Overall, I do agree that email inboxes do contain a lot of interesting data about people and how frequently they communicate over email and potentially IM if a vendor offers both products in an integrated fashion. That being said, I don’t see how any of the top web email providers (Microsoft, Yahoo, and Google) can use this email information to build new social networking products. There is, however, an opportunity to use that data to power other people’s applications.

What additional value would I get in using one of these systems over Facebook, MySpace, or my current social network of choice? Details on these products are sketchy at best. However, almost any social networking product worth its salt has a contact importer. Once a user imports his/her contacts, he or she can then determine who from that subset of people he/she would like to invite. Is having a machine prompt to do this for personal social networking of great value? I can see the utility of this auto-population or auto-discovery in a work context (Xobni does do a good job of showing me my own correspondence patterns and I can imagine many things you could build on top of that data – the work use case is different as I think work communication patterns tend to be more dynamic than personal ones). Nothing I’ve heard in the limited details that have come out gives me reason to think that they’re on to something bigger.

I’d also say that if “powering up” this network requires me to create a new profile page, it’s a non-started. I’m out of that business for now unless or until I see a really great application that’s worth the time.

Webmail inboxes are a mess – I have yet to use an email product that has an even decent address book. All of the email address book offerings from the Big 3 email providers feel really dated. For example, the Gmail address book does not do a very good job of de-duplicating contacts. I have folks in my address book who have multiple entries and I’m not interested in going through to manually de-duplicate them; I’m counting on a machine to do that for me.

The larger point here is that I don’t know how you can build a really good, effective social networking product on top of email if you don’t do something to put some good, quality structure around the data. Social networking services who are sucking up email addresses to match a user’s inbox with their database of contacts don’t have the same problem – you just throw away the ones that don’t match (or allow a user to invite them). It’s a very different situation if you want to build a whole new social network product with email as the foundation.

Cross-functional collaboration is not easy inside of large companies – This is a fairly obvious point, but big companies are notorious for having internal challenges when it comes to cross-product collaboration. When one of the products in question is email, I don’t imagine that will be an easy conversation – nobody wants to play around with an interface that touches tens or hundreds of millions worldwide.

Think about the refresh cycles for webmail systems. How often do Gmail, Yahoo Mail, or Hotmal get updated? Not that often, and I have to think that touching those interfaces requires a lot of signoff and a strong conviction that the proposed changes will positively impact a wide number of people. Otherwise, you might end up with angry users. I have a hard time seeing any of these companies acting aggressively with one of their web crown jewels.

The end game ought to be to make this information available to other services and make mail the data platform, not build new applications. Sadly, I don’t think that’s a very interesting business to be in – I don’t know how you re-establish yourself as a major player in social networking by simply providing the data layer that powers other applications.

So what’s next? Well, I think what’s next (and by far most interesting) is some concept of the “strength” of a connection. Specifically, today I can see a lot of my friends’ social networks, but I have no idea for the relative strength of connections. Sure, if I see Person A knows Person B, I can always make an offline inquiry to see if that connection is strong or weak. But very soon I think we are going to have tools like Xobni that profile communications patterns and surface that information both to end users and to other applications. And it won’t be just social networking and community applications that benefit. Enterprise applications (collaboration tools, CRM tools, HR/recruiting systems, etc) will all benefit from having access to some of this information. We’ll call this contextual “strength” Phase III.

Phase III is really interesting to me because I think it has to be a largely machine-driven approach. Communication patterns are too dynamic for any user to bother continually updating “strength” of connections. Also, as Xobni has shown me, if you are a power emailer you’re likely to be surprised by who shows up as ranking highly. There’s no reason the same can’t be done for IM. I’m not sure that I’m going to turn my phone logs over to some 3rd party analytics company, but IM and email would be a pretty decent picture of what I do and with whom I communicate. Passive profiling of communications patterns is going to be really interesting and I think will expose really interesting information about the nature of communications. I think Xobni is on to something really cool and big as it’s delivering value to me today (even though I have to use it in Outlook) and I can see a path to a lot more value in the future.
As an aside, I think this is the best shot that Google, Microsoft, and Yahoo have to wedge their way back into social networking relevance. They already own the message stream and have the data they need to get a sense for who knows whom. It will be interesting to see whether they choose to open this information up and let other applications take advantage of it or whether they use it for the bedrock of their own auto-generated social networks.

For many users, social networks are becoming the new home pages. This is just a simple assertion that I’ve made before in previous posts. As social networks become the places where users go to start their days and consume information, social networks will have a lot more power. Not convinced? If Facebook were to auction off the right to provide embedded search in their service, I know there would be a very attractive bidding war to win that placement.

The more assets you have, the less likely it is that your users are making use of all of them. Finally, the argument I always hear is that “company X has all of these great assets – IM, address book, etc. If they could just integrate them all, it would be a killer application.” But think about it. When Google just had search, anyone who used Google search was consuming 100% of the services offered. Add Gmail and you lose some folks. Ditto on Gtalk. Same is true of Google News. You get the point – the more services a portal offers, the smaller the share of users who actually consume all of the apps. If that’s the case, the value of having a super-integrated offering from Yahoo or Google is not that high. If you look at all of the things under the “More” tab on Google or all of Yahoo’s services, how many of them do you use? More importantly, how many of them do you not use because you have found something else that better meets your needs?

At the end of the day, I think Steve is right – portals will win the social networking wars. But this will happen because the winning social networks will look a lot like portals today.

As an aside, one thing that Zimbra has going for it is that it’s a very “classic” email interface. As much as I love Gmail, the interface and paradigm is not for everyone. Deploying a Zimbra-like mail experience will be less scary for some groups of users.

Webmail needs to be scalable and stable – The Zimbra technology team knows what they’re doing. Every since I got on the beta for the “new” Yahoo Mail, the AJAX interface has felt slow. If Yahoo wants to continue to be a leader in AJAX-ified email on the web, they couldn’t have picked up a stronger team. If you’ve ever had to deal with slow or buggy webmail (and who hasn’t?) then you know how important this is.

People who pay – Advertisers or merchants (in the case of e-commerce platforms) must get something out of the platform, be it lead generation, payment processing, brand advertising opportunities, or something else of value. Having people who are getting economic value out of your platform (and paying you for it) are key to providing the resources to build great products and support developers.

People who consume – The products and services the core platform provider offers needs to be of value to a wide audience of people. This is stating the obvious, but I think it’s good to get all the components down on paper first.

People who extend – There are a lot of developers and tinkerers out there who will build products and services to extend products that they enjoy. There is an art and science to getting these folks interested in building on your platform and making sure you provide them with enough resources to make it happen.

Just based on traffic, Yahoo clearly has good coverage in the “people who consume” category – they continue to be one of the top destinations on the web. However, if you’re in charge or running Yahoo, I’m not sure which of the other two open items you tackle first. Based on everything I’ve read, Panama does not appear to be the silver bullet solution to solving the “people who pay” part of the equation. So what’s a Yahoo to do? Do you focus on developers or focus on the revenue engine piece?

If Yahoo were a start-up, they could do what most of the start-ups out there are doing. Specifically, most of the emerging platforms (Netvibes, Pageflakes, Twitter, Facebook, etc) are taking a pretty smart approach based on their market position. First, get a user base. Second, get a developer community. Third, figure out how to monetize it. This seems like a reasonable approach to me – developers want to build on top of platforms that have adoption. Sometimes those extensions can create new products/services that deepen user investment in the platform. At some point one hopes to have enough users and scale to be able to monetize via advertising or some other medium.

I think it’s easy to argue that Yahoo should focus on the developer community – that’s likely to do a lot more in the short-term to boost the company’s profile and get more developers looking to Yahoo as a place to build their business. To me, however, this seems like the “easy” thing to do – Yahoo could likely spend the time and money to get developers interested in extending their products. And, to Josh’s point, the existing user base for many Yahoo products would make them enticing targets for people looking to build innovative apps.

Yahoo is not a web 2.0 start-up, though – it’s a large public company with thousands of employees and a big spotlight on it at the moment. Something about focusing on the developer piece at the expense of the monetization piece doesn’t seem to make sense to me.

What Yahoo really needs to do, however, is crack the “people who pay” piece. I am not sure that chasing search marketing dollars is the way for Yahoo to win — they’re in second place by a wide margin and making big bucks on search advertising really requires search market share. Until Yahoo increases its search market share significantly, I don’t see how pouring more energy into squeezing incremental increases in RPM is going to move the needle for them. The answer to what ails Yahoo is better monetization, not more popular products or more support from developers.

Switching gears, I think “platform” is a highly abused term these days. By my reckoning, there are a relatively small number of companies who have actually achieved true platform status in the web world. I look at Amazon (they have just about every service you would need to build an e-commerce business from scratch) and eBay as the two best examples of companies who have actually build platforms. I think there’s a lot to learn from studying these two companies – both have done a pretty good job of continuing to bolt on products and services that meet the needs of the core 3 constituencies outlined above.

The thing that perplexes me is that I have a lot of friends who are not into technology and not photo buffs (also known as normal people) who find Flickr confusing, hard to navigate, and generally not the solution they want. I am always wary of the “my grandmother/mother/father hated it so everyone in middle America will hate it” type of anecdotes, but my experiences have been that Flickr appeals to web and photo savvy folks and is overkill for most people who don’t fall into those buckets.
I hope that Flickr succeeds and converts a lot of Yahoo Photos’ traditional base — it would be good for web 2.0 technology as a whole and good for Yahoo in particular.

Aside from the Peanut Butter Manifesto, I don’t see the burning need to shutter the old photos product — it seems to me that both could succeed as independent offerings as they cater to different niches.

For my tastes, I will still use Meebo and not just because I went to school with one of the founders. My friends are all on different networks and I like what Meebo is doing in terms of cross-network integration. I will be curious, however, to see whether Yahoo and other web-enabled chat providers continue to treat Meebo politely or whether they will change their approach as they roll out more web-based offerings.

2005 – 11 deals (Verdisoft, Ludicorp Research, Stadeon, TeRespondo, Dialpad, Blo.gs, Konfabulator, Alibaba, Upcoming.org, Whereonearth, del.icio.us)

2006 – 10 deals (SearchFox, WebJay, Meedio, Gmarket, Jumpcut.com, AdInterax, Right Media, Kenet Works Bix.com, Wretch)

2007 – 1 deal (MyBlogLog)

Interesting to note that Yahoo! has only announced one acquisition this year. I wonder if this trend will continue. Could it be due to the internal changes going on at Yahoo? A diminished appetite for web 2.0 companies? Of just a random coincidence?

Below are three things I would love to see someone develop. I know that not all of these things can be accomplished using the Yahoo! Mail API today:

Email-oriented personal organizer – I’d imagine that someone who pays the extra money to get Yahoo! Mail Plus is a serious email user and probably relies on email in a real way. Right now, a lot of my life happens on email — a lot of my to-dos, social events, and meetings start off as email exchanges. The hardest thing today is finding a good way to take all of that information and context and import it into some other personal organizer system. I would love to see an enterprising developer take the Yahoo! Mail functionality and move to a model where I can start with an email string and convert it into a real task, event, or something else. I realize that you can do some of these things in Outlook today (drag an email on to your calendar or task list to create an event or task, for example), but I’d like to be able to see this work in a web context without a reliance on an Exchange server. I am sure that some enterprising person who deals with a lot of email could come up with a clever app that helps email addicts stay organized.
Email Stats Dashboard – This isn’t particularly useful, but I would be willing to give someone access to my message streams in order to get some visibility into the underlying patterns of my communications. With whom do I communicate the most? To whom do I reply most quickly? Whose messages do I always read and what messages do I generally ignore? This information has limited value on a standalone basis, but could become a very powerful feeder for a next gen personal organization service. If the system could get good at profiling me and my message stream, I might actually trust such a system to start doing things on my behalf of sending me reminders (you haven’t talked to Noah in a few weeks so you should email him, you have an important email from Jack and you haven’t responded for 4 days, etc). Having access to this communication pattern data could be useful to me as a user, especially if it becomes the foundation for more interesting apps based on how I triage my own email flow.
The ultimate address book – Plaxo is just about the only company that seems to have a real interest in address books. How can that persist? I use Plaxo and find it useful, but there are a lot of things that Plaxo does not do for me. One of the most basic things that I would like is a smart bounce manager. First, the smart bounce manager would give me a report on all the mail that I send that bounces and flag those contacts as being out-of-date. Second, because almost every contact info update email I get has the same structure, this program ought to also be able to recognize those kinds of messages and silently update my email address book. Third, it would be great if this ultimate address book would do automatic de-duplication for me. I have tons of friends who have personal and professional email addresses and end up showing up as two different entries. There has to be a better way. There are lots of other gripes I have with the modern address book, but suffice it to say that there’s plenty of work to do.