theSpiel on Business

The cheap car muse

2006-12-12T23:09:00.000Z

I love cheap cars, and I hate 'em. Transport is a great thing, personal transport even better. But it's a win-lose, isn't it? The cheaper they get the more they infest our lives. Not only do cars cost us resources when being built but they rob us of our land as well with infrastructure (especially roads) everywhere. Great for getting around, not so good for the environment or our peace of mind. Trouble is that the market is totally out of whack with true costs. The car makers get a free ride with infrastructure and then get subsidised power and resources to boot. Now this gives us employment and transport "freedom" but at the price of a distorted market. Such markets run wild and consume resources with little restraint because the price paid does not reflect real costs. Great for our personal freedom to consume and move, bad for everything else. Here's another cheap car entering the Aussie car market. Just what we need.

Virtual opportunities

2006-12-06T21:28:00.000Z

Go on, have a Second Life. I must admit I'm there, but only in the most modest way. I find the virtual world as scary as the real one, so my social and financial success is limited. Forbes has an article here about successful entrepreneurs in Second Life. Including one self-professed real-world millionaire who made her dosh virtually in real estate. It's still early days... and there are competitors, but Second Life seems to be gaining street cred real fast. I must conquer my fears and get out more, in a virtual sense.

RSS and business

2006-11-20T22:35:00.000Z

Do you use RSS feeds? I do, in various ways. They feed my content (such as this posting) to any web page of mine that I choose. They arrive in my reader (to be read or ignored, depending upon time). They also trigger emails to warn me of changes and some even pop up on my screen. One feed gets turned into voice and podcasted. But do you use RSS?

I must admit most people around me - socially - go blank. Even some people at work. And I work in IT. They may use it but the name escapes them. It's just how some things work. And you don't always take an interest in the how, just the what.

So it surprises me that InfoWorld can report that "In fact, a recent Pew Internet Foundation survey found nearly one in three individuals consumes RSS feeds. But for enterprises, the most telling response was that 63 percent of these RSS users subscribe to work-related feeds."

The claim of one in 3 "individuals" surprises me. Maybe these are unusually IT-aware individuals. I'd personally be surprised if 1 in 3 individuals in the street had even heard of RSS. Maybe 1 in 10 - and that's a big maybe. But once you do know what it is and what it does it's not a surprise that people find it useful. That 63% of actual feed users use RSS for work purposes is probably about right - but I'd love to see the data!

IBM TV - another way to get the SOA message across

2006-11-16T22:33:00.000Z

In the IT world SOA (Service Oriented Architecture) is getting attention - along with frameworks like ITIL. SOA can be a bit hard to get to grips with, especially for the non-IT manager. You may find the new IBM TV service useful - it presents a rich multimedia approach to explaining concepts such as SOA. I'm biased, I work for IBM, but it's still a useful site. My opinion only, not necessarily that of my employer.

Dell dies a death in network gear

2006-11-10T02:53:00.000Z

If Dell is the great commoditizer, why hasn't Dell run amok in the networking business? Network World takes a look at the question and finds that maybe the range isn't broad enough, or that it's gear is neither cheap nor enterprise-grade. Others have found Dell's network gear to be robust, reliable hardware, so maybe the problem lies elsewhere. As in trying to be all things to all markets, or maybe just realising that the periphery isn't as profitable as the core business.

Netflix and its ilk - is there a future?

2006-11-07T02:48:00.000Z

In case you don't know, Netflix runs a web-based hard-copy DVD business. They are considering online downloads but they, and many commentators, don't think that the current business model will fall apart anytime soon.

Now how would you analyse that? You could do a SWOT. You could do an environmental assessment. You could consider core competence. Let's just do some of that now.

They are strong with online presence and do a great job at getting DVDs out to customers and back. So they could leverage that online presence to go for downloads, but the movie companies want to sell DVDs, not rent 'em., so that could be a problem. You need to have a usage limit or a time-lock of some sort if you do rent 'em out by download. Still, it's do-able.

What about threats? Bigger capacity DVDs may mean more business, or multiple movies per DVD - which is possibly less business or less revenue per disc anyway. Kiosks that burn single copies are a threat. Downloads are obviously a threat, but are restricted by download speed. Now if that speed limit is broken by Internet-over-powerline - or any other technology - then that could be serious. It would have to be super-fast, however, or super-easy. That's either a lot of bandwidth or some means to pre-load much of the content to customer's machines before they select it. That's do-able, too.

Environmental threats include the cost of fuel (affecting delivery cost) - which is sure to rise.

Now Netflix are thinking no real threat for 5 years and they expect to be doing good business in 15 years time. With what you know about the speed of change in IT, and the imminent arrival of WiMax and IP-over-powerline, what do you think?

Forbes has a nice overview of Netflix and the threats to its business plan here.

Ads that work? Sony Bravia - Bouncy Colors

2006-11-01T06:24:00.000Z

Well, did it work? Does it sell? How about their 'paint bomb' advert? It certainly makes you look. But does it make you want to buy, now or in the future?

Aussie vs US CEOs - US study

2006-10-25T00:11:00.000Z

Interesting survey result - from Workforce Week: "Those Fun-Loving Aussies: Australia's "work to live" culture is borne out by results of a recent study. Australian CEOs tend to take more risks, while U.S. executives are more conservative in their business practices, according to a survey commissioned by the Executive Connection, an Australia-based organization for CEOs. Although both Australians and Americans are described as "hardworking, socially skilled and self-confident," Australia CEOs tend to be more flexible and willing to take risks than their U.S. counterparts, who are more likely to do things "by the book." The information was gathered through personality assessments administered to 55 Australian CEOs by Hogan Assessment Systems of Tulsa, Oklahoma. Their responses were compared with nearly 8,500 U.S. business leaders across a range of organizations and business sector."

I'm a little surprised that the US CEOs aren't more 'entrepreneurial' in that 'risk-taking' sense, but maybe we are talking about different things. As always the devil is in the details with any survey. In other words, please take with a grain of salt!

I've just run another strategy workshop

2006-10-18T14:01:00.000Z

I think the hardest part is the admin afterwards. All of the butcher's paper, all of the post-it notes and the PowerPoint presos to be collected, collated and saved somewhere accessible. I didn't do a SWOT this time... maybe I should've? It was what the client wanted, though. Participation, discussion and more discussion. Only a few heads nodded off towards the end and mostly we seemed to have good, practical things to say. Only at the very end did someone actually twig that strategy was different from tactics - it always seems a hard bit to grasp - and most were mired in a world of daily practice rather than lifting up their heads and looking around. It's always fun to expand an audience's horizon a little, so if one or 2 heads took a peak then it was worthwhile :)

Sony's battery blues

2006-09-29T03:34:00.000Z

Sony's woes continue with IBM and Lenovo battery issues. Sony is picking up the tab. In looking at the story over time, going back to the beginning as it were, it's interesting to see how the issue of exploding/overheating/short circuiting batteries has developed. I think Dell was first cab off the rank and it got a lot of attention on both old and new media. I think we all saw that Dell laptop catch fire, didn't we? I know that I thought dark thoughts at the time about Dell and their knife-edge margins (sorry, but I did) however the issue subsequently became one of 'pin the blame on the battery' as other laptop makers joined the fray as well. Eventually Sony admitted it had a problem and has made all the right moves to recall and replace. Perhaps Dell could have doused the flames earlier, but did it actually know what the issue was? I imagine that the manufacturers were 'waiting and seeing' who would get the bad publicity first, hoping it was someone else - but I could be wrong. They could all have moved first and got in there before the literal blaze of stories, if indeed they had detected an issue. I assume they had seen it smouldering in the repair stats for a while. Anyone know for sure?

IBM Cell on sale

2006-09-14T22:33:00.000Z

A gaming chip, or a supercomputer on a stick? IBM and its partners have beaten up its potential but done little so far to generate product. Well now IBM has launched the Cell with some demos of its abilities in medical imaging. It looks like a juicy niche rather than a wider market, but it could also be the start of something broader and deeper. It needs strong marketing and a commitment to port applications across to its unique architecture. There are some hurdles here to wide acceptance, but once the hard work is done the product appears strong. And yes I do have a day job with IBM, so my views are my own and not necessarily representative of the company's view.

Ding dong Dell

2006-09-07T01:37:00.000Z

My Strategic Management lecturer didn't agree with my 'Dell is doomed' analysis but I will stick with it for now. My thinking? Dell is great at supply chain efficiency and wringing the cost out of selling and building a known - well known - product. However that core competency dooms you to always arriving late to the party, playing catch-up to the innovators. Whilst you can derive a good business out of the top and tail of the life cycle, you must also continue to spread the net ever wider, until you have extended yourself too far. Meanwhile your core business has either declined or evolved, and you again have to chase. I'm not saying Dell can't survive at this game, just that it will reach limits. Has Dell reached its limit?

This Wharton interview with Michael Dell is interesting, if only for the insight into Dell's reliance on a future services business and relatively old hat ideas like Dell Connect. Can services save Dell? Hey I work for IBM, and my opinion is my own and not my employer's, but I still won't comment further!

Apple and iPod. How long would you wait?

2006-09-04T22:42:00.000Z

If you had 75% of the US MP3 player market and led the world overall in marketshare, how long would you wait before introducing a new player? Apple and its iPod are in exactly this position. Probably the slickest looking and easiest-loading player around, but increasingly facing slick new competition with more capacity. Do you wait until market share takes a tumble, or anticipate that fall before it happens? Ah, strategy, strategy.

If Apple is smart - and they are - they will have numerous ideas up their sleeves. Products ready to launch but kept in reserve for the right moment. They may have a digital radio player, which would be a differentiator - and would show leadership. They may have more capacity or a larger screen, which would be matching the competition, not leading it. They may have something completely unique. Or they may have botched it completely. Unlikely but possible.

By letting the opposition get ahead on memory size they have indeed risked looking like followers. But their loyal clientele are rusted on - at least a hefty proportion, anyway. So the risk is minimised - and in the meantime they can get the most value - and profit - possible out of the current design. Why change for change's sake when you are sitting on cash flow like this? (CNET article here, btw, that prompted this thinking.)

Google Trends - a useful service

2006-08-27T12:39:00.000Z

Don't forget to use Google's Trends service... or use it now if you've only just realised it's there! Trends allows search term comparisons, as in "alfa" vs "alfa romeo". It plots it graphically and by geography. If you need to know what search terms are hot and where, this is how you find out.

Oh yeah, it's also fun.

Generations - a real effect?

2006-08-22T06:03:00.000Z

So are generations, as in the labelled generations, a real effect? money.CNN.com thinks so, as do many, many others. The article on the end of that link tells us how to understand and work with the differences in attitudes between generations. It's easy to think along these lines - convenient even. But what's the evidence? Why indeed do we label ourselves Boomers or GenX or Y, or even Gen Next? Ostensibly because society evolved - changed - in more than subtle ways during the periods in question and we should recognise how the people born into these generations are indeed 'different' from each other. But are they?

My argument runs like this. Firstly, genetics is probably the most powerful influence shaping our lives. We act out our genome in the world, or our individual world, because where you are born matters a lot. In fact country, race, wealth, sex... you name it, these are all big players in our lives. Where you are born, the wealth and culture of your society and your individual family, and the education that you receive will act to shape your behaviours.

When you add all of that up it's hard to factor in "the Internet" as a big factor. Yet (to give but one example) the Gen Xers reputedly are more impatient than Boomers, having been brought up in an instant-on environment of which the Internet is a prime example. I would agree that a large proportion of the "1st World" born since 1967 have indeed grown up with PCs and maybe - just maybe - slow Internet; and that a large proportion of "1st World" Gen Yers will have the expectation of faster PCs, handy MP3 players and faster broadband Internet. But what proportion? And don't they still have parents telling them to wait in line? Don't they still have to wait in queues in the bricks and mortar world? Are they queue-jumpers as well as impatient?

Indeed, why do we say that they are impatient? Where's the evidence that frequent job-swapping is correlated with Internet use? Are we possibly putting the cart in front of the horse? Isn't it possible that the job-swapping comes about not because of an innate desire but because jobs now vanish, evolve and move in a way that didn't happen in the 1960s? Is it not true that female participation rates are now higher? Aren't many of us now better educated? Aren't our 1st-World economies now service-based rather than manufacturing based? Does none of this matter? Isn't it so much easier to just label the people?

When you total the World's population it's a small proportion that has been exposed to the nominated "generational" influencers, whereas everyone faces their genes, their need for food and shelter and company every day. And everyone - even the Boomers - live in today's world. Shouldn't today's "fast pace fo life" have rubbed off on them too, or are we saying that they really can't learn?

When you look at what the pre-Boomers went through - 2 successive World Wars - you can imagine the after effects. A shortage of males. A shortage of food, of shelter.... destruction in much of Europe and Japan, coupled with rebuilding would bring on huge changes in society. This is the argument for the post-War Boomers, that they grew up having 'known no war'. Yet we continue to have wars. Both before and since. And the effect varies with where you are standing. And humanity is a continuous, blended stream, not an on and off sausage machine churning out clones.

The Generations? It's just labelling. Treat people as people and don't get hung up on what you want to call 'em.

Business post wrap-up

2006-08-15T03:12:00.000Z

Free stuff from McKinsey's

Highly recommended for anyone in business or involved in business studies: the McKinsey Quarterly. Some content is free upon registration. If you are doing an MBA these reports are great reference material.

Monday, August 07, 2006

Apple's Leopard about to pounce

OS wars, again and again

Does it really matter what Apple does? They only have about 2% of the global PC market, if that. However they do possess greater 'mind share'. Far more than 2% of us know about Apple as a brand. We may like 'em or loathe 'em but they do come out with some funky stuff. Here's a positive (perhaps overly positive) report on Leopard from SmartHouse. With Windows Vista somewhere in the wings it's Apple's (and Linux's) time to make up some ground. With Macs now powered by Intel the obvious is happening - Apple can now confidently assert that all apps are available on the one platform - the Apple platform. Whilst that's reassuring for the Mac users - to have access to Windows apps on their otherwise more limited (if impressive) architecture - will it drive PC fans into the arms of Apple dealers?

I suspect it will grab a bigger bite, but it won't shake the earth.

posted by gtveloce at 2:52 AM

Sunday, August 06, 2006

Strategic purchase by AMD

The ATI purchase by AMD is interesting. It's not just a simple play to grow a company by absorbing a related but smaller company. Sure, AMD is a chip maker, but it makes the grandest chips of all - the CPUs - so buying up a graphics specialist is (a) chicken feed and (b) not going to shake the Earth. Or will it?

By buying up such a reputable graphics card maker they have guaranteed that at least some of AMD's product will now be getting inside some of those Intel boxes, not just their own. Intel may now have to consider putting pressure on its customers to drop ATI - but it surely risks anti-competitive action in so doing. And some graphics and games buffs love ATI, so there will be resistance. It's thus another ploy by AMD to get the brand into Intel territory and to drive a wedge into the box makers. Do they stick with ATI and thus side with AMD, risking Intel's wrath, or do they side with Intel and drop ATI, accepting any collateral damage that may bring?

It's a canny move by AMD in any case. Read Infoworld's take here.

Sunday, July 30, 2006

Top ten proliferated new technologies by 2020

"In the year 2020 -- the death of locality and other predictions", from Infoworld with extras in bold by yours truly. Infoworld's writer had a talk with Hossein Eslambolchi, former president of AT&T Labs and CTO for the company. This is his/their top 10, except I have added my comment to Infoworld's.

Number 10 -- Next generation speech recognition and Natural Language Understanding [NLU] will redefine human machine interface. Comment: I hope it comes before then, I'm sick of typing. On the other hand I get a sore throat and what happens? Perhaps some more direct mind-machine interface would do the trick?

Number 9 -- Knowledge mining will transform the way we do business. By 2010 individual databases will store 5 terabytes to 10 terabytes of data. By 2020 Eslambolchi says a single database will contain 100 petabytes of data. Comment: can't argue against this one, it's happening as we speak (or write). Tell us something new!

Number 8 -- Open source components at network edge will dominate. Stuff that sits on the edge now, like security and XML messaging will be integrated into the heart of the network and new things will appear at the edge. Comment: hmmm, not very convincing. What's the new stuff? Should we be that concerned about where stuff "sits"? Will we even have an "edge" to consider by 2020?

Number 7 -- Broadband will be common -- death of locality. Comment: well, yeah. Once we cure famine and war we will have the death of locality. In lucky western countries we already have reasonable broadband and it doesn't matter much where you are. I am in Australia. Can you tell? But it matters in Lebanon right now, don't you think?

Number 6 -- e-collaboration and P2P will dominate the workplace. Infoworld says: Maybe. Comment: As we Kazaa and Skype our P2P way through our day now, this is a no brainer. Similarly with e-coolaboration. Like we do it now, so why should it not persist? It will proliferate. It will remain difficult to plough a field e-cooperatively but I'm sure tractors will be electronically, remotely controlled, guided by GPS and absolutely brilliant by 2020. We'll all want one.

Number 5 -- Sensor networks will proliferate. "Yes, if you sneeze into a tissue there will be a sensor on the tissue and you'll find an email in your inbox when you get home asking if you want to reorder". Comment: like we need to waste the world's resources on all those throw-away sensors. Better bet - the box counts the tissues and suggests a reorder, and the new tissues come sans-box.

Number 4 -- Wireless Internet Access will grow exponentially. Sounds obvious but Eslambolchi says gaps will be filled in over the next gen. Comment: still seems obvious. Barring a better way being developed, makes sense. Not earth-shaking. Burying/hanging copper made sense under the old water/power utility model. Thinking of which, what about data via the power lines? Talk about ubiquity...

Number 3 -- Networks will become personal. Wireless IP networks will create a new class of personal devices and services. A network dedicated to you. Infoworld supposes its 'like a personal portal on steroids'. Comment: I think we can all see this one happening. Loads of people have personal LANS, it's just an extension of the obvious.

Number 2 -- Security requirements will continue to increase. Comment: no way! Surely not? Are they wasting bandwidth writing this stuff? I'm beginning to think I am!

And Infoworld says that "the number 1 technology change we will see by the year 2020 is --
Emerging networks and the Internet will be ready for the "sextuple" play. Voice, video, data, wireless, gaming and sensory information". Comment: Go on, tell us more. Did someone have a slow news day? I'm sorry I just added to it! Anyone out there want to prognosticate with vision and insight, rather than stating the blindingly obvious??

Neverthess, as Infoworld says, "go forth and build a business around one of these. You can't lose". Indeed, it's a pretty safe bet you'll have a market. You may have to fight for your marketshare and the return on investment may be poor, but... hmmm. There's no free lunch here, folks. This is leveraging what's already well on its way with many players already claiming rights.Grab a niche or go for a big play, or perhaps build something compelling and new that leverages off these no brainers. Your choice.

OS wars, again and again

2006-08-08T02:52:00.000Z

Why Fi? Connectivity as a utility

2006-07-06T22:40:00.000Z

Several cities in the US have committed to or are considering providing WiFi connectivity as a public utility. Just as we have public electricity, transport, sewerage and water supplies, so should we have Internet connectivity to our doorsteps. Now I couldn't agree more. However it has to be said that in so doing we potentially undermine established and future businesses. One emerging 'provider' of sorts is FON, a collective of WiFi users who intentionally open up their bandwidth (plenty of people do it unintentionally too). Now those people are buying bandwidth from an ISP, often using ADSL and copper wire. So a public WiFi network circumvents the need either for FON or for the underlying ADSL connection. Someone loses, somewhere. Now this is how it works anyway - you can't expect new players or technologies to back off and leave you alone just because - so I don't blame companies or organisations trying new models.

But we may have a problem when governments start to 'compete' as it were, or to in effect subsidise one delivery method over another. Local government infrastructure is great in providing cheaper connectivity to a broader range of the community - got to like that - but it does lock in an economic distortion. By subsidising WiFi you are advantaging WiFi over ADSL, WiMAX or any other delivery mechanism. What are the consequences in 5, 10 or 20 years time? Infoworld has a story on San Francisco's WiFi plans here.

Another market to explore - batteries

2006-07-04T04:40:00.000Z

Looking to investigate a market? As a marketing or strategy case study or report? How about batteries? Smarthouse has a nice wrap about it here.

It's not a bad market either. As our devices have become smaller (think cell phones or mp3 players) or our requirements for power and endurance greater (think laptops especially, now 50% of the PC market overall and growing) we have many issues to explore. The technology - how do you get more power for longer whilst making it smaller and cooler? The environment - what the heck do we do with discarded batteries? The future - alternative technologies and delivery strategies for increasingly pervasive computing-based devices.

It's worth some googling, surely?

Try these previous posts for MBA resources and discussions...

2006-06-29T07:27:00.000Z

Try these previous posts for MBA resources and discussions...

Price Wars

2006-06-29T04:27:00.000Z

Suppliers don't win price wars, so they avoid 'em. Really substantial profits lie in monopolies (set your own mark up) or where the competitors are small in number and preferably weak. It's allied in nature to the product life cycle, or at least similar in the way it progresses. Let's take a look.

You get a new idea and run fast. If you are successful you sell lots at great margin because there's no real competition. However that soon gets noticed and other people invest in similar designs and start to carve up the market. At first this is a good thing as it expands the overall size of the market, and profits remain high per unit sold whilst increasing volumes lower costs. However more competition comes into the market and there's a point where you can only maintain profit by lowering costs further or knocking off the competitors. So you use innovation, marketing and whatever comes to hand to beat off the little guys. You may make 'em offers they can't refuse or simply leverage your pricing to drive down the price so far that they (with smaller production runs) start to lose money. So the market tends to converge around a smaller number of winners. They get bigger, they keep their big production runs and lower costs per unit and the market settles into smaller price fluctuations that don't rock the boat.

At this point an uneasy truce may reign until someone will either decides they want more marketshare (perhaps they employed an MBA grad) and begin to innovate, or they pare back costs and start a price war. Innovation will keep the price up and refresh the cycle, like Gillette bringing out a new razor or Toyota marketing a hybrid petrol-electric car. However a price war will clearly drive prices down. If it's prolonged then you have a real problem. Once you have cut prices the market is less inclined to accept a higher price again (unless you have obvious supply problems across the board, like droughts affecting farm production) or demand is so great that it simply can't be met (like the world oil price as China ramps up demand).

Got the picture?

OK, so back to PCs. The microprocessor market was reasonably diverse in 1978 with chips from a range of companies (including Motorola and Zilog) that drove the earliest PCs. So prices were high but reasonable given the small production runs. As demand for PCs heated up the market saw some competition in the chip market with various players ramping up production and placing their bets on which designs would dominate. Prices came down. Then Intel, like Microsoft, lucked into a deal with IBM. When IBM stamped its name on a PC (and later on what it called the XT) it created a standard - a beige box with an Intel microprocessor, a monitor, a disk drive (later the hard drive) and an operating system - that is pretty much what we have now, give or take a mouse and a GUI.

What IBM did was expand the market. What happened next was that the market inflated quickly, new players came in and the race was on. IBM's sheer weight drove out the little guys - bar Apple - but gave the 'clones' like Compaq and later Dell a platform to work on. When the profit per unit fell too low IBM sold out. What we have left is a volume market where the only way to make money is to dominate and make lots. Which brings me to Intel. They cashed in on IBM's design and then went with the clones as well. Others tried to compete but Intel's was the standard endorsed by IBM, so they had to catch and then match Intel, who were romping away. In the long run we really only see AMD offering serious competition. At least until something left field - perhaps like IBM's Cell processor or another multi-use but single-die chip - comes along to disrupt things.

Now AMD have both innovated and offered a better price. They have been gaining ground, too. It's still a $US1.3billion minnow fighting against Intel's $US30billion whale, but Intel are hurting. So here comes the price war. Check out the Forbes article.

The telephony marketplace

2006-06-26T23:49:00.000Z

OK, here's another example of strategy playing out against the background of a product life cycle. You know the cycle - invent or buy into product or a marketplace, get it adopted, grow it, proliferate it, others copy it, they make it cheaper and better, you decide between volume or innovation or a balance of the two, you battle your competitors, make a good profit, find even more competitors sniffing out your profit, get bigger volumes, drive lower costs but profit stagnates and - bloody hell, is it worth it? Is this sustainable, or should we get out now and put our money elsewhere? Or do we innovate? Maybe diversify? Choose to lose the battle and shrink the company? Sell out to a winner (ie consolidate)? Become a niche player and nibble at the profitable edges? And so on until the product either becomes seemingly entrenched in a long-running war between a small number of big players (firstly think Coke vs Pepsi, and now think about how both Coca Cola and Pepsi have diversified their portfolios) or it dissolves into niches before disappearing.

The example? Telephony. Infoworld reports how Avaya is fighting back against VoIP in the smaller business arena by joining in with a solution that bridges the customer from small scale to larger PBX system. It's worth a look.

So, here's my brief analysis of the Telephony market. Firstly, pigeons. Then snail mail. Then telegraph. Lots of wires strung around the place. Then the telephone leverages the wires. It catches on, gets cheaper. It proliferates. Big players gobble up smaller ones. In some places it becomes a public utility monopoly, in others it's always commercial but is regulated to ensure some degree of competition. Better electronic switching technology drives down costs, allowing for less capital investment, more automation, fewer workers. The market saturates - everyone has a phone and most business a PBX of some sort. We see an innovation from within - mobile (cell) phones come along that use wireless transmission and the market accepts lower quality voice transmission for the convenience. All is under control of the big players until...

Along comes another technology, this time from left-field - data packets that leverage the wires. This technology proliferates and connects computers rather than telephones over the same wires and later wirelessly. The snail mail market is the first attacked - by email. Then email is attacked by instant messaging. All remains well in telephony - but uneasy - until this new player starts transmitting voice using these data packets. But the quality is awful when compared with dedicated analog voice circuits. But as the quality of VoIP improves it becomes clear that this will severely undermine every part of the telephony business. The new competition offers software based switching (effectively replacing PBXes), good voice quality and integration with instant messaging and low cost of entry. New players emerge from other industries taking bites out of the telephony market. Network world reports on one of these (Virgin Megastores) here. It's so easy to do that any retailer (for example) can buy into the VoIP market and take a share of the telephony market - right now.

Where do you think this will lead? The Telcos still provide most of the wires and wireless infrastructure but it is now being used by others to replicate telephony services on computers. And to integrate that with new services like video blogging and video chat. Some would say that Telcos are happy to be gate keepers and collect tolls on their systems. Some may say that the cheap internetworking of Wifi and WiMax services will undermine even that cash-producer. Will Telcos jump in (as some have already done) and embrace the digital convergence? Or will other players from the left side of the field now gobble them up?

Dissecting Dell

2006-06-26T22:51:00.000Z

MBA lecturers - and their students - love to pull big companies apart, especially so when there's joy to behold in someone's success - or failure. So we see classic case studies such as Kodak vs Polaroid or IBM vs Microsoft. Now I have to say it's fun to do this - it's like an archaeological dig where you stumble over some vital clue to why Carthage fell or Rome triumphed. But it's always post-hoc and it's almost never black and white. We think we learn something in these forensic examinations but how usefully can we employ what we supposedly learn?

If I'm ever in the instant photo business I'll make a point of reading up on the Kodak/Polaroid battle for example, but it's salient to remember that in the longer run another technology - the electronic optical sensor - developed alongside film and quietly got better, smaller, faster and cheaper until one day it overwhelmed the old film-based market and offered the sort of instant image capture we really wanted. A classic case of Porters' forces at work, where no-one was seriously looking sideways at threats from outside. As in outside the film and camera business. Hmm, maybe that's worth knowing.

Another threat comes from inside. As in inside the personal computer assembly business, for example. It's a classic product life cycle, isn't it? Early years lots of ideas, proliferation and innovation. Lots of home built stuff and tiny brands. Then 2 or 3 of those tiny companies shine and look to get an advantage (say Apple and Atari, but there were several more, including Visual) before a big player wakes up and claims turf using massive resources (say IBM). Suddenly the market is certified as real and the dominator creates a standard (which is later leveraged by Microsoft to great effect).

We then see profits made and competitors start up to leverage IBM's design (read Compaq and its ilk). Of course technology improves, production techniques improve and the PC assemblers keep leveraging lower and lower component prices so that the only ways to make money are volume (read Dell and similar) or niche (read Apple and the specialist gaming guys). So the big guy leaves the room (IBM) as it is writ large in MBA strategy courses - if you can't be 1 or 2 in the market or if you aren't growing you should get out.

So (in this highly simplified analysis) you end up mid-cycle with a myriad of niche players and the ever-collapsing and consolidating volume guys (Compaq gobbles Digital, HP eats them both). And what happens when the highly touted cost-reduced assembler stops growing? They look to diversify. So is that a good idea, to leverage your core competency (in Dell's case efficient assembly and distribution) across other products? Could be. But what if your competitors nibble at the sides of your core business as you look sideways? What if you lose focus? What if the big guy actually has new technology up their sleeves and is planning to come back and eat your market in a new way (for example IBM with pervasive, self-healing, autonomic grid computing)?

This could go is so many different directions. For example the Gillette scenario - keep reinventing your product so you extend the product life. The horse-drawn carriage maker scenario - your product becomes nearly extinct, replaced by a similar but better product. The super-customised-niche-in-volume scenario (which is where Toyota sees the car industry going).

So where next for Dell? Read this networkworld report on how Dell diversified into a related field, got the product and the pricing right but still floundered - the suggestion being that the product was great but it wasn't the solution the market wanted. Ah, the total package - product and solution. So how does a single-play volume guy survive the solution war? Is this another lesson for all of us?

Outsourced complexity

2006-06-23T01:05:00.000Z

Outsourcing deals may involve taking over a company’s assets, such as buildings and computer hardware, and may include the workforce as well. The impact on the employees is an obvious one, however it will vary in detail across industries, and is dependent upon circumstances such as the company culture and nature of the work. There is often a hidden agenda to deal with as well. Follow the link on this page to read more.

How Ducati killed its marketing department

2006-06-22T00:26:00.000Z

Is this a sign of the new way to partner with all stakeholders - including your customers? BNET provides the access to this Forrester report. Register at BNET (I have no interest in BNET BTW, just my own interest in knowing what's happening in the world) and either search or go straight here to read it.

In a nutshell, famous moto manufacturer Ducati has leveraged their heritage and loyal customers to "kill" - or possibly just rename and de-emphasise - their marketing department. And it seems to have worked.

Now I would have thought that Ducati was a no-brainer in terms of marketing. The bikes are highly differentiated and their fan base is loyal because of that and the company's pedigree. It's also Italian, which to me adds a certain degree of style and passion just by association. These fans are going to develop an unofficial online marketing engine anyway, so why not partner with that effort? Many other famous brands could do the same I'm sure (whether they subsequently decouple their marketing departments or not). I'm thinking top-end racing (push)bike brands like Colnago and cars like Alfa Romeo for starters.

The problems that may arise are manifold, however, so diligent planning and execution are vital. You need to be open yet ready to combat bad vibes from disgruntled rather than loyal clientele for starters. And will this community-feel work for equally well known but less passionate brands like IBM or General Electric?