There was a lot of talk last week about Google’s recent quarter with profits rising by 69% in the quarter. Google’s got its groove back and it is becoming clear that it is not just an expansion of the pie, but it is at the expense of its rivals. Elinor Mills of CNET News explains:

The contrast between the financial results announced last week for the two top search engine companies couldn’t have been more stark… Google’s share is rising at the expense of Yahoo and Microsoft. While Google’s share rose 6.1 percentage points last year, Yahoo’s fell 0.6 percentage points and Microsoft’s dropped 1.1 percentage point, ComScore numbers show.

There is no better predictor of the future than the past. And interestingly, we’ve seen this story before, played out in previous generations of the computing era. Each computing era has had its own killer app, and each of these eras is marked by the struggle for dominance with an eventual winner being crowned. King Microsoft, it’s time to hand the throne over to Prince Google.

In my lifetime, the three killer apps have been: operating systems, followed by office productivity software, and now in the internet age, search. Each of these have been figurative money factories for the winners. And each has been marked by a fierce struggle with an eventually winner being crowned (soon followed by talk of monopoly power).

Let’s take a look at these battles:

Battle of GUI Operating Systems: 1984 - 1995 (1)

• Combatants: Apple (Mac OS, 1984), IBM (OS/2, 1987), Microsoft (Windows, 1985)
• Apple took the early lead in the battle for the GUI operating systems with the introduction of the first Mac OS. Microsoft didn’t start to establish it’s dominance until the introduction of Windows 3.1 in 1992. IBM took at swing at reclaiming the operating system of the personal computing platform it created in 1987 but it never got traction. By 1995 with the introduction of Windows 95, the war had been won by Microsoft.
• Winner: Microsoft

Battle of the Office Software Suite: 1990 - 1995 (2)

• Combatants: Apple (AppleWorks 1991), Corel (Corel Office, 1991), Lotus (Lotus SmartSuite, 1992), Microsoft (MS Office, 1993)
• In the early 90’s software makers started to bundle word processing software with spreadsheet software. Wordperfect had been the leading word processing software until Microsoft released its Office Suite. Lotus was an early player too, led by its early spreadsheet software, Lotus 123. Microsoft eventually established dominance as compatibility became crucial for collaboration, driven by its ubiquity in the business world.
• Winner: Microsoft

Battle of Internet Search: 1996 - 2007 (3)

• Combatants: Ask (1996), Google (1998), MSN Search (2005), Yahoo Search (2004)
• The first Internet era created search engines. They were features of portals that were somewhat of an afterthought because the money was in banner ads. Goto.com, (later Overture) invented search advertising business model in 1998 (4). And immediately a business was created out of search. Google soon perfected the the search advertising business model with the launch of Adwords in 2000 (5). And though Yahoo, MSN, & Ask all relaunched their search engines during the mid-2000’s, Google’s dominance has been established.
• Winner: Google

I believe that it is time to close the chapter on this era’s killer app: search advertising. Google is clearly dominant and is pulling away from the field. I wonder what the next great business model will be.

Google goes back to pre-Katrina maps…Google’s popular map portal has replaced post-Hurricane Katrina satellite imagery with pictures taken before the storm, leaving locals feeling like they’re in a time loop and even fueling suspicions of a conspiracy.… (more…)

To understand what’s at the crux of the $1 billion Viacom suit against Google for copyright infringement, look no further than the guy who has become the flash point for the suit, Stephen Colbert. Colbert spent Monday’s episode giving a platform to the debate of copyright law and fair use that is embodied by the current collision of old media content owners versus new media technologies that enable the mashing up of that content.The Colbert Report has been at the crux of the Viacom-YouTube/Google suit since Viacom first sued and highlighted the fact that copyrighted episodes of the The Colbert Report were freely available on YouTube. The Electronic Freedom Foundation then sued Viacom over YouTube’s takedown of a Colbert parody produced by MoveOn.org and Brave New Films.

On Monday’s episode, Colbert mapped out the players with skin in the game with his guest, John Perry Barlow of the EFF. Here’s an extrapolation of what he whiteboarded for the audience:

Colbert was at his subversive best as he gave platform to the EFF’s suit against Viacom and their interpretation that a parody of a parody is fair use of The Colbert Show. While he is clearly beholden to Viacom, (”they own me, baby… I am their bitch”), by giving a platform to the EFF he is emboldening the enemy of his parent company.

Watch the clip right here (via ColbertNation.com, not YouTube) to see Colbert lay it all out:

Colbert clearly “gets” what is going on with mashup culture and that value is added by allowing the market to remix and remake content that he is creating. And all of this casts a reflective glow back to his show. To showcase his point he announced the Stephen Colbert:For Your Editing Pleasure contest, encouraging views to download footage of his mock interview with PBS’s Gwen Ifill. Viewers are encouraged to edit the footage to make Colbert appear in as unflattering a light as possible and resubmit it to the show. Through this contest he is showcasing that creativity that can be unleashed when content is freely distributed, and how smart copyright owners are encouraging the remixing of their content facilitating deeper connections with their audiences.

If you’ve ever had a business relationship with Google (i.e. Google Adwords or Adsense), you may already know that it’s a little less than egalitarian. While the services they offer are innovative, and, if done right, lucrative, Google holds all the cards (I’ll pause here to say that I know that there are other contextual advertising services out there, but Google is undoubtedly the biggest and will get all of my attention today). If a problem arises where you question the quality of the Google services, you’ll probably end up having to accept whatever Google tells you (and that can range from “You’re right, let’s work something out” to “We don’t agree, sorry.”)

Quigo is changing this, and offering an alternative to Google domination. Now, no one will ever be able to infiltrate Adwords results that appear in the Google search engine, but contextual ads that appear on private sites are completely controlled by the site owner. This control is attractive, and some huge sites are already leveraging the Quigo way of life.

What is Quigo doing, exactly? Here’s how the NYTimes put it:

What Quigo offers is transparency and control in what can often be an opaque business: advertisers pay Yahoo and Google for contextual ad placement on a wide variety of Web pages, but get little say over where those ads run or even a list of sites where they do appear. (full article)

Transparent is the new opaque. Again, this is more of having to take Google’s word for it. If you are an advertiser and have a question about where your ads are running, good luck getting an answer. This isn’t to say that the Google technology isn’t advanced, and probably accurate most of the time, but there is a danger to Google being so large. They can’t possibly track everything, and since they can’t, you can’t either.

This probably isn’t news to everyone, and I’m sure there are companies out there that are completely aware of Google’s position and have chosen to stay out of the contextual advertising space for this very reason. Imagine how the market might grow now that there are alternatives to Ma Google.

Learn more about Quigo here and here.

Media isn’t something we merely watch or interact with for fun. Media is something we consume. Our eyes eat it up, and our brains digest it. Throughout history, media has almost always been fed to the ravenous masses through screens. Movie screens, television screens, computer screens, and now, cell phone screens.

I’ve heard rumors online about an Apple iPhone (cell phone + iPod) for months now, but the New York Times mentioned it in an article today. I think we’re not surprised and are all expecting our desktop/laptop computers to continue shrinking until they are able to fit in our pockets, but proof of this impending phenomenon is evident in the growth of wireless information being delivered by wireless providers.

Cellular carriers reported $1 billion+ for each quarter of 2006 in revenues for wireless information transfer services. To put this in perspective, that puts the US about even with Europe, and about a year behind users in Asia where about 50% are connected to 3-G networks, next generation wireless networks. This trend can also be seen in initiatives by companies like Earthlink who are racing to be the first to create wireless halos around major metropolitan areas (including New Orleans).

More about the 4th screen

Think of Steve Jobs as a drug dealer…(that’s a little strong)…as a Lay’s potato chip dealer. He offers you one. You like it. It’s crisp and clean high technology, but palatable due to its ease of use. He’s got you hooked on his chip and now you’re ready for his next offering. It just so happens that this new taste is similar to the first one, but he attaches much more meaning to this one.

An iPhone is going to do a lot, and I don’t mean as a geeky gadget. It’s going to mean more to you because you’ll be able to control your life, work and play, everything, from a device that fits easily into the palm of your hand. The 4th screen is going to set off an arms race among established behemoths like Nokia and Motorolla, not to mention wake the sleeping mother of all behemoths, Google. But as huge as this stuff is, and as amazing as it’s going to be, I think we (consumers) are going to have more power and control than we ever had before.

It’s as if Jobs taught us how to open a door, and then let us open a door. Now he says open this door. You’ll open it the same way, and it looks the same all glossy and white, but this time instead of a door, it’s a floodgate. Prepare for the deluge, change is a’comin.

Two recent articles about Russia caught my attention as our Flatsourcing development team is based in Kazan, Russia. Last week’s Business Week featured an article on the current oil fueled economic boom in Russia by Jason Bush, Russia: How Long Can the Fun Last?. In it he points to the software industry as a showcase example of Russia can and is moving from natural resource-based economic success into knowledge-based growth.

And Russia is well ahead of most other resource-rich countries in its economic development, with a long tradition of education, science, and industry. Now, its tech companies are starting to give India’s outsourcing sector a run for the money. Software exports will top $1.5 billion this year, vs. just $128 million in 2001. “We really can compete on a global scale,” says Dmitry A. Loschinin, chief executive of Russia’s largest software developer, Luxoft.

This is really interesting to us as we continue to build our partnership with our Russian team. I have tremendous respect for their education system after traveling to Kazan last spring. I believe in that because of the strength of their education system in science and engineering disciplines that Russia is becoming a world leader in software development very quickly. And we plan to be part of that through Flatsourcing.

Speaking of Russian developers, the New York Times featured an article today by Eric Pfanner titled New To Russia: Google Struggles to Find Its Footing about Google’s struggles in competing in the Russian search engine market. My take on it is that the challenge has been issued and Google will continue to climb in market share in Russia.

The company’s difficulties in Russia probably have more to do with the complexities of the language than with politics.

“Our understanding of Russian was not as good as we wanted it to be,” said Kannan Pashupathy, head of international engineering at Google. Google revamped its Russian site last week, Mr. Pashupathy said, improving its ability to deal with Russian, a complex language in which nouns may be one of three genders and be declined in up to six cases.

This article also is great read. It’s fun for us to see this focus on technology and software development in Russia, and it is clear that our little secret won’t be such for long.