Microsoft buys users on whopping scale

May 11, 2011

Microsoft top management has a good reason for their recent agonizing buying spree. Everyone and his dog know that Windows and Office cash cows will be dead one day, and the day is coming fast. Microsoft is really trying to make a move into online, cloud, and mobile – the most promising categories dominated by Google, Facebook, and Apple.

Apple… was a marginal company only a few years ago. Apple passed Microsoft in market cap in 2010, passed Microsoft in revenues in October 2010, passed Microsoft in profits just recently.

Meanwhile Microsoft pays a fortune to buy users from Yahoo, then from Nokia, and now from Skype. That’s right – Microsoft is paying billions just to get the users, not valuable technologies or products (not entirely with Skype, but mostly so).

Every business school teaches that this strategy is not going to work. If you purchase users with low ARPU from someone, the users will continue to bring low ARPU to you. If you try to charge them more, they will flee to your competitor. Those business schools will soon have an excellent case study to support the claim that the strategy is bad. The chart below shows how Microsoft Online Services Division has been doing for recent years. If you have trouble summing those columns up, here is the summary: the Online Division is losing $2.5b per year. Surely you have no trouble picking the trend.

microsoft online division is losing a fortune every month


Dropbox uses social game tactics to increase virality

May 5, 2011

famous dropbox logoDropbox is one of the best known applications in the world that appeared in recent years. While Dropbox is really useful and a great app, perhaps some creative marketing helped it to go all the way to #1 file sharing app in three years. It turns out that Dropbox cleverly utilizes the same tactics that is commonly used among social gaming companies on Facebook and other social networks.

For example, once you sign up to Dropbox, you are offered to perform 5 of the following 7 steps to get 250MB of storage space for free:

  1. Take the Dropbox Tour
  2. Install Dropbox on Your Computer
  3. Put Files in your Dropbox Folder
  4. Install Dropbox on Other Computers You Use
  5. Share a Folder with Friends or Colleagues
  6. Invite Some Friends to Join Dropbox
  7. Install Dropbox on Your Mobile Device

Compare this to the 5 steps that Office Wars – an addictive Facebook game – asks to do in order to become an “Office Wars Pro” and get some perks for free (that otherwise would have to be bought for real money):

However, Dropbox doesn’t stop with the list above. More simple actions will get more free storage to the users, like:

  1. Linking Dropbox account to your Facebook account
  2. Following @Dropbox on Twitter
  3. Tweeting about Dropbox to your followers

Every step of the above will get you 128MB more. All this is on top of the “old school” marketing gig: any new user signing up to Dropbox off your referral link would add you 250MB of storage space for free.

It is very easy for Dropbox to utilize this tactics, because they can give away free space in small increments for just about anything: if you Like their page on Facebook, write a positive blog review about them, put Dropbox sticker on your laptop and post a photo of it – the possibilities are endless. It is much harder to do the same for a company that sells software for a one-time payment, like we sell MobileNoter SE. The company could give users discount coupons for the user actions it want to appreciate, but even this is not guaranteed to work – the biggest application store – the AppStore doesn’t support coupons.

MobileNoter works with Windows Live SkyDrive now

May 3, 2011

Access your Onenote notes on SkyDrive and Android with MobileNoterWe released a SkyDrive update to MobileNoter SE for Android a few days ago. Users have a choice to host their notes on either DropBox or SkyDrive now. Both services provide a lot of storage for free. Windows Live SkyDrive has a big advantage in that it allows editing your OneNote notes on the web. We have only one step remaining for the ultimate OneNote solution for Android: the ability to edit notes in MobileNoter SE, which is coming in less than 2 months.