Weekly Update

Even connection is becoming a commodity

I have used a paradoxical phrase a great deal in recent months, because it gets at the heart of something important. The line is

Mobile first, Cloud first, Connection first.

These are the three legs of the stool for what most people call collaboration tools, which I call work tech nowadays.

We’ve moved pretty fast in the last few years in all three of these dimensions, and the result is a very different way of working, with an always connected workforce increasingly working from mobile devices, connected to coworkers through cloud-based services.

I have decreased the use of the term social except when talking specifically of social network effects. Instead, I prefer to talk about connection: the subtle but significant shift in communication style and substance when people frequently message each other, and remain aware of others status and location.

There have been a number of announcements in recent days and weeks that bring the shifting nature of work tech to the foreground.

I see a trend developing. As I have said several times in the course of the recent developments in the file sync-and-share market, the price of storing files in the cloud is trending toward zero. The place where those vendors will make their money in the future is increasingly going to be connection: the monthly fees they will charge for users to sync files, and to share with others.

Work technology is headed toward a stark fall out. On one side will be the giants — Google, Microsoft, Apple, and Amazon — who will be providing the core platforms on which work tech resides. And increasingly, they will be the ones providing capabilities like productivity tools (office documents, etc.), file sync-and-share, and the hardware on which everything is running. On the other side we will have smaller competitors in various niches, like file sync-and-share (with Box, Dropbox, and two dozen others), work chat (Slack, Hipchat, etc.), task management (Trello, Asana, etc.), and specialized tools for HR, CRM, and customer support.

I maintain that whenever the giants enter a market, a consolidation takes place, like that which is going on right now in file sync-and-share. However, it is still possible that upstarts can come along with something really innovative, and redefine how some aspect of work tech is accomplished.

But I’ve started to believe that the conventional model of work tech — project-oriented group contexts, office files, activity streams, user profiles, following, and so on — is now a commodity. And therefore, that form and style of work connection is now going to trend toward zero price, too. Only the giants will be able to play, and all of them will be getting their money from other sources: Apple from hardware; Google from search, apps and increasingly hardware; Amazon from advanced cloud services and (maybe) hardware; and Microsoft from apps and cloud services (and not from hardware).

The tipping point for me was Microsoft’s announcement this week about Groups in Office 365, which provides work tech contexts and activity streams. This is going to cannibalize its Yammer revenue, but maybe they don’t care. They are in competition most clearly with Google in the enterprise, and they may be willing to lose the Yammer battle to win the Office war. Office docs are still where 80% of the information in the business sits. That’s a battle Microsoft wants — needs — to win.

But activity streams and work contexts are simply the file system and windows interface of this century: everyone is going to just get that for free.

And those design metaphors are all about connection, and sharing. That baseline is going to be free. So the Slacks and Talkos  of the world will have to provide something really spectacular to be able to charge more than commodity pricing for their services, because the giants will be giving it all away, like the ketchup packets in fast food chains.