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Are you ready for the wireless web?

Making sense of commercialising new technology and the emergence of early platform models

Software development companies often focused more on the technology and less on how to take their innovations to market. How new software solutions should be packaged and sold, and to whom, in what format, ultimately raises questions of which business model a company should adopt. For the pioneers of the dot-com era, this was a “Blue Ocean”, an opportunity so new that no one quite knew how to best monetize it. Two-sided platform models and advertising as a revenue stream are now key elements of online businesses, but at the start of the millennium, these solutions had not been invented yet. When we talk about the dot-com era nowadays, we tend to focus on the successful big tech companies that were launched at the time, such as Amazon.com or Google. However, most companies from this era either failed or continued to operate at a much smaller scale. For these tech-focused start-ups, developing the commercial side of the company between the stock market boom of 1999 and the subsequent crash of the stock market in 2000 was challenging. These entrepreneurial ventures had to find ways to bring new software to the market in the absence of accepted solutions of how to sell these new tools.

The "post-PC era" referred to the decline in the sale of personal computers in favour of cell phones / mobile phones, tablets, and other handheld devices. Steve Jobs is widely considered to have popularized the term in 2007 with the launch of the first iPhone, but it was coined by MIT scientist David D Clark in 1999 and adopted early on by AuroraTec.

“Content enabler for the post-PC era”

In early March 2000, the CEO of AuroraTec (a pseudonym), Ravi Chowdury was ready to introduce to the press the company's vision for the wireless web, and what they call the "post-PC era". This went beyond launching a new suite of products and AuroraTec’s Chief Marketing Officer, Jennifer Corby, discusses how the company is positioning itself and flags her suggestions in an email to Ravi and the senior team.

This debate took place when the dot-com boom first began to show signs of being a bubble. Read “It’s all about the Burn Rate” to understand the context and compare this to the NASDAQ performance at the time.

Ravi responded by highlighting that he viewed their PR efforts as successful “based on how widely the market embraces our vision and not based on [the] number of times we get a mention in the press.” He made it clear that he considered Jennifer’s points as details when the future of AuroraTec would likely depend on being successful in the “post-PC era”:

“1. The best way to deliver content in the post-pc era is to use existing HTML content without modifications. Any other approach is […] wasteful.

2. Building device-specific infrastructure is stupid and wasteful. Anyone who recommends this approach is self-serving! There will be a plenty of devices that will be used for access including voice phones.

3. Providing mobile commerce (transaction-oriented stuff) is the key to [the] success of wireless internet. Not sports, news and weather. You can always buy a $0.25 newspaper for that.

4. A successful wireless portal is not the one that provides access to 20-30 brand name websites. It is the one that allows every individual to choose any website that he/she wants to go to.

5. Finally speed and costs matter. If you are going to take 3 months to enable a site and have to maintain it everytime [sic] the website changes, you may as well forget about [the] wireless web.”

NASDAQ daily closing value
(January 1998 - March 2000)

Monetizing software

In March 2000 AuroraTec was getting ready to launch new wireless software solutions that bring the internet from the PC to handheld wireless devices such as Palm Pilots, Blackberries, and mobile / cell phones, known as the AuroraTec Rendering Tool, or ART. But selling this type of software was different from selling something from a software tool that did specific things for consumers, say a word processing programme. Key people at AuroraTec were discussing how to monetize the ART, which was a software solution that helped to create a digital infrastructure accessible to a range of different devices. Some at AuroraTec were concerned that selling a core software outright carried the risk of selling the company and its intellectual property (IP) with it. How should they price a software solution, considering those risks?

If you want to know more about IP and how AuroraTec debated how to use and protect its intangible resources, see Did the Internet kill strategy?

Left: Jarek Tuszyński, CC BY 4.0. Credit: Wikimedia Commons
Right: Rama & Musée Bolo - Own work, CC BY-SA 2.0 fr. Credit: Wikimedia Commons

Promoting new software

Marketing, technology marketing, corporate communications and sales departments started exploring ways to create a market for the new software. They were invited to present their new solutions for a public evaluation at which their tool was supposed to compete with other solutions – called a “shoot-out” like a Western at high noon. They hoped this would generate considerable attention in the professional press, and several different departments mobilised resources.

Are you ready for the wireless web?

As the date approaches, everyone is nervous about how ready their technology and their team are. Preparing for the Shoot-Out becomes the highest priority for technical marketing. AuroraTec pulls off a great show and expectations for the new software were now sky-high. Sales were planning to use the forthcoming Shoot-Out results in their promotion activities. AuroraTec continued to “kick butt” in other trade shows in the summer, and Ravi’s ambition to gain attention and exposure for AuroraTec’s software seemed to be preparing the ground for great commercial success.

“Vaporware” and “webscraping” –
the language of selling software

AuroraTec’s technical capabilities had been confirmed in the Shoot-Out and other events aimed at IT professionals. Yet how to translate this into commercial success remained an open question. The software developers were speculating about their competitors’ capabilities and how their own ART tool compared. Some reports suggested that their recent successes might be quickly leapfrogged, but they hoped that these claims were mostly still “vaporware”. Competition was fierce. In a rapidly evolving industry with most major carriers already offering wireless portals to their customers, existing providers faced losing their portal deals as companies like AuroraTec and competitors entered the market with new and better functionality. And technology-driven markets have always been notorious for not necessarily favouring the best solution, a well-known story since the “standards wars” between VHS vs. Betamax videotapes in the 1980s, and Blu-ray vs. HD DVD in the mid-2000s. And AuroraTec’s competition appeared keenly aware of the power of language in describing what new software solutions do,especially when most decision-makers and users ultimately did not really understand the underlying technology.

The war between VHS and Betamax. Credit: alchetron.com

Ira’s email is forwarded
by Luke to other members
of the senior management team, without her knowledge.

Who is selling the ART - and to whom? Business development versus sales

While AuroraTec’s technical leads saw recent software developments as opportunities to These discussions about how to position ART vis-à-vis the competition still reflected the technical capabilities of the tool from the perspective of software engineers. While AuroraTec’s technical leads saw recent software developments as opportunities to change the “playing field” and “making our technology THE dominant enabling/mobilization tech”, potential customers still needed to be convinced. But organizationally, it seemed unclear whether this was the role of sales or business development. How to package the ART also remained an open question. Two generic solutions existed: to sell the actual programme, or to sell software as a service (SaaS).

From “enabler of the post-PC era” to developer of web portals

While these discussions were ongoing, AuroraTec had been contacted by a carrier (mobile network operator) in spring 2000. The carrier liked their technology to develop both a comprehensive wired (PC accessible) and wireless portal, which was to include a content directory with wireless ad capability, mobile wallet, auto-fill capabilities, alerts, SMS messaging, etc. As a major US carrier, they were expecting explosive growth in their wireless subscriber base in the next 18 to 24 months. AuroraTec had the opportunity to show them their Mobile Portal in May 2000, which was accessible from PC and non-PC devices. This offered a concrete solution that potential customer wanted to buy and that would use the ART as its digital infrastructure.

“Our company focus changes frequently but this week the Portal is number one priority for the company.”

After a positive meeting, the idea of creating a portal to sell the ART rapidly gathered steam. The AuroraTec team considered various options for the portal, such as a search function, as more and more websites were offering wireless access. But ultimately the choice was made to mobilize existing websites as part of a content directory. Consequently, AuroraTec found itself recruiting potential content providers for the portal as a means to sell its software. They decided to start with their existing customers, which again generated confusion as to who was responsible for initiating contact – business development, or sales?

It remained unclear for several weeks who should contact existing customers with this letter, so business development followed this up in June.

Sales and business development remained at odds as to who had responsibility for recruiting content for the portal. Lori from business development wanted to resolve this issue.

Proof of concept for the web portal

In autumn 2000, a proof of concept was being developed, and AuroraTec sought to understand what would be involved in building a portal as requested by the carrier. More and more AuroraTec employees became involved in working on this, and were asked to treat this confidential. Unsurprisingly, this led to internal speculation about which of the major US carriers they might be bidding for.

Creating a wireless portal

AuroraTec’s executives were increasingly confident that they could close the web portal deal. As a result, recruiting content providers for the portal suddenly became a priority again. But the confusion over who was supposed to contact existing AuroraTec’s customers – sales, or business development – and who was responsible for what remains an issue, and Lori (business development) and Cathy (sales) were both trying to pass the buck.

Who pays for content?

The job ultimately landed with Lori in business development, who spent the next few months sending out volleys of identical emails to existing customers, and cold “calling” large, well-known online companies, and numerous smaller ones. These firms already had a presence on the web portals of other major carriers. AuroraTec offered them placement on the portal, initially for free, as an opportunity to increase their website’s distribution.

As Lori reached out to prospective content providers for the portal with a standard linking agreement, a wide variety of expectations in terms of revenue and payment emerged. Some of the very large names that come out of the dot-com boom could dictate their revenue models. Smaller players were sometimes happy to be included for free, others questioned advertising and placement on the page. More problematically, some asked to be paid for the content, even though the carrier was keen to charge content providers for inclusion. Lori generally accommodated requests for individual changes to the agreements with content providers, in consultation with legal. AuroraTec wanted to sell its portal software to the carrier and remained disinterested in the revenue opportunities of the portal itself.

What is AuroraTec’s core business model?

Business development and sales continued to rub along uneasily as the portal and its content were developed. One of AuroraTec’s existing customers, IStock, was nervous about being included in the portal, as they were already on the existing portal of the carrier for which AuroraTec was developing the new portal. As AuroraTec was seeking to keep potential clients’ names confidential, IStock did not know that the new portal would replace the existing portal they were on.

We are not in the portal business…

By early 2001, the situation at AuroraTec again changed radically. Lori left the firm in February 2001, and Aditya took over her role and now liaised with the carrier. Discussions about portals appeared to have come to an end – the carrier now wanted to purchase the underlying software solution (renamed AMAP in a new iteration) but not without testing a free evaluation copy first. By this stage, business development and technology marketing were keen to get rid of this can of worms and passed it to sales with the explanation that AuroraTec was not “in the portal business”.

Platform business models

The portal developed by AuroraTec was ultimately a platform approach that could be licensed to carriers with “content” already in place. Web portals, while all the rage around 2000, became obsolete soon after the rise of Google as a search platform, and none of the companies that ran portals at the time discovered a way to make them profitable. The successful platform business models that emerged since these early versions had different value propositions from the “information hub” model of the early portals. Platform business models have been discussed widely as successful strategies, but discussions tend to focus on those platform-based companies that came through as “winners”. For AuroraTec, this commercialisation strategy was not met with success, even though the company’s software solution was competitive and had industry recognition. Harvard Business School professor David Yoffie discusses the key strategies that have emerged in the last 20 years around platform business models.

Photo credit: Harvard University.