Opera is spreading out in a number of directions and the question is, for a small company with a global reach, whether it is trying to do too much?
I need to emphasize that my posts here are my own and do not reply on any "inside knowledge" about the company. That said my view is that most likely Opera has two main priorities. They are completion of development and release of version 9 of the desktop browser code named
Merlin and the recently released Opera
Mini for cell phone and mobile/wireless devices.
But wait there's a lot more.
Last Fall Opera deployed its
community web pages with free social blogging services. The objective is to get people to use Opera's cell phone browser to blog and increase usage of the mobile product line.
Opera used the giant Consumer Electronics Show in January to
showcase its TV set
top browser software for home entertainment devices.
In 2004 Opera also released browser product
offerings in the automative and airline industry. You can control your car or watch a movie while airborne using the Opera browser.
Overall, it isn't too hard to see that the company might be starting to spread itself a bit thin.
Opera's own
statements to investors indicate in the third quarter of 2005 it earned $5.6M with a loss of $450,000 (coverted from TNOK). The firm now has over 250 employees worldwide with a hiring
campaign well underway.
The big push for Opera in 2006 is expected to be revenue from licensing or marketing partnerships that put the Opera browser on mobile phones. Opera also expects to push the home entertainment product line and has a new
executive in charge of that market. Selection of a VP for the desktop market is still pending. What could be coming in the future is whether the Opera mini will support the delivery of video to mobile devices. This could create linkages between these markets.
I doubt someone is ever going to walk into a home consumer electronics store and ask for a television and stereo music entertainment system specifically because Opera is the browser that controls it. Opera's success in selling the browser to home entertainment device manufacturers is going to be based on the brand name of the desktop browser plus performance and pricing of the licensing deal. The branding effect is the main reason Opera promotes the desktop browser. The desktop browser is a key to branding for sales of the browser where Opera earns its revenue, which is on mobile devices, entertainement devices, and embedded systems etc.
Interestingly, the desktop market is very active. The desktop is the most significant platform used by members of Opera's community web pages. Opera most likely sees the community blog pages as being a potential showcase for both desktop and mobile versions of the browser. Release of version 9, code named Merlin, may emphasize integration between desktop and mobile devices. As noted above, with version 9 being a significant priority for the firm, watch how the company promotes its across application spaces, e.g., desktop, mobile, TV, etc.
So what must Opera do for its community web pages to succeed?
This is one of the areas where Opera appears to be pursuing the theme that "a man's reach must exceed his grasp." Opera has both reliability problems and capacity problems. Access to this blog space is repeated interrupted due to server errors and slow performance is often the norm. My favorite error message is "bad upstream server."
My suggestion is that Opera deploy mirror servers outside of Norway for its community pages to avoid the now long standing performance and reliability issues that have continuously troubled the community web pages since their launch in September 2005. As it is now February 2006, it is no longer possible or relevant to assign these issues to "growing pains."
If Opera wants to play as a global company, it should consider how it will provision its community web pages with assured access by users. I've noted that other firms with global community blog services have offered users access to servers in Asia, Europe, and North America in an effort to avoid single points of failure with one server farm.
Blogging services that fail through technical shortfalls or mismanagement, or both, get negative computer trade press. See for instance this
report from Computerworld on
Typepad's service and access problems which resulted in significant outages in December 2005.
While Opera's web pages are free for now, and Typepad is a commercial service, I assume it is only a matter of time before Opera offers advertising on community pages perhaps even offers to share revenues with the best bloggers. This business model can succeed if Opera is able to execute its technical plan and management processes in ways that avoid the current access, reliability, and performance problems.
Users who invest heavily in blogs, with or without the expectation of revenue, will migrate quickly to other services if the ISP or blog service cannot perform in a reliable manner. The Computerworld article cited above cites others blog services' problems and the marketing hit they take in their brand value for "single points of failure."
Opera has less than half a million users on its community web blogs and Typepad claims 12 million users. Assuming Opera wants the page views needed to boost revenues from its search deals with Google, Amazon, etc., it has to take a lesson from Typepad's rough experience.
Does the desktop market matter to Opera?
The question now facing Opera is how much faster can it expand without busting the seams of its current capabilities to support the products and services it already has. The desktop market is mostly likely to lag since Opera's revenues from it are hardly significant compared to revenues from mobile devices.
Opera wants very much to reach "young, hip, and dynamic" users with its mobile device software and services either directly or through marketing partners and their devices running the Opera browser. Opera my be successful in many parts of the world, Asia, Europe, where the Internet is mostly accessed from mobile wireless devices rather than desktops.
In the U.S. where the desktop on broadband or wireless laptop are still the devices of choice for accessing the Internet, Opera may be less market penetration, but may not care, or at least not much. The desktop might be seen by Opera, especially in the U.S., as a necessary evil, but not as the main event. Interestingly, in email exchanges with mainstream media reporters at the Washington Post and Wall Street Journal, the feedback they get is that what U.S. Opera users care about is primarily using the browser on the desktop. U.S. users, except for the most digitally "hip" just don't blog from their cell phones. They use text messaging from cell phones and instant messaging from desktops.
Now it may be that Opera can find a way to promote the Opera mini as a means to support text messaging and instant messaging on mobile devices. I don't know if social blogging alone will achieve that result. Websites that promote exchange of photos such as MySpace and Flickr include uploading of photos from cell phones. The so-called 20-something generation is the big user group. Can Opera use the desktop to build brand recognition for cell phones that use Opera mini and with this demographic? Will just viral marketing to one age group of end users be enough?
Neither Opera nor Mozilla's Firefox have overt enterprise strategies. A lot of the desktop marketing efforts by both firms are aimed directly at end users. So if you look at market share for browsers, Microsoft, which markets its PC operating system and Office suite globally to enterprises, is likely to continue to dominate the browser market. Indeed, after a noisy start Firefox is still hovering in the range of 10-15% market share depending on how you count and where. Opera's next version of its browser software will identify itself as Opera and this may bring an end to under counting of users. Even so, despite going free earlier in 2005, Opera's market share in the desktop arena is still so small it is almost an afterthought in the statistics. If Opera wants enterprise sales it has to find a way to deliver value to large organizations either directly or through partners without losing brand building momentum in the process. It also needs a resource package for deployment and support across a compnay's internal network. IBM may have promoted Firefox to hundreds of thousands of its employees, but you can be sure they didn't do it with downloads, employee-by-employee, from Mozilla's website.
So, there is a lot on Opera's plate, and the company cannot be faulted for its ambitions. That's good for investors. End users must be realistic about what the company is trying to do. If you want to use Opera on a mobile device chances are you will get your way.
More to come on this next week.