Sunday, August 29, 2010

Back from a hiatus

Been away for past few weeks to tend to the duties of a new dad. Hopefully have learnt the fine art of balancing now. Should be back to regular updates soon.

Saturday, May 15, 2010

Carrier Clout Prevails as Google is Forced to Beat a Hasty Retreat

The mobile operators have finally had their say and the equilibrium is restored. Google's announcement that they are going to withdraw selling the Nexus One through their own online channel and instead work with 'partners' in expanding presence vindicates the risky nature of their decision that I had alluded to a few months back. While getting US consumers to part with full unsubsidized rates was a challenge in itself, I believe the larger issue that forced Google's hand in this case has been its handset partners and the pressure from carriers such as Verizon.

Take the case of HTC. The Taiwanese vendor has been one of the most active promoters of Android, given its lack of a clear identity in the Windows Mobile days when it moved from being an Original Design Manufacturer to a full-fledged smartphone vendor. HTC's business potential is severely impacted if some of the best phones that it makes are restricted only to a channel that does not subsidize the cost of the handset. Moreover, by coining marketing phrases such as "Superphones" Google made it all the more tough for HTC to sell its other high-end smartphones to carriers willing to pick the subsidy tag.

For the ecosystem, Google's decision to go on its own clearly had larger implications over trust. Carriers were concerned that Google with its unsubsidized channel could potentially attract the high-ARPU customers who were then free to choose their own operator; not the most ideal of scenarios for carriers that historically were used to exerting extreme control over their consumers, through low entry and high exit barriers.

For Google as well, the channel wasn't without its more than adequate share of challenges. I reckon other than all the issues around managing partners in the Android ecosystem, Google also woke up to the fact that customer support in an important expense item. The initial wave of complaints against the device and its limited support options forced Google to come up with telephonic support one month into the launch.

While Google may have retreated from its online store, I don't believe it is the end of the road when it comes to Google's attempts to disrupt traditional channels. For those channels exert far too much control over the overall mobile ecosystem in the US and some other European countries. And controlled ecosystems are a ticking waiting-for-disruptor bomb. I believe Google's results with its online channel are not indicative of their future, but are an important milestone as these markets move to a more equitable and customer-centric model.

Friday, May 14, 2010

The Battle for Conversations over Facebook 'Like'

A version of this post first appeared in VentureBeat

Facebook's recent announcements over its open graph and the manner in which it impacts privacy has been the point of debate for the past few weeks. The developments are certainly a cause for concern from a end-user perspective (see VentureBeat writer Kim-Mai Cutler's analysis on how facebook and Google have the ability to build highly accurate social composite of you, the Facebook user), although I would view them as a key stepping stone in Internet players' attempts to weave a social web. Open Graph is Facebook's bold attempt to try and structure the web by organizing content and behavior around the web. Facebook's move to create such a massive social graph, with interconnected discrete data points, on the face of it, is indeed a welcome move. It tries to bring a sense of order to the chaotic manner in which the web has expanded. However, if privacy issues are a cause for concern for consumers, the other major stakeholder in this graph, the publishers, are not without their share of risk too. For these players who are already grappling with a decline in their traditional business and the slowdown in online advertising, the lure of becoming Facebook-friendly is indeed high. But, does that mean publishers have no other option but to welcome Facebook with open arms? Are they in danger of becoming commoditized in a situation where Facebook builds a much stronger and larger advertising-supported ecosystem than their traditional enemy, Google? These and many more questions are on top of the mind for publishers. While the questions are pretty clear, the answers are significantly more complicated.

Traditional publishers have been under significant pressure for a while, given the declining state of print. Consequently, most have been attempting to build a strong online presence that encourages engagement and virality. In this context, it is probably right to take a step back and look at some of the efforts that publishers have taken to drive their online businesses vis-à-vis the evolution of online advertising, which to-date has remained the primary means of making money for most publishers on the web.

Advertising on the web has evolved from display advertising in the initial days of the web when content was mostly static. With websites starting to become interactive, focus began to move to content that users were actively looking out for, and thus evolved search advertising. Going forward, as players such as Facebook and Google will increasingly attempt, advertising is set to shift to a new paradigm yet again. This next big opportunity is around conversations, where social connections play a big role in driving uptake of both content (think story recommendations) and commerce (think product recommendations). A real world example, albeit currently under a cloud, is that of Blippy or the more recently launched Swipely, the social network where members share all of the purchases on their credit cards and then build conversations on top of these transactional details. And it is precisely conversations that Facebook has in its crosshairs. The opportunity to build a strong database of real human interactions around third-party generated content is what Facebook is looking at. And in doing so, it is relying on users to provide the data and publishers to provide the content.

To be fair to publishers, most of them had begun to realize the importance of a social web around their content quite early and have over the years tried to add social elements provided by third-parties. For example, they have started off with enabling commenting and emailing on their content, then progressively adding sharing features and then warming up to Facebook/Twitter when it came to using authentication systems that lowered entry barriers for new visitors. Some content players such as BusinessWeek and The New York Times have gone one step ahead and even attempted to create a complete social service (Business Exchange & Times People) on top of their content.

So where does Facebook's recent moves leave these publishers? A quick look at the pros and cons of enabling social plugins for publishers should help:
The Pros:

· Traffic is one of the most obvious benefits. Facebook's 400 Mn, and growing, network provides an audience that is ready to consume, share, and (hopefully) pay for content. (Of course, Facebook currently does not have any payment solutions for third-party content, but the potential for using Facebook credits for micropayments on publisher websites cannot be ruled out) For smaller publishers, there probably exist more incentives around traffic and engagement than for the larger players. For these players, they now have in their hands a highly cost-effective way of tapping into the social web. For the larger players, though, the challenge around effectively monetizing online audiences remains.

· There exists future potential for publishers to be part of Facebook's chosen 'partners' if, and when, they come up with an advertising solution. I must say though, the signs sure point to a Facebook-controlled ad network that will allow both self-service and premium brand advertising based on the treasure trove of behavioral data that Facebook is beginning to accumulate

· The potential to add 'value' to the publisher's audience. Readers wound undoubtedly benefit from the knowledge that comes with seeing popularity of content amongst their social network. Indeed, the sheer momentum of hundreds of millions of users is enough to give the perception of value to the end user!

The Cons:

· In my view, Facebook's "Like" effectively dis-intermediates the reader-content producer chain by propping up as an intermediary. By telling the reader what stories she's supposed to be reading, Facebook takes up the role of an intelligent recommendation engine. True, Google and other aggregators have been doing similar recommendations where they list the most popular stories on their sites. However, by adding a social layer to it, overnight, Facebook recommendations make tremendous sense where the real life social network of a user determines their online content consumption trends.While this is great from a end-user perspective, sadly, one cannot say the same when it comes to the publisher. By encouraging publishers to install the social plugins on their site, Facebook takes a vantage position in terms of gaining access to publisher clickstreams. For any business, a key to success remains how close they are to the customer in the value chain. For publishers who are going through a particularly trying time, the challenge is all the more pronounced. Sure Facebook adds value to their content, but then, by diverting conversations back to its site, Facebook is encouraging fundamental changes in user behavior where conversations, irrespective of whether they are on content/product/service/friends, are kept inside Facebook, effectively making the subject of the conversation a commodity.

· For their participation in the Facebook open graph, publishers get access to profile data that they could use to target ads on their sites. However, user behavior on other sites, for example competitors, or even on Facebook, is not available to publishers. That data resides with Facebook. While usage patterns of their website will no doubt be of value to publishers, however, Facebook effectively limits publisher understanding of the overall user behavioral trends by limiting access to usage. Such overall trends can be critical when publishers look to venture beyond their core business and want to understand their user-base in greater detail. Ofcourse, all of this does not rule out the possibility of Facebook launching a highly targeted behavioral ad network, building on top of data that publishers themselves volunteered!

· Despite all the positives from the Facebook initiative, the fact is that it is a diversion from their day-to-day business and probably marks a shift in focus. Publishers now need to spend significant time with developers in trying to understand the various ways that they can wrench value out of the whole social ecosystem. The system surely has benefits, but, they are more likely long-term.

· The impact of Facebook's initiatives, particularly when a significant number of publishers are considering erecting paywalls is highly debatable. Monetization of online audiences has been a tricky proposition for publishers, and they are increasingly trying out multiple experiments to figure out the best possible solution. In such a situation, having social plugins that share the content 'likes' of a pay user with their non-pay friends is likely to result in an array of links that will likely work against the brand of the publisher, given user limitations at getting past the paywall. Of course, Facebook could potentially come up with a solution similar to Google's first-click-free program.

· Lastly, the risk of relying on a single all-encompassing platform hold true even in case of Facebook. The recent outage of the open graph search API for an extended duration highlights such risks. Of course, the recent outage could have been a teething issue, but that doesn't take away from the vulnerability of a system where all nodes feed into a central network.

Facebook's initiatives have been compared with Google. Indeed, many believe that "like" can potentially replace Google's famed PageRank methodology of determining the best search result. While that might be a stretch, I do believe Facebook has learnt significant lessons from Google's experience with publishers, and accordingly is expanding its reach. While Google first built out the tools and offered it to consumers, and consequently is facing significant heat from publishers, Facebook is taking the smart way out. By making publishers a core component of their initiative right from the word go( large publishers including CNN and The New York Times are some of the select partners that Facebook is working with) Facebook appears to be positioning itself as a friend-of-publishers. The fact that it has taken just over a week for over 50,000 websites to sign up for the plugins is ample proof of the fact that its approach towards publishers appears to be yielding results.

All said and done, Facebook's initiative towards organizing the web, as it deems fit, appears to be a move that is fraught with multiple long-term implications for all stakeholders involved, be they users or publishers. As I noted at the beginning of this post, there appears to be no clear-cut answer to the question of if publishers should warm up to Facebook and offer their clickstream data on a platter. But if they do decide to go ahead and partner, it seems judicious that they take a clear view of the pros and cons before jumpting headlong into this global social media party, where the host and guest both are Facebook, and everyone else and their conversations are purely incidental, or more scarily, collateral.

Thursday, April 29, 2010

The Apple-Adobe Altercation Continues

The open-than-thou battle between Apple and Adobe continues in full swing. Steve Jobs has now come out with an essay on how Adobe's Flash is technically inferior for usage on the mobile platform and how Flash is yet to evolve beyond the PC-centric web that it was originally designed for.

No doubt, some of Jobs' complaints on Flash might indeed be on the dot, in terms of battery usage and/or bugs. The logic carries weight when Jobs says there's a sizable body of content through YouTube that can still be viewed through Apple's devices. However, the argument breaks down when Jobs tries to drive home the point that Adobe is as closed a platform as any other. The problem is, as Jobs himself acknowledges in a fleeting manner, Apple has taken onto itself the responsibility (as it sees) or control (as Adobe sees) of determining what is best for its consumer. And a huge factor going in its favor currently is that consumers don't appear to be giving a thought. For now, Apple's innovations in user interfaces and form factors are greater drivers for consumers. Is that likely to sustain?

Apple is no stranger to criticism and Steve Jobs no stranger to writing open letters. A few years back Jobs wrote an open letter on criticisms that it faced on DRM'd music content. A common theme across both these letters is the emphasis on how industry players are expected to work around to address the needs of Apple's consumers! In the case of music, Jobs exhorted labels to go DRM-free and in the case of flash, the focus is on telling Adobe to deliver a tight product.

Jobs' reference to Adobe's strategy of working as a cross-development platform and how that hinders rapid deployment of new features is a clear acknowledgement of how Adobe's multi-platform multi-screen strategy gets in the way of Apple's single-platform multi-screen strategy (which I had alluded to in my previous post on control issues on the iPhone). And that issue is clearly one revolving around business model and potential monetization than a real pressing technical challenge.

Computing platforms have historically evolved and will continue to evolve. Flash may indeed have been designed for a PC-centric world, but it is as much Apple's responsibility to its consumers as it is Adobe's that they develop a working version of Flash rather than create their own versions of walled gardens. The issue at hand is very little around whether consumers can view flash videos on Apple's growing stable of devices, but one that is fundamental to how the web evolves. A seamless experience for the end-user or a series of islands that constantly spar on how to and if they should build bridges !

Tuesday, April 20, 2010

Why platforms like iPhone and Twitter are becoming control freaks

This post first appeared in VentureBeat.

Small app developer shops have had a great couple of years. Facebook, Apple, Twitter, and a host of other platforms opened up and let these third-party developers build games and other apps to entertain their users, and in the process allowed developers to build multiple monetization channels as well.

It was a great move for the platforms — all those cool apps brought in more users and kept those users coming back. And it was great for the developers who would otherwise have found it hard to drum up an audience for their apps. But it looks like that trend is probably in danger.

In recent weeks we’ve seen both Twitter and Apple clamp down on developers, adding new restrictions to their developer agreements. It looks like the platforms are eager to take over what appear to be lucrative business opportunities those developers helped to build. Now the question on everyone’s mind is, exactly how much control are the platforms going to be exerting here? It may be that wresting back control from the stakeholders is imperative if a platform is to grow, but if so, how do the stakeholders that helped popularize a platform benefit?

Whether we’re talking about Twitter launching an ad network that could challenge other Twitter-based ad players, or Apple’s recent decision to ban Flash-to-iPhone conversion tools, or the fact that Apple’s new iPad device lacks external ports, it’s clear there’s a trend towards control here. Apple has never been considered an open system, but the actions of the past week indicate that it’s going even further down the road to a closed ecosystem. And then there’s Google’s Android platform. Android’s raison d’être was to enable openness and allow the partners in its ecosystem to decide how closed they want to go. Yet, Google, as the curator of the platform, decided to introduce a new distribution channel and differentiate between phones based on its own criteria. Meanwhile, social networking giant Facebook has been busy, too. The social network has long said that its users should be in charge of their own privacy settings. But a few months ago, it changed tack and took on the role itself.

Why is this happening? Well, there are many reasons, but they tend to fall into three broad categories:

Erect Entry Barriers: Facebook, Google, and Twitter have all grown and scaled on the back of the open web (where access to services has been unfettered by any gatekeeper and consumers were free to switch services with minimal switching costs). They have been able to attract users rapidly because the web has been an open playground, with users gravitating to services that best served their needs. This is very unlike the physical world, where competition is highly uneven in different geographies and location inherently serves as an entry barrier. Increasingly, these companies are recognizing that while the open nature of the web has been a great contributor to their growth, they need to erect entry barriers one way or the other to limit competition if they want to sustain growth at the same rate. By taking steps to control access, features, development tools, or buying out competition, successful companies are looking to raise their control over the markets that they operate in. Apple’s lack of USB ports (primarily aimed at discouraging sideloading) and Google’s “Superphone” requirements for its distribution channel are both indicators of such entry barriers. These barriers will usually not be obvious to the end-user, but they certainly limit the ability of third-party players to operate and interact at will.

Build Platforms that Can Scale: As companies grow larger and more successful, a key decision they face is how much to invest in new products versus how much to continue investing in their existing assets. While there are pros and cons to both approaches, when companies decide to continue investing in existing assets by, for example, building new products/services on top of existing ones, they’re more inclined to protect that investment by exerting more control over their base products. Apple’s approach with its various product lines clearly exemplifies this approach. Starting off with the iPod ecosystem, Apple built the iPhone. On top of the iPhone OS, it has now built the iPad. Note that the iTunes way to interface with the product remains a constant, while the underlying core remains the same for apps (iPod Touch, iPhone and iPad). Having built a platform that Apple has now scaled to multiple products, the company has to ensure that it retains significant control. And that explains its latest move to keep companies such as Adobe at bay — companies that have a professed multi-platform multi-screen strategy that obviously gets in the path of Apple’s single-platform, multi-screen strategy. Similarly, consider Google’s new online-only distribution channel for Nexus One. A movement towards distribution is a first for Google, since the company had thus far allowed device vendors to forge their own distribution tie-ups. While these are still early days to gauge the success or failure of this channel, the intent is pretty clear. As Google continues seeing increased uptake of Android, it wants to involve itself not just in enhancing Android features and providing web services on Android phones but in expanding this presence to newer areas.

Grab the Early and Late Majority Crowd: A key feature of most web and PC-based services remains that most users tend not to tinker around with default settings. The implicit understanding is that if they are comfortable installing/using a service, then they are fine with the settings suggested by the provider. And this user behavior is exploited by service providers to further their goals. For instance, Facebook’s recent privacy settings changes are aimed at making as much profile info public for as many users as is possible. In a similar vein, Twitter’s move to acquire Tweetie or that of releasing a semi-official Blackberry app can be seen as an attempt by Twitter not only to control its platform but also to encourage users to access it through their own application. The underlying assumption here is that, while the innovators and early adopters ( read up here on the theory around diffusion of innovation) might care too hoots about using an “official app”, it is the next wave of people that are the low-hanging fruit. And to this large mainstream crowd, Twitter does not really want to project the impression that the service is significantly separate from the platform. While there are no obvious advantages to using one app over the other currently, that will likely change, as future versions of “official apps” are likely to be more tightly integrated with Twitter’s monetization model and will potentially offer more incentives for users to stick to them.

Given these advantages, it’s clear why platforms would feel the pull to take more control over their offerings. But does enhanced control really deliver in the long run? An answer to that question might come from a different set of players, the mobile operators.

Having started off with highly controlled and closed ecosystems, mobile operators have flourished offering their services in a lock-down fashion. However, of late, they have begun to realize that while closed systems are great for milking consumers, they are not sustainable in the long-run, since the more closed a system gets, the easier it becomes for a disruptive entrant to create havoc. You only need to take a look at the rapid collapse of operator walled gardens (where users were not allowed to browse any mobile site beyond the operator portal and a few select partner sites) and spread of flat-rate mobile data plans (that enable unfettered access to the mobile web) to gauge the pace of this change. Consequently, they are now attempting a painful transition to open ecosystems.

It is ironic that a key reason these mobile operators are beginning to change their business models is because they’re trying to emulate the very same Internet players who are now closing up their offerings. And as the two worlds — mobile telecom and the Internet — converge, expect players from both categories to switch business and operational models more often.

In the meantime, what does this mean for stakeholders in the Internet platform ecosystems — the app developers? Are they going to be left high and dry? I would reckon not. Going by past evidence, closed ecosystems, while being tremendously helpful to the platform owners, still allow for opportunities to be made at the edge of the ecosystem in areas the platform owner deems too small to bother with. The difference in this situation is that there are now a lot of edges — wide edges — where innovative developers can create products that can stand on their own whilst leveraging the larger platform. At the same time, services that offer limited value-addition will fall by the way as the platform owners decided to expand.

So it is really up to stakeholders to decide if they want to be offering me-too services or building out truly innovative offerings. But keep in mind that while platforms are going to continue to exert control over their ecosystems going forward, that strategy will only last until the next disruptive company springs.

Wednesday, March 24, 2010

Indian Media & Entertainment Industry Report

Who says print media is a dying breed. Atleast in emerging markets such as India, where disposable incomes are beginning to rise thanks to a strong economy over the past few years, the media and entertainment industries show no signs of slowing down. The annual FICCI survey (carried out by KPMG this year) of these industries reveals some interesting numbers. Print media revenues are expected to grow at a CAGR of 9% between 2010-2014. However, what is more interesting is that subscription revenues in TV & Print are estimated to grow at a CAGR of over 12% during the same period. The report is packed with stats and gives a ringside view of India's M&E sectors. You can download a copy of the report from KPMG India, or view it below.
FICCI-KPMG India Media & Entertainment Report 2010

Saturday, March 20, 2010

3G/WiMAX Finally off-the-block in India

India appears all set to finally auction 3G spectrum after one false start too many. Over 9 incumbent and new entrant operators have applied for the bidding process. While the list has all the usual suspects, a few names sure make you wonder. Videocon, with operations reportedly in only one city currently, Etisalat DB with no operations on ground and S Tel, an operator with a professed interest in low-ARPU C circles of the country makes one wonder if the hype around the India mobile story still continues to be strong. While 3G definitely can act as a boost to low-ARPU hit telcos, however, it is not likely to be a magic pill that will help new entrants rapidly pose a credible threat to established market leaders. At least not with the limited amount of spectrum that is up for grabs. It is in this context the Telenor's response to stay away from the auctions appears a well-taken decision. Indeed, opportunities to gain a 3G presence will increasingly present them as an inevitable market shakeout looks more certain with every passing month.

Despite past expectations, global players that currently don't have a presence in the market have stayed away from the bidding process. While one can debate ad nauseam the benefits of entering or staying away from the Indian mobile market at this point in time, a little less competition might be just what the doctor ordered for this hyper-competitive market. And while we are at it, here's hoping that the 3G pricing, when it finally hits the market in Sept 2010, is more realistic than what we have seen.

Thanks to the delayed 3G spectrum auctions, the collateral damage is more visible on the broadband front. While mobile growth has been extremely strong in the last few years, the same cannot be said of broadband growth. With limited fixed-line network presence across the country, and lack of last-mile unbundling, broadband has been the biggest sufferer thanks to lack of wireless options thus far. Naturally, the auction process for Broadband Wireless Access, tied to the 3G auction process, has received more applications, 11 in all. It has also attracted the attention of technology majors such as Qualcomm who are hoping to queer the pitch for WiMAX proponents in the auction. However, that is unlikely to take away from strong bids from WiMAX operators who are looking to use the technology to reach an under-served audience. To me, these auctions are probably far more significant in terms of the impact that they can have on India.

Be it 3G or WiMAX, it is about time the Indian consumer gets to experience the benefits of technology advancements. Here's hoping that the auction process and the subsequent service launches finally see the light of the day.

Friday, March 19, 2010

Will Microsoft's Windows Phone 7 Series Bring Focus Back on End-User?

Software behemoth Microsoft is usually not the company that gets top-of-the-mind recall when someone mentions smartphones. Particularly, in the post-iPhone era, Microsoft's foray into building software platforms for smartphones has been turning into an eminently forgettable chapter. And it is not just mindshare, the numbers speak for themselves. Gartner has recently published its 2009 handset market share figures, and Microsoft's slide is evident. The company slipped from its third position in 2008 to fourth behind Symbian, RIM and Apple, accounting for only 8.7% of all smartphones shipped globally.

Microsoft appears to have recognized the precarious position that it is in, one bordering on irrelevancy in the market for a mobile operating system. And in a manner which is very un-typical of the company, Microsoft chose to tackle the problem head-on with its launch of the Windows Phone 7 Series, which despite being a mouthful, packs a punch. While Microsoft has take a completely different and bold approach to the design of the OS, it is more interesting to see the impact that Microsoft can have on the overall smartphone ecosystem, that increasingly appears to be to shaping up as a bubble that I had earlier alluded to, one dominated by an inordinate focus on mobile applications.

The smartphone market has been in a phase of hyper-attention (and strong growth too, I must add) for the last couple of years. More so with the significant attention that is being paid to applications and their ever-increasing download numbers, particularly from the Apple Store. This overwhelming focus on applications has meant that every player in the telecoms and handset space, and their neighbor, has an app store. However, increasingly, the discussion appeared to be veering so much towards applications, that the overall user experience and a primary focus on the end-user was probably lost along the way. While Apple offered a highly engaged audience for mobile developers, Android with its open approach promised to unshackle developers from the restrictive rules of Apple's vertically integrated ecosystem. Phone launches were accompanied by significant noise on how many applications that users can download. More worryingly, the primary target market for smartphone vendors appeared to be developers and how to bring them aboard. The implicit assumption has been that users will flock to the platform that has more applications. Take the recent announcement of the Wholesale Applications Community from the grand alliance of 27 mobile operators and device vendors which was clearly aimed at attracting developers onto a platform that they control. And this thinking is increasingly becoming more prominent. Indeed, a Wall Street Journal story suggests that the recent purge of risque apps on the Apple store might get developers to abandon ship and move to Android. Like most of the focus in recent times, the end-user is completely missing from the picture. The singular focus on developers is too hard to miss.

I am in no way denying the important role that developers get to play in the smartphone ecosystem. Indeed, I'd attribute the strong success of smartphones as a category to a potent combo of killer apps + high carrier subsidies. However, that should not be reason for any one stakeholder in the ecosystem to upend the consumer's position.

It is in this context that I find the Microsoft approach to a mobile platform refreshing. The UI in itself has eliminated the need for users to jump between applications. While it might be a tiny change in the overall context, however, I view that as indicative of the consumer returning to the forefront. It represents a design where the end-user takes precedence over all other stakeholders. Microsoft's presentation at the MWC has been remarkably bereft of a focus on applications. In fact, the company has gone on to the extent of not disclosing much info for the developer community, reserving it for a separate developer-focussed event.

Microsoft's focus on the consumer, and this time the enterprise category, with exchange, sharepoint and office functionality in-built is likely to work in favor of a significant proportion of enterprise users. In the smartphone space, players including Apple and Android vendors have targeted this segment as an after-thought. Driven by the idea that enterprise consumers can be a profitable proposition, multiple vendors and carriers have tried to push through smartphones into the enterprise, but haven't seen real great successes against the likes of RIM. However, Microsoft's Windows Phone 7 arguably holds the strongest potential for enterprise adoption, thanks to its native feature-set.

Microsoft has, over the years, shown that it has vision when it comes to desktop computing, user interfaces and the like; and this launch certainly proves that they have the potential and capability to boldly think out of the box when it comes to mobile platforms. However, it remains to be seen if this vision can be translated to execution. But as far as I am concerned, I believe Microsoft has already made its contribution in changing the course of the smartphone industry. By bringing the focus back on the end-user, it is forcing its current competitors to acknowledge and act. And in the long-run, despite the success or failure of Windows Phone 7, this development is likely to have a positive impact on the overall industry. Indeed, there are very few, if any, examples of industries that have thrived by focusing on any element of the value-chain that reads other than end-users.

Thursday, March 18, 2010

YouTube’s live sports broadcast deal is watershed moment for online video

This post first appeared in VentureBeat

YouTube is taking a major step today with its first live sports broadcast deal. It will be streaming live the Indian Premier League Championships. Such live broadcast deals have hitherto been the bastion of traditional pay TV operators. The Google-owned site signed an agreement with the organizers back in January and retains rights for two seasons.

The IPL is a tournament of a short-form of cricket that has become extremely popular in the last couple of years. The tournament spans 60 matches over the next 45 days. The IPL is currently in its third season, and has already seen runaway success in attracting eyeballs. By acquiring global rights (other than the US market, where Willow TV has the rights) for online streaming, YouTube is testing out a whole new business territory.

The IPL constitutes what are called Twenty20 cricket matches between eight teams made up of players from multiple cricket-playing nations. Revenues from advertising and sponsorship will be shared between Google and IPL, with YouTube offering the content free to consumers. The tournament itself is big money. TV broadcasting rights for 10 years were reportedly purchased by India’s Sony Television Network and Singapore’s World Sports Group for over $ 1 billion. In previous years, while online streaming was available on the official website of the tournament, however, it was geo-blocked in nations where the IPL had TV broadcast deals. That is changing this year. YouTube’s deal with IPL requires them to delay the stream by 5 minutes in countries where they have simultaneous TV broadcasting. Moreover, the online streams promise significant interactivity and customization. Viewers will be able to select their camera choice and freeze and fast-forward footage.

YouTube is reportedly going to stream the match at four quality levels. Google is also bringing its social network Orkut into play here through IPL-branded communities while engaging in both print and outdoor advertising promoting the event.

The timing also appears to be right. Comscore reports that by end of January 2010, over 10 million Indians had visited a sports site in the month, an increase of over 97% year-on-year. Viewer engagement also recorded strong figures, with both total minutes spent and total visits recording growth in excess of 100%. Google is expecting over 10 million unique visitors, and over 40 million cumulative viewers through the duration of the IPL. To put this in context, India had over 8 million broadband subscribers [PDF] (defined as speeds >256 Kbps) at the end of January 2010. Sponsors too are looking to cash in on the latent demand. One of the sponsors on YouTube, telecom operator Airtel is upgrading the access speeds of all its fixed broadband subscribers who wish to watch the matches to 2 Mbps, although fair usage/tiered limits still apply.

What does this deal mean for YouTube? Google is stepping on the pedal when it comes to generating revenue streams on YouTube. This tournament, when viewed in the context of YouTube’s tryst with legal content is interesting. YouTube has, to date, been primarily a forum for user-generated content, but it’s been trying for a while to increase the proportion of content that it can sell advertising on. User-generated content is great for pulling in the numbers, but it is deals such as this that will likely help YouTube make money. Already, large name-brand advertisers including Coca Cola, Samsung, HSBC, and HP are said to have signed up for advertising in India, with each of them said to be purchasing between 5-10 million ad impressions. YouTube will also be producing over 20 clips per match, which will be up for sponsorship, and it is likely to deploy several ad formats including homepage ads, pre-roll and mid-roll ads, and banner ads next to the video player. Advertisers get an opportunity to target a global audience. In the UK, which has a sizable cricket audience as well, local advertisers are being brought aboard.

YouTube is no stranger to live/high-traffic events. Its live streaming of U2’s concert last year attracted over 10 million viewers. The site had also hosted highlights of the Beijing 2008 Olympics, but only in geographies where digital rights could not be negotiated. Experience from such major events could ideally help YouTube refine its pitch for streaming other sporting events. While the current agreement offers content free, YouTube could indeed explore paid subscriptions of such events at a future date. Again, all of this depends on how successful the company is at hosting the event without technical hiccups.

For pay TV operators, who traditionally have paid significant broadcasting license fees to gain exclusive access to sporting events, YouTube’s entry is sure to shake up the scene. There are not many ways in which broadcast TV can compete with the interactivity offered by online viewing. In markets such as India, where cable and satellite subscription is still growing and broadband penetration is very low, migration of ad dollars might be limited. However, in a market such as the UK, YouTube will likely eat into the potential ad revenues that ITV4 (incidentally, a free-to-air channel) looks to generate. And if you take into account that set top boxes that allow YouTube content to be streamed to large-screen TVs are also making their presence felt, pay TV operators, such as Sky, that have traditionally relied on exclusive sports content definitely have reason to be concerned.

For Google, the imperative of making YouTube profitable is becoming more pressing with every passing day. By gaining rights for online streaming of major sporting events, YouTube gets a solid chance of trying to position itself as a comprehensive online video destination. One comprised of user-generated content, video rentals, on-demand premium clips, and live events. Viewed in that context, YouTube’s current deal with the IPL indeed appears a step in the right direction. If YouTube succeeds in creating a compelling usage experience for the viewer, one that betters broadcast TV, then rest assured, Google is going to be a regular fixture at event rights auctions around the world.

For those of you based in the US that want to watch the IPL matches, YouTube has clarified that you’ll be able to view them 15 minutes after they have ended.

Google to offer stripped-down Nexus One phone in India?

This post first appeared in VentureBeat

Google may be preparing to launch a stripped-down, low-cost version of its Nexus One smartphone in India, and possibly other developing markets, according to speculation on multiple Indian technology sites. The rumors appear to have originated in a tweet from a TV show producer. But irrespective of how it got started, it sure highlights the importance that Google is placing on the developing markets.

Apple has historically focused on building high-margin products and slapping the legendary Apple Tax on them, but this strategy hasn’t found many takers in markets such as India. Indeed, many would say Apple has priced itself out of the market. In India, the iPhone 3G 8GB model is priced at about $680, while the 16GB variant is priced at about $790 (the 3GS has not yet been released, possibly due to the limited uptake that the 3G version has met). However, Google’s entry into the mobile handset space has to do with more than just device margins. The company is trying to increase the avenues by which consumers can interact with its services. Be it in the mobile space through Android or through its attempts at experimental fiber networks. And it is in this context that emerging markets such as India represent a large market that Google can ill-afford to ignore.

India is adding close to 18 million mobile subscribers every month, and the Indian telecom regulator TRAI estimates [PDF] there were around 127 million wireless subscribers accessing data services (essentially GPRS/EDGE based mobile data services) at the end of September 2009. That is a sizeable number, and one that continues to grow. Mobile advertising, too, is beginning to make its presence felt. Admob metrics [PDF] from January 2010 show India accounting for over 5% of all ad requests, behind only the US and ahead of many other developed mobile markets including Japan and the UK.

Moreover, Google already has some strong traction in the market. A Comscore September 2009 reportestimates that Internet users in India spent up to a third of their online time on Google sites, a figure that is over three times the global average. Given such strong usage indicators of its services, Google will want to build on its brand strength, while simultaneously tapping into the fast growing mobile space. Google is already experimenting with multiple mobile products for its Indian audience, including Google Phone Search (search using voice calls to a toll-free number, with results being sent as a text message), Google SMS Search (search using text) and Google SMS Channels (SMS-based mobile communities). Putting a feature-rich, yet low-cost phone into the hands of its users appears the right next step.

It is in this context that a stripped-down version makes sense from Google’s perspective. Google has previously signaled that it considers India an unfriendly marketplace for smartphones. One can only speculate on what components might be tossed, but there are a few low-hanging fruit. India does not yet have 3G networks, given that the required spectrum has not been auctioned yet (although that will likely change soon, hopefully). Similarly, GPS and WLAN chipsets could be on the block, if Google is looking at cutting down on the radios. The display, too, could be swapped out for a less expensive and smaller LCD screen as opposed to the OLED display that the Nexus One currently boasts.

The resulting device would definitely not be what Google calls a “Superphone“, and therefore would not qualify for its online webstore. However, that might do a world of good to Google if it were indeed to launch such a phone in India where online commerce is still finding its feet. Apple found out the hard way that in a large country such as India, having a presence at the neighborhood handset retailer store is critical to driving uptake (Apple’s iPhone is primarily available only at select carrier-owned distribution stores, which are very limited). While Google might not have the experience of dealing with large third-party distributors, it has shown that it does not shy away from such challenges. Indeed, the very fact that it chose to launch its own distribution channel for the Nexus One in the US is testimony to that.

India would likely not be the only target country for such a stripped-down version. Brazil comes readily to mind as another good candidate. For Google to translate its successes on the desktop to the mobile web, a strong presence across devices will be inevitable, be it through carrier partnerships or through Android-based phones, or better-still, a Nexus-One style device where Google exerts significant control. And emerging markets such as India with its large mobile base are probably the right entry point.

Thursday, February 25, 2010

Online Video...A Quick Update

Online video continues to make waves. Be it Veoh shutting shop or that giant of a company, Walmart purchasing Vudu. User interest in consuming online video also shows no signs of abating. Indeed, stats released from the BBC iPlayer confirm the same, with video streams more than doubling year-on-year. The reports reveal some interesting new trends, while validating a few existing ones. Consumption is increasing, albeit slowly, on platforms beyond the desktop, and streaming is increasingly the choice mode of viewing. That viewing patterns replicate broadcast TV in terms of time-of-day should drive broadcasters to understand that linear TV in its present form is rapidly getting out of fashion. Consumers are open to the idea of viewing TV content on other platforms, while it might be low in absolute terms, however, the larger trends are clearly making themselves obvious.

The BBC sure appears to have hit the right chords when it comes to new media delivery. They have also recently unveiled a plan to launch a series of mobile applications for smartphones that will enable them to offer content from their stable. However, as is typical of a public sector undertaking, even this initiative has met with  resistance from newspaper organizations who take issue with BBC's pricing of the apps. They are priced zero pounds. The BBC is not new to this kind of protests. The iPlayer has been a constant target of ISPs who contend that the service chokes bandwidth without monetizing them.

Anyway, take a look at the iPlayer report embedded below. Some neat tidbits.

BBC iPlayer Statistics - January 2010

Tuesday, February 23, 2010

Content Vs Platform : Walled Gardens 2.0?

The buzz around the e-book pricing wars refuses to subside. After the very public Amazon-Macmillan disagreement, and a renewed hope on Apple's iPad as a savior for the publishing industry, the news isn’t getting better for publishers. The New York Times is reporting that Apple is likely to have included with publishers aboard the iPad platform, a clause that lowers the prices for bestsellers, to a level matching Amazon's $9.99. These machinations, coupled with internal turf wars over pricing, throw the spotlight on what is likely to become a recurring theme over the coming months - one that of constant strife between platform promoters (in this case, device vendors such as Amazon and Apple) and content providers (Publishers, music labels). And this is not something that is likely to be witnessed only in the e-reader market. Apple's issues with developers over its app approval process, and with music labels over pricing of tracks are more examples of this strife.

While it might seem atavistic to say so, however, the current scenario indeed appears a throwback to the era of walled gardens , where mobile carriers decided what content you could browse on your mobile phones and which content provider gets the best positioning in their on-portal content decks. Those days are, arguably, gone. But guess what, players in the device and content industries have now begun to see the merit that telcos had seen all these years in being gatekeepers to the consumer's user experience. Content and device players are now in a face-off over who can lay claim to the 'last mile'.

What is it that is driving both these categories of players at one another's throat. In the case of the e-reader, the reasons appear to come out of a recent survey done by consulting firm L.E.K. In the study on changing media consumption habits, the survey found that over 44% of e-readers increased their consumption of other media content. This is a very telling statistic indeed. While it has been a generally acknowledged fact that the early wave of e-book adopters have been the most compulsive of book readers, however, such results point to a future where the e-reader has the potential to be a gateway for a new era of content consumption. And this is where Apple's trying to get its foot in the door with its iPad.

However, more than specific devices and the corresponding business models, one key underlying driver for all these changes is the massive impact that the Internet is having on traditional content consumption. And that is what is encouraging multiple players to try and set up vertically integrated ecosystems where they drive the user experience, and more importantly, own the billing relation with the customer. And this movement towards closed systems is happening everywhere. Take for instance, the case of Microsoft's Windows Mobile. One of the key issues for Microsoft over the years has been the inability to create a uniform user experience across devices that ran Microsoft's earlier versions. Platform splintering between multiple device vendors became rampant, and the end result, Microsoft started loosing market and mind share after the advent of the iPhone. And Microsoft's response, the stunningly beautiful, Windows Phone 7 Series , with its long list of hardware and software restrictions. Yes, Microsoft has realized the value of Apple's approach in offering as minimal a portfolio of devices as possible. However, since Microsoft already has a history of working with several mobile carriers and hardware vendors, it did not directly replicate Apple. Rather Microsoft put in place several restrictions that are going to determine how the Windows Phone 7 Series platform evolves.

Platforms begin with restrictive definitions of who can offer services, what kind of services can be offered, what are the pricing points, what are the hardware features, what is the role of the gatekeeper. And every major content and device company out there is now trying to build its own platform where they can define each of these parameters. We can debate ad nauseam whether such closed platforms offer more value to the end consumer or they are just a walled garden with invisible-to-the-consumer walls. However, the fact of the matter is, they are here to stay. And it is in this context that the current e-book pricing wars and aggressive tactics appear as nothing beyond a red herring. The real battle is for the control of the platform.

Wednesday, February 17, 2010

Google Buzz’s privacy breach is sign of things to come

This post first appeared in VentureBeat

Google's Buzz is facing some pretty strong headwinds. After being hit by significant backlash over the cursory way it treated privacy settings for the new service, the company has tweaked the settings yet again. Per google's product manager Todd Jackson,

"Starting this week, instead of an auto-follow model in which Buzz automatically sets you up to follow the people you email and chat with most, we're moving to an auto-suggest model. You won't be set up to follow anyone until you have reviewed the suggestions and clicked "Follow selected people and start using Buzz."

The question on everybody's mind right now is, "How did Google botch it up so badly?" I'm inclined to believe that a lot of this backlash is probably what Google expected. Given the strong feedback Facebook got from its user community on Facebook Beacon, and more recently, when Facebook reset its privacy settings, Google should definitely have known what kind of collateral damage such a product can do to user privacy. Google's blatant disregard of privacy issues probably echoes what Mark Zuckerberg had to say a few weeks ago -- Privacy is dead.

Increasingly web players are going to test the limits of privacy, and how they can put more and more of our digital lives out for everyone to see. If the web is indeed making a transition to a social web, then Internet companies are going to spare no effort to ensure their strategies for monetizing the web are carried forward to the social web. And what better way to do that than to win yourself access to the fattest possible data pipe. Google can't build a social network of 400 million people to compete with Facebook today, but it can start creating one with what it already has. Build a social layer, thrust it on the inboxes of millions of people, push the limits, and then take baby steps backward.

Such scenarios are likely to recur increasingly as social networks, email providers, handset vendors, and mobile carriers vie for a piece of the pie in the next phase of the evolution of the web. Each of these categories of players has access to a certain amount of personal data, and they will increasingly look to build what they will want us to believe are, 'social' networks. With mobile-based check-ins expected to be a commodity soon, the intersection of location with behavioral data from social media offers significant potential for the next generation of online/mobile ads. Metrics from current social media are extremely encouraging to say the least. Comscore, in a recent report, says that time spent on Facebook at end of Dec 2009 increased almost 200% year-on-year. And this is on top of a 100% growth in unique users.

To Google's credit, it has been prompt in reacting to feedback. But the very fact that it has attempted to marry personal services such as email with public networks shows the large leap that it has taken with user data. The tweaks that it is currently doing now are pretty minor -- just the bells and whistles of how the service is defined. It's that large leap that's going to encourage other players in this space to keep experimenting around the borders of traditional privacy norms. These norms are going to be tested so many times, that they might indeed be reset at some point soon.

Monday, February 15, 2010

Bharti Finally (?) Goes Global

Update: Looks like I hit publish a tad quickly. News media is now reporting that Bharti and Zain have entered a period of exclusive talks. I believe unlike the MTN saga, this is likely to work out in favor of Bharti. Will update once details are reported.

Bharti has finally managed to break its international growth jinx. While the company already has a cursory presence in some markets, however, all the while, it has been lacking a truly global name tag due to its absence in the emerging markets of Africa. No more. In news coming out, Bharti has managed to snap up the African operations of Zain, giving it immediate access to over 40 Mn subscribers and the potential market of many more millions. Penetration levels in several of the markets that Zain operates are below the 20-25% mark, indicating their strong growth potential.

Bharti has been trying to break into the African markets ever since its twice-botched attempts at acquiring MTN. However, it has been out of luck thus far. It also helped significantly that Zain is currently undergoing a management change at the top.

International growth is increasingly an imperative for Indian telecom operators. Operators such as Bharti ,who have pioneered a low-cost high-volume model, now want to take their model global. Their Indian ops are more or less going on auto-cruise mode, and African markets in particular can offer Indian telcos significant experience in mobile financial transactions. With the Indian Government likely to firm up regulations around mobile transaction soon, Bharti can do with all the help in order to build a strong mobile banking model. Moreover, scale helps in driving down capex given the increased bargaining power that the company now has with equipment vendors.

It will be quite interesting to see how Reliance Communications, the other large home-grown telco now reacts. RCom has made multiple acquisitions in the enterprise communications space, but this move will likely force it to identify newer markets much faster. The company has been speculated to have been in the market for these very assets of Zain. As for Bharti, the deal offers it the first big opportunity of becoming a large global telco. It will be very interesting to see how fast Bharti can transfer the learnings from the Indian market and pick up skills from the African operations.

Friday, February 12, 2010

Google’s fiber network is attempt to force telcos to change

A version of this post appeared first in VentureBeat

Google's come up with yet another ambitious plan- that of deploying fiber-to-the-home as a trial in select communities across the US. The company claims it will will adopt an open access approach making its network open to other service providers as well. What’s most interesting about this announcement isn’t the possibilities of high-speed, instead, it’s the thought of how this test rollout could effect the telco industry.

Google has slowly been crossing paths with the telcos, a fact that’s been more than obvious from its series of forays over the course of recent years. However, while telcos have always looked at Google with a sense of alarm, this latest announcement is likely to set the cat among the pigeons. Telcos have traditionally considered selling voice minutes and, of late, data bundles, their raison d’être. While so-called “over-the-top” services from Internet players such as Google have threatened telco revenues from additional services, their core networks were never under threat. At worst, most telcos believed they might be relegated to the role of a dumb-pipe. That is now set to change.

Google’s apparent entry into the fiber-to-the-home (FTTH) space comes as a rude awakening for US telcos. Consider for instance, Google’s proposition that it will allow third-party service providers to use the network. While that might sound great in isolation, Google appears to be making a clear move aimed to force the FCC to allow last-mile fiber unbundling. “Unbundling” would allows service providers to use the existing last-mile network of an incumbent operator. The FCC currently exempts incumbent telco operators from having to lease their lines to other providers. But the FCC continues to get requests from providers to fully enforce unbundling with regards to fiber rollouts, as it does for fixed lines.

Similarly, consider Google’s emphasis on communities. In its announcement today, it reached out to local community managers interested in bringing the test network to their neighborhoods through its public Request for Information. A key factor that determines speed of FTTH rollouts, and implicitly cost, is getting the necessary regulatory permissions and the right to use existing infrastructure. By encouraging local residents/community managers to reach out to Google with a list of what their community can offer, Google is striking at one of the biggest challenges telcos routinely face across the world in terms of fiber rollouts: that of encouraging higher uptake in areas where they’ve already rolled out services. Experience from smaller European fiber operators such as Lyse clearly demonstrates that higher user involvement in the overall fiber rollout process helps drive down churn (churn refers to the number of subscribers that move away from a service — a key metric for any telecom service provider). Lyse rolls out the fiber network right up to the edge of a subscriber’s home and then encourages the subscriber to dig and lay out the fiber themselves through their gardens and into their homes. This has helped it create create an emotional attachment to the service, which has a clear impact on churn.

I’m not saying Google is already looking to build services aimed at rapid uptake with minimal churn. But these are two sure indicators that Google is now ready and willing to shake up the teleco ecosystem by striking at the heart of what they do and how they do it. They are pointers that Google clearly understands some of the biggest telco challenges and is ready to come up with innovative ways to address them should it decide to go all-out as a fiber service provider.

Globally, telcos have always tried to make the case that fiber rollouts are highly capital intensive — even more so when they are FTTH as opposed to Fiber-to-the-Node/Cerb. They’ve used this point to make their case against last-mile unbundling or, in some instances, as a case against net neutrality. High investments have acted as a natural entry barrier, and with low competition, pricing of the access services has remained high. Moreover, lower competition has meant there’s less incentive for telcos to rapidly rollout networks. Google’s entry (or the threat of it) could change that.

It is quite possible that Google will back down from its stated “experiment” after the initial rollout. But it’s more likely that Google will continue with a phased rollout program until it can generate enough panic amongst the telcos to create what it set out to create. But until then, the noise around Google’s FTTH plans are only going get more shrill and gain more momentum across the developer and user communities.

Google does not necessarily have to go ahead with a highly capital-intensive network rollout and subsequent maintenance, a completely alien line of business compared to its core search advertising business. All it needs to do to is ensure that the right environment is created to force change upon existing telcos. For proof of the same, think back in time to the whole debate around open mobile ecosystems and Google’s ‘bids‘ for wireless spectrum. I believe today’s announcement was a first — albeit giant — step in that direction.

Thursday, February 4, 2010

Nokia's Key to Long-Term Relevance : Emerging Markets

A version of this post appeared first in VentureBeat

Cellphone maker Nokia may not get as much love (or press) in the US as Apple does, but internationally, it's putting on quite a show. The company has 39% of the global smartphone market, according to a new report from market researcher Strategy Analytics.But put the smartphone market to the side for a moment, and take a look at some other markets Nokia's currently building out -- markets most other device makers have largely ignored. The company has been rolling specialized services out to emerging markets in Brazil, China, India, and parts of Africa where there's a high demand for affordable, practical mobile services.

Yesterday, the company announced its latest progress on this front. It has already offered English-language services on Nokia phones and via mobile portals in China since 2007 (a service called MobileEdu), but now it's partnered with international education firm Pearson to bring other types of educational content to phones in China in a joint venture called Beijing MobileEdu Technologies.

The MobileEdu service to date has over 20 million subscribers in China, according to Nokia, with over 1.5 million active users every month. The site offers downloadable courseware that appears to be typically priced at 2 Yuan (~$0.3). The new venture will obviously seek to expand that market.

Services such as these, coupled with a strong presence in low-cost handsets, have resulted in Nokia gaining a significant leg-up on competition in emerging markets across the world, including two of the biggest -- China and India. Be it in terms of coming up with highly cost-competitive, yet utilitarian, phones (think of the 1100 series), or in terms of carefully building up a brand that endears itself to the bottom of the pyramid, Nokia has demonstrated that its understanding of emerging markets is next to none. While other vendors such as LG/Samsung/Motorola have traditionally focussed on LC (Low-Cost) and ULC (Ultra Low-Cost) handsets to drive sales, Nokia is probably the only handset vendor taking an active interest in services that it can bundle along with its low-cost phones.

One of these services, similar in intent to the MobilEdu initiative, Nokia Life Tools (currently available in India and Indonesia), is offered through partnerships with content providers such as Reuters and forms a key part of this services thrust. The SMS-based service offers agriculture, education, and entertainment services through an on-demand or a subscription model. The service has been available in India at prices of Rs.30 - Rs.60 ($0.65 - $1.3) since mid last-year. It is targeted at rural consumers, for whom the mobile phone is the primary means of connectivity to the external world. The agriculture services enable farmers to get market rates directly on their mobile, without having to travel to distant towns. That means they can accurately identify the right price and right market for their produce. And it means those farmers no longer have to go through a middleman to conclude a sale. Nokia promotes this service with its strong existing distribution channels and with its innovative "Nokia Vans" with which it reaches into the hinterland. The service is currently available in over 10 languages. And with India's adult literacy rate of ~66%, the company indeed has a sizeable target market for the service. While Nokia hasn't disclosed any uptake numbers in India thus far, I assume they're good, since the company extended the service to Indonesia and has announced plans to introduce it in Africa too.

Life Tools is only one example of Nokia's push into emerging markets through unique phone/service bundles. Others services include money-transfer solutions such as Nokia Money, a basic service that provides banking services to the unbanked, and Nokia Tej, a mobile order and supply chain management solution.

A focus on these markets is also likely to help the company over the long-term. These are markets where subscribers wouldn't be able to afford $30+ monthly data plans and where literacy levels aren't high enough to justify deployment of complicated mobile applications. And that's precisely why Nokia is going behind these subscribers with a two-pronged strategy of low-cost phones + highly relevant services. While the margins may be slim on the actual phones, the volumes are significant. And so is the opportunity. For instance, India just added over 19 million mobile subscribers in December 2009, and this is a country in which Nokia holds a 50% market share.

It also greatly helps that the company has built a solid brand that is valued high for reliability. The company was voted the most trusted brand for the second year running in the annual brand survey conducted by India's Economic Times business newspaper.

Nokia certainly has to figure out how to deal with North American carriers and sort out how to create phones that appeal to a North American audience. However, in the meantime, it's putting up a strong show in the global smartphone market. And whether its hold on that market is sustainable or not, one thing that it can safely lay claim to is an understanding of consumer behavior and needs in emerging markets. And these markets are the reason Nokia is not going to vanish anytime soon.

Saturday, January 30, 2010

Is Apple falling behind itself in the innovation game?

A  version of this post, including early reactions from Asia, appeared first in VentureBeat

I agree, having a title like that on a day Steve Jobs introduced what is arguably “Apple’s greatest” device is debatable. But nevertheless, today’s unveiling of the iPad begs that question. While the iPad undoubtedly has top-of-the-line hardware, and a ready content/application ecosystem to feed on, however, does that mean Apple has genuinely innovated in creating a device category that can potentially rescue the legions of traditional media players? Or does it mean that Apple has created a device that can move an entire content stream from other devices/screens on to the iPad? I don’t believe so.

Innovation begins where conventional thinking ends. With the iphone, Apple had done just that. They questioned the fundamental thinking of handset vendors on why keypads should be there, on why compelling third-party applications can’t be built easily, and many more. However, with the iPad, Apple appears to have fallen for the trap of sticking to conventions and building products that do more of the same. True, the iPad indeed boasts a variety of features, targeted at e-book readers, regular content-viewing consumers, and ‘business’ consumers (although I am highly skeptical if we are going to see too many people suited up and using iWork on the iPad).  Apple has also thrown in a 3G radio and sewn-up a flat-rate data plan with its long-time partner, AT&T. But somewhere, all of these bells and whistles fall short.

Apple's iPad adopts a position that is confusing, both to the industry observer and the consumer. While the Kindle and the iPod tried to push consumers to adopt different screens/devices for different needs, the iPad, by attempting to do bits of everything, runs the risk of falling into a no-man's land! For instance, consider its suggested role as a netbook replacement. You cannot run regular Mac OS X apps! And lack of multitasking means users cannot perform basic netbook-style activities such as having a twitter client open whilst streaming music from an online radio. The lack of a camera is also likely to flummox consumers who would expect a $600+ mobile browsing device to allow video-conferencing. And finally, despite the high-end 1 GHz processor that the iPad boasts of, Flash is still off-limits for iPad users, stunting the overall browsing experience. Similarly, take its comparison to a portable high-res media player. The device lacks widescreen display, and you can't connect it to your large-screen TV. 

For more, consider its role as an evolved music player. You're stuck with the amount of memory you opt for, no expandable memory slots for you. Its positioning as a gaming device is probably the only thing that makes sense. Social gaming apps are likely to get a shot in the arm with this category. However, serious gaming remains a big if. Such hazy positioning makes for a potent combo when one takes the pricing of the device into consideration. Although it might start at $499, once you add 3G capability, a 3G data plan (the $15 plan for 250MB from AT&T is a joke for this kind of a device) and the keyboard, and suddenly even the entry-level iPad looks much pricier. Beyond the consumer, Apple also runs the risk of cannibalizing sales of its profitable Mac lines. 

Apple has historically shown that it has been ahead of the innovation curve, atleast in the decade gone by. Starting with the iPod, the iPhone, and the Macs, and the ever-neglected Apple TV, Apple products have always been known for going the extra mile in building innovative solutions for consumer challenges and in the process, profitable business lines for themselves. However, with the iPad, all I see is a product that does a little of many things, a product that tries to build on past glory (not necessarily a bad thing) and most importantly, a product that is representative of other technology companies and not Apple.

Make no mistake, the iPad will likely sell in strong numbers. It might strike it rich in some of the Western Europe markets as well, but as for as I am concerned, this is a step back for the innovative company that I have admired for long.

Tuesday, January 26, 2010

India Telecoms : Storm Before the Calm?

That might very well seem to sum up the current happenings in the Indian mobile market. Rapid growth in the past couple of years has seen the entry of a host of new players into the market, and more are set to enter in the coming months. Indeed, the attractiveness of the market can be gauged by the fact that even at this late stage, where there are 10+ operators for each circle, more operators are reportedly interested in making an entry in to the market. It's a different matter that the cost of entry might be much lower than what other global telcos have had to cough up, given the significant noise associated with the prospective target, Datacom and the consequent delay in launching services.

However, all is not well with the Indian mobile market. Rise in competition, coupled with a rapid dis-proportionate decline in industry revenues, is pinching the incumbents hard, while the new entrants appear to have resigned themselves to a long battle. The current price war, triggered by the new entrant into GSM Tata DoCoMo with its per second pulse plan, has forced other operators to follow suit. In the process, mobile tariffs, that were already significantly low compared to other emerging market peers, sank. However, unlike the past, the elasticity appeared missing. Declining tariffs had led to significant uptick in usage in the past. However, latest results of listed telcos indicate that the usage is flattening, and more worryingly, showing signs of decline. And we are not yet done with launch of all operators. Some of the operators with pan-India rollout license are yet to do so, and there still remains the threat of newer larger global players. And let's not forget the fact that 3G license auctions are yet to be done, and despite the limited spectrum on offer, many expect atleast one more new global player to enter the market.

Does all this mean that the great Indian mobile opportunity is lost?  I don't believe so. The current market scenario where there are 10+ operators in a given circle cannot sustain itself. Hyper-competition, whilst good for the consumer in the short-term, results in creating tariff wars with seemingly bottom-less levels. Players with deep pockets and a genuine interest in the market over the long-term will battle it out, and survive. Non-serious players that entered the market looking at it as a get-rick-quick geography will increasingly find their hands tied and will exit, sooner, if not later. Indeed, the present storm appears to forebode a period of consolidation in the Indian mobile market.

Sunday, January 24, 2010

Google's risky attempt to rewrite the carrier-customer relation

Google has finally decided to put its weight behind phones that ostensibly represent their vision of a smartphone, making for a, er, Superphone. The Nexus One in many ways, has been viewed by many as a response from Google to take on Apple in its (now) own backyard, the high-end smartphone. While Google has indeed made a strong effort to meet the expectations of its own fanboys, by coming up with what many claim to be the best implementation of Android, however, in the process, Google is also attempting rewrite the traditional rules of the mobile industry in the US. In a market where carriers have historically held an iron grip over the consumers, and any other stakeholder in the value chain, (including device vendors, content creators, app developers) was kept on a tight leash, by opening up its own distribution channel, and encouraging people to buy directly, the company is attempting to break the nexus between carriers and device vendors.

For long, the US mobile market has grown on a diet prescribed by the carriers, that had made it extremely difficult for handset vendors to directly take a device to the market. With rampant handset subsidies, device vendors were left with little chance of trying to engage directly with consumers who were happy paying a fraction of the device cost upfront. While multiple others have also attempted to go direct to the consumer, however, few had the weight of a large player such as Google. Lacking the presence of an iTunes-like ecosystem, and a handset-presence, Google is now trying to create alternate channels to carriers and in the process displace them from their 'hallowed' position. By making it clear that it is going to only showcase a limited number of handsets on its channel, Google is making it amply clear that they now want to take the position occupied by the carrier in terms of driving device specifications, and now, tightly integrated applications.

The initial uptake might have been low, but this move is not really about one handset or of the resultant margins. Combine the Android marketplace, with Google Voice and Gizmo5, and a direct distribution channel to customer that's free of carrier-interference, and you are increasingly looking at the prospect of Google creating AND monetizing several over-the-top services and in the process bypassing the carriers completely.

All these moves are however, not without their more than adequate share of risk. Google's pseudo-entry into the handset space will prove quite uncomfortable with its handset partners that decided to latch on to the Android bandwagon. The fact that the Nexus One used the latest Android version before it was made available as an SDK will definitely not be lost on its partners. And by declaring that only select 'superphones' will be retailed through Google's online channel, the company runs the risk of negatively impacting sales of Android 'smart' phones that it has deemed not worthy of the 'super' tag!

Google sure has embarked on a pothole ridden path to controlling the customer relation on the mobile platform. It has its task cut out if it is to emerge unscathed, without antagonizing its partners, whilst hoping to significantly change consumer behavior.

Saturday, January 9, 2010

In the Battle for Online Identity, Privacy is the Casualty

Content consumption on the Internet is rapidly becoming mainstream. Given the increasing amount of content that is moving online, and the dis-proportionate influence that online services are having on our day-to-day lives, Internet based companies are in a race to have a ringside view of our online behavior. And what better way to obtain such data than to be the gatekeeper to the web. It is in this context that leading players such as Facebook, Twitter and Google are trying to push their 'connect' products, or so to say, reach extenders. These single-sign-on applications help websites across the web significantly cut down on the efforts required by a casual browser to interact with them, whilst providing Facebook & Co with a goldmine of usage data. While companies such as Facebook will market this as a manner of enhanced utility for the consumer, however, the truth remains that control and knowledge of usage behavior online is indeed going to be a key determinant of online success. As it is, targeted advertising on Facebook is taking advertising to hitherto virgin territory. On the mobile platform, Google is attempting to become this gatekeeper that offers 'open' access into which only the company has 'closed' access. Its recent acquisition of Admob now ensures that Google has a ringside view in to consumer behavior on this emerging platform. 

Facebook has already embarked on a monetization path of user data. The recent about-turn that Facebook did with respect to user privacy settings marks the beginning of a change that is likely to become more prevalent across the web. While most major online players have thus far resisted the allure of making user data public, Facebook's stance marks a major shift for the Internet as we have known. For, the company's changes impact over 350 million people directly. And despite what the folks at Facebook would have you believe, the question over how much privacy is 'enough' privacy has yet to be answered clearly by the consumer. The fact that consumers are sharing more and more personal info does not mean that everyone wants it to be revealed to a global audience. Likewise, the increasing social nature of the web  and the rise of conversational media can hardly be an excuse for Facebook or other online players to reset established privacy rules. The sad part is, revealing personal info and looking at monetizing them through search is the easy way out. If Facebook or other social networks indeed wish to remain relevant over the long term, they should probably spend more time in creating alternate business models.

As our day-to-day lives and our online personas start intertwining and integrating more often, with usage of smartphone applications, we can only expect more such developments. Facebook might have been the first, but they definitely wont be the last !