Innovation in Software

Do you remember when, as a geek, you thought Eric Schmidt was cool? Maybe it was about the time that he was working at Xerox PARC. Maybe it was when he was working for Bell or Zilog. Maybe it was when he led the development of Java – man, actually, he deserves a slap for that one – or when he moved to Novell. In recent months, his straddling of Google and Apple has been analysed in some depth around the blogosphere.

The problem is, as a businessman, his strategy is all wrong. If you’re a Google shareholder, you should be asking quite serious questions about whether he really understands the economics of software development in a consumer market correctly.

The “road to Damascus moment” for me was when I read that he thinks mobile phones should be paid for by advertisers and that Google will be lining up to deliver the advertising platform needed. This is an idiotic business model. Thinking about it, I now realise that their entire business model is flawed and can be defeated by somebody offering equivalent execution of a product/service but with a low-cost subscription in lieu of advertising. Just because something is free, it doesn’t mean people will want it if it comes with adverts: if you don’t believe me, ask ITV.

The problem with advertising as an economic model behind any business, is that it requires you, the advertiser or publisher, to distract your customer/target/victim. If I build a web-mail system and say “hey, this will let you get your mail done in no time at all!” don’t you think I would be clearly in a position of hypocrisy if my business model required me to distract you constantly with “partner offers” down the side of your inbox?

If I offer you a ‘free’ spreadsheet or word processing tool, don’t you think I might be harming your productivity just a tad by hoping you won’t mind me looking at what you’re working on and making some useful suggestions for websites you should go and visit that want to sell you stuff? You thought clippy the paperclip was annoying? Wait until Google start running ads inside Writely.

The issue for me, is that advertising in the UI is anathema to good software design. We should be aiming to produce high-quality, bug-free software that lets users do the right thing as quickly as possible, and make it difficult for them to do the wrong thing at all. If we accept that the way this development will be paid for is through advertising, we are telling the user “actually, we don’t care about your productivity as much as we should”.

Advertising on mobile phones would be even worse. I look at my mobile phone maybe a dozen times a day. When I use it to browse something on the web, I make sure it’s as quick and painless and ad-free as possible. It is a tool, a device I carry around because I need to. It’s not my best friend that I feel the need to consult whenever I don’t know what to do with my evening.

If people are going to give me a £250 phone for free just so I can watch their ads, they’re going to quickly get burnt and end up having to cut costs and reduce their quality of service to me. They’ll do this as they realise I’m not going to be interrupted by them all day, and their maths of how excited I would be to hear about their special offer collapse under the weight of my considerable apathy.

What I’d prefer is what I have – a contract for 12 months where I give O2 my £25/month, and they give me a free/subsidised phone every year and a few free minutes of calls chucked in as well. I pay this for them to provide me a high quality of service, and to not send me adverts. To be there when I need them to be, and to stay out of my way when I’m, you know, living my life.

I think a lot of customers are going to start buying into this as well – they realise the problems with advertising supported businesses because it hurts their productivity, and when somebody produces a webmail tool as well designed as Google’s, but costing a small subscription year with no ads, Google will see market share slide. People will start to realise that whilst money is expensive and scarce, compared to time it’s cheap and freely available. If you ask somebody “do you want free, but takes longer, or a small amount of money and it’s less time with fewer distractions?” when they want to get something done, they’ll reach for their wallet every time.

The result will be the only people using Google and other ad-supported software being those who can’t pay a subscription, or use the tools so infrequently a subscription is of little value to them: exactly the wrong demographic advertisers want to talk to. As software developers, it is in our economic interest to notice this before Google and others do.

There is another scenario as well. Thinking about this, I came to the conclusion I don’t use Gmail because it is ad supported and I want my mail client to be a productivity tool as much as anything else – I don’t want to be distracted. But I do use Google search. Why don’t I get distracted there? And the answer hit me: my brain filters out the ads. I now just don’t see the links in the blue box at the top, or the boxes down the side of the page: I have adapted to focus on what I need. This is an interesting observation from the perspective of how the human brain adapts, but the scary question for Google is: what does this mean for an advertising-funded business model when everybody adapts?