Tioga Venture Blog

Google Chrome secret to beat Microsoft IE

 

It is no secret that over the last two years, Google Chrome has been stealing significant market share from competition, both from Firefox and Internet Explorer. Over the last 2 years, Google Chrome has reached 20% market share.

Why is that? First, and foremost, Google Chrome is a good browser: it is simple and fast and offers most of the functionalities proposed by competition. On top of that, Google marketing machine has been pushing very hard this product over the last 2 years, for instance:

• In 2010, they had a major advertising campaign in the French market with TV advertising, billboards in the metro, banners on major websites …
• On Google search homepage, the advertising to download is constantly present (if you are using a different browser).

Looking at the details with our team, we noticed that one of the most striking features of Chrome is its release cycle. Google releases one major version every other month when Microsoft releases a major version of Internet Explorer every other year. The following graph maps this phenomenon quite well. At the time of its release, internet explorer is roughly at par with chrome in term of performance (here load time to keep it simple), except chrome will then release 2 or 3 major versions in the following 6 months creating a new performance gap. Beyond the capabilities at a given time, the real differentiation of Chrome is the way the development is managed more than an absolute level of performance. In the end the learning is faster and the quality perceived by the consumer is better. Interestingly, Microsoft has mostly stuck to its old ways of doing things releasing a version every two years. This way of working is an asset when working with enterprises as they don't want constant upgrades but not so much when you're addressing the consumer markets. Once again Microsoft is on the enterprise side of the business whereas Google has a consumer side to it.

 

We believe that this applies to many software products, especially targeted at consumers. Fast release cycle end up creating a better product and a real advantage on the market place.

What do you think?

 

Frederic HALLEY

 

Skyrock : le problème des blogs

Mardi 14 avril, Pierre Bellanger, PDG fondateur de Skyrock, a été remplacé comme directeur général de la société par son conseil d'administration. Ce changement a une répercussion considérable dans les médias notamment grâce à une campagne politico-médiatique remarquablement orchestrée. A ce stade, il est très difficile de comprendre dans les medias classiques les raisons de ce changement. Fidèle à nos habitudes, nous voudrions apporter quelques éléments factuels au débat.

Skyrock a deux business distincts :

• Une radio
• Un site web de blog (skyblog)

Les informations publiques disponibles sur l'activité de la radio ne laissent pas paraitre d'un problème spécifique. En revanche l'activité blog a souffert de manière majeure de l'arrivée en France de Facebook. Ci-dessous, les données d'Alexa montrant la part de pageviews (mondial) réalisée sur le site skyrock.com :

La chute est brutale. La 'part de voix' de Skyrock est passée en deux ans de 0,7% à environ 0,02% soit une division par 30 ! Aujourd'hui Skyrock est classée au 19^e rang en France alors que Facebook, avec 20 millions d'utilisateurs, est au 2^e rang. La décroissance s'est apparemment stabilisée depuis la mi 2010, mais il est vraisemblable que cette décroissance ait changé les équilibres économiques de la société.

Browser war : the hidden factor

In its most recent data on the US internet market, Net Applicatins highlighted that Microsoft Internet Explorer (IE) had gained market share, mostly against Mozilla Firefox. For those following this market, this is a somewhat surprising data. At the same time, the introduction of the ballot screen in the EU has not led to a major drop of market share for IE. Google Chrome has definitely made inroad but it owes its win to massive advertising campaigns across the EU which was synchronized with the appearance of the ballot screen. For those using several of these 3 products, it is difficult to argue that IE (even IE 8) is a  much better product than either Chrome or Firefox latest versions ; IE 8 is a fine product with its plusses and minuses but not a much better product. So why is it that Internet Explorer is retaining a clear leadership in browsing statistics?

 

Of course, one can argue on Microsoft dominance and its management of the OEM channel explains it. Legacy and habits probably play a role too. On the other side, the replacement of IE6 and IE7 by IE8 would definitely help. Microsoft Brand recognition by consumer is good, but which internet user does not know, and trust, Google?  I don’t think these elements explain the numbers we are seeing now.

 

Actually, the best reason for the remarkable stability of the IE market share was probably provided by IBM last week. IBM just decided to switch its browser of choice from IE to Firefox. This, from the company who is a major force behind open source and one of Microsoft’s staunchest competitors, is most surprising! Why not years ago? Firefox has been a better product than IE arguably for most of the last decade and it took IBM 10 years to switch?! If IBM did not / could not do it, you can easily imagine that the vast majority of corporations are still using IE as their default browser. The deep integration of Internet Explorer with most of Microsoft’s enterprise solutions such as SharePoint, and most generally with IT corporate ecosystems, makes it the de facto browser of choice for most companies.

 

What we may be seeing in the browser market data is some of kind of leveling due to the weight of enterprise browsing vs. consumer browsing. The key issue is that Net Applications does not break down browsing stats by enterprise vs. consumer. However, I would not be surprised that IE’s market share in the consumer market being already low and close to equilibrium but dominant (and stable) in the enterprise segment. If this is the case, we could actually see IE’s market share nudge up as IE 9 is released and they gain some traction in the consumer market. Microsoft’s core strength in enterprise will probably allow IE’s market share to be at least stable. Time will tell, but short term, any companies able to provide browsing stats by consumer vs enterprise would have a winning product.

 

Frederic HALLEY

Dailymotion : breakeven or not?

In an interview to the French news magazine Capital, the new CEO of Dailymotion revealed some breaking news : 
- the company just raised 15M€ - it looks like an inside round
- Dailymotion is now breakeven

The first part is not really surprising and I would argue that the existing investors didn't have much choice. The second information is much more surprising. In 2007, Dailymotion lost 14M€ on a revenue of 4,8M€ - these are the official numbers filed by the company at the 'registre du commerce'.

Let's extrapolate from the interview that the revenue grew 50% both in 08 and 09 that would mean around 10M€ revenue for the full year 2009. That would be an amazing performance knowing that the internet advertising market is flat or low growth in 2008 and 09 and that the ranking of dailymotion has been dropping constantly over the last months (see below the worldwide ranking of dailymotion.com from Alexa).

In the meantime, to be breakeven, management would have had to cost cut by 2 from ~20M€ a year to ~10M€. That is possible but difficult. At the same time, Credit Suisse estimated that Youtube is losing ~500M€ a year, showing it is very difficult to be breakeven in that business

Either we missed something in the above analysis, either Cedric de Tournay is being very positive in the media to give a positive spin.

Frederic HALLEY

Web 2.0 for Companies: Social Software

Whichever way you look at Web 2.0, it relies on few new (or updated) technologies: blog, wiki, video, etc... and all their combinations to allow people to collaborate in an efficient way. What is interesting is that innovation in this wave is clearly coming from the consumer arena. That is a radical change from most of the previous technology waves: the PC and the web, to name only two, started in the corporate or defense/academic world before benefiting consumers.

A few weeks ago, I argued that Salesforce.com was really the new wave of the enterprise software. I still think that this is the biggest trend of the moment. However, a few small companies are trying to bring the Web 2.0 technologies principle and technologies from consumers to companies. One of the most interesting is Socialtext. It brings together blogs and wiki for collaboration. I really like their pitch and the product demo. In France, the buzz of the moment is on Blue Kiwi. At our anniversary party last Thursday, I cannot remember how many people were discussing them.

The issue all these companies are going to face is user adoption: are people ready to contribute and publish? And do so on a regular basis on top of their 'normal' way of working? In the last 5years, I have run and implemented many different collaborative solutions: open source content management, home made intranet, sharepoint portal, etc... After the initial enthusiasm, the issue is always the same: people get tired of having to 'post', in one form or another, their file to the new system.

Let me propose a solution which does not involve changing anyone's way of working: put a Google appliance on top of your file server. True, you won’t solve all the collaboration issues in a company, but you are solving the number one pain point: finding the right document when you need it. That may be one reason why Microsoft is so focused on enterprise search at the moment...

~ Frédéric Halley

Enterprise Software 2.0

Last month at Tioga Venture’s 4th Annual International Software Summit, Phill Robinson, COO of salesforce.com (NYSE: CRM), keynoted the event, presenting the strategy of the leading Software as a Service company with a focus on its latest big announcement: Appexchange. It is easy to underestimate the changes that Appexchange can bring to the enterprise software market.

The Software as a Service (SaaS) trend started in the late 90’s as the potential of the web to deliver enterprise applications became obvious. However, the take-off was slower than expected in spite of the ease of use for end-users. Among the reasons was the fact that each SaaS vendor was actually an island of proprietary software. Solutions were difficult to merge at customers’ sites. The cost of starting one was very high with most of the financing going into infrastructure investments and channel building. SaaS companies were also very difficulot to merge, each coming with its own proprietary infrastructure, technology and channels.

Appexchange has the power to change all these elements. For the first time, it is possible to start a software vendor relying on an existing platform for production, integration and distribution. This allows budget and bandwidth to be spent on value-creating activities rather than building the foundation of a SaaS. We should expect to see many small but creative vendors emerging in this new ecosystem. Today there are limited alternatives to Appexchange. The questions that remain are whether other SaaS ecosystems will emerge or will salesforce.com will be able to extend its reach beyond CRM.

~ Frédéric Halley

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