer of iPhone Twitter-client Tweetie, promptly responded by saying, “I dare you.” What resulted from the ensuing exchange was a coder battle that may go some way in illustrating the real potential of WebKit, with Kaneda already producing promising results.

In the meantime though, users are caught between a somewhat chaotic App Store and a predominantly lackluster selection of web apps. There’s clearly room for improvement in both arenas and it’ll be interesting to see what developers manage to squeeze out of WebKit in the coming months.

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The app is the brainchild of Dave Dederer, onetime singer and guitarist for the Presidents, who now acts as VP of Business Development for Melodeo, a company that deals specifically in software designed to stream iTunes content to other sources. In an industry that needs to look more and more at alternative content delivery methods, Dederer may be on to something. A $3 investment is probably going to attract a lot more attention than a 99-cent single track, since it gives interested customers the chance to sample a wide selection of a band’s work before making the decision to buy a full album or a number of tracks for more flexible use via their iTunes library.

For most other bands, this sort of thing is a problem, because they don’t usually own their own distribution and copyrights. That’s why Dederer is currently in talks with indie labels to release similar apps that cover entire stables of artists, thereby lessening the number of steps required in order to get legal permission to reproduce the tracks.

I am very much in favor of this new model. I prefer the idea of getting similarly grouped artists (by label, by genre, etc.) to go in together on an app like this, because then it becomes a sort of digital jukebox or focused Internet radio channel that you can have with you wherever you have cellular reception. At the same time, from an artist/label’s perspective, they’re getting great exposure with a growing market of people who tend to have disposable income and spend some on music. The Presidents’ app even has “Buy” links that redirect users to the iTunes purchase page so they can directly add tracks to their library.

It’s such a good idea, in fact, that I hope it catches on with other media. Imagine how great an NBC app would be that works along the same lines, providing the same full episodes they have on their site for streaming via iPhone on a dedicated app. They could include their commercials, and again, provide buy links that lead to their iTunes store.

What do you think, is this kind of delivery something you’d be interested in? For music, video, or both? Do you think it’s a realistic possiblity that the big networks will ever come on board?

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Rockstar Games, makers of the extremely popular Grand Theft Auto franchise, are picking up and moving a very lucrative music partnership from Amazon to iTunes, which offers players of GTA IV the opportunity to purchase tracks used in the game’s soundtrack.

The reason for the switch? Apple’s (a AAPL) decision to finally go DRM-free. Rockstar had apparently always wanted to go with the big fish (how could you not, when they command more than 90 percent of the digital music distribution market?), but also wanted users not to be tied down with the music they purchased using it.

The switch will come alongside Rockstar’s upcoming downloadable expansion for GTA IV, which will also introduce a major addition to the game’s existing soundtrack. This is a perfect example of why Apple’s decision to move to a DRM-free music library was the right decision, from the consumer’s standpoint, yes, but also as a sound business decision. Formerly wary prospective partners will now embrace iTunes with open arms.

For us as iTunes customers, this sets a precedent that other companies will hopefully follow, which would lead to more choice, and innovative content purchasing models. With GTA IV, you purchase the music via the in-game “Zit” service, and you can then download the track outside of the game through Amazon’s MP3 store (soon to be iTunes). Video games are an obvious partner, since the interactivity is already there, but movie and television soundtracks could soon follow. I’d also like to see the reverse implemented, whereby you can use any of the tracks from your existing iTunes library in-game.

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What I don’t think I will ever do, though, is buy an individual book application. To me, that would be like buying individual albums as independent applications instead of through iTunes. Why would I opt to have a thousand different icons on my desktop, one for each album, when it would be far easier, more organized, and more sensible to keep them all in one place, i.e., my iTunes library. The same applies for electronic books. How is it beneficial, to anyone besides publishers and developers, to have discrete applications for individual books?

The problem is that it does represent a significant benefit for those parties. iPhone users vary greatly in terms of their knowledge level and expertise. I still know someone who is, as of yet, not really sure how you get apps on to the device, and he owns one. Obviously, he’s an extreme case, but the point is that there’s still a large segment of the market that might not even be aware apps like Stanza even exist. Hence the need for books-as-apps, like the recently released ScrollMotion Iceberg Reader titles like Stephenie Meyer’s crazily successful Twilight.

Even beyond being impractical, books-as-apps prove annoying to end-users like myself who browse the app store regularly, and have to sift through a great many of them some days to find quality new releases. Might there be a way to satisfy both commercial interests and the interests of the consumer, without clogging up the app store and home screens with hundreds of unnecessary apps?

The answer is the iTunes store. Whether as a model for successful, centralized distribution, as with Stanza, or quite literally, meaning that they begin selling books through the iTunes store itself (not audio books, those don’t count). And yes, Stanza does already do this, but it needs the backing and promotional power of the iTunes store in order to convince publishers to use it instead of creating individual books-as-apps. Now if we could just get comics from major publishers distributed in a similar manner, the world would be a perfect place.

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