Tying it all together — the end game of present day silicon valley (circa — October 2010)

As silicon valley goes about disrupting one industry after another, it has at this point in time, laid it’s sights on the combined fuzz of commerce, social networks, mobility, and payments.

In the quest of the holy grail for a system that understands consumers and anticipates their likes and dislikes across several dimensions, a group of companies are at the precipice of a massive opportunity to build the ultimate system of systems (SoS). This SoS combines identity, commerce (online & brick-mortar), social networking, mobility, and likes/dislike across services (both traditional services, and information services).

Let’s first start out with my premise of why we are far from the end. As much as we like to believe otherwise, the vast majority of commerce still occurs “offline”, i.e. happens away from your computer desk. The majority of this offline commerce also happens within a relatively short driving distance of the domicile or work place of the average consumer. Therefore, while the world is flat, you still buy the majority of your consumables from your neighborhood. Note: my argument is focused around the “transaction”, and not the production of goods and services.

I will now describe the capabilities of the SoS, and then towards the end of the article prescribe a method to tie it all together.

The SoS is a platform that provides each user with a hub for the consumers digital life: an interface to manage and manipulate incoming/outgoing communications of all types (personal, professional, social, financial, medical, entertainment, news, etc). This first piece is an anchor tenant of the system: since this is the interface which enjoys the greatest amount of #attention from a user. Until 5 years ago, this interface was the desktop computer, and today that is changing rapidly toward being untethered. The race to own this piece is being fought by the giants of information technology today, and there are several flavors of solutions out there. The vocal debate sparked by Chris Anderson of Wired summarizes the shifting landscape of this interface well. Let us name this interface “the hub”, for the sake of this article.

The SoS then extends the hub to the mobile experience, and brings along a few key elements such as: identity, a communication end point, the social network, a financial toolset, and some sensors. For users with smartphones today, you know what I am talking about.

Now that we’ve covered the interfaces extended by the SoS to consumers, let’s shift our focus and think about what it does for merchants and service providers.

The SoS provides merchants an interface similar to the hub, let’s call it “the register”. The register is a system that comprises of a point of sale interface, ties into the merchants CRM system, interfaces with social networks, and ties into the merchants accounting solutions. We hardly find a lot of discussion about innovation in this arena and I believe this is facet of the SoS that is the most under developed at this point in time. Yes, IBM has had point-of-sale solutions for decades, but they have hardly changed in my life time. With the exception of Square (by Jack Dorsey), I don’t know of a single startup or tech major focusing time and R&D efforts on “the register”.

Tying the millions of registers and billions of hubs together is the central fabric of the SoS that extracts context from transactions conducted between the various hubs and registers connected with each other. While the central fabric is built on top of the Internet, it is not the internet itself: but has a combination of capabilities possessed by a search engine, a recommendation system, a social broadcasting system, and a trusted provider (bank). These different components put together comprise the SoS.

The end game that the tech giants are chasing is to build and own this central fabric, its engines, and it’s interfaces for consumers and merchants.

Google and it’s Android platform are best suited to realize this SoS.

The Google search engine is a dominant onramp to the internet, Gmail and the Google Apps suite is fast supplanting the Microsoft Windows desktop paradigm, and Android is fast becoming a pervasive mobile hub. While Google has failed to own the social networking experience, they play well with tying into them from other Google services.

The biggest gap in their portfolio is a foray into owning “the register”, and providing a value exchange to merchants to incentivize them to adopt. The Android platform in it’s tablet avatar is a good starting point. Tie it with other services described above and allow the transaction to flow. Merchants get subsidized analytics and broadcasting tools in exchange for adopting the Android platform.

If I had a venture fund, or access to large financial resources, I would invest in a business or a project to go after the register.

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