March 20, 2011 § Leave a comment
News just hit the wires that AT-T, the once largest, sometimes and recently second largest telecommunications carrier in the US agreed to acquire T-Mobile, the 4th largest carrier with 33 million subscribers in a $39 billion dollar deal. This makes AT-T the definitive largest carrier by a big margin. It is early hours to speculate and confirm if the deal will pass the scrutiny of the antitrust folks but chances are the big telecom lobby will make sure it does. And when it does happen, it will mean 3 major carriers left standing (and one of them wobbly at that) and a bunch of fringe players whose valuation just jumped up at the prospect of Verizon scooping them. Metro PCS at less than $6 billion now seems a juicy target for Verizon. While the 8 million subscribers that Metro PCS offers is much less than the 33 million from T-Mobile that AT-T just picked up, it is still a first step for Verizon. The added bonus of having a LTE network rollout in progress will help the Metro PCS-Verizon Wireless marriage, if it were to happen. The speculation will start tomorrow and Metro PCS shareholders will definitely see the stock go up.
The implication of this event is significant. As recently as last week, rumors suggested that Sprint-Nextel, the third largest carrier with about 50 million subscribers was looking to merge or get acquired by T-Mobile to give the third and fourth place carriers some heft against AT-T and Verizon. This is particularly important in the era of exclusive handset agreements that can make or break multiple quarters for a carrier. The iPhone exclusivity is a case to point that effectively killed a lot of business for Sprint-Nextel and T-Mobile. The Verizon-Google-Motorola relationship was another. It made sense from a business standpoint for T-Mobile and Sprint-Nextel to merge although there were significant technological hurdles stemming from the completely different radio technologies used by the two (CDMA by Sprint and GSM by T-Mobile).
The synergies for AT-T and T-Mobile are much more than T-Mobile and Sprint-Nextel. Given that they have significant field test and operation presence out of Seattle and that they utilize similar wireless radio technologies, it makes for a relatively smoother transition. It also gives AT-T, extra spectrum for its LTE roll-out in the future. But where does that leave the consumer?. T-Mobile has been consistently rated as the best in customer service while AT-T often finds itself at the bottom of the pile. T-Mobile has a loyal set of customers who have benefited by excellent data and messaging plans often times cheaper than AT-T and Verizon. What T-Mobile has lacked is the killer smartphones that have fueled the rise of AT-T in recent years and also a larger coverage map thanks to AT-T’s legacy. This will change now with AT-T and Verizon primarily duking it out for the best smartphones while Sprint-Nextel watches from the sidelines with the occasional exclusive HTC phone. But consumers also have only one national GSM operator to pick making AT-T a bigger behemoth than what it was with a lot more muscle. This will affect the all critical data plans moving forward. On the bright side, with the expanded network, voice calls on AT-T will be better.
Day After Update:
Metro PCS stock is up 5% (PCS). Leap Wireless, a similar CDMA operator is up 12% (LEAP). As expected, this hurts Sprint the most, not just the stock price which is down 15% (S) but also their future prospects (here).
And yes, its all about LTE spectrum.
March 8, 2011 § Leave a comment
Last week, the world witnessed the launch of Apple’s second generation tablet device, the iPad2. What it also saw was one of the best presentations yet from their CEO and arguably the greatest salesman of this generation, Steven P. Jobs. If you want to save the trouble of reading the post, you are welcome to view the presentation here. Jobs unveiled a modest upgrade to the immensely popular iPad in his inimitable style that has been copied by many but mastered by none.
Prior to the event, there was speculation if Jobs would be present given his recent health issues. But surprising many, Jobs took stage at the Yerba Buena Center in downtown San Francisco to launch iPad2. Some have questioned if the upgrades iPad2 has offered over iPad could have really been part of the first generation of the product and if the specs are comparable to the current and upcoming slew of Android tablets. But the way Jobs masterfully presented the product to the world, there is little doubt that this iteration will be as wildly successful if not better than the first generation of the product. Joshua Topolsky has a well written Editorial at Engadget explaining just why so. Avid Apple enthusiast John Gruber of Daring Fireball fame has a nice article that actually goes beyond his love for Apple and presents a valid case for why Apple will succeed with the iPad 2.
I wanted to dwell for a few lines on the presentation itself which was brilliant. Starting with the appearance of Jobs and the masterfully edited iPad montage and simple yet assertive slides on how much more popular the iPad was, compared to the competition, it was just fantastically done. Friends have referred me in the past to a wonderful blog titled Presentation Zen and the associated books[Presentation Zen: Simple Ideas on Presentation Design and Delivery][Presentation Zen Design: Simple Design Principles and Techniques to Enhance Your Presentations][The Naked Presenter: Delivering Powerful Presentations With or Without Slides (Voices That Matter)] from its author, Garr Reynolds that lets us present much like Jobs. Reynolds in facts writes quite a bit about Jobs as seen here and here. The books are great but not everyone who has read these books and others[The Presentation Secrets of Steve Jobs: How to Be Insanely Great in Front of Any Audience] can present like Jobs and we all know that. Jobs, in my opinion is a one of a kind innovator and salesman. This video from the author of the Presentation Secrets book captures the gist of Job’s presentation greatness and how we can emulate it. We are truly privileged to see the man in action in our lifetimes. Remember, the tablet is something most of us really don’t need. Between the superphones of today and our laptops/desktops, there is really not that big a void the iPad fills. But it is to Apple and Jobs credit that they have convinced over 20 million people and counting, that they need the iPad. And with the launch of the iPad2, they will only conquer more such millions. And the launch presentation set the ball rolling just about perfectly!
July 30, 2010 § Leave a comment
Often times we see something odd in the marketplace that doesn’t make sense at first glance – a glaring deficiency in one product does not translate to lower sales when compared to a better engineered and a more wholesome offering. It took me a while of looking at such examples to understand the critical common thread that causes it – product relevance. In what is a first for this blog, I hope to do a detailed analysis of this phenomenon over examples spread across multiple posts. The first of these examples is the story behind the rise of the Xbox360 gaming console from Microsoft overtaking the incumbent home console champion, Sony.
Alive after Death: The 360 degree perspective on the Microsoft’s success
Back in 2000, Sony introduced the Playstation 2 gaming console to unparalleled expectations and eventually tremendous success. Microsoft which had realized that it needed to get into homes for the next digital revolution brought out its own console in the form of the original Xbox a year later. The original Xbox was a decent console with some interesting features like an inbuilt HDD and a fledgling online service for gamers titled Xbox Live. The Xbox was a poor cousin to Playstation 2’s in most homes and non existent in many others. Publishers continued to release console exclusives on the PS2 and shoddy ports for the Xbox. Most Japanese publishers stayed away from it completely. Losses on the Xbox continued to mount and shareholders called for an early exit from the business.
Years passed and Sony and Microsoft were getting ready to launch their next generation consoles. This time, Microsoft had enough market data and experience in the US market to tailor its offerings to the right audience. They knew the relevance of their product to the right consumers. In the meantime, Sony had gotten cocky with the success of the PS2 and assumed they could do no wrong with the PS3. What followed was a true David vs. Goliath episode (although calling MS a David isnt entirely correct considering their 40 billion dollars in the bank). Microsoft launched the Xbox 360 a year ahead of the PS3 and garner critical early audience. They also targeted the console squarely at the best audience- teenage first person shooter loving players that spent countless online hours on the console playing death matches and shoot outs. With Halo and Gears of War franchises, the 360 sucked up all the key buyers before the PS3 even launched. It also helped that Sony priced their console so high to recover a portion of the cost of the expensive blu ray drive included in every unit.
Drunk with initial success, Microsoft kept the hits coming by tailoring their partnerships, games and offerings to the target audience. More FPS’s followed. More exclusive relationships and improvements continued on their online offering, Xbox Live. The most interesting part about the ascendancy of the 360 was the fact that the product was inherently defective with a reported 30% of units replaced. For any other product with that level of defective units, the reception would be non-existent. But the strong teenage FPS loving audience lapped up even a defective console. On the other hand, the PS3 had very minimal defects, a Blu-ray drive built in and free online gaming. None of this lured as many buyers as the 360. Price cuts on the PS3 and a slimmer version have improved sales but it still does not match those of the 360.
The only rational explanation is that the early mover advantage worked for the 360 and the deluge of core gamer audience friendly titles kept them coming. For the PS3, until recently, there has been little thought given to the relevance of the product in the marketplace. Until the release of the cheaper Slim model backed by blockbuster titles, it was languishing in stores without many takers. So there is something to be said about how Microsoft spent time to understand its audience and tailored its product accordingly.
Yes, I did not talk about the tremendously successful Wii in this post. It was not the topic of this post because Nintendo took a risk in building a console for non-gamers. They succeeded but could well have failed and we would be talking otherwise in that context. The PS3-360 case study could be extended to the Nintendo DS-PSP situation but the circumstances are different with the DS being the successful incumbent and the PSP being a still challenging competitor.
More on this topic with additional case studies in the coming weeks.
June 30, 2010 § 1 Comment
A few posts back, I had written the following on the Microsoft Kin.
“The one thing I found extremely interesting is that the Big V network is positioning this as a tween device but with a data plan akin to an iPhone or Droid. This makes no sense. Why would I pay more for a half baked browsing experience with poor phone performance and a good social networking interface when I get all the good stuff and a much better phone, awesome screen and a Webkit based browsing experience with the Droid or an iPhone.”
Turns out, I was not the only one. Microsoft canned the Kin today admitting that the product was a debacle. A few years back, maybe it would have been a marginal seller worth keeping in your portfolio. But with the bevy of Android devices, enterprise friendly Blackberries and the juggernaut that is the iPhone, any other vendor trying to make a dent needs to work extra hard. Hopefully Windows Phone 7 series will get much better traction than the Kin. For Microsoft’s sake.
And yes, its big enough that its trending high on twitter.
June 16, 2010 § Leave a comment
I will start this post with a disclaimer that I have limited experience on this topic. It is an area I have been fascinated by, and have been reading up all the material I can find on it. I am just putting my collection of thoughts on the matter here. I expect this post to serve mostly as a springboard to exploring the topic in further detail.
My inspiration for this post is an excellent book I just finished reading titled The Design of Business: Why Design Thinking is the Next Competitive Advantage by Roger L.Martin. More on the author here. The author argues that the future great companies will be pioneered by a new way of business thinking he terms as Design Thinking. This is not to be confused with marketing and branding. As FastCompany describes it,”it is a proven and repeatable problem-solving protocol, that any business or profession can employ to achieve extraordinary results”. Such a method is a carefully chosen amalgam of innovative thinking and an analytics based approach to doing business. With this introduction, I can delve into the reason why there is an Apple on the blog post title, which is why most of you are here. If you want to skip the rest of the post in favor of learning more about design thinking, I would recommend that you start at the footsteps of the famed thinkers of IDEO. The HBR article by Tim Brown of IDEO is also a good starting point. Oh by the way, IDEO and Apple have a shared past that reflects why they are, who they are. More on that relationship and the growth of IDEO is captured in an excellent book by Tom Kelley, The Art of Innovation: Lessons in Creativity from IDEO, America’s Leading Design Firm.
If you view how products are rolled out by Apple under the design microscope provided ably by the aforementioned pillars, there is a lot of fascinating stuff to see and learn. At Apple, there is a sense of design thinking in much of what they show and sell to the world. There is a tremendous amount of onus on the human centric approach to designing their products. The iPod was not the most innovative product in the market. Nor was the iPhone. They are instead a very user friendly solution to a known problem. They represent a vision of wanting to change how the mobile device is perceived and used, but not so far as to alienate the audience. For much of that they have Jon to thank. But they also have Steve to thank for his unerring sense of audience perception and customer requirement. He is willing to go where the customer wants to but doesn’t know to.
There is occasionally a resistance at Apple to take user feedback into evolving the device or creating one to reach everyone (Eg: lack of 3G in the first generation iPhone, lack of camera in iPod Touch, lack of camera in first generation iPad and so on). Some are business considerations while others just don’t make any sense. But these are minor quibbles while looking at the big picture of how Apple has revolutionized design and how we perceive it. Admittedly, Apple is at an odd but very successful crossroads between technology and liberal arts.
It could also be argued that Apple has had its share of failures in what it thought was a great idea at the time (Ex: Apple TV, iPod Shuffle in some versions). What cannot be denied is that the design powerhouse shows us a way to think and execute on good ideas and make them great products. For Apple, it is not just the technology. It is so much more.
If you are really interested in learning more about this particular topic of how design thinking and Apple’s innovation go hand in hand, there is a paid HBR article here.
May 20, 2010 § 1 Comment
Somewhere in San Jose, there are big changes happening. One that is not being shouted out from rooftops but a major one, nevertheless. As the title of the post would have revealed, I am refering to the transformation of and at Cisco. For most of us, the perception of Cisco is a staid old router company that makes gazillions selling routers and switches to the world. While that is still very true, Cisco has made a very conscious and admirable approach to expanding its portfolio in very adventurous ways.
Looking at their acquisitions over the last few years, one can get an idea of how they are trying to spread their wings without fundamentally changing themselves. The first oddball acquisition really happened in 2003 when they picked up home networking gear pioneer LinkSys. At that time, people were surprised by Cisco’s move to the SME and home office business but it definitely made sense. Things were then relatively silent from their image makeover standpoint until 2005 when they acquired Scientific Atlanta, a profitable maker of set-top boxes. Until then, Cisco had primarily been a backend communication equipment vendor with the lone exception of LinkSys. With this, they were starting to expand further into consumer electronic devices. The rest of their 2005 acquisitions, minor yet important are listed here. In 2006, they acquired a bunch of complementary tools to start putting together an ec0-system for enterprise customers at the front end. They are listed here. Their next big acquisition came in 2007 when they picked up WebEx, a pioneer in web conferencing systems and business collaboration tools. This was a major move by Cisco, one that would be bolstered further by their Tandberg acquisition in 2009.
With WebEx and later with Tandberg, Cisco was placing itself more and more in the end point devices and services space- for enterprises big and small. This was a smart move to build a complete enterprise offering for its customers- many of whom had large Cisco accounts and affiliations. The icing on the cake happened in 2009 when Cisco is an extremely surprise move, acquired Pure Digital Technologies, the maker of the very popular Flip video systems. This was a straight consumer play that was extremely unlikely for a very large networking vendor. But by 2009, Cisco was no longer that Cisco 0f 1999. They were a “network” ecosystem player- one that made anything any everything that had an IP address and the ability to communicate via a wired or a wireless interface.
The launch of the Valet line of Linksys devices targeting the novice home network user and the acquisition of the Moto Development Group, a consumer electronics design firm confirms Cisco’s full on assault on home electronic and networking devices. The company is now intriguingly poised to be a force to reckon with across the full spectrum of networking gear- ranging from GigaBit core routers to consumer video capture devices, from corporate wireless systems to enterprise video conferencing software and hardware. This is not your dot-com Cisco. This is a very different beast and one that had a lofty vision.
Welcome to the Human Network!
May 11, 2010 § 1 Comment
In late December of last year, the Internet was abuzz with information about a new phone from Google- a superphone that had any and every feature that man had ever dreamed of. The iPhone competitor from Mountain View. Soon after, the Nexus One debuted in the hands of Google’s employees. Sneaky photos and videos of the uberphone debuted all over the Internet. Everyone was curious to know if this was the iPhone killer?. Once the hype was on overdrive, Google unveiled it officially in a very simple affair at their Mountain View HQ.
Thanks to a friend whose wife worked at Google, I had a chance to play with the device in early January after the official launch. I liked the touch and feel of it not to mention how fast it was. But that was that. I didnt see it as an iPhone killer- atleast not in the Nexus One version. The Android software, while extremely flexible and developer friendly was not yet the business minded developer’s platform of choice. Until that happened, the real cool apps would not make an appearance on the platform and hence prevent a very large uptick in sales of the device. That said, Google was attempting to change the carrier lockin system tied to handsets by offering it on its own website based on the carrier of choice. This would be a revolutionary way of selling handsets and one that had the potential to change the landscape, if it worked. If it worked.
Over the last four months, a lot has happened on the Android front. Today (May 10, 2010) NPD revealed that the Android platform was the #2 largest selling mobile platform in the US ahead of the iPhone. This has been made possible thanks to the proliferation of Android devices on all four carriers not to mention great promotions and some really cool hardware. Added to all this is the fact that the iPhone is exclusive to ATT which makes it hard to match a platform selling across 30+ devices on 4 different carriers.
But things havent really been all that great for the Nexus One. What was once viewed as a superphone and the best of the best from the Android stables is now almost an also ran. A few weeks ago, Verizon which was supposed to get the Nexus One in Spring said that it was skipping the device in favor of HTC Incredible. Two days ago, Sprint joined Verizon in politely declining the Nexus One in favor of the HTC EVO. It is hard to blame the carriers. The cost of marketing and promoting the tent-pole devices is so high that one cannot afford to have multiple such devices. One or maybe two superphones is all a marketing team can focus on. Not to mention trying to cannibalize one phone over the other in one’s own portfolio.
To be fair to Google, they went for broke and failed. But they did make an attempt to change the status quo in an industry that hasnt changed by much in a very long time. The only downside to all of this is that we wont see Google put up a big effort on the mobile handset front for a while, if not ever. They will continue to spend their resources and effort on the Android which is bearing fruit as we speak. So Android as a platform will be Google’s contribution to the cellular industry. The Nexus One will be a footnote. An uber one at that.
Disclaimer: After I finished writing up the post, I noticed in my Google Reader that Fast Company has an article very similar to this one titled “The Rise and Fall of the Nexus One”. It is a very nice article worth reading here. Soon after, I saw the Motley Fool article along the same lines here.