Startupers beware: your mothership will eat you for breakfast

The recent news and rollouts by major companies are going to have a huge impact on the startup surface, and sink a lot of them as well. Here are some I want to mention:

  • Microsoft’s roll-out of web-based and free Office is going to damage web office suites developers, like Zoho;
  • Microsoft’s new Outlook 2010 is going to include social network features. Bye-bye Xobni (which is a social Outlook plug-in);
  • Twitter buys one of the iPhone clients – Tweetie. It means all other iPhone twitter clients are screwed;
  • Facebook, in addition to their Credits system, is rolling out an offers system – a very popular way of monetization. Wait till they make their Credits the only way to take money from the users, and numerous startups will kiss good-bye.

However, the top prize for screwing its ecosystem and partner network goes to Apple:

  • Their are introducing their ad platform iAd. No doubt it will be the exclusive way for advertising on iPhones and iPads;
  • Their new SDK licence agreement clearly prohibits use of any development platforms except for Objective C. This is a major blow to Adobe with their new Flash CS5, which includes tools to easily port Flash apps to iPhone OS. It also potentially makes Unity – a new platform for 3D  game design outlawed.

The lesson we all can learn: when your application totally depends on some company’s product for monetization or value for users, the company can evaporate your business in a blink. Our MobileNoter also falls into this category. People like our product, but if Microsoft decides to port its OneNote to MacOS and iPhone OS, we’ll have to have a much better product than theirs in order to win the customers.

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3 Responses to Startupers beware: your mothership will eat you for breakfast

  1. Vitaly says:

    >Bye-bye Xobni (which is a social Outlook plug-in);
    http://techcrunch.com/2010/04/15/khosla-and-rre-lead-16-2-million-series-c-in-xobni/

    I’m really confused how Outlook Plug-in can gather so much VC money, but that is the fact. Probably they have excellent business plan. “What doesn’t kill us makes us stronger”

    • Oleg Kokorin says:

      Apparently, they are trying to move to other platforms ASAP. They will use the new round of funding for “more mobile apps, and expansion of the plugin into other email platforms besides Outlook”. So if they grow into other areas fast enough, they can survive the arrivial of social-friendly Outlook 2010.

      On the other hand, all commenters on TechCrunch agree that this startup is never going to recover the money they burnt. With 5 millions of downloads of the plug-in to the date, the guys would be lucky to have revenue of $1m-$3m. Their total funding has exceeded $30m to the date.

      • Vitaly says:

        The full quote is “The funding will be used for further product development, more mobile apps, and expansion of the plug-in into other email platforms besides Outlook.”

        I think the first in this list, “further product development” that is, is still the main one. Please tell me what “other email platforms” could be? 🙂

        It’s possible to compete with MS. Their niche is Outlook users that need innovative features. They can deliver what they want faster than MS, no doubt.

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