Is UX Going to be Commoditized Next?

Over the past month with Tempo AI (formerly called Fifo Labs), we’ve been trying to recruit a full-time UX person. As much as I hear the difficulty of recruiting awesome technical talent, our challenge has been recruiting the right user experience (UX) team member. For most, the UX role has become so lucrative, that considering a full-time role just doesn’t make sense anymore.

What’s fascinating is I distinctly remember when this wasn’t the case. When I was working with Kodak Mobile in 2004, the situation was quite different. Not in any negative way, but we had almost a surplus of strong UX talent with multiple people interviewing for UX opportunities. In today’s economy, strong UX team members (rightfully so!) earn similar compensation as relative technical talent!

This got me wondering – how did this happen? And then it occurred to me that user experience is the next layer in the stack. In the 70s, 80s, hardware was the juggernaut. As seen in Pirates of Silicon Valley or other, IBM and other hardware vendors did not expect software to ever reign. Hardware was the premium and where the money was made but as I was reminded earlier today when I was considering taking my Apple Monitor in for warranty, a 42 inch TV is now $400 – hardware has absolutely become commoditized and the premium moved to software.

But within software, there are multiple layers to the onion. Initial software development was a pain in the butt. We didn’t have the benefit of EC2 and other frameworks and platforms to leverage. I remember while in college in ’99, it took real Computer Science chops to simply build a web application and it cost $500+ per month to just host a simple server and website. Now software can be readily developed and thus why you are seeing multiple movements like CodeAcademy and the Kahn Academy attempting to teach software development to children – this makes perfect sense, building software is a lot easier (and affordable) now than it was in the past! Let’s be honest, who is a Software Engineer that hasn’t at least dabbled in building an iPhone app? It’s simply gotten too easy to write software.

As a result of this, the differentiation has moved upstream. Instead of maintaining a 2:1 engineering to QA ratio within an organization, the QA ratio has vastly shrunk with real-time “live” user-testing and more importantly software frameworks and approaches that better handle user data and security. Whereas the QA ratio is gone down, the engineering to UX ratio has vastly increased which makes perfect sense. The next layer in the onion is UX; there is certainly a growing repository of guidelines and approaches in dealing with UX and we are of-course limited to what is possible with the hardware and software but we are definitely nowhere near a point where UX is commoditized.

So my question is whether UX can become commoditized? And I know most would argue that would never happen just like the hardware in the 70s/80s (eg IBM) and the software in the 90/00s (eg Microsoft) but the reality is that software, just like hardware has been getting cheaper year over year.

On a seperate note, if you haven’t read Steve Jobs biography, I strongly recommend it – it’s incredible to see that someone was paranoid about design in a time when being paranoid about design wasn’t sexy.

Is Apple Making a Mobile Wallet Play?

Probably not apparent to all folks but a fundamental reason that in-application advertising performs so much better than mobile web advertising, is because there is a very clear path to an ecommerce transaction. Most in-app ads lead back to the iPhone app store from which another app could be purchased meaning it’s truly performance-based since it can be measured and optimized. Mobile web advertising was always at a disadvantage since it rarely led to a transaction (ie Is the user as likely to purchase a product through Amazon on his phone as he is on his PC?). The answer is no, since it’s so painful to enter credit card details into a mobile device (via app or browser).

Now, you could argue that merchants could integrate with Paypal and use them to process transactions on mobile under the assumption that it is more likely that a consumer has his credit card details cached with Paypal versus the merchant itself (exceptions maybe being Amazon). However, in an informal poll amongst my friends (non-techies), a surprising number of them did not have their credit card or bank account associated with their Paypal account (and I live in the Bay Area!). In addition, Paypal may not yet have that global footprint plus merchants definitely want to process the transactions through their own system for data collection, reporting, handling chargebacks and of course lower fees.

The alternative to a cloud-based payment system (a la Paypal) would be to store the payment details on the device itself (ie credit card details encrypted and stored on the mobile device). In this model, the browser or an app could conceivably request the details from the device/OS and form-fill the credit card purchase page. There were some under-the-radar examples of pieces of this at MWC with one SIM card provider storing CC details on the SIM.

Going back to the Apple question, what’s interesting is that iTunes is similar to Paypal and Amazon in that they have a large number of registered users with cached credit card details (cloud-based payment). With the recent Quattro acquisition, you have an interesting scenario where Quattro could go to the publishers and while selling ads, offer iTunes as a payment gateway. Effectively, if Amazon (or an equivalent) wanted to buy product ads on the iPhone, they could and then process them through iTunes as the payment gateway to avoid the huge drop-off that usually occurs when the user has to enter CC details into the payment landing webpage on a mobile device. This would mean that yes, ecommerce transactions could be as likely on mobile as they would on the PC, if not greater since it’s effectively a one-click experience across the whole web. This of course assumes that Apple adjusts their rev-share for non-app store digital products to be in-line with CC fees (and of course that they are willing to deal with all the pains of being a Paypal (eg chargebacks etc) but it is quite a unique advantage that Apple, as an OEM has given all the user CC details they hold.

The same scenario is actually possible with Google Checkout and Android but they have by far fewer stored credit card details (today) but maybe that will change. Nokia with their bundling of Openbit as part of the OS, may have a play their as well.

Payments and advertising is definitely looking exciting!