It should raise some eyebrows that MySQL AB, the Swedish maker of a free database management system, has sold itself to Sun Microsystems at a price that Cnet estimates at (begin Dr. Evil impersonation) one... billion ... dollars. Hopefully it also will open some minds about alternative business models and "low end" innovation.
MySQL's revenue model is best described as "voluntary pay." Anybody can download and use the software at no charge. Businesses are encouraged to sign up for support services, but that's completely optional.
The "voluntary pay" model isn't unique to software; quite a weekly newspapers use it, and some dailies are beginning to experiment with a mix of free and paid circulation that effectively is "voluntary pay" for targeted neighborhoods. It's an intriguing option for a print medium that lets the newspaper control its distribution while continuing to enjoy some of the revenue benefits of the old model.
In the music business, Radiohead stirred things up by offering their latest album as a free "pay what you want, if you want" download. Of course, other music businesses such as Magnatune have long offered unusual pricing models. Magnatune lets you listen online all you want, and pay a price of your own choosing to download files.
And in Kirkland, WA -- the east side of the Seattle area -- there's even a coffeeshop and deli founded by a Google programmer that seems to be surviving on a voluntary-pay basis. The wi-fi is free, too.
The MySQL deal also is significant because MySQL is a perfect example of a low-end disruptive innovation.
You don't have to stir the anthill very much to discover that a lot of highly paid, highly trained Oracle database administrators regard MySQL as junk, a toy, beneath consideration. Blah blah constraints, blah blah referential integrity, blah blah transaction rollback.
But MySQL was "good enough" to create entirely new markers and enable entirely new services, including this blog, which sits atop a MySQL data store. And as MySQL improved, it began displacing expensive solutions in increasingly more mission-critical settings.
Now it's the engine behind Google AdSense, which of course is the revenue engine behind Google itself. Good enough, and then some.
For awhile part of the Sunday morning newspaper-reading ritual at my house has been to dig through the "guy toy" inserts from Lowe's, Home Depot, CompUSA and Best Buy.
Three of those companies are doing pretty well (in fact, Home Depot just opened another store within walking distance of my house). One is doing very poorly: CompUSA, which announced Friday that it's throwing in the towel and will close its stores after the holiday sales.
Oddly enough, there's a lesson in this for newspapers.
CompUSA isn't a technology store. It's specifically a computer store. While it has non-computer electronic entertainment devices, it's not positioned as such in the marketplace.
Moore's Law describes how computers get more powerful over time. A side effect is that for N amount of power, price declines. While computer retailers are desperately trying to maintain prices at 2001 levels by stuffing more power into the box, reasonably powerful computers are relentlessly heading toward a $200 price point for desktops and a $350 price point for laptops.
As the unit prices decline, unit sales at CompUSA haven't been rising to offset that decline. Instead, consumers are finding cheap laptops at an array of new competitors. Walgreen's, a corner drugstore for cryin' out loud, was advertising laptops last week.
Trapped in a business model that assumes $1,000 desktops and $2,500 laptops, CompUSA can't cover its fixed costs and its obligations. And because of the power of its brand, it can't easily segue into selling $2,000 flat-panel HD televisions like Best Buy can.
This is very much the trap that many newspapers have wandered into.
A newspaper isn't a media company -- it's a newspaper company. The core product -- news information -- is no longer rare and expensive. An array of new competitors enter the business. Media consumption is actually growing like mad, but the growth is all in a new kind of media consumption, focused on personal entertainment, practical utility and communing/communicating with others. The powerful brand of the newspaper puts it in a box, and it can't easily segue into the growing space. Revenues decline, obligations mount, trouble follows.
And as CompUSA shuts down its local stores, one more source of advertising revenue for the daily newspaper goes away.
In a commentary for the Pew Internet & American Life project, Susannah Fox writes that she's "struck by a phrase repeated a few times: 'good enough' technology."
The phrase actually is a key to understanding disruptive innovation as laid out by Harvard prof Clayton Christensen, and embodied in the NewspaperNext Blueprint for Change.
Truly disruptive technologies tend to enter the environment at the low end, not the high end.
To incumbents, they may at first appear to be a joke. Two examples from the world of database technology serve as examples.
The first is MySQL, a free relational database server that began as a fairly primitive tool.
"Real" database administrators -- the guys with Oracle DBA certifications -- sneered at it. A toy fit only for amateurs, it nevertheless was "good enough" to enable thousands of new Web-based applications (including the software that runs this blog). As it improved, it climbed the ladder of quality and eventually became the data engine behind Google AdSense, a truly disruptive technology.
The second is SQLite, an even more primitive data store -- it doesn't even have a server! This funny little thing is just a C library that can be compiled into any application. It's not worth a damn if you're running a corporate data center, yet it might be "good enough" for some completely new applications where a relational data store was never possible or practical. In Christensen terminology, this is "competing against nonconsumption." It's the tinny little Sony transistor radio in 1955.
So the Mozilla project quietly sticks it into Firefox. And the PHP project quietly sticks it into PHP5. And now Google has used it to create Google Gears, a technology platform that will spawn a whole new breed of Web-based applications that work offline just like they do when you're online, and then sync your data when you reconnect.
This is world-changing stuff. And it begins not by building the high-end, be-all, end-all super-performing solution to all possible problems, but rather at the low end. "Good enough" to solve one new problem at a time.
Like a lot of people, I've been trying to puzzle out Google Video, which launched a week ago to a chorus of boos from reviewers. Apparently they were looking for iTunes-the-next-generation. What they got instead was a cheap toehold on the Google Grid and a low-end disruptor right out of the Innovator's Solution.
Google Video potentially lets any random idjit upload a video and publish it to the world (actually only the USA at this point I think). Apparently some already have. For someone looking to burn some time watching joke videos and Family Guy rips, it's incredibly simple and easy. You can watch the free stuff as Flash videos with one click.
The paid stuff is a little more complicated but not much. There's a proprietary video player (based on DivX codecs) that does some weak digital rights management. Basketball games for $3.95 aren't going to set the world on fire, but I don't think that's what this is all about.
Behind the scenes, apparently, Google has created a Paypal-like payment handler. Put it all together now: Google Base, Google Video, Blogger, Adsense ... sell your stuff or give it away, and if you make money, Google takes a cut. Let's say I'm a real estate agent. Or a car dealer. Why not put my videos on Google?
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