The term “serial entrepreneur” gets tossed around a lot in the technology world, but few executives can match Cheng Wu’s resume when it comes to building – and then selling – startups. During his 20-year career, Wu founded Arris Networks (which was acquired by Cascade Communications for $145 million), Acopia Networks (acquired by F5 Networks for $210 million) and ArrowPoint Communications (picked up by Cisco Systems for $5.7 billion) before co-founding Azuki Systems 18 months ago. We talked with Wu about the confluence of Web 2.0 and mobile.
There’s no shortage of companies looking to extend the Internet to mobile phones, and many of them have been around for years. What problems are you hoping to solve with Azuki that have yet to be addressed?
I think there are a couple of things that, at a high level, I think it’s important to take note of. One is that most of the services and content are already available on the desktop side, but it’s very difficult to extend information, content and services from the desktop to mobile. I see a number of reasons for that. What we really need to have is what I call a horizontal way of bringing the desktop to mobile. By that I mean not to create vertical niche-type services specific for mobile, because from a service angle it really should not make any difference whether the Internet is accessed from mobile or from a desktop. Technically, it’s possible to make it transparent, from a service-deployment point of view.
So I had the vision that if we can enable it horizontally, if we can simplify the process, then we can unite the fragmented ecosystem of mobile content and services. The problem is not demand, the problem is the fact that the ecosystem is fragmented, and if it’s fragmented nobody can make a lot of money. Because every piece of opportunity is a small fragment, and therefore it cannot become a mass deployment.
Why is that fragmentation a problem from a publisher’s standpoint?
From a mobile content provider’s point of view, if you want to create an extension of the desktop (experience) in mobile, you have to specially prepare the content for mobile, you have to worry about technical details in terms of transcoding, you have to change the content layout for the smaller screen. I think that, for one, can be hidden and totally automated. Secondarily, if you think about the desktop, most are in the space of Web 2.0, which means social networking, to a large degree. (Publishers) do not have the ability to add socialization over their content for deployment in mobile. We’ve got to make it transparent so people who provide content can have socialized services added on top transparently, independent of what they know or don’t know.
And personalization is another aspect. We feel that from an information retrieval and consumption point of view, mobile content should be designed for grazing, not designed for browsing. There’s far more content that’s available on the desktop that needs to be made in a way that’s glanceable on mobile, so the ability to make it grazeable (on mobile) transparently, from any content provider, on a real-time basis is a pretty tough thing to solve.
But aren’t there transcoding services that already handle much of this?
The function of transcoding (content) to fit on a mobile device we see as the first step to be done, because short of that, a lot of the content that’s available on the Internet cannot be consumed on mobile. Those companies serve a purpose in automating the transformation process in being able to address different content from the source.
But only solving that problem doesn’t make services created automatically, it doesn’t make content consumable automatically, it doesn’t add personalization automatically, it doesn’t add socialization automatically. You still have the problem that the amount of information on the desktop simply outscales the amount of consumable information in mobile. Therefore I think there’s a logical content-reduction process that needs to be executed, in the sense that you want content that’s consumed by mobile to be already sorted out, discovered correctly, personalized, targeted so that it’s mobile-relevant. The question of relevancy becomes a key issue.
This is your first foray into the mobile-software business. As a newcomer to the space, do you see any important trends that more venerable players may not be tracking?
There’s a lot of focus on the platform for the handset, and some focus for back-end services as part of Web 2.0 or cloud computing, but what I have not seen is a recognition that those two forces eventually will intersect with each other, in that one complements the other. The reason I say it that way is that if you look at what’s in development from Google in the form of iGoogle, and you look at what has been in development from Apple in the form of opening up their SDK and trying to leverage more and more back-end services like MobileMe, you pretty much see the handwriting on the wall. There will be a natural division of forces between companies that focus on the back-end and companies that focus on the handset in terms of the operating system.
What really has not been the focus, I think, is the handset user’s point of view, unfortunately. They just want to access what they want to access. They really do not care what operating system (they’re using). Therefore, when you talk about accessing information it really is more about the operating system as a matter of how to make content consumable for mobile users. That’s really the angle I see missing. I think it’s more quote-unquote sexy to work on the handset operating system, because once you control the handset platform you control market share. But from a consumer’s point of view, they wish people focused more on content creation, the ability to consume content, the ability to create services, the ability to share and collaborate the same way as on the desktop.
How large a role will wireless advertising play in Azuki’s business?
We think advertising is a very important angle, because content itself as a business is expanding. By that I mean the traditional, on-deck, subscription-based content is being complemented by content collaboration, shared content, socialized content and user-generated content.
When you think about it that way, then you think about a multilayered content ecosystem where traditional, premium content is at the bottom, and there are two layers on top: syndicated content and user-generated content. Those two additional layers create activities which are potentially viral and which can create business opportunities back to premium content. There are business models that make sense for those two additional layers that we happen to believe will be based on advertising.
Another angle that’s important to point out is that as you create derivative content layers in the form of syndicated and user-generated content, they create more potential slots for advertising inventory.
But those “derivative layers” typically deliver less valuable real estate when it comes to advertising. How big a problem is that for mobile?
I think the key factor is how you view the market. If you view it to be specific to mobile, then you ask how big it is. If you view it to be an extension of desktop social networking – not try to replicate what is being done on desktop social networking, but instead try to create a mobile framework that can transparently access an interface to a desktop social networking, – then I say the market is very huge.
What do you see in the short term for the mobile Web, as Google’s Android begins to come to market and the iPhone continues to gain traction?
I look at Android to be second to Apple’s iPhone in terms of impact, and that maybe over time its impact will increase. What I think is important that
they bring to the table equally is the notion that some back-end services that are enabled for those platforms are increasing at a rapid pace. To me, that creates a possibility that the back-end cloud services and the operating system would intersect much quicker than otherwise.
The other thing that’s interesting to me is the fact that some handset manufacturers are rolling out services, like Nokia’s Ovi, and that carriers – though still resisting the idea of complete openness – are increasingly embracing the idea that a slow migration toward open systems is inevitable. All those things point out, I think, a pretty healthy picture. Because until we get to the level where back-end services are considered additional service layers that are accessible from mobile, there will be too many niche-based service deployments and creation for mobile. That would not make anybody any money.
