Mobile Fragmentation, Patents Challenge Software Makers, Execs Say

The Android platform, which “loosely” powers devices as divergent as the Kindle Fire and smartphones, will only become more diverse, said David Bluhm, president of social game maker Z2Live. The headaches that Android fragmentation gives software makers is “the price of innovation,” he said. T-Mobile Chief Marketing Officer Cole Brodman said the carrier would love to see more integration, which is Apple’s big advantage, but openness is “what made Android successful.” Google’s genius is letting downstream developers do all the work in differentiating Android devices, freeing Google to improve the platform so fast that many manufacturers simply take the default version, said Mike McSherry, CEO of text-entry developer Swype.

Abolishing the Patent and Trademark Office would be the single best thing that could happen to mobile infrastructure, McSherry said, drawing applause. Patent fights have “caused a hell of a lot of questions” and required startups like Swype, recently bought by speech-recognition giant Nuance Communications, to “do a dance around the big boys” who own vast patent portfolios, he said. Brodman said he would get rid of device subsidization, which “distorts the economic reality of what devices actually cost,” makes consumers “devalue completely the hardware they're using” and forces carriers to do trade-offs between drawing new customers and rewarding loyal subscribers. But implementing that vision is “hard when the other three don’t want to play along,” he said, meaning AT&T, Verizon and Sprint.

Rhapsody President Jon Irwin said he most wants the ability to “write the app once” and have it work across all devices. Though iOS “breathed new life” into the music subscription business, Rhapsody is constrained within the Apple App Store, he said. “You're in there on their terms,” which would mean forking over a 30 percent cut for any users who sign up through the iOS app, he said: “My board’s not going to let me stay in business long” under those conditions. Hence, its app only works for pre-existing Rhapsody subscribers. HTML5, long seen as the silver bullet to device fragmentation, is a nonstarter for Rhapsody because the company needs a way to protect copyrighted content, Irwin said. Bluhm, also a fan of abolishing the PTO, agreed HTML5 wasn’t a panacea. “We produce user experiences that have to be ‘wow,'” and Z2Live can’t be limited by technology that gets standardized, goes through “committees” and can’t recognize new functionality like finger swipes, he said.

Microsoft’s Windows Phone, whose earlier versions were unpopular with T-Mobile customers going back a decade, is “finally good” and getting positive consumer feedback, Brodman said. It has “quite high” chances of becoming a credible rival to Android and iOS and sales of Windows Phone 7 devices have been “quite strong” for the two quarters T-Mobile has sold them, he said. McSherry said Windows 8 has a “compelling form factor,” noting its use in coming tablets that dock with keyboards. But Microsoft hasn’t leveraged its massive Xbox Live community to drive phone sales, and until the mobile products powered by Windows OS get sales “volume,” Z2Live won’t develop for it, Bluhm said: “I just don’t think they've done a very good job” in marketing. The new phone software is “very solid” but Android and iOS have a “tremendous lead,” Irwin said. “Don’t discount Microsoft’s cash” as a shortcut to market share, McSherry said, though he said Microsoft should have spent its marketing budget on device subsidies and not relied so heavily on Nokia. Amazon will certainly release its own phone and “subsidize the hell out of it,” he said.

GeekWire Summit Notebook

The growth of tablet sales that threatens to upend the PC dominance that drove Microsoft’s boom years shouldn’t be seen as consumer repudiation of the PC, former Microsoft Chief Software Architect Ray Ozzie said. He stands by his prediction in 2010 that the PC ecosystem would keep growing, but the crux of the matter is “no one really knows what a PC is … in some scenarios [tablets] substitute” for a PC, and in others they complement. No one knows whether consumers want a “clean break” with 30 years of desktop computing or to retain the familiarities of the PC world, he said. Ozzie, who said he now spends roughly equal time in Boston, Seattle and the Bay Area as a startup guru, said he was brought in to Microsoft to manage its interface with “what was happening outside” the company, and shift its focus to selling “productivity” and “entertainment” more than products: “I feel very good about a number of things” he helped change before leaving a year ago, and “impatient about other things.” Whether the “doom and gloom extreme” of mobile phones and tablets replacing the PC comes, or Windows 8 “bridges” the two worlds, “why are we arguing? Of course we're in a post-PC world,” but it’s all “general computation.” The same overhaul is happening to the “classic document” as Facebook and Twitter -- indirect legacies of his early work on social networking in the PLATO system -- overtake word processing, he said. There’s “hardly an area that isn’t exciting” in tech today, such as the global spread of smartphones and the fact that, in rural India, his guides “tried to swap Facebook contacts with me.” Ozzie said he won’t talk about his shadowy new startup Cocomo, the subject of buzz in tech circles for the past two months, except to say he’s focused on the “incredibly explosive” mobility market. Cocomo is “just a handful of people” on the coasts, he said: “I'm really excited about what they're working on but it’s not time.” Having spent the past year in an “exploratory phase,” Ozzie said he’s been advising former colleagues who are “wondering if they should take the leap or not. … Today’s startup environment is extremely lean,” and it’s “very difficult for people with the five-bedroom home and the vacation home to make that leap.” He keeps popping up at startup gatherings to keep “my finger on the pulse” and wants to find the success factors behind “startup clusters” in tech hubs, one of which is the presence of “accelerators” -- funding organizations like TechStars and Y Combinator. Addressing current disputes in tech, Ozzie said he had no beef with tightly controlled application stores like Apple’s: “One man’s gatekeeper is another man’s distributor,” and “app store gatekeepers earn their money” by marketing apps. Noting he’s a board member of the Electronic Privacy Information Center, Ozzie said he’s not worried about consumers becoming too privacy-sensitive in the ad-driven Internet economy. “We don’t know the social norms yet that should be present online. We have to be very careful” about what service providers and vendors do with consumer data, and create a “regulatory structure” to complement the social norms. It’s the “nature” of product designers to “push the limits,” he said.

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Hulu Chief Technology Officer Richard Tom played coy on whether the online video service could leverage its massive platform for cloud usage by customers as Amazon has done with its Web services infrastructure. The company built its advertising infrastructure internally a few years ago even though several products were available from ad vendors, he said. “It was a big bet” but “we really wanted to have full control of our platform,” one that wouldn’t be dependent on the “search and display” legacy of existing platforms and that would let Hulu collect massive data for targeting, he said. It now has 1.4 billion video ad impressions monthly, recognized as the most on the Web. Asked whether that infrastructure could provide an opening for “Hulu Web Services,” Tom said: “Our focus purely today is about our users, our advertisers and our content partners,” and it will get into cloud services if it helps those groups -- a theme he returned to repeatedly in the on-stage interview. There are “seeds being planted today” for Hulu features two to three years out, like more “augmented viewing” experiences, beyond simply using a laptop to chat while viewing content, he said. Hulu hasn’t shared results from its integration of a Facebook field under each video, but Tom said the social network was a “very natural choice” and “certainly not the last platform we'll be looking at” to provide social features: “It opens so many different doors for discovery” of new content. It’s “early days” for Hulu original programming such as the political drama/comedy Battleground, giving users a “strong tie” to Hulu and an “emotional connection” to original shows’ characters more than a higher profit margin for Hulu, he said. The company has succeeded in delivering content across devices by focusing on service-oriented architectures that “push as much of the business logic … into the backend” and leverage “core libraries” across devices, but developing each app is still “extremely painful.” An avid device user, Tom said his favorite at home is Roku, and iPhone for the road. Hulu would tackle a more user-friendly remote control than exists in the market now if it fits Hulu’s mission, he said. Tom is “extremely happy we've gotten through” the auction bidding process for Hulu, which its media owners canceled last fall, he said: More than anything the news and rumors around the potential sale were “distracting” to his team. Their chief hurdle now is handling the glut of innovations that each team at Hulu develops: Decisions on what to prioritize are “highly data-driven” but “some of it’s also going to be gut,” with preference often given to tech that scales well and solves data challenges. Referring to rumors that Netflix is in talks with cable companies on creating something like a Netflix “channel” on TV, Tom said “that would be an option as well” for Hulu if it makes it easier for users to get content. Acknowledging gripes from users that Hulu Plus content often isn’t available on TVs or non-PC devices, Tom said content owners are “really trying to identify how quickly they can make that happen” and Hulu has to show them “we can do an incredible job of monetizing it.” In the meantime, Hulu is focused on telling users exactly how they can experience content, he said. As other techies said at the gathering, Tom called device fragmentation a drag on Hulu’s work. “You spend a lot of your time porting … versus spending all of that raw energy on innovating."

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Education, medicine and even bartering are long overdue for big innovations in the coming years, tech entrepreneurs at Internet giants told the gathering. “A lot of kids are really bored” in traditional classrooms, and they learn best through technologies like Facebook and Twitter, said Lili Cheng, general manager of Microsoft’s Future Social Experiences Labs. “You just have to bring that passion inside” the classroom, she said: “We don’t have a big enough pipeline to let all those smart people into a few schools.” The “white board” has sadly been the biggest innovation in education in a century, said Ed Lazowska, computer science chair at the University of Washington. Healthcare suffers “tremendous inertia and lack of changes because of regulations,” said startup investor Hadi Partova, one of iLike’s founders before Facebook’s acquisition. Less regulation will make the system more efficient and better tech will bring costs down, he said: “A doctor that’s mostly a computer” and personal gene sequencing in the hundreds of dollars is the goal. “The economic model of cash and credit” is getting stale, said Jocelyn Goldfein, Facebook engineering director. Bartering of goods with differing values worked in the past because participants had “social capital” with each other, a useful feature that today’s markets rarely acknowledge, she said. Though small companies are usually associated with innovation, big companies that carefully manage their cultures can keep bringing forth breakthroughs, said Feinberg, who worked at VMware through its transition to a virtualization giant. That company “definitely became different” as it grew, notably in “redundant efforts” owing to poor communication and workers not realizing they had access to resources for special projects, she said: “Organizational information flow is an area ripe for innovation” in such companies. Facebook keeps teams small, she said, noting its Timeline feature was developed by “a team the size of a startup.” Partovi noted that Facebook’s video chat was built by a single Seattle employee: “That would never happen at a Microsoft or a Google.” That’s why universities are important, said Oren Etzioni, co-founder of Farecast and Microsoft’s Bing: Students “don’t know what can’t be done and they're happy to try. … Universities just throw up a prototype and you've innovated.” Goldfein said 30 to 40 percent of Facebook’s hires are new graduates. Microsoft is proud of the innovation the Kinect has enabled through user hacking, said Cheng. “Status comes from growing bigger” and getting a better title, but innovating is about “failing economically,” and the small Kinect team was “willing to fail big.” It’s hard to tell a good idea from a bad one from the start, so “you have to insulate them from the cost of failure” to drive innovation, and drop dragged-out projects in favor of faster iteration, Goldfein said.