NewsGator acquires FeedDemon – Consequences
Many bloggers report on recent acquisition of FeedDemon by NewsGator –
Greg Reinacker's Weblog NewsGator acquires FeedDemon. Congratulations and Good luck!. As a new entrant to the blogging industry I pondered on this move, what purposes it aims to serve and what purposes it will serve anyway.
NewsGator tries to become the ubiquitous news aggregator for enterprises and consumers. This vision being very broad by itself enforces them to engage two competitive arenas where each arena dictates specific rules; the consumer arena and the enterprise arena. This acquisition has been rationalized (On the posts I read) as an enterprise play where a completeness of product has been addressed "We now had a presence on Microsoft Outlook, on the web, mobile devices, other e-mail clients besides Outlook, and shortly thereafter even on the TV with Media Center edition.". A rich standalone client that can provide offline capability is an important extension to corporate needs. This addition will also probably serve specific segments of consumers that rather read news via client-side software with all its advantages and disadvantages.
Still, at first it seemed to me it is too early for a company such as NewsGator to deal with product completeness before gaining momentum into a specific arena with the current offering and I tried to look for other reasons.
NewsGator is addressing two different board markets, consumers and enterprises and I do think that although their shared code base can serve the initial needs of both markets these are market definitions that are two wide to be addressed effectively by one company at their stage as well as in later stages. Let's take a look at their competitive spaces to see what are their challenges are how this acquisition serves them.
In the consumers competitive space NewsGator is an early mover and it accomplished high acceptance among early adopters. NewsGator took the decision to approach this segment with a no-brainer MS-Outlook extension that gained fast popularity thanks to its reliance on MS-Outlook "real estate" (Already installed, sharp UI framework, least resistant path to users); and didn't "suffer" like other standalone readers that had to do much more consumer education not to mention fixing client-side application bugs:).
Listing the names of real competitors in the consumers space is quite easy since the most important competitive edge that served in almost every consumer application war was "real estate". Consumers don't like to learn new tools and if a certain application that they already use can be broaden to cover new related functionality then it will be done and consumers will follow through. Microsoft is the only company that has the personal communications "real estate" among consumers (Although this dominancy is shaken from time to time with disruptive innovations such as Firefox). In recent months there were different talks on Microsoft wishes to integrate RSS into IE7 and I can say in confidence that it will be just natural for them to follow through in MS-Outlook as well.
This competition with Microsoft means two things for NewsGator (And for other consumer aggregators):
1) Very tough competitor and that can be bad or good news depends on the character of the CEO.
2) The RSS consumer space receives interest and validation from Microsoft, which means a very large business opportunity and that is good news for all CEOs.
Rationalizing the acquisition as a wish to own a standalone news aggregator for removing the high risk dependency that is inherent in NewsGator's rich client deployment (That relies on MS-Outlook) is a very good move!
Following this rationale the question that immediately pops is what are their chances to stand competition with Microsoft especially while considering many past "casualties" in similar wars. Let's consider several controlling factors in this competition:
1) The news reading experience as defined today by NewsGator and others serves only current needs of early adopters so it is in its very early days.
2) The inherent nature of client-side aggregation with server based capabilities dilutes MS "real estate" that is more a client play then a server play in its nature.
3) None of the players in this arena has a considerable market share.
This makes RSS news reading a new playground with better chances for new entrants to compete; better chances then the ones that existed in past competitions on consumer plays.
Few points to consider for consumer RSS aggregators that wish to increase their chances in this game:
1) Microsoft tries to identify large opportunities from the beginning in order not to lose their first mover advantage (Which is crucial to keep their growth) and here they seem to get the importance of blogging by water testing with MSN spaces and other means. This means that Microsoft will probably start to show presence in the consumers' news reading experience very soon. If done in Microsoft "fashion" then expect this presence to be well announced into the markets. This buzz will serve everyone in the playground, the ones that will benefit from it are the ones who will know how to use this awareness level to their best interest.
2) Any feature in a client side aggregator that relies on unique server side capabilities will create a competitive edge. MS-Office serves many office related purposes and there is a limit to the amount of pinpoint integrations Microsoft can do.
3) UI responsiveness – MS Office is a large software suite that carries many weights from the past. A fresh and clean product that is lightweight will be something that is hard to imitate. i.e. Firefox.
4) Take your .Net decisions wisely. It provides and will provide tempting features that can become a lock that will prevent strategic future enhancements. .Net will be a good place for Microsoft to embed their RSS infrastructure. I don't think it is a matter of giving up on .Net, it is a matter of hard thinking on what to use and what not.
5) UI sharpness – Microsoft has terrific internal capabilities to create great UI. They have done that before and they will do it again with RSS. This is one of the main factors that control users' decision. Hire UI designers!
6) The last advice would be Focus! Focus! Focus! – Many larger rivals with good market share lost the fight due to lack of focus. Microsoft has an inherent focus while deploying products thanks to their massive existing user base that fact does not allow them to make mistakes. My suggestion is that you should maintain a level of focus as if you are already serving 10 million customers!
Enough for today. I will write down about enterprise RSS in a future post.
Again Good Luck to NewsGator in all their endeavors.