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 !