Alec Saunders SquawkBox

It turns out that I jumped the gun on the Bubbleshare news yesterday.  Last night, while at the hockey game (the Sens beat the Rangers, handily, despite a lengthy injury list), Albert emailed me about a bunch more features they released yesterday, the day after the BubbleBar release, including captions, a mobile gateway to make it easy to upload photos from your camera phone, and a new API.  There’s also a slick magnifier as well.  

I set to work to try some of these out.  Here, for example, is a captioned set of some of old family photos of people with dogs. It was easy to do, although I would have liked to have a tool to lengthen the descender from the bubble.

The BubbleShare API released yesterday is a very simple tool for uploading photos.  Presumably this is to allow folks to build integrations with BubbleShare into photo editors and so on. 

BubbleShare started out to make photo sharing very simple.  What we’re seeing though, is the evolution of BubbleShare into a tool which also makes photo sharing personal.  The albums, with voice over, and captions, plus the BubbleBar on the desktop, are some clever innovations in a very crowded space. I think the MySpace crowd, for instance, is going to love the captions feature! 

Some further commentary: Scoble, Segal, and don’t miss this very funny album from Mix ‘06.

A story is emerging that some folks on Wall Street think Vonage is shopping itself around as a takeover target, rather than an IPO.  S1’s have been filed, but there has been no further action.  Furthermore, Vonage continues to chew through massive amounts of capital, without any sign of abatement. 

Vonage may be the worst choice for an IPO this year.  Why?  Two words: price elasticity. In economics, price elasticity is the notion that propensity to buy varies in proportion to price.  Drop the price, volume goes up.  For some kinds of products, notably commodities, this relationship holds true.  It’s the classic "Vinnie — drop the price, we’ll make it up on volume!" gambit.

This graph is something I sketched out from publicly available FCC data.  It shows daily usage (in minutes) of the telephone, sketched against price.  Notice how, as price drops, minutes increase.  Voice minutes, it turns out, are price elastic.

Now, consider the following thought experiment.  What happens if the price of the underlying commodity (voice) drops to zero, or near zero?  After all that’s what’s happening in voice today.  The graph I sketched out shows the cost of minutes at about 10 cents.  It ends in 2001.  Today, in 2006, that cost is at 2 cents, and still in free fall. 

If the price goes to zero, usage should skyrocket.  If usage skyrockets, then the costs associated with running the network also rise.  Cost basis increasing, revenue decreasing… does this sound like an IPO to you?  Not on your life!

Not only does Vonage have the problem just described, it also has all of the same customer retention, and customer acquisition costs of the big telcos.  It simply started with a lower cost basis, which allowed it to price itself aggressively into the market.  Despite what Vonage says, its business is no different from the incumbent carriers — the guys who are losing land lines at 10,000 lines per day.

So I find myself drawing the same conclusions as Om Malik: 

Who is going to buy them? Isn’t that the billion dollar question? Gorbatenko suggests Qwest, but I find it hard to buy into that. I think like the IPO, finding a buyer would also be a big challenge for the company.

And that, my friends, is the crux of the problem.  Buying Vonage, or buying into the Vonage IPO, could be the ultimate triumph of greed and stupidity over common sense.

Friday March 31 — Update: This generated quite a bit of traffic.  Suffice it to say, there’s some solid research and thinking behind what I am saying here, which is going into a presentation I am preparing for VON Canada on Monday.  I’m writing about the IP Telephony industry in general.  It just happened that the Vonage piece appeared yesterday in CNN and I had some ready analysis to contribute to the discussion.  Stay tuned. 

Toronto’s Albert Lai dropped me a piece of mail last night about the newest BubbleShare feature — the BubbleBar.  This little piece of code displays a filmstrip of your Bubbleshare albums, including albums that others have shared with you, on your desktop.  Mouse over any photo, and it will expand. Now you can watch all of your latest photos on your desktop while you work!

Installing the BubbleBar was painless.  Just download it, and run.  There were a couple of Windows firewall warnings, but that’s to be expected, since this is alpha code.  I logged in to my Bubbleshare account, waited, and a few minutes later I had photos. 

Cool!

The really neat thing about this is the sharing feature.  When you share an album with someone else, your photos just start appearing in their BubbleBar, which makes it super easy to discover new content.  No surfing to a website, or opening emails and saving attachments — the photos just appear.

The BubbleBar also includes buttons that let you create a new album, see which albums you’ve received from others, and use your photos as a screen saver.  So it’s a mini-dashboard for Bubbleshare as well.

I stumbled on one of the coolest features completely by accident.  Take note Albert!  Hidden away in the menus is the ability to browse the pictures you are displaying on your hard disk.  Just click File/Browse Local Content to see all the photos.  BubbleBar actually downloads the photos before it displays them.  This is a totally painless way for me to share my photos with all my family members.  Bubbleshare makes it easy to upload the photos and share an album, say with my mum. BubbleBar downloads those photos to my mum’s hard disk so she can store them, or print them, or whatever.  Again, it makes the process totally painless. 

I was trying to explain to a friend of mine the value I get from blogging.  Like me, he’s the CEO of a small tech company here in the Ottawa area.  His company has been around a lot longer than iotum, though, and hence should be more well known.  It’s not.   I stumbled on a very convincing tool to show that — alexaholic.  Alexaholic lets you compare the alexa rankings of up to five URLs at once.  Here’s what I showed him:

The red line is iotum.com, and the green line is saunderslog.com. iotum.com is also the host of iotum’s corporate blog, simplyrelevant.com.  Simply Relevant’s results are therefore included in the iotum results.  The blue is his (unnamed) company.  It’s pretty striking.  His company has a well populated web site, with lots of product information.  Graphically, it’s eye catching.  And regularly they spend money on SEO.  Yet their rankings are dismal. Their best days are days when they have news.  Even on those days, we get 10x the reach he does, without doing any of the things they do. Why?

Part of the explanation is the DEMOgod award we won in February (that’s the big spike early in the month).  The other part I put it down to blogging, but have had trouble explaining it. Blogs tend to have more indexed pages than static sites.  Blogs also tend to have more links (in, out, and between pages) than static pages. Both of these dramatically increase your rankings on the major search engines.  You’ll also notice that iotum and saunderslog have similar spikes of activity.  Both blogs are deliberately cross linked, in order to create traffic and links between them. Our pages are getting reasonably constant traffic as a result, while my friends pages get small spikes in traffic only when his company puts out a press release.

The counsel I give to any startup today is pretty simple.  Skip building a corporate site.  Build a blog. 

Om and Erick are on the same meme-train at the moment — the re-creation of the "desktop" in the web.  It’s the web-top idea of a decade ago, but implemented in Ajax, and with enough bandwidth to make it truly useful.  Hence their interest in desktop app replacements like Goowy, Writely and utilities like Fabrik.  The latest story is about Hive7, an online environment, similar to the very popular Second Life.

We’ve come a long way, but there is still far to travel.  Or, something old, something new…

MUDs, or MOOs, or whatever the acronym you want, have been around for a very long time.  I played a multi-user online game called the Scepter of Goth through much of my university career from 1982 to 1987.  I used to travel everywhere with a 300 baud accoustic coupler!  My brother met his wife on LambdaMOO in the early 1990’s too.  LambdaMOO, if you don’t know the history, was the precursor to PlaceWare, ultimately bought by Microsoft and now marketed as LiveMeeting — a very useful product, and a real surprise that it came out of the text-only multi-user LambdaMOO, which was primarily a place where people went to chat.  That’s the power of a programmable environment, I guess. 

Hive7?  It’s very much like a MOO with a side-scrolling graphical environment placed on it.  You can meet people, build custom avatars, move from room to room, build new rooms, and so on. The limitations imposed by Ajax are significant.  It’s completely 2D, unlike Second Life, and uses really none of the capabilities of your graphics card. There’s nothing like VRML (anybody remember that?), or a sophisticated 3D rendering engine built on Direct3D, for instance.   Hive7 is also somewhat slow.  You won’t be building the hedge maze I just found in Second Life on Hive7.  Nor will you be choosing to fly around the landscape, the way you can in Second Life.

That said, as a beta, it’s pretty intriguing. If what you’re looking for is a fun chat interface, then this might be just the ticket.  And because it’s Ajax based, and exposes a standard web API, there are some intriguing possiblities lying just below the surface with new kinds of mashups.  Imagine, for instance, marrying this environment to the personal information available in a dating site…