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Robert Scoble’s announcement that he will no longer add friendships to Facebook got me thinking…

Ignoring social networks for a moment, when was the last time you had to decide if somebody was your friend or not? Choosing who is in the circle and who isn’t —that’s silly and childish.

Social networks are binary. Friendships are analog.

Friendships in the real world are not as simple as binary in-or-out decisions. Friendships, and the trust that accompanies them, fade in and out over time. Friendships are rooted in emotions. They are strengthened and weakened through interactions, our thoughts, desires, and expectations.

Today’s social networks are very crude and simplified representations of our real-world social networks. The only way these networks can become smarter is by tracking our behavior and using this information to map the complex web of our relationships.

Each time you look at someone’s profile, search for something, make a comment, post a link, or share an interest, your action says something about you. What’s more, every action by one of the people you interact with also reflects on you. How much each of these actions says about you is a judgment call. Over time, the social networks will become scary good at making these judgments and knowing more about you.

Friend lists or circles are primitive and will soon disappear. Over time the social graph will look much less like a diagram or a collection of lists. Social networks will evolve as neural networks that work very much the way our brain is wired. They will become socially savvy and understand what makes us tick.

The end of friends lists will mark the beginning of (artificial) emotional intelligence.

We are amazingly close to this.

As this cartoon points out, the iPhone apps business isn’t all fame and fortune. Customers who don’t hesitate spending $5 on a quick, fancy cup of coffee think twice before paying less than a quarter of that for an app that may give them hours or days of enjoyment and productivity.

This highlights one of the challenges for entrepreneurs in the new economy: people still often equate value and cost with physical things. Creative works may require weeks or months of hard work by multiple people, yet consumers often feel they should be free because no physical atoms are exchanged.

At the same time, consumers don’t always value their own intangibles. They are willing to give away tons of private information and let others monetize it. Companies like Facebook and Google are making billions taking advantage of this dynamic.

Success in the economy of intangibles requires a new mindset, along with a deep understanding of what drives and motivates people. The times are changing. Bob Dylan’s prophetic words of more than 45 years ago still ring true today. You better start swimming or you’ll sink like a stone.

I’m on my way back from iOS DevCamp at PayPal/Ebay campus in San Jose, CA. We’ve created a brand new team of developers, designers, and testers to build an iPhone application that lets you browse information about the Stimulus on your iPhone. Our app won the second prize as most useful iPhone/iPad application.

Let the numbers tell a story

The Open Government initiative makes all kinds of interesting government-related information available to all interested parties: policy makers, journalists, entrepreneurs, and citizens. One excellent example is the recovery.gov website, where all grants and loans related to the Stimulus can be downloaded in XML or Excel format.

iOSDevCamp is a conference where people come together to build new, innovative apps for the iPhone, iPod, or iPod. I came to iOSDevCamp with a simple idea: to put all data related to the Stimulus in your pocket, making it easy to browse, search, and visualize. In less than two days we formed a team of geek-volunteers who designed and built the app from scratch.

Friday: Team formation and initial design

Late Friday evening I made a pitch for the idea to a room full of iPhone developers and designers. Several enthusiastic volunteers came up to me, ready to join and contribute. Our final team had six members: John Varghese, Hoa Long Tam, Dantha Manikka-Baduge, Muthu Nat, Consuelo Griego, and myself.

We each had very diverse and complimentary skills. Together, our team was ideally suited to build an app of this nature. Less than one hour after the initial pitch we held our first team meeting. We defined the initial design of the app and divided the work based on our skill set. Then we went to work.

Saturday: Life in the trenches

Most of Saturday was spent with our heads down in code and designs, occasionally interrupted by check-in meetings to synchronize our work and reach common milestones. The projects was moving ahead on schedule. Paypal was generous enough to open up their offices until 2AM and we used every minute of time we had available.

Sunday: The final sprint, followed by show time!

During many worthwhile challenges there’s a moment you’re wondering if it will all work out or if this will end up being the huge catastrophe you are due for. Sunday morning felt like that. We pushed through and made our deadline. We were done by noon and practiced our demo… over and over and over again. We were ready!

The presentation went without any glitches. Murphy had made an exception for us. I had to leave for the airport before the awards ceremony completed. I was able to watch it on Ustream from San Jose airport while waiting for my flight home. We won second prize for most useful app! Many of the other apps participating in the contest were very impressive. It was a terrific event with a great atmosphere centered around sharing, innovation, and creativity.

It’s all about innovation

Our app brings the recovery.gov data to life. It shows you only the data that was relevant to you, in a way that is easy to explore and triggers meaning, stories, and relevant associations. Open government provides the raw data and lets others run with it.

Anyone may spin the data to support their own cause, or visualize it in ways that spark new ideas and dreams. Our iPhone app is just one simple and useful example of that. There’s a huge opportunity for innovative uses of this new wealth of government data that is now available publicly. If a small team of people who had never met before can build an app like this in a weekend, the possibilities for a real company to build something are boundless.

Objective C is awesome except for the awful syntax. MacRuby is very close to nirvana and I’m pretty sure Apple could make Ruby the next main language if they wanted to. Sure, Objective C would stick around, but only for super high performance code, drivers, and other special projects. I love Ruby, and I think Ruby shares the same values as Apple: powerful, clean, simple, elegant, and at times a tiny bit quirky.

However, knowing Apple’s thinking about competitive advantage I wouldn’t be surprised if they decide to create a brand new language. Apple owns the dominant mobile platform and a new elegant programming language would give developers one more reason to put all their eggs in the iOS basket.

In the midst of all of the iPhone’s and iPad’s success it may not be apparent that Apple has a serious problem today: iOS development is not productive at all. You need to hire very expensive, hard-to-find developers to write good iPhone software. One bad developer can easily ruin the stability of the entire app and memory allocation or wild pointer bugs can be hard to track down. A new language could solve these problems and bring the same elegance of Apple’s products to the development tools. Ruby or not, I hope that Apple makes a major new language announcement at the WWDC 2011… or sooner.

According to the Wall Street Journal, the Federal Trade Commission is spending more time investigating Google’s acquisition of Admob. Why on earth is the FTC investigating mobile advertising, one of the fastest growing and most competitive markets in today’s economy?

A few weeks ago I received a subpoena from the FTC to come and testify in Washington DC and share my experience with advertising in mobile applications. I have spent a good bit of time explaining to the FTC why this acquisition isn’t a problem and will actually benefit app publishers.

Many of Sax.net’s iPhone apps are ad-supported, and we’ve been using a variety of ad-networks, including AdMob, Google Adsense, and Quattro Wireless. Using Adwhirl and some in-house technology it’s very easy to monitor the results of different networks and switch in real-time to the one that yields the highest return. Other solutions, like Mobclix, provide similar technology, putting different ad networks in the most direct competition against each other.

How could there be a competitive problem in a market where customers can constantly compare results and completely switch to a different vendor in a matter of minutes? Google’s acquisition of Admob and Apple’s acquisition of Quattro Wireless are signs that the market is heating up. This is the type of competition the FTC should encourage.

To compete beyond price, ad networks are developing innovative new ways to yield higher returns and make their ads more appealing to consumers: Apple iAd focuses on making ads more emotional, Quattro and Admob have built highly interactive ads, and Google Adsense uses keyword targeting to make ads more relevant.

Meanwhile new players, many of them venture-funded, appear in this market on an almost monthly basis. Does this seem like a market that needs help from the Federal Trade Commission right now?

This reminds me of the movie Minority Report, where Washington DC-based law enforcement officers arrest people to stop possible murders before they happen. Is the FTC concerned that some day one of the players involved in mobile advertising might become the leader in serving engaging ads that consumers love? Is the role of the FTC really to prevent future success?

Tim Bray writes:

For a 1Ghz device with limited memory, the iPad is unreasonably fast.

Is it unreasonably fast or have we just become sloppy? Users have been conditioned to accept poor performance. For a >2GHz device with 4GB of memory, our PCs are unreasonably slow.

On my way back from MIX10 I’ve had a chance to reflect on both the hype and substance related to the Windows Phone 7 Series. Except for the terrible product name, Microsoft is clearly doing all the right things.

There are a few pieces missing from the puzzle, though. Below are a few things I learned during a several (non-NDA) conversations I’ve had with people at MIX. Some of these issues have also been confirmed online.

• No Socket Class — Currently the only way to communicate is through Windows Communications Framework or pure HTTP calls. The practical implications are no chat or mail apps, limited multi-player communications.
• No Local Database — This is problematic. Storing data in a local database is essential, not only for applications that can work offline, but more importantly for regular applications to cache information, increase performance and reduce network traffic. Application vendors could include their own database engine (such as C# SqlLite) but if everyone starts doing this it will only create bloat, increase memory usage, and delay application startup.
• No In-App Purchase — This is no biggie, in my opinion. Aside from a few content-centric apps, the in-app purchase in the iPhone AppStore has only been used for semi-trial versions. The trial scenario is already supported by Windows Phone.
• No Copy & Paste — Call me superstitious, but I believe missing copy and paste in the initial version is a prerequisite for launching a successful mobile platform (look at Blackberry and iPhone vs. Newton and Palm Pre).
• No Component Class — The Component class lets you create non-visible components that use the Visual Studio designer to define relationships with other components, change properties, and quickly create event handlers, all without coding. It’s not essential but very nice to have if you’re interested in building reusable, easy to integrate components.
• No Component Licensing – The lack of a LicenseProvider class means there is no standard mechanism for component vendors to license their components. Third party components give Microsoft a huge competitive advantage over other platforms, and it would be a shame if this opportunity is wasted in the mobile platform.

I was told that the Windows 7 Phone project was started only a year ago. The team has made truly remarkable progress and it’s no surprise that there are a few pieces missing. Hopefully many of these issues will be addressed before the final release.

One more thing: The Windows Phone OS update mechanism will be driven by Microsoft, not the individual carriers or device manufacturers. This will allow new versions to be deployed very quickly and let the platform to evolve at a very rapid pace.

I’ve seen the future and it is murder. Who’s the victim? Your PC.

Let me explain:

Windows 7 Phone Series is clearly awesome.

It’s well designed and easy to develop for. Most importantly, it creates accountability for the user experience: you’ll know exactly which application is culpable if speed or battery life go down. With a tap or two you’ll completely obliterate the guilty app from your device. Both adding and removing apps and content is simple, quick, and risk-free. The UI is simple, modern and consistent.

The iPad is clearly awesome.

An affordable device that feels luxurious and lets you do everything that’s important to you related to words, music, pictures, and video. The iPad will become at least as popular as the iPhone. It’ll be a new platform for apps and content to thrive on.

A Tablet edition of Windows 7 Phone Series is inevitable.

It’s super easy for Microsoft to do this, and OEM partners will be begging for it. Because of the way the OS is designed, all the troubles that plague users of regular Windows will just vanish. The result will be a device that is so much better than any PC in everything that matters: faster, safer, dramatically more battery life, with a beautiful and consistent UI. Also, easier to support for carriers and manufacturers. It will kill the PC.

The new application platform will be something much simpler than a traditional PC. In many ways, the current PC is still a hobby device: you have to become an expert (or hire one) to simply use and maintain it. The iPad and the Windows Phone Series tablets will change that.

This change will have several important implications:

The app is the new website

The iPhone appstore has proven that people love apps if they can trust them. There will be literally millions of apps, they’ll all be free or very cheap. And like websites, lots of them will be terrible, and some will become indispensable.

Apps and content will blend.

Books, magazines, and movies. They’re all coming to life. Books are becoming interactive. Movies become games. Even radio shows (like This American Life) are turning into apps. Newspapers, magazines, and news TV networks are reinventing themselves. This is all happening because apps have become as easy and safe to install (and remove) as content.

A big gatekeeper battle is looming.

iTunes, Amazon Kindle, Windows Store, studios, publishers, and all the phone carriers will be waging an epic battle for a piece of the app/content pie. This is where Microsoft has an edge over Apple. Remember the All Things D interview where Jobs said he admired Microsoft’s ability to partner and wished Apple had that more in their DNA? He was right, and it’s still true. While Apple will continue to have a mostly adversarial relationship with many of its business partners, Microsoft will figure out a way for everyone in their eco-system to make money.

Forget Android and Chromium.

Google will never be dominant as a platform company. Android has many of the problems of desktop Windows and without apps Chromium offers too little. There’s no room for a #3 in a drag race. Google will continue to be enormously successful is its core business as a match maker between people, information, and merchants. RIM/Blackberry is the wild card.

This trend is unstoppable. The era of tinkering will soon be over. Computing is for techies. Personal computing is dead. From now on, it’s purely personal.

Six months ago I shared how less could be more with Google ChromeOS. The exact same ideas apply to Apple’s rumored tablet:

Well, let’s think about this for a second. How could less be more? The five main opportunities for user value that come to mind are battery life, security, robustness, user experience, and cost.

What if you could triple battery life?

The iPhone has excellent battery life because Apple doesn’t allow third party background process, and because the device has built-in hardware decoding components for the most popular audio and video codecs.

If you control the entire OS there’s an opportunity to optimize power consumption to a level that isn’t possible with a more generic OS. In a regular OS, apps simply have too much freedom to hog the system’s resources.

What if security was simply not an issue?

Because apps have very limited powers, there’s very little damage an app can do to your system. When you think about it, the kind of power you give perfect strangers when you install an application on a traditional OS is insane. Unless you use Google Chrome OS Apple’s Mobile OS, you are always one click away from identity total theft or the complete demolition of all your data.

What if nothing could freeze or slow down your computer?

Do you remember the snappy feeling you had when you did a fresh install on your computer? Everyone accepts that systems tend to slow down over time, as you install more software. In a traditional OS, because applications have so much power, they are able to slow down your computer (or drain your battery) at will. While the web still has the possibility of run-away scripts, the ability of a single app to cause damage or bloat is severely limited.

What if everything was as easy to use as Amazon?

People care about their stuff. They don’t care about file systems, shortcuts, installers, upgrades, turning your computer on/off, and other old-fashioned concepts. These concepts don’t add any real value to the user experience, so why not remove a layer of complexity and bring people directly to their data?

What if you could have everything you want for free?

Removing layers of software reduces the cost of the hardware. Being able to use specialized hardware decoding chips lets you use cheaper components that provide a much better user experience. Carriers will love Google Chrome devices the Apple Tablet because they’ll be very easy to support and they’re a perfect match for always-on network services. With over one billion phones being sold every year, a device that does a better job of running web apps and playing web media than any low-cost laptop may prove irresistible if it’s free.

I believe there’s a real opportunity here for Google Apple to build a new platform. If you cut out all the legacy support and you focus solely on what people care about, people will, with absolute certainty, fall in love with what you’ve built. I hope they get it right.

Plus ça change, plus c’est la même chose. (The more things change, the more they stay the same.)

The first paragraph in an article from today’s Financial Times:

” Microsoft has had discussions with News Corp over a plan that would involve the media company’s being paid to “de-index” its news websites from Google, setting the scene for a search engine battle that could offer a ray of light to the newspaper industry. “

Nobody is paying anyone to de-index anything.

What really happened was that Murdoch said “Hey, Google is making money off our WSJ news content. They better start paying or we’ll block them.” Google doesn’t want to pay because if they start paying the WSJ they have to start paying everyone.

If Microsoft offers the WSJ payment for letting customers search their content, they’re just trying to make Bing a better product. It’s pro-competitive, not anti-competitive. Yet for some reason the Financial Times, a WSJ competitor, is spinning this as if Microsoft is paying the WSJ to exclude Google.

Murdoch is blazing the path to give newspapers a revenue model that may allow them to survive. If Bing and the WSJ make a search deal, Google’s stock will fall because the free party will be over. Newspaper company stocks will start rising because their papers may have a future again.

Interesting Times! (only a little bit of pun intended)