I saw this post about whether shoppers who showroom your business are unethical or just savvy. There are some excellent tips on that post that go beyond solving this problem through “differentiation” alone, but while I was practically screaming at the screen that it doesn’t matter, I realized that the question isn’t about how we feel about shoppers using our resources without paying for them, it’s how they feel.

Part of the issue is that your customer has no penalty for show-rooming but plenty of reward (in terms of price). It isn’t easy to punish customers, but we needn’t disregard their emotions either. Good salesmen know about this; they call it building a relationship. Customers are getting something from you before they make a purchase, but you may not have let them know they have. Perhaps it ought to feel bad if they don’t reward you for their efforts. Reputation, mutual trust, commitment, all these things are important to our social species, and we must take advantage of these positive aspirations if we’re going to keep customers from simply buying from the lowest bidder. Differentiation alone may not be enough.

While you’re giving away all that free information to your customers, make sure you let them know that you’re investing in the relationship. In retail this might be as simple as signage and discussion about buying-locally, or buying from a trusted source. For a technical businesses, it could be informing your customers that all the information you’re providing is part of the final product. Maybe it’s just a few words on your quotation or proposal, perhaps it’s frequent acknowledgment during discussions.

The fact is customers may want to the best bargain and will eventually pay for only what they value, but how they feel about themselves is part of that equation. Your goal is to make sure that buying from you makes them feel better and using your storefront or product knowledge as a show-room for a cheap online retailer, or a low quality solution feels about as nasty as it sounds.

The dot.com era may never be over. Mark Zuckerberg’s Facebook.com just spent $1,000,000,000 (that’s a billion…) on Instagram. Have you heard of Instagram? Of course you have (well, maybe not)! It’s become popular as the hipster photo-sharing program with clever lo-fi filters for your mobile phone. It’s a nifty little social network in the crowded space of social networks and using grainy retro film-like effects to take otherwise stinky mobile phone snaps and turn them into “art” (scare quotes intentional, but not sarcastic) is a darn clever idea.

30,000,000 people (that’s thirty million) use the site and they look to be pretty engaged users. They upload their pictures not only to Instagram’s website, but also to a range of other social network and blogging tools like Tumblr and Foursquare (and sometimes, even Facebook).

So, what did Facebook buy? Certainly not the clever photo filters. Not the social networking model. Not the software. All of those things are either in place or easy to replicate. The only thing I can think of is that they bought 30 million active users. Some (let’s assume many) were too hip to even use Facebook. They got the user activity, where else their logging in, and even what they’re taking pictures of. Of course, much of this information is available about the 845 other active Facebook users, and I am surprised that growing its user base is a big concern for Facebook. If their business model is advertising which, one way or another much of it is, than selling 845 or 875 million users seems hardly enough to make a case. Of course, improving the knowledge of of these users actions increases their value, but at the end of the day, advertisers only have so much of their budgets to pay to acquire new customers.

E-mail direct marketing lists are expensive, but they rarely cost $30 per lead. On the other hand, they rarely contain this much active information about the users. And maybe the money isn’t real, since much of it will be Facebook stock and that means that upcoming suckers who support the Facebook IPO will be buying a 30 million strong customer list. Remember, Instagram makes $0.

Or perhaps Facebook just bought out a competitor. Some pundits are proposing just such an argument. Silly, of course. OK, sure, Instragram is growing at an incredible pace, but just how do you get from a really nice photo-sharing site to an all encompassing social network company? And does anyone really think that growing from 0 – 30 million is, while amazing and impressive, somewhat easier than growing from 30 to 845 million? And what if Google bought them? It’d be a better match for Google, and I can imagine some legitimate concern, but now we’re back to the question of amount. Is it worth one billion dollars just to weaken your competitor? I think Google’s social networking competitor just spent a load of cash—doesn’t that weak their position?

Maybe you’ve seen ABC’s reality program Shark Tank. In this television show, venture capitalists decide if they’ll invest in ideas pitched to them right before the camera. Of course, being the vultures they are, they only want to invest in businesses that actually do, well, business…you know, the kind that make money? I wonder how well Instagram would have done on TV.

Many of today’s start-ups talk about being flipped, that is, sold for millions, as part of their business plan. Andy Grove, former CEO and founder of Intel recently told NPR that his two least favorite words were “exit strategy.” I’ve always felt that the best exit strategy a company could have, is just go and be a successful company. Build a business, sell something, repeat. During the dot.com era, that idea went out of fashion. Well, if Facebook has its way, it’s not coming back into fashion any time soon.

Brick and mortar stores are in trouble, but so are we. Brick and mortar stores like Best Buy will surely be missed once their gone, even if we’re the one digging their graves. Every shopper with a smartphone has probably already engaged in some form of “showrooming.” Showrooming is the act of going to the camera store to get a feel for how well a new model feels in the hand only to purchase it much more cheaply online. Today Amazon even offers an app that allows shoppers not only to scan barcodes and compare with the online price, but to buy the product right there for less money-guaranteed.

Many items like groceries, where freshness is hard match, or clothing wear fit is difficult to ensure, resist showrooming. Electronics, the heart of of Best Buy’s business, are a different story. Once I’ve convinced myself that my new gadget will fit in my stereo cabinet or on my kitchen counter, there is little incentive for me to purchase it locally. Shoppers go to Best Buy to confirm the few things that online retailers haven’t been able to convince them of, and then place an order online where it’s often significantly cheaper, because, well, Best Buy has to pay all those clerks, and keep the lights on in their attractive showrooms in convenient locations.

We’re using Best Buy and others like them as a place to touch and feel products and make our final decisions, but we’re only rarely paying for that privilege. Even though we have an interest in the status quo, it’ll be hard to convince Best Buy’s stock holders if they can’t make any money. The real beneficiaries are online-only stores like Amazon.

It isn’t easy to be an online only retailer, but Amazon addressed many of the needs of their customers’ unique situation. Price and selection are very big drivers, but not the only ones. In addition, consumers need to decide which items to buy and determine if a product really does fit needs and expectations. Amazon offers an array of tools from suggestions to user reviews that do wonders to remove the obstacles to online purchasing. The rise of efficient logistics from FedEx and UPS has sealed the deal, turning the FedEx man into Santa for adults. Of course, avoiding sales tax isn’t bad either, even though most states insist that you’re not really legally doing this. Perhaps this inadvertent discount was necessary to jumpstart online retailing, but, today, even if we lost the 5 – 10% advantage, many purchases would still stay online. We may love Amazon and other online retailers, but they’re getting a free-ride, paid for by brick and mortar show rooms for their goods.

It’s not impossible to be both. Perhaps the best online retailer today is Recreational Equipment Incorporated. REI has managed to sync their online and real-life shopping experience to the point that it’s almost invisible. Buy online, ship to the store. Not available in store, we’ll get it for you from our catalog. Same price, same products, same service.

I bought a compact video camera recently. I was able to choose the product completely online thanks to copious reviews and comparisons with a variety of similar products. I didn’t even visit a brick and mortar store. Still, after I’d played with it for a day, I realized it wasn’t going to meet my needs and wound up having to return, at my own shipping expense, to the online store where I bought it.

I’m replacing that camera with a different one available at REI. Still buying it online, but this time, if there is any problem with that camera or it doesn’t meet my expectations, it can go back, at no extra expense to me, to my local store. I can both showroom and return the product from the brick and mortar store, but buy it conveniently online and have delivered to my door. It truly is the best of both worlds.

The REI model could work elsewhere. Imagine if a new electronics superstore charged a membership fee, just to enter their stores. I imagine it like this. You pay $100 per year to be a ElectroShop member, and you get $120 a year credit towards your purchase. You can buy from our online catalog and pick up your item in our store, or have a look at a sample in the store and place your order online. You’re motivated to purchase from us because you’ve already paid ahead of time for the privilege, (hey, we’ve got to keep these lights on somehow) and because we offer the easiest return service out there. Electronics can be heavy or expensive to return to an online store, but here at ElectroShop, you can just bring it back, no questions asked.

Best Buy might find it hard to implement this model, but something has to be done to cover their costs, because right now, we’re getting this showroom service for free and the going out of business sales are proof that the current model is not sustainable.

Bloatware is everywhere. You know it. More and more features creep into a piece of software until only a tiny percent is ever found, much less used, by consumers. In the early days, computer resources, from working memory and storage, to processor cycles, were scarce and programmers were forced to work within narrow constrains. Today, the opposite is true and features are crammed in to fill up the space of all these idle resources and when they’re full, bigger hard drives are an inexpensive upgrade. All this may enable bloatware, but it isn’t the cause. Bloatware is everywhere. Economics is the cause.

Three menus deep to type three characters

Once Microsoft Word is sold with a feature, say, a menu item for inserting “RE:”, popular or not, it may cost nearly nothing to leave it in for the tiny minority of users who depend upon it. New features are valued by a longer and longer tail of users, but they add value none the less. For the rest of us, it becomes visual noise, rapidly filtered out from non-use. Digging three menus deep to type “R” “E” “:” certainly seems a bit ridiculous, but, how many Microsoft Word users, even knew they could? Or cared? No skin off their mouse finger.

Do think this problem is reserved for software? My office received a new color photo-copier/networked laser printer/fax machine/scanner. Email addresses can be stored in the printer to send scanned files to the users. Faxes can be sent from the desktop, and jobs can be stored for printing later (why, exactly, would you want this?). It also has four paper feed trays, which seems pretty reasonable for letterhead, envelopes, plain paper and larger size printing, but, and I bet your medium size office is just like mine: no one here actually mails things very often and three of the four trays are filled with plain white paper (the fourth one has larger plain white paper). This amazing piece of machinery can print both sides of the paper, collate in multiple ways, organize print jobs by speed, or efficiency. It can hole punch with two or three holes, and staple your documents in any corner or along one side. It can surely do much more, but I got bored reading the 300 page manual. How many of us in the office will use them, um, stapling features (I’m guessing none). Why, then, did we buy (well, rent) this behemoth? Beacuse that bloat is essentially free to us. We needed a printer with a certain capacity for the number of people who work here and the company that rents them to us has this. I’m sure some customers are super excited to have the auto-fold feature (yup, it does that too, I think, I mean it was in the manual, but I haven’t tested it yet), and the manufacturer closed a sale by having it in there, but the rest of us get all a package of features whether we use them or not.

The 1968 Corolla! It's little.

Only happens in the office? Take a look at the Toyota Camry. In 1978 the Camry was a special model of the Toyota Celica and was a compact car. It’s grown in size and features from year to year, encouraging satisfied users who like the brand and model to make the upgrade, but eventually leaving a gap for compact cars (like the Corolla, which, itself, began life as a tiny, sub-compact ). You could suggest that cars have gotten larger over time, but this isn’t true. Totoya still makes smaller compacts and even sub-compacts today. Cars don’t get bigger, individual models do. Features are added and standardized across models and manufacturers until they are cheaper to include then to remove. Try buying a car without electronic windows or without an automatic shift. Marketers push to add features so that the cars can be differentiated from competitors even if those features are of interest to only a few users.

Why would car manufacturers add GPS to cars when integrated GPS is almost always inferior to stand alone devices you can buy later? Even with development costs, adding technology enables auto manufacturers to claim tighter integration (true or not) with their cars and the extra couple of hundred bucks is lost in the over-all price of the car. Pressure to differentiate from others in the marketplace, has an added benefit of increasing the average selling price and with it over all revenue for the products sold. More revenue generates just the necessary cash it takes to research and lard on an integrated GPS in a car and still only charge a few hundred for it by the time it winds up on the showroom floor.

920 Calories!

Economics offers a better explanation than a range of convoluted arguments for American’s fast-food super-size me dietary demands. Restaurants, from fast-food to fine dining, increase their portion sizes because food is cheap, but empty seats are not. A restaurant has to pay its employees whether every table is full or not. They have to buy ingredients just in case tonight is a big night, and this food won’t be fresh long, unless they get it out the door in your stomach. If your plate grows large enough to feed you for three days, and costs only a few dollars more, well, you can always take leftovers home. And that’s all the better for the restaurant. They’ve actually gotten two or three meals out of you even though you really didn’t plan on eating at the same place twice in a week. There is simply little incentive for restaurants to offer you a reasonable portion at a lower price. It will cost the exact same amount of time to prepare and serve, and probably the same amount of time for you to eat it; but you’ll leave only half as much money behind as you would have otherwise (and maybe even complain that the portions were a bit smaller than expected). Economics warns us that there is no value in leaving them wanting more.

Why is this portion inflation, so prevalent in the United States and not everywhere else? First, it is popular elsewhere. Germans sit down to an entire pig’s shoulder for a classic meal and the Chinese regularly order many more dishes than they’re likely to eat. American restaurants suffer particularly from bloatware, thanks to a range of contributing factors. Food subsidies make the raw materials particularly cheap compared to labor which isn’t. In China, in contrast, ingredients and labor are much more closely priced and the benefit of restaurants pushing larger portions is mitigated. Culture has an influence too. In densely populated Europe, space is more limited, refrigerators are smaller and doggie bags are rarer. Customers don’t see as much value in giant portions if there’s no way to take away extra food, and no place to put it when they get home. Europeans have looked on with envy at our closet size fridges and they can be found in more and more houses today. Try asking for a doggie bag in Europe these days and there’s a good chance the waiter will not only return with a container, but he might even hold back the sneer.

Unfortunately, useless software features really do have a cost. Developing new versions of these tools with truly innovative features becomes impossible; flexibility in the face of a changing market is lost. It remains to be seen how well Microsoft’s new tablet-themed Metro operating system overhaul will manage when all the traditional Windows features consumers demand remain. As cars add feature after comfortable feature, older models fill up junkyards and newer ones barely improve more obvious features like fuel efficiency (and with it CO₂ emissions). The healthcare costs of our bigger waistlines is already legendary, but blaming MacDonald’s for bigger portions is foolish. Restaurants are driven to this business model by forces well beyond how hungry their diners are.

Bloatware isn’t just for software and it isn’t free either. Steve Jobs famously said innovation “comes from saying no to a 1000 things.” It’s one of the hardest things we have to do in business or even sitting down to dinner. It’s just economics.

I wouldn’t exactly describe myself as a social media expert. I opt out of whole chunks of it and wonder what could possible motivate someone to share unutterably mundane comments and photos from life day after day, much less read about it from others. Then again, I do have my own blog, two of them, actually, but who’s counting, and I edit on a couple more. I have a photo stream on flickr, a Facebook page, a LinkedIn profile, a nearly unused twitter feed, a Google+ account, not to mention profiles on Quora, Memrise, Foursquare, Yelp! and even Apple’s Ping! to name a few, but you get the idea. Do I really think I’m any less mundane? (More importantly, do you?)

Here are just a few reasons why Google+ is way better than Facebook but will fail anyway.

Circles are the mullets of social media and that’s a good thing.

• Business in the front, party in the back. Circles are intuitive and easy, and they reflect the real world in a way Facebook never thought of. Officially, you can wrangle Facebook’s groups into the same kind of functionality, but circles transparently enable you to share your drunken photos with your fellow partiers and your straight-laced business posts with your work colleagues. There are things your mom just doesn’t want to know about and Google+ understands this. The standard Facebook solution, meanwhile, is to create a another user account.

Google+ is better for businesses, which is better for users.

• A business has several opportunities to promote itself with Google+ including shared circles and search. In Google+, learning about what my friends are interested in gives me a chance to follow their interests without signing up to a new app that will clutter my feed with all manner of unwanted, unexpected posts. You build your reputation on social sites (like you do in the real world) by following things that are interesting and others find interesting too. Facebook mangles this with apps and likes and continues the nearly failed strategy of banner ads that users ignore or a search function that essentially reformats the user’s friend list and news feed. This is better for businesses because their advertising efforts are rewarded and better for users because we’re less distracted by junk we don’t care about anyway.

+1 is sticky, while “likes” fade

• “Likes” are more widespread to be sure, but unlike Google’s +1 likes fade away, buried underneath the weight of the social noise generated by Facebook’s users. +1 meanwhile is attached to search and appears anytime a user searches for similar things. Google knows search, and social search, creepy as it is, can be really powerful. Likes are about a user’s ego; +1 is about something more powerful, a user’s reputation.

Facebook users share, Google+ users curate.

• Facebook is designed around the concept that we want to share everything we do. It’s pretty clear that I’m wrong about this, based on its staggering popularity, but all this over-sharing destroys value. Perhaps because everyone who follows you isn’t necessarily your friend, Google+ users tend to curate what they post, using the simple circles functionality to ensure that the right content gets to the right people. You can see an example of this already in action. Compare Photobucket to flickr. Sure, some flickr users will upload a whole “roll” unedited, but where that’s practically the point of Photobucket, user curation results in amazing, captivating pictures on flickr. Browse the two sites even for a moment and see if you don’t agree.

Google+ is growing fast.

• I won’t bore you with statistics, but Google+ has over 100 million users and has built them up much more quickly than Facebook did.

Somehow, none of this matters. Two facts will slowly kill Google+.

The first one is that people sign up, (just look at those growth numbers) and quickly realize that nobody they know is there sharing anything (even anything uninteresting). Sure, they could follow famous people, but if they care about that, they’re already doing so with Twitter (nearly all of the features of Twitter, except, perhaps for its name, are duplicated in Google+).

The second problem is fatigue. Fatigue from users, radio and tv announcers, web designers, content creators, even businesses, who have add and manage yet another way to contact and hear from them. You’ve probably heard the phrase “check us out on Facebook, or follow us on twitter at….” over 100 times already today. Adding “+1 us on Google+” is just too much. It’s a big hurdle to get over and it means knocking at least one of those two addresses from its dominant position (Twitter, Google is looking at you!), although, up till now, I’ve seen nothing to indicate that this is Google’s strategy.

If I’m right, it should be, but, what do the pluserati think? Feel free to let us know in the comments section; or over at Google+

Apple’s a bit slow. The iPhone has been followed up, twice now, with incremental upgrades. The iPhone 3GS and the iPhone 4S were both relatively minor tweaks on the previous model. Bloggers complain, customers barely notice, but one group is absolutely thrilled: developers.

I work with an Apple developer and it turns out, that despite all the hoops and regulations they have to jump through to even sell something related to the Apple an Apple platform, it’s all worth it because Apple has made the big picture much easier. The write-once-deploy-anywhere notion is sort of true in Apple-land in a way that Andriod can’t even dream of. Once a piece of software or hardware is developed for an Apple product, it will plug into the same port, in the same location and have the same application hooks on iPods, a range of iPhones, and a couple of different iPads. That’s a pretty big deal when compared to developing an accessory for an Andriod-based phone or tablet. In that world, it’s develop once, and then try try again for nearly every phone or tablet on the market.

Apple will release an iPad “3” in March, but, like their other incremental upgrades, it isn’t the time to expect much. Rumors are starting to shake out that there won’t even be an all new A6 quad-core processor, for example. As if anyone but the technorati even cares. The iPad is firmly in the lead among tablets; there is little reason to rock this particular boat. I could, for example, imagine that the real feature of the new iPad will be its price: cheaper than the last ones. Such a move would be devastating to the competition who are making compelling products but struggling to make them as inexpensively as Apple has (with the obvious exception of Amazon).

A cheaper iPad could be decimating to the only real competitor: Amazon’s Fire. Seeing as the iPad already runs Amazon’s Kindle app, a cheap iPad would fill a visible niche. Not to mention how happy developers would be. They wouldn’t have to re-design accessories for this new product. Keeping developers happy is critical in these days when your product isn’t just a shrink-wrapped device, but rather that whole eco-system of market channels, accessories, and add-ons.

Still, I’ve taken up this prediction thing, lately, so, I’ll predict that, in spite of my hopes and dreams, Apple will not be lowering their iPad 3 price. They can always (and likely will) sell last year’s model for cheaper, but really, why would they want to cannibalize their own margins to sell a few extra units? The Kindle has proven no real threat and there is little point in being both the performance and low-cost leader.

I haven’t been back to Photonics West, the premier conference and trade show for the photonics industry, in years. I’ve missed it! But being away gave me a chance to notice something that, while obvious, might have slipped by the regular visitors.

Years ago, many of us in the industry debated the role of the Chinese in the photonics marketplace. Low quality, many reasoned, but the rest of us recalled hearing that argument before about Japanese manufacturing, then Korean, Thai, and everyone else. We could guess that today’s low quality were gathering skills to compete directly with U.S. manufacturers.

Only five years ago many companies were already feeling pressure from Chinese manufacturers (indeed, in lower skill assemblies) but today the tradeshow floor wasn’t filled with Chinese made products from American and European designs. It was filled with Chinese people selling Chinese products. From optics to lasers, all the way to complex instruments the Chinese were no longer content to offer cheap labor to product manager’s problems, they were here today to meet with researchers directly, and see how well the fruits of their labor would solve their problems or create the next markets.

This dilemma and what exactly is behind was well documented< recently by the New York Times. While the problems and trends described in that article sound intractably difficult to solve, the photonics industry is different. Unlike Apple’s supply chain which has almost completely translated off shore, from nuts and bolts to qualified engineers, photonics still enjoys a significant infrastructure here in the United States.

The challenge that this high tech industry faces is whether our experts are willing to make the sacrifices that our Chinese colleagues often have. Are we willing to pay for opportunities with a bit more risk and yet still receive less pay off than fellow executives and entrepreneurs do? It’s well known that people value their own wealth only in comparison to their own peer group. That’s too bad, because the U.S. is a rich nation, and making the choices that Chinese companies must do every day feels much more painful to our entrepreneurs. They argue it’s not worth it to them; they’ve invested so much into their small businesses. One of my industry colleagues spoke of the kind of deals he can accept these days; he has to feed over 20 employees in his small business and he’s got to find opportunities that keep them safe, but also provide him a good return. It all made perfect sense, and he’s by no means rich, but I wonder if his Chinese competition would be willing to accept much less.

I hope he’ll reconsider. I want him to be rich: he’s had a business for more than a decade already and he’s grown slowly and steadily. He’s a critical part of the infrastructure that remains here in this very high-tech industry. If he can’t compete with the Chinese at his door, then our industry may mirror what’s already happened in the iEconomy and what could have been a beachhead to maintain our position in the world economy, will go to the far east, just like Apple’s semiconductors and the engineers who support them already have.

I remember buying used books in the college book store. I was amazed how expensive they were, but I remembered most how heavy they were as I quickly learned not to carry them with me to classes. That’s a shame because having the book there to refer to right after a lecture might have made it easier to work out the problems assigned. We actually used books during class in elementary school; keeping these heavy things with us was a necessity. So was a sturdy backpack.

I predict Apple wants to change all that. In the process, they want to improve the way we learn and even the way books, themselves, are created. The Kindle and Nook are both excellent eBook readers. They are light and easy to read in typical light. But textbooks, especially those for earlier grades, are in color. Interacting with textbooks can make them more effective and more stimulating. Have a textbook that’s attached to the internet, so it can be updated, fact checked, compared with other sources, and shared with friends makes it even more powerful. E-readers fall short on interactivity because their beautiful screens are slow to refresh, and their unsophisticated, but perfect just for reading, software is limited. That’s what keeps them cheaper (around a fifth of the price of an iPad) but whypreferred iPadsto Kindles.

The iPad isn’t new, so why hasn’t it already become the text book replacement I suggest it should be? Apple’s been here before, but it’s all about the eco-system. As each new Android phone is released with better and better specs, even than Apple’s offering, pundits predict it will kill off the iPhone. It doesn’t happen because, like buying into a camera system, buying an iPhone is gaining access not only to a nifty phone, but also a huge app-store, and giant accessory market.

In order to bring iPads to classrooms, Apple needs an eco-system. This, I predict, is what Apple will announce Thursday, 19 January. Many are calling it GarageBand for text books. It really means that by making the tools available to develop textbooks, new, interactive textbooks that take advantage of all of the iPad’s features, Apple can crowd-source the eco-system that it needs to build out this market. This is not to say that suddenly everyone will be able to make text books that the Texas Board of Education is likely to accept, but there is still a need for iPad compatible tools that make this development much easier. Tools that expand the interactivity of the book with the rest of the world. Imagine how much better Facebook would be if kids we’re able to share references from their homework instead of just the latest “re-post this if you think….” Apple has a long history of enabling content creators, and not just content consumers. Not a bad strategy if you develop tools to both consume and create digital content. If you want to know where Apple is going in the future, expect them to look for opportunities to enable one side or the other of the content equation.

And check back in a couple of days to see if this is at the heart of Thursday’s announcement.

If you remember earlier days of the internet, the discussion was often about eyeballs. How do I get more eyeballs looking at my site; how to I get them to stick around longer? Eyeballs were motivation for free services like Yahoo, and later Google, hoping to become the coveted homepage which would appear first whenever you opened your browser. Getting these eyeballs was about selling advertising through banner ads and then more sophisticated advertising.

Google was the most clever here, realizing that eyeballs weren’t free and that a homepage had to offer something of real value to users every time they used the internet. Used is important; sure the internet is a source of entertainment, but it’s also a place where we find things (including that entertainment) and answer questions. Google’s solution is to develop new and innovative ways to use the internet, like integrating all that search with the real world of mapping and route finding.

The business model for each of these companies hasn’t changed much since that original default homepage concept. Google has lead the way with adwords and microcontent, but if Google, (or Bing, or Yahoo) is the gateway to all that useful content from so many dozens of other companies such as Yelp, Wolfram Alpha, or Weather.com, or this blog, they can collect advertising fees for their efforts.

Alert readers will already know where I am going with this by my choice of content providers (well, except this one). Apple’s iPhone 4S and Siri have done something more than just make voice recognition finally useful. (Note: I haven’t actually used it yet, but reports are that it does work pretty much as well as television commercials would lead us to believe.) They made a very clever end-run around Google and the other search engines. Using restaurant search from Yelp, a giant searchable database from Wolfram Alpha and local weather from weather.com, Siri replaces Google as a gateway to information in such a disruptive way, I’d be surprised if their competitors saw it coming.

Back in the day, companies competed for all those eyeballs, offering better and better services (targeted search, local weather reports, entertaining content) and figured they’d figure out a way to pay for it later. Perhaps they were all so focused on finally covering their costs that they didn’t even notice the rug being pulled out from under them. Although, it remains to be seen how Apple will pay for the content, it’s not like either Apple or Weather.com can advertise when Siri tells a user to bring an umbrella. Still, holding the key to the treasure trove of information on the internet is, as Google can tell you, very powerful indeed. If voice-initiated internet search takes a significant share, it behooves companies to start thinking about how that effects their promotional strategy, before the next unexpected disruption comes.

Google’s Android chief Andy Rubin thinks that talking to your phone isn’t such a great idea. I’ve expressed some reticence here as well, arguing that it has to actually work well (unlike the existing features on Mr. Rubin’s Android phones, no wonder he doesn’t like it) and it really won’t be useful in every situation. In a cube-farm office, for example, dictating e-mails to your is silly, and mildly embarassing, as well as a disturbance for your colleagues. And, lo and behold, dictation has been around for a while, but I’ve yet to find an office using it.

With all the attention Apple’s Siri is getting, you might be forgiven if you thought Rubin is just expressing sour grapes that his primary competition may have leap-frogged him for a while. Instead, I think there’s a marketing lesson there for us. Rubin worked at Apple once, maybe there he learned a few things from Steve Jobs who often did the same thing that Rubin is doing now: dissing the competition’s technology.

Mr. Jobs has told us that no one wants a netbook, and released the iPad. No one wants a 7″ tablet, but who knows if there is one on the drawing boards. What Jobs often meant by these observations is that there is something wrong with the technology on the market. It doesn’t meet customer’s expectations in some way and he and his team at Apple are going to figure out what that is, and if it’s a worthy market, they’ll solve the problem, likley calling it something else entirely.

Rubin is likely playing the same game. Today he can tell us that people shouldn’t be talking to their phones, but to a person on the other side. Tomorrow, he may very well reveal a technology that works ‘just like a real person on the other side.’ I can imagine Google combining their artificial intelligence solution with search and crowd-sourcing to make this very argument. That unlike Siri, Google’s voice activated assistant compiles the information knowledge of real people–you’re not talking to an AI, you’re talking to the millions of fellow internet users.

Market leaders really need to shoot down their competition and promote their own products, even in the face of weaknesses. The lesson that Rubin may have borrowed from Jobs is to be out there, aggressively taking a position, ignoring the accusations of hippocrite and sour grapes, because, at the store counter, few are thinking about the mood of the CEO when deciding if they really need the latest Andriod phone or Apple iPhone.