Last week's release of Amazon CloudDrive (a digital music locker that provides storage in the cloud for consumers) should give consumer web services which store, stream, or otherwise provide simple webapps on top of S3 pause. It should also give a bit of heartburn to investors chasing the pot of gold at the end of music streaming, photo sharing, video hosting, backup and other thin front ends to public storage utilities.

Why?

Until now Amazon has been very good about sticking to its "sell the picks and shovels" strategy with its web services business unit. Having experienced phenomenal growth— the chart here is for the number of objects (files) in S3 since inception but I bet there is a similar chart for MIPS rented through EC2— mainly on the back of startups— this platform provider is now looking to get a bit closer to the consumer. And thanks to that side business known as "Earth's Biggest Bookstore," these guys have got the chops to do so: they take credit cards, have one of the most sophisticated data-driven merchandising infrastructures out there (constantly testing and iterating every offer), and a brand that caused a friend recently to ask whether he couldn't just direct deposit a part of his paycheck to Amazon directly.

Let's look at the classic platform-eats-its-young economics: Dropbox, a fantastic consumer file syncing product whose storage is provided by Amazon's S3, sells 50GB of storage for $99/year. As of last week, Amazon intends to do the same for $50/year or 50% of that. And to boot, they'll offer a 20GB plan for $20/year an option which I suspect Dropbox can not match due to their paid user acquisition (in a very competitive category, $20 to acquire a user, a rough guideline being to spend first year's margin doing so, doesn't go very far). Naysayers might quickly point out that CloudDrive is for music files, has no sync or fine-grained access control, and lacks features X, Y, & Z. All of this is indeed true but it is early still, and the important thing to realize is that as a beachhead service, music streaming has much broader appeal with consumers than file sync (as Jim from the EchoNest [disclosure: an investment] likes to say, it is the "gateway drug to every other type of media").

I would bet that Amazon is about to begin that delicate dance across the consumer and SMB application ecosystem it hosts (at 300B objects, I'm going to guess at least 300,000 individual applications) all the while cherry picking those most likely to have broad appeal, and in cases like this one, well aligned with the strategic direction of its e-commerce business (the 20GB option is free if you buy one MP3 album for them per year). And much like Microsoft in the "Office Wars," they will end up eviscerating quite a few of the existing services which can not structurally achieve independent economics. In fact, it is likely to be worse because unlike packaged software, rented storage/MIPS carries a marginal cost with which Amazon will always have the advantage.

What to do about it?

Run up the stack as fast as humanly possible. Broad horizontal services that depend on storing consumer/SMB data for one part of the value proposition are played (arguably they were done before this, but now it seems certain).

On the SMB side this may mean providing rich workflows around the data which which go well beyond simple backup or sync. And on the consumer side, companies should be thinking hard about data-based value added services that Amazon is unlikely (or unwilling) to be able to provide any time soon. For sure this is more than just a pastel UI on top of a file explorer or a SendBigFiles service with encryption on both ends. It may mean deeper ACLs based on social graph data, or more likely, applications which make sense of vast data stores backed by S3. I'd also be moving aggressively to support other cloud storage backends (though given the relative strength of Amazon, this may be a bit of a pipe ream).

In the end, you can't blame the platform player for eating its most promising youth— it is in its nature after all as Apple is also proving when it comes to iOS and its own rich new ecosystem. It's also why platform plays that win are so valuable (look out all of you thousands of companies building telephony assisted apps on top of Twilio/Tropo).

Given that most of the technology value creation that takes place by non platform players (because let's face it, while most of us try and all of us like to call ourselves "platforms") happens because of temporal arbitrage across features not yet baked into the core platform offerings and the resulting M&A premiums paid, running like hell to high ground seems to me to be the best option.

The super smart robots over at Thoughtbot recently asked me to do a video on the main idea from my Pycon 2010 keynote that everyone in a small startup should learn to code. Given that this is the the one year anniversary of the talk, and that loads of people have email/talked/tweeted me about it, I figured I'd recap how the idea has worn over the last 365 days.

(PyCon for those that don't know is the annual developer conference for the Python programming language)

Originally the talk started as a thought experiment around removing unnecessary inefficiency from startups trying to act too much like "real" businesses by functionalizing too early. To that end, I took a pretty liberal definition of what "coding" was. The gist though— to get everyone involved in the mechanics of how the product/service is built— has graduated to almost conventional wisdom at least among the most capital efficient consumer Internet/SaaS businesses that I've seen over the last year. It's funny to me one year after mentioning Y Combinator as an interesting "experiment" that its become a legitimate source of some really high quality startups with relatively low inefficiencies in the maker loop between users and product. You could see this even back a year ago— but 2010 really proved to be YC's coming out year.

It's a good read (or watch) and I'm still quite grateful to the Pycon organizers for giving me the opportunity to get my thoughts together on this.

Bonus track for those just getting started with the technology selection process— my favorite bit from the talk: "A side note to all of the people pushing Erlang, Clojure, Scala, F#, Haskell the Rascal or any of what I like to call the Ewok languages (Ewoks are cute and cuddly and all have tremendously adorable names— so much so that you want to hug them. But spend a few days in Ewok village and you will quickly discover that they are as disposable as hamsters)— Get Real People. The science fair attitude around all of these is great right up until you have to a) hire people b) use external libraries or b) be able to read and understand the code that was written by folks coming up to speed on whatever the new paradigm your fringe language was trying to introduce when they first learned in 12 months ago.

Last week while Mobile World Congress was taking place, Apple launched its revised subscription agreement on the AppStore forcing all third party vendors to pay 30% on the content that flows through iOS apps even after initial purchase. Understandably, the world revolted with all sorts of public letters to Apple arguing about why 30% was too much to allow for continued innovation on the iOS platform.

What happens next will come to be known as Apple's Alamo moment. For those that don't remember their US history, the Battle of the Alamo was the moment during which the US didn't lose Texas to Mexico thanks to the fact that a lot of Texans were moved to dig in and fight hard because of the feeling that Mexican General Antonio Lopez de Santa Ana had gone too far and been too brutal in his handling of the two week siege on Texan soil.

If Apple prevails in forcing all in-app payments (for content or otherwise) to go through its 30% tax, we're looking at a world where others will likely follow suit soon enough. On the bright side, the web will become more "monetizable" than it has ever been before (watch what happens with Facebook credits for instance)— albeit by the platform vendors. If on the other hand, Apple backs down in the face of all of the cries of "unfair," we'll end up right back where we started with the web— with Applandia being nothing more than a curated onramp to the wild west of creative monetization strategies.

I'm rooting for the latter but unlike the web days, this time around I am not optimistic. Why? Well because of the way these communications/media ecosystems develop.

With my first MWC in Barcelona behind me, I thought I'd write some quick observations in a new format: the easy (obvious) conclusion from walking around and meeting with folks, followed by the more nuanced interpretation after having caught up on sleep and thought a little bit harder about things.

Easy conclusion: In the era of blogs and Twitter, traveling all the way to Barcelona to hear about the future of the mobile world is a waste of jet fuel.

Nuanced: If you care about mobile, this is the one conference to attend all year. Apple may not have been on hand to accept its "Best Device" award for the iPhone 4 but whether you care about the operators, device makers, or even the new kings of Applandia, you'll never get as high density of interesting folks to see. Plus, because the conference is done with a European sensitivity, you can avoid that "I'm about to get crushed" feeling that you get at CES both at the conference and at the various evening after parties.

Easy conclusion: Carriers are quickly becoming the dumb pipes they deserve to be— the future belongs to the citizens of Applandia and the chiclet-sized paradise they are going to deliver us into. Meeting with Vodafone? Pfff— it was way cooler to run into the CEO of Rovio (Angry Birds).

Nuanced: Every app maker I ran into at the show was either coming from, going to, or really looking forward to, a meeting with a carrier. And not just the up-and-comming hopefuls but also the guys who've already shipped millions of units and (in some cases) become household brands. Why? Big fat piles of money. And the fact that three years into the smartphone revolution, there isn't a single sleeping giant left where the carriers are concerned (or at least I didn't meet them). Dumb pipes? Maybe if you laid over in Amsterdam with a few hours to kill. Otherwise the folks getting ~$100/month from the "subscribers" are still pretty meaningful in this game.

Easy conclusion: The mobile OS game is done and its a two horse race: Android for the volume play and iOS for the high-end Apple faithful. RIM is decaying with the half-life of a Uranium isotope and everyone else should just go home (sorry Winokia and HP).

Nuanced: Here I sort of half agree in that I think Winokia and HP are too little too late to matter (though I will admit that for now RIM seems like a big wildcard). Where it gets trickier though is that it's really hard to see Android being the same as everyone else at the rodeo. It's more movement than operating system in the way that we've traditionally thought of it: device makers, carriers, and even consumers are excited about it because it seems to make the whole mobile thing so easy. To that end, it was hard to argue with the amazing booth (and corresponding party) that Google put on to show that this was a movement that was here to stay.

And still, I can't help but wonder about the comment that a friend made as we sat on the second floor of the booth watching the masses of developers and device makers sliding down the curvey dot-com era slide into commoditized pit of Android phones and tablets: "Look at all of these sheep on the way to the slaughterhouse," he said to me, "not realizing that they are going to race to the bottom when it comes to margins in this business."

He was half right in that I think all of these tier one and tier two device makers are in a race to the bottom. But what seems more interesting is thinking about what their likely response will be when they fully realize that this is where they will end up without doing something to differentiate their product. INQ "Facebook" Android-powered phones? Nokia's act three after Windokia fails to deliver? Straight up forks of Android by people who get the balls to actually start writing software again?

As Horace writes, it is hard to call this particular movie over when it just started and when the two "dominant" players didn't even exist three years ago. Instead it's worth thinking about the Android explosion as one of these industry redefining movements that will leave a whole new world in its wake. Much like Linux did in the datacenter, we'll probably end up looking at a whole class of new winners when the dust settles which no one would have ever foreseen by looking at Android as simply the "mass market" iOS play. It's hard to see who they will be— though what is not hard to see is that it won't be the folks playing the Apple game a few years behind with their $800 tablets and undifferentiated phones. At least not in this round.