John Juliano: The Funnel Effect – WoodWing, Adobe and the iPad explosion (plus audio)

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In any new market, a wide variety of players and technologies enter the market; as the market matures the number of players and the number of technologies shrinks to a stasis influenced by competitive market pressures, strategic and tactical decisions, and legislation (writes John Juliano).

In technology, whenever a new company enters the marketplace it always touts as its major selling point the ability to interface with everyone else in the marketplace. As the company becomes successful, interfaces to other players are viewed as lost revenue opportunities and the goal shifts to closing the doors to other vendors.

Microsoft was always seen as the black monk of this behaviour and Apple the good, shining white knight. But, to quote 1930s movie star Mae West, “goodness had nothing to do with it.”

Apple, under the leadership of Steve Jobs, followed this very tried-and-true formula eventually bringing out products that contain no uncontrolled interfaces to anyone.

And now in newspaper and magazine publishing, are we watching something similar with WoodWing's agreement to abandon their own mobile content products in favor of Adobe's products?

Technology funnel leading to HTML5? It seems all technologies eventually spiral down to an agreed-upon default. Competitive vendors spiral down to a stable handful, and if there are no anti-trust laws, one vendor may be all that remains standing.

The common wisdom is that within that forest of large trees will grow new upstarts to challenge the status quo.

However, we live in a time of unique interpretation of the standard rules. In our global economy, players with four per cent of the market are considered too small to survive (Sony-Ericsson) and the upstart (Apple) is the most valuable corporation in the world.

On October 27, Sony announced that they had bought whatever part of Sony-Ericsson they didn’t already own for a little over US$1 billion. Ericsson returns to their core business, supplying infrastructure to mobile networks because the handset venture never really took off. (Pity, the phones I owned by them were the best I ever owned.)

Earlier, garnering less general press, but of more importance to us, it was announced that WoodWing would drop their mobile products in favour of Adobe’s, thereby returning them to the traditional role of integrating to Adobe products. (The two have a special relationship: much of the early InDesign API was heavily influenced by WoodWing.)

The idea of their giving up products intrigued me, so I started calling people inside Adobe, WoodWing partners, customers and founder Erik Schut.

One contact inside of Adobe, if I have this right, told me it made perfect sense that WoodWing would do this, “They already had all the big customers.” I’m missing something here, clearly.

A WoodWing reseller told me that the company was returning to what they have been doing: supplying ancillary products. To keep out in front of Adobe was a larger undertaking than they were up to.

One WoodWing customer told me that their biggest strength was being able to change horses whenever it made sense. To mix metaphors, they wouldn’t go down with the ship just because it was their ship. They are a nimble company.

Another publisher just choked, literally, when I asked what they were doing about WoodWing and Adobe. He stammered, after a moment, that it would be inappropriate to say anything about what they were doing vis-à-vis Adobe and WoodWing, just that they have looked at both products and were aware of what each offered. Yikes.

And now in newspaper and magazine publishing, we watch something similar with WoodWing's agreement to abandon their own products for mobile content in favor of Adobe's products.

I called Erik Schut (pronounced sk-hute) who, together with Hans Janssen formed WoodWing. Erik, Hans and I know each other from a Dutch company, Mediasystemen, that I worked with in the middle 1990s.

I asked Erik why WoodWing decided to cede their products to Adobe’s: According to Erik, Adobe does things very well, but it is a big company and takes awhile to get going. WoodWing developed their mobile products to fill a product gap so WoodWing could sell their own products.

“Well, when the iPad came along, well we jumped on it,” he says. “Adobe wasn’t ready to do anything, and so, yeah, well, we had this success coming along. Ever since the beginning, we had been trying to see how we could make this work between us and Adobe. Because, from both sides, we didn’t feel it made that much sense end up competing.”

About how long WoodWing could continue to be the dominant vendor, “The question was, how long would that be sustainable? Adobe had a very slow start… We had a lot of success. But eventually Adobe will get it right. And, I believe at this point they got it right.”

Once Adobe started moving, there was no way WoodWing could keep out in front.

Erik, who thinks very highly of Adobe, points to three things: Adobe understands how fast things are moving and has transformed their release schedule from annual to every six weeks to keep up with the technology movement.

Secondly, while everyone still perceives WoodWing as the market leader in producing mobile products for newspapers and magazines, Erik says it is not true and hasn’t been for quite a while.

“A year ago, we reached 100 apps, at that point Adobe probably just had a handful. At this point we’ve probably exceeded 500 apps, while Adobe, last month (October 2011) crossed the 1000 mark. I guess, they’re probably are closer to 1500. There are quite a few small ones in there, where our early ones were large media company, so the good question is ‘how long can you keep it up?’

“As you can imagine, a lot of our customers were getting quite nervous that we were  competing with Adobe They rely on Adobe for the creative suite products and for us for the editorial system… and those two suppliers are doing a fierce fight on the street.

“From both sides, we thought this was not in the best interest of our customers.”

WoodWing will be discontinuing its reader app and delivery platform and integrating those components from Adobe.

“I think people were surprised at the speed and momentum. If you look at the development of the iPad market, it was just one big explosion. I’ve never seen something happen so quickly. So, normally, the success we’ve had in 18 months would have taken five years.

“And so for us, if not our customers, we decided we better settle now while we are strong, not when Adobe starts beating us up. From that point of view, we did it at the right moment.

“Our mission is to provide multi-channel publishing systems to publishers, that’s what we want to be the world leader in.”

As a vendor, “… you need to keep your eyes open for when components are becoming a commodity… We see the iPad reader app as a commodity. So why would we try to compete there? We should be competing on our multi-channel publishing.”

I asked Erik if HTML5 will get rid of apps on the reader side? “I don’t think so. Because in general, the concept of an app is something that people like.

“That’s part of the iOS platform, that apps have a specific task.

“I think HTML5 confuses things because on the one hand it is a technology…You can use it in your app. In our app, if you go to a store to purchase a magazine, that is all written in HTML5.

“The good thing about HTML5, from a development point of view is that it is cross platform.”

Another major reason to use an app: the iTunes store. The 99 cent purchase must be completed before the customer has time to waiver and this is the iTunes store’s strength. According to Erik, the act of going through multiple screens and a credit card transaction will lower the buying rate by 80%.

Is Erik saying that there is no technical reason why a publisher needs a mobile app? Yes, exactly that. The decision to present content in an app is strictly a business decision, with one small technical caveat. There can be no guarantee that the various browsers will display content the same way. WoodWing uses an embedded webkit browser.

I asked Erik what about the funnel effect, standards and HTML5. The answers were interesting. The funnel effect? Absolutely.

Why an app then? Packaging, branding and most of all two special features, the walled garden and e-commerce. It is important to keep the user in a closed environment so that everything is under the control of the publisher.

Our conversation continued to the viability of paywalls. Erik’s comments are within the mainstream range of opinions with his own special comments.

As digital presentation of content slides through the funnel, will the world be an easier place to publish in? Yes, absolutely. Will it be smooth and easy? Think of Android OS across different manufacturers. Every vendor is looking to get an edge over its competition. Many of those edges will be sharp enough to cut both ways.

• Listen to the interview with Erik Schut

Newspaper systems industry veteran John Juliano writes regularly for GXpress Magazine, Contact him at john@jjcs.com

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