There’s been a firestorm of controversy on the internet following the leak of the NSA’s data gathering program codenamed PRISM. Frankly, I’m not surprised and had suspected this was happening. In fact, Wired magazine produced an article in May of 2012 revealing that the NSA was building the country’s biggest spy center in Utah (view article here). No one seemed to care much at that time.

Today, it’s hard for me to get that excited about PRISM. As far as I know, I’m not involved in any illegal or illicit activities, so even if all of my digital fingerprints were made public, I wouldn’t have anything to hide. But it’s not today that bothers me. Tomorrow is why I care about PRISM, and why you should too.

While my digital fingerprint may be clean today, there’s no guarantee that people who come to power in the future will see my activities that way. What if they determine that anyone who has liked a specific Facebook page is considered an enemy of the state? What if certain digital “friends” get into trouble and because you are associated with them through Facebook, Twitter, Google+, LinkedIn or some other network that you are deemed guilty by association, even if you don’t know the person? What if the data falls into foreign or nefarious hands, and they use it to target specific types of individuals? If you think these are paranoid far-fetched ideas, here are three events that occurred during the last major world war that should have you thinking otherwise.

1. The German census – 1933
   The Germans began conducting a census in 1870, and held one approximately every 5 years thereafter through World War 2. For the most part, these census were simply a matter of counting the population, a seemingly innocuous task. However, with the Nazi rise to power in the 1930’s, the government used the census of 1933 not only to count the population but also to identify nationalities, most specifically Jews. The data was poured over to determine things such as family lineage in an effort to identify people who may have lied or avoided detection. The census was such a powerful tool for the Nazis that it was administered in most of the territories Germany seized during the second world war.
   Data sourced from Wikipedia article concerning the German Census
2. Japanese internment camps
   If you think that persecution of nationalities could not happen in the US, Japanese internment camps are a stark reminder. After the bombing of Pearl Harbor, Japanese Americans along the West Coast were rounded up and imprisoned in internment camps. It’s estimated that over 150,000 people were interned, with over 60% of them American citizens (see Wikipedia article here for more detail). The internment began in 1942 and lasted until the Supreme Court overturned the legality of the internment in 1945. It was believed and eventually proven in 2007 that the US Census Bureau provided confidential neighborhood information on Japanese Americans to assist with the internment.
3. McCarthyism
   The 1950’s coincided with the spread of communism, and in an effort to suppress communist efforts in the United States, people who had been affiliated with communism, were viewed to be soft on communism, or even were associated with alcoholism or sexual deviancy were considered threats to America. Even things such as Anti-American books were viewed suspiciously. The investigation was led publicly by Senator Joseph McCarthy, but much of the data and information he utilized was supplied through FBI investigations led by J. Edgar Hoover. Activities I’m sure many people thought were innocent or protected by their First Amendment rights during the 1930’s and 1940’s may have branded people as enemies of the state during the 1950’s.
   For more details on McCarthyism, see this article

I’m also concerned with what the NSA will do with the data they’ve collected. In other words, how will they process it to determine threats to the US? I’m sure many of these analysis tools will be pattern-based software algorithms. As an engineer, I know that these methods will not be 100% accurate, so how will we justify the small percentage of people who are inaccurately targeted or accused? Will they be considered part of the cost of keeping America safe?

The fallout from PRISM is just beginning and has the potential to be very costly. International companies who have invested in cloud-based services offered by US-based companies such as Google, Microsoft and Apple are certainly rethinking their decisions to place their data in the hands of seemingly secure American companies. Our government’s stance on the international stage as a protector of human rights will be questioned as well, particularly when we condemn the Internet censorship practices of countries such as China, Iran or Syria. How can we criticize the way these companies manage their citizens’ internet access when our own government is spying on us?

Finally, and perhaps most importantly, it’s further erosion of our Constitutional rights, specifically our Fourth Amendment rights, which state:

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

I’m fully aware that there have been many cases at the Supreme Court level that have attempted to clarify the text of the Fourth Amendment, but the spirit of the amendment stands – people should not be subject to search or seizure of their private property without probable cause. I’m not a lawyer, but it would seem that taking my personal files and communication and storing them without my permission or probable cause is a violation of my Fourth Amendment rights.

No matter the outcome of PRISM, this entire episode underscores why we as citizens need to remain engaged and cognizant of the actions of our government. Alone our voice is small, but collectively, we have the ability to change the make-up and trajectory of our government by engaging in the conversation and exercising our right to vote, which is why I’ve chosen to add my voice to this discussion.

I tried to give Facebook a chance. I did, really.

I created an account. I friended some people. I accepted friend requests. I joined some groups. I “liked” some company pages. I created a couple of company pages and managed them. I checked in on my news feed once a day or so.

In the end, it just didn’t work for me. For a while I couldn’t figure out why, but then I realized what my beef was with Facebook. I’m not a user, I’m the product.

Facebook and Mark Zuckerberg report to their investors and shareholders, not to me. They’re obligated to provide their owners with a return on their investment. So long as that’s true, Facebook will be under pressure to make money. (Shocking, right?)

In case you haven’t figured this out, Facebook makes money from advertisers, not by creating services for you and me. Yes, you and me are an integral part of the Facebook product since we and our data are how Facebook makes its money – by packaging us and selling us to the highest bidder. So long as Facebook makes money through advertisers, they will continue to exploit their user base by encouraging over sharing through more and more relaxed and/or confusing privacy controls and settings. Basically, I don’t trust Facebook because their business model is based on making money by exploiting users and their data.

For what it’s worth, just because I have an issue with Facebook doesn’t mean I think Mark Zuckerberg is a bad person. In fact, I believe he has the best intentions in his heart, but his board and investors are directing him to chase money rather than serving users and making investments in long-term technologies. A look at some recent Facebook decisions around their mobile strategy are just one example.

Facebook’s initial strategy for mobile was to develop hybrid apps based on HTML5, an emerging web technology that would allow for universal apps across operating systems – iOS, Android, Windows Phone, and BlackBerry. However, under the guise of performance, Facebook moved to proprietary apps. To me, the real reason for the change was to create a proprietary system that would allow them to isolate users, and I am not alone in my thinking. In order to chase a short-term gain in users and revenue, Facebook gave up the chance to be a technology leader.

Because Facebook is not interested in the long-term, I don’t trust them with my data, or with my most valuable asset – my time. For a couple of years, I managed brand pages on Facebook, investing time and effort trying to connect with potential users of my service. Facebook made it an inviting option by allowing you to set up a brand page for free and then allowing you to connect with users who “liked” your page. However, even those rules changed when Facebook realized it could wring more money out of companies by making them pay to promote their posts.

This focus on the short-term is why I feel that Facebook will not survive the long haul. Sure, they’ve created a useful service, but it is not an essential internet service, and their desire to chase short-term dollars over long-term technology leadership will leave them susceptible to what I like to call the “night club effect“.

So while there’s no doubt that Facebook has been the biggest success of the social networking space, I’ve given up on the service and don’t miss it. I even see my kids spending less and less time there, which doesn’t bode well for Facebook since teenagers tend to be the leading indicators of the next big social networking site (which is Twitter these days, by the way). I’ve even given up on it for the brands I manage. Maybe I’m missing something by not being there, but it sure doesn’t feel like it, and I have no plans to go back anytime soon.

Despite a 40% drop in stock price from $700 to $400, Apple continues to roll. The company generated $43.6 billion in revenue this past quarter, $9.5 billion in profit and added another $12.5 billion to their hoard of cash, raising their cash balance to $145 billion. With these kinds of monstrous numbers, the company should be receiving nothing but praise and accolades. So why is Apple not receiving any love these days?

Stale products
I can’t count how many times iPhone users have asked me recently about my Galaxy Nexus, which is almost two years old at this point. One particular example stands out in my mind. When I was car shopping this past January, a junior salesman at the dealership was very curious about my phone and began asking me a lot of questions about it. When I asked him why he was interested, he said he was getting tired of his iPhone and was ready for something new. He didn’t like it that everybody seemed to have one, and he felt as though the design was getting old. Someone in their early 20’s who is not technically inclined complaining about a stale design is an indication of a larger issue in my mind. It would appear that Apple’s one design philosophy, which was such a powerful tool for adoption, is now having the opposite effect. People are experiencing gadget envy with their competitors.

Taking a look at the differences, or lack thereof, between the iPhone 4S and iPhone 5 is a good indication of how the design has grown stagnant. Outside of an extra row of icons on the screen, the devices really don’t appear to be that much different.

A recent sales analysis shows that the transition from the iPhone 4S to the iPhone 5 has been much slower than the previous generation (see this article at AllThingsD for a complete analysis). Depending on how you look at it, it either means that Apple is doing a good job servicing the lower end of the market with the iPhone 4S, or that there’s not much incentive to upgrade. If it’s the latter, this could be the leading signs of a fundamental problem since margins on newer products are much better than margins on older ones. Personally, I see it as the latter, meaning Apple needs to step up the innovation.

Arrogance and Elitism
When senior Apple executives fail to take their competition seriously (read Apple marketing chief Phil Schiller’s comments to the Wall Street Journal ripping Samsung and Android here), they are either out of touch or arrogant. Based on anecdotes from others in the industry, I believe arrogance is the answer. Apple still believes they are far and away best, when the reality is that their lead has eroded, and in some areas they have been surpassed by Android. By trying to belittle the competition, Apple is taking their user base for granted and assuming that they won’t look around at alternatives.  While they may not want to admit it, Apple is one poor product launch from falling significantly behind the ever advancing Android juggernaut.

There’s also the issue of elitism. Whether it wants to or not, Apple is crafting an image of itself as a product for the 1% by forcing obsolescence and mandatory upgrades. While product cycles are a fact of life in the tech sector, Apple is one of the few tech companies who openly flouts it. Unfortunately, it’s starting to create a backlash, even among Apple loyalists as this article points out (if you have time, peruse the comments to get a more in depth reaction to Apple’s tactics).

As a PC user, I find it strange that an Apple user is forced to upgrade their machine after four years when I’ve been using numerous PC’s in my house, some that are over 10 years old. I’ve been able to keep machines modern and operational by cost-effectively upgrading accessories, monitors, memory and video cards. Apple on the other hand, recommends throwing out the old and buying new. While this may be a good strategy for the elite, it doesn’t translate well to the lower ends of the market.

“Are you incompetent, bureaucratic, or out of touch?”
This quote from a Michael Mace article recapping the Apple Maps debacle summarizes things well (by the way, Michael is one of my favorite tech bloggers – well worth following). In the article, he simply asks the question of “How in the world did Apple let this happen in the first place?”. As a company that is supposed to amaze and delight its users, releasing half-baked products does not instill confidence in its users and removes some of the luster from its well polished marketing machine. And while Apple did eventually try to make amends and apologize for the quality of Apple Maps, it begs the question if this is an isolated incident or an indicator of how product launches will be handled moving forward. I’m not a loyal Apple user, but I’m also aware that there were some glitches in the release of iOS 6 that seemed to be fairly basic in nature regarding security and Wi-fi connectivity.

So let’s face facts – Apple isn’t going anywhere in the short-term, meaning the next 3-5 years. They have way too much cash in the bank to become irrelevant anytime soon. In fact, they will continue to generate significant sums of cash, and their cash stocks will only go down based upon how much they chose to pay out to their investors. Given the expected growth in tablets and phones, I expect more record breaking sales from Apple throughout 2013 and 2014. The question is how long they can maintain their momentum. The consumer market is fickle (just ask Sony), and while Apple will always have their core group of loyalists, the so-called fanboi’s, the general consumer market is not nearly as loyal. If the market perceives that Apple is falling behind, has lost its customer focus, and has become too arrogant, they will punish Apple not only in the stock market but in the one market that really counts – the marketplace.

So yes, the stock market may be punishing Apple over the short-term, but there are reasons for concern when you take a longer-term look at Apple’s prospects.

A “freemium” is a version of a company’s product or service that they offer to users for free. It’s a great way to get users to try out a product or service. I’ve signed up for many myself. In some cases, the company offering the freemium tries to make money through advertising, but unless your product is Gmail, they don’t make much through ads. Most of the money is made when users convert to their premium, or paid, products.

For many web services, the freemium version is a feature rich product, So much so that you can do a lot without ever paying a penny. Prominent examples that come to mind are Dropbox, Evernote and RunKeeper.

While it would be easy to continue using these services without ever paying, I decided it was time last year to support the web services that I’m getting value from. For example, the premium version of Evernote is $45 – for the year! To put it in perspective, it’s less than $4/month, or just over 10¢ per day. It was pretty obvious that I was getting way more value than $4 per month from the product. Look at it this way: I spend more than that in one trip to Starbucks, and that fix only lasts a couple of hours. There’s even the added bonus of getting a few extra features, which makes the upgrade even that much easier to pull the trigger on.

In many cases, the annual fee for a service is even less than Evernote’s. I also subscribe to Remember the Milk, a to-do list manger that has helped me immensely over the last year. It only costs $25 for the year. Another of my favorites is RunKeeper, which is a downright bargain at only $20 for the year. Given how much I use these services, paying these small fees is the least I could do. I view it as doing my part to help insure that these application are available in the future.

So what’s my advice? By all means, take advantage of the freemium model. Use it to try services and see if they add value. Once you determine they do, then upgrade to the premium version and pay the nominal annual fee. If not for the additional features, do it to support the teams who are making it happen so they can continue to work on and develop the product. Otherwise, you have no right to complain when the service you love and depend on falls into a state of disrepair and eventually goes away.

There are lots of rumors going around that Google is going to open up retail stores in time for the next holiday season. I don’t think they’ll succeed.

For some reason, there’s a desire these days for companies to expand outside their areas of expertise, whether it’s organically or through acquisitions. In the overwhelming majority of cases these expansion plans don’t work. Companies need to focus on their strengths.

Let’s look at some examples.

Google is a technology company
Google started out as a search engine, ventured into advertising, and then started creating all sorts of other technologies ranging from Gmail to a mobile operating system. In all of these cases, what Google does well is technology. They don’t do so hot on the support and marketing fronts. In fact, Google’s previous forays into retail selling of phones. The Nexus One, which was a great phone, was not promoted or marketed well, and anyone who tried to purchase a Nexus 4 before the holidays is well aware of how poorly they handled the demand for that product. I don’t see how they’ll be able to maintain a retail presence.

Apple is a hardware company
Apple may want to be claim their a vertically integrated hardware and software company, but in my mind they are a hardware company. What they do well is create hardware that is easy to use for the average consumer because of the user interface they place on the hardware. When they’ve tried to venture too far away from hardware into services and software, their efforts have not gone well. Just look at things like their Ping music service, iCloud, and most recently Apple Maps. Apple would be best served to focus their efforts on creating outstanding hardware and leave the software and services that go on top to someone else.

Microsoft is a software company
I find the rumors of Microsoft building their own smartphone entertaining. Quite honestly, I don’t think a Microsoft phone would even be as successful as the Surface tablet, which has gotten of to a very slow start. I understand that there is a certain allure for Microsoft in wanting to be like Apple, but the fact of the matter is that it’s not in Microsoft’s DNA. Similar to Apple, Microsoft would be better served to focus on the software side of things and leave the hardware up to their partners who know better.

BlackBerry is an enterprise company
What precipitated the demise of BlackBerry? Chasing the consumer. BlackBerry does not know how to service the consumer market – never has and never will. Even today, BlackBerry would be best served to focus on their enterprise strengths. They still need to build competitive hardware, but the hardware (and software) needs to be focused on serving the needs of their enterprise clients. By chasing the consumer market, BlackBerry alienated and lost their enterprise base and was never able to become relevant in the consumer space. In other words, they lost on both fronts, which they will be hard pressed to recover from, even with the release of BB10 and their new Z10 and Q10 handsets.

The moral of this story, identify what you’re good at and embrace it. Trying to expand to be all things to all people is a recipe for disaster that doesn’t work well for anyone, and it doesn’t matter if you’re in the technology business or outside of it.

I was involved in an entertaining discussion with a group of individuals this week where someone stated that the battle for the internet is over, Facebook has won.

It made me laugh and think of an article that John Naughton wrote in The Guardian recently titled, “Why the Facebook and Apple empires are bound to fail.” It makes a bunch of great points.

“Nothing Lasts Forever”

Unfortunately, as in the real world, while companies are built to last forever, they don’t. Markets and technologies change, and the favorites of today eventually become forgotten tomorrow, only to be remembered through case studies and business school discussions. It’s hard for us to imagine a world where Microsoft, Apple, Facebook, Google, Intel and Cisco aren’t the dominant technology companies, but a time of decline will come for all of them.

“…Facebook’s latest attempt to become the AOL de nos jours…will fail for the same reason that AOL’s attempt to corral users within its walled garden failed: the wider internet is just too diverse, innovative and interesting.”

I don’t bet against the web. Naughton’s spot on when he says the internet is “too diverse, innovative and interesting.” There is only so much that Facebook can do to keep users captive on its site. There’s too much innovation and interesting content being created on the web for Facebook to keep up and stop users from leaving the comfort of their environment for greener pastures.

“…because Facebook looms so large in the public consciousness at the moment, it’s difficult to keep it in perspective.”

We tend to get so caught up in the moment that we lose historical perspective. Sure, people will say that it’s different this time. We heard that before the internet, telecom and real estate bubbles popped. There’s no such thing as different this time. Eventually, fundamentals (and reason) take over, allowing us to gain perspective and realize the errors in our previous ways of thinking.

“Although the eclipsing of Apple and Facebook is inevitable, the timing and causes of their eventual declines will differ….What will determine its [Apple’s] future is whether it can come up with new, market-creating products such as the iPod, iPhone and iPad.”

The hardware business is a brutally competitive business characterized by compressed product cycles and thin margins. Apple has managed to buck the trend temporarily, but it won’t last. They are one, maybe two, bad product decisions away from losing their status as a category defining company and becoming just another face in the crowd. Don’t think it’s possible, just take a look at Sony’s rise and subsequent fall as a consumer electronics giant.

“Facebook, on the other hand, makes nothing. It just provides an online service that, for the moment, people seem to value. But in order to make money out of those users and satisfy the denizens of Wall Street, it has to become ever more intrusive and manipulative  It’s condemned, in other words, to intrusive overstretch.”

If not already, Facebook will become a slave to its investors. Having a billion users means nothing if you’re not making money off of them. Facebook has been lucky thus far that its user base has tolerated so many of its over reaching privacy intrusions. At some point, Facebook’s need to satisfy its investors will force it to go too far, driving users away.

The moral or the story: history is doomed to repeat itself. When we’re engrossed in the moment, we lose perspective. It’s hard to see how the companies we hold in such high esteem today will fail. Unfortunately, nothing lasts forever, and the cyclical nature of technology only reinforces that tired cliché.

There is concern these days that the web is under attack as companies like Google, Apple, Facebook and Twitter wage platform wars in order to control and monetize their users. These companies have amassed large user bases, and the longer they can keep their users on their platforms and within their “walled gardens”, the more money they can potentially make off of them through services and advertisements. This causes these companies to curate web content for their users, bias search results toward their web properties and offerings, and take ever increasing liberties with their users personal information and trust. While they may not be trying to replace the web, they are trying to replicate it with a network their users will never have to leave.

I do not share this concern over the web because I’ve seen this game played out before.

Twenty years ago, online companies Compuserve and AOL tried to play the same game. Both companies amassed large user bases. They provided a gateway for people to access their version of the web, which was a moderated and curated version of content supplied by both companies and individuals.

I was a member of AOL back in the days before the web browser. At the time, it was the best way to access online content. You could participate in chat forums and user groups. You could read magazines such as Sports Illustrated and Consumer Reports. Companies advertised and created storefronts where you could buy stuff, not much different than Facebook Fan Pages of today.

With the introduction of the web browser, people discovered there was a much richer experience on the web outside of the walled gardens of AOL and Compuserve. As people left for the freedom of the open web, AOL and Compuserve’s user bases dwindled. AOL and Compuserve tried to maintain their user base by replicating their curated experience on the web, but this failed, too. I left AOL back in the late nineties, and I can’t remember ever accessing their site on the web.

The moral of the story is that you don’t bet against the web. While Facebook, Apple and Google may want to keep (or trap) their users within their walled gardens, it is only temporary. Eventually, a service or company that provides more freedom and unfiltered access to information from the web will displace these companies. It’s only a matter of time.

Trends always move in cycles. Whether it’s fashion, hairstyles or technology, there will be fads that come and go, only to return later. Trying to trap users on your platform is one of those fads. It passed once, and it will pass again.

So while I won’t bet against the web, I will bet that this fad will pass. And it’s a bet that you can take to the bank.