Boston University IS850: Winning in the Network Era

From Thin Clients to Network Clients

2006-11-13T13:42:00.000-05:00

I found Jonathan Schwartz observations on network clients to be interesting. It reinforces the points that we made that it is not just about thin clients connected to a centralized server anymore. It is far more important to think of these clients as nodes on the network. This is creating a new topology for information systems and a new logic of the architecture of interactions.

verison and youtube

2006-11-08T14:00:00.000-05:00

It looks like Motorola has fallen a step behind in hte race for seamless mobility. If Verizon's vcast completes their proposed partnership with YouTube they might be the first to reach a point where video content can be viewed on cellphones, televisions and computers. I think we all suspected that it would happen this way but the answer lies in the service not in a device.

Comcast seems to have missed the concept of Business Networking and is going to go it on their own.

The article is available to WSJ subscribers here.

ilike.com

2006-10-26T23:48:00.000-04:00

Check this website out. They offer a free piece of software that adds a pandora.com feature to iTunes. Except in this case it is a social network rather than by by the musical genome identification that the pandora people used.

http://www.ilike.com/

there is also an article on them in the personal journal section of Wednesdays (10/25) Wall Street Journal.

grant

2006-10-26T23:45:00.000-04:00

hey hope all is well.

Disney's Mobile ESPN to close, move to licensing

2006-09-28T22:57:00.000-04:00

MORE EVIDENCE TO PROVE THAT YOU DON'T HAVE TO OWN THE WHOLE NETWORK AND PROBABLY SHOULDN'T BUT RATHER PARTNER WITH THOSE WHO KNOW WHAT THEY ARE DOING. IF YOU TRY TO OWN THE WHOLE THING AND IT'S NOT PART OF YOUR CORE COMPETENCY YOU MAY AND PROBABLY WILL FAIL!

September 28, 2006

SAN FRANCISCO (Reuters) - Walt Disney Co.'s ESPN cable sports channel said on Thursday it will shut down its Mobile ESPN wireless telephone business operations later this year and aims to license the brand to existing mobile providers.

Owners of Mobile ESPN phones will receive a full refund when they settle their final Mobile ESPN bill and customers who choose to stop Mobile ESPN service will be released from current contract obligations, the company said.

Mobile ESPN was one of the most ambitious mobile virtual networks, or MVNO, projects to be launched amid a broad move to provide branded wireless services to niche markets.

MVNOs rent space from wireless network operators such as Sprint Nextel Corp. Other MVNOs include youth-oriented services Amp'd Mobile and Helio.

Salil Mehta, ESPN Enterprises executive vice president, said in a statement: "With a redefined approach we have a greater opportunity to reach millions of fans while achieving our strategic and financial goals."

Shares of Disney were down 10 cents at $30.94 in midday trade on the New York Stock Exchange.

at&t adds

2006-09-20T10:26:00.000-04:00

don't know if you have seen them, but they show the seamless mobility concept in action. and oddly, they don't show the network hub that the winning wharton solution proposed. it seems to be a little less about syncing and more about seemless "availibility."

and i am not bitter about wharton taking the prize. i let it go. really, i did.

music platforms become the rage

2006-09-20T09:41:00.000-04:00

funny. i haven't thought about posting in a while but then i read venkat's comments in an article on BI in healthcare. I was going to post on that, but i couldn't find a way to make it work with the network era.

instead, i will comment on the ipod/itunes post that I made in the spring.

there is a bunch of stuff in this article from the chicago tribune.

myspace will begin selling songs - pretty cool idea, they have a captive audience and lots of bands already registered, they are providing an outlet
microsoft is still hanging around the music space and will role out a platform and a player, wonder what happens to "play4sure"
platforms are the rage - ipod and itunes work so well together that everyone else will soon follow suit (as microsoft has suggested). the wall street journal recently printed an article on the music platform that samsung is building.
spiralfrog will offer free music downloads this winter - Universal and EMI have joined the network. the trade off will be some type of embedded advertising. still it looks like the beginning of a strong network.
90% of all music is still sold on CD.
cell phone music players, like chocolate from verizon are selling well but transferring music is troublesome. in many cases it is easier to buy the song directly from the provider website than to rip and transfer from a CD you already own. Paying for music twice doesn't sound right but that is where the providers make their money.

that is all for now. hopefully i will see some of you soon.

Dow Jones thinks about distribution

2006-07-28T15:10:00.000-04:00

Could the WSJ go paperless? A topic we dallied with during class gets tossed about in this Ad Age article. Nothing ground breaking here but interesting to read about nonetheless.

Nike + ipod

2006-07-24T18:18:00.000-04:00

Here is a good overview video that highlights some of the key points.

Here is an ad that highlights some of the key features

Google Checkout

2006-06-29T14:37:00.000-04:00

The long-awaited and much-hyped Google Checkout is here.

It will clearly alter the lanscape of e-commerce by linking search to purchase behavior more finely than ever before. Worth wattching to see what ebay, Yahoo, MSN and Amazon do in response..

When Nokia and Siemens Join Forces for Handsets....

2006-06-19T12:35:00.000-04:00

It looks like Nokia and Siemens will combine their operations to produce handsets in a 50-50 joint venture worth about $31 billion. The handset market is consolidating. This is not surprising given that the handset 'layer' is becoming commoditized. The value is shifting to software (applications) and services (SMS, MMS and ringtones) as well as search and transactions. One reliable estimate of the # of handsets in use by the year 2010 is 4 billion (yes, 4 billion). This clearly has implications for business operations--not just for th emanufacturers of handsets but also for services that can be delivered through the handsets.

This deal follows announcement by a group to create Linux-based software for handsets. This group includes: Motorola, Vodafone, NTT DoCoMo, Samsung, NEC and Matsushita. NTT DoCoMo and Vodafone are operators while others are hardware manufacturers. Clearly, this is meant to challenge Symbian (Nokia-dominant; but Siemens also is a shareholder) and Microsoft Windows Mobile.

Is the Nokia-Siemens merger intended to further consolidate the role of Symbian against competing software standards? It may be curious that Samsung and Panasonic are common members of both Symbian and the new Linux-based software initiative. But, it is expected in dynamic networks.

Positioning in multiple networks may be a strategic requirement for success in the network era. Fixed, static positions under conditions of fast-change may prove limiting.

Transitions at Microsoft

2006-06-16T00:54:00.000-04:00

Bill Gates announced that he will transition from day-to-day responsibilities by July 2008 and retain his post as the Chairman of the company that co-founded over three decades ago. More important is the elevation of Ray Ozzie as the Chief Software Architect.

Why is this critical? It signals a fundamental commitment to the inevitable move to the network era. The future is not about software as a product but about software as service. It is about reorienting the company around the concept of Microsoft Live. It is about building the requisite capability to win in the network era.

Will they win? That's an open question. Microsoft will always be Bill Gates. and Bill Gates will always symbolize Microsoft.

But the announcement of Ozzie as the Chief Software Architect is more than a symbolic transition--in my opinion. It is a signal of the power of the network era and the need to adapt business models to the new context.

The leaked memos a few months back hinted at the transition. Yesterday, Gates made it official.

ebay Wiki: Shape of Things to Come?

2006-06-14T09:14:00.000-04:00

eBay and Jotspot have joined together to launch ebay Wiki. I think it is an evolution of the electronic marketplace that thrives on conversations between buyers and sellers. EBay community is 193 million strong and apparently, their message boards get over 100,000 messages per day. And Wiki makes this set of conversations tidy and efficient.

Richard MacManus noted in his blog:

Having a Wiki on eBay will serve to refine and formalize the cream of the content in its user forums. It will also help eBay in the search engine rankings, as its user-generated content coffers will increase significantly over time!
I spoke to JotSpot co-founder and CEO Joe Kraus about the new eBay wiki yesterday. He described eBay Wiki to me as "a kind of Wikipedia for eBay and about eBay". He said its main focus is to give "tips and tricks on how to get the most out of eBay". The eBay Wiki will complement and build on the eBay forums, in that the wiki will be a "single point of reference" on topics.

I think it is a sign of markets as networks that focuses on information and knowledge of buyers and sellers to create effective trading mechanisms.

Seen other companies offering wikis as ways to connect and converse with customers?

Sony: Innovating to Win in the Network Era

2006-06-10T05:33:00.000-04:00

Sony has an uphill battle to win in the network era. Here's a candid interview in WSJ with Dir Howard Stringer. It's worth taking a look at to understand the enormity of the challenges he faces at Sony to transition to the inevitable network world and compete against Microsoft, Apple, Samsung and others.

This following quote is particularly interesting..

If you're talking about delivering music, [there's] the Sony walkman phone.
We sold three million before Christmas in Europe, but thanks to the confusing
cellular system in America, we're only just bringing the Sony walkman phone into
the United States. We're bringing out another Sony Ericsson phone that pushes
email and that will give BlackBerry a bit of a headache. That's coming out this
summer. I'm not suggesting this is going to have Steve Jobs sleepless, but you
just have to keep coming at him, and I'm fairly convinced that the next
generation of devices will master software.

Worth seeing how he will succeed in the transformation..

Inside Look at Google: A Year-old Video but worth looking

2006-06-07T08:49:00.000-04:00

It is a good overview.

Google Picasa and Joga

2006-06-07T08:37:00.000-04:00

Google is making it easier for users to upload their photographs to Joga: the Google-Nike unofficial community created around the FIFA 2006 worldcup (Soccer of course!). This may be their way to experiment before making a full-fledged attack on Yahoo's Flickr. See here.

In the transofrmation of the music network, the traditional music companies stood in the sidelines while Apple established the new rules for winning in the network era. Similarly, it looks like the transformation of the photography network is taking place with Yahoo and Google calling the shots.

I think it is one more way we see Google's ambidexterity in action.

"Google Spreadsheets"

2006-06-06T04:49:00.000-04:00

Google offers now a new spreadheet web service. The files are stored on a Google server and allows file export and import (.xls and .csv) for offline service. The service also provides a sharing and chat function.

Microsoft will not be happy, but I think that they will also initiate an Office online ("live" program) version.

Google Offerings: A Wishlist

2006-06-05T19:51:00.000-04:00

This is an interesting list.

While some may be far fetched, others are not so crazy at all and we may end up seeing some version of these ideas in reality sooner than some may think.
For example, Google TV is not so far fetched as an idea in light of IPTV (the convergence is already happening). Similarly, Google Travel is not a far off extension (aftera;; advertising around travle is a big business!). So also is Google Storage (logical extension of GMail and riding the cost curves of storage!).

What do you think? Suggest?

Google-Microsoft's Collision Course

2006-06-05T19:12:00.000-04:00

Most observers and analysts expect Google and Microsoft to compete directly more and more as the software industry evolves from software-as-products to software-as-services.

The so-called leaked Gates/Ozzie memos clearly hinted at this eventuality. The latest move is Google's announcement to offer a web-based spreadsheet application. Google already offers a word processing application through its acquisition of Writely. What does this mean for Microsoft when it introduces Office 2007? If you are an analyst, you track the rate of upgrade from prior versions and the distribution of such upgrades across different sectors and across different regions in the world. That will give a strong indication of the impact of the shift from software-as-products to software-as-services. Other early-indicators are the degree of use of Windows Live and Office Live as compared with Google's applications.

So, what next? May be it is no longer about the market share of applications such as Word and Excel--which made sense when software was a product. May be it is about the click-through advertising when users rely on word processing, spreadsheet and presentation applications. If so, then it also has important implications for companies such as IDC who track market share data in the software industry when software functioned as products. I wonder if these companies have the requisite competence to track patterns of click through advertising when people use different applications or do they suddenly face competitive threat themselves from Google and Microsoft--who have this data as part of their service offerings?

Update: It looks like Google is particularly focused on the shared application idea--further bolstering the importance of networks. Take a look at this from AP.

To avoid swamping the company's computers, Google's spreadsheet initially will be distributed to a limited audience. Google also wants more time to smooth out any possible kinks and develop more features, said Jonathan Rochelle, the product manager of the new application.

The Mountain View, Calif.-based company planned to begin accepting sign-ups for the spreadsheet at 9 a.m. EDT Tuesday through the "labs" section of its Web site. Rochelle wouldn't specify how many people will be granted access to the spreadsheet application.

Google's spreadsheet isn't as sophisticated as Excel. For instance, the Google spreadsheet won't create charts or provide a menu of controls that can be summoned by clicking on a computer mouse's right-hand button.

Rochelle said the program's main goal is to make it easier for family, friends or co-workers to gain access to the same spreadsheet from different computers at different times, enabling a group of authorized users to add and edit data without having to e-mail attachments back and forth.

"We are totally focused on the sharing aspect," he said.

So does it mean Google gets the network era? Perhaps, Yes!

Is Friction Inevitable in Dynamic Ecosystems?

2006-06-04T08:42:00.000-04:00

Friction is inevitable in dynamic ecosystems. It is because the roles and business scope changes dramatically. Take the case of Symantec (publishers of the Norton Software). For a long time, Norton software was a complementor to Microsoft. Many retailers bundled the security and virus protection software and offered trial versions free for 30- or 60- days. The roles were clear: Microsoft offered Windows platform and Norton offered security protection modules.

But when Microsoft begins to offer Windows Live OneCare service, the distinction between platform and module blurs. Microsoft and Symantec are no longer partners but they start to compete more directly for the same customer dollars. Their cash registers collide.

I had blogged earlier about the tension between Microsoft and Adobe over whether Microsoft can offer the PDF making functionality for free. The WSJ article reported that:

The dispute with Adobe is whether users of Microsoft's Office software, which include the Word, Excel and PowerPoint applications, will be allowed to save files in Adobe's PDF format. If Microsoft included PDF in its widely used Office programs, it could potentially crimp distribution of Adobe's Acrobat software, which is one of several programs that can be used to create PDF documents.

Adobe declined to clarify its exact objections to Microsoft's use of the specifications. (my emphasis).

Adobe offers technical specifications for PDF free, allowing other software makers to build applications that can read or write PDF files. Software from Apple Computer Inc. and open-source software called OpenOffice use the PDF technology.

These two incidents are not isolated incidents. They are part of the inevitable tension that exists when partnering under fast changing conditions.

Effective strategy in a network era is about navigation under dynamic conditions. And it calls for recognizing the early signals of shifting business roles even in tight ecosystems.

End of Conglomerate Synergy? Time Warner Thinks so..

2006-06-03T23:45:00.000-04:00

We had debated that the network era is about thinking of a corporation as a portfolio of capabilities through relationships, not vertical integration through ownership of assets.

One of the aberrations during the shift from the industrial era to the network era was the Time Warner-AOL merger in 2001. Steadily, it appears that Time Warner has concluded that the synergey was never created and captured by the merger. Here is the WSJ article that provides a good update. Recall that Google and AOL entered into an equity stake recently. Google-Dell link to preinstall Google Pack. Yahoo-eBay link and so on. At the same time, mergers wont go away (Ebay + Skype is a recent example).

Will we see less mergers and major acquisitions and more alliances in the network era? I will have to say Yes unless managers still rely on the logic of industrial era focused on economies of scope that has proved elusive.

Microsoft Office 2007 and PDF (Adobe): Friction in Software Ecosystems

2006-06-02T16:42:00.000-04:00

Microsoft had intended to offer native 'save as pdf' option within Office 2007. Adobe 9which incidentally gives the reader away free) is not too happy with Microsoft providing this functionality! This seems to be the latest friction point within software ecosystems.

This seems to be an interesting case of who likes Open Source and who embraces it under what conditions...
Here is an interesting observation from Brian Jones, a program manager working on Microsoft Office:

"I'm still trying to figure that one out given that PDF is usually viewed as an open standard and there are other office suites out there that already support PDF output. I don't see us providing functionality that's any different from what others are doing.
It looks like Adobe wanted us to charge our customers extra for the Save as PDF capability, which we just aren't willing to do (especially given that other companies already offer it for free). In order to work around this, it looks like we're going to offer it as a free download instead. At least that way it's still free for Office users, but unfortunately now there is an added hassle in that anyone that wants the functionality is going to have to download it separately."

There is a CNET post on this as well discussing the legal angle.

The path to seamless interoperability is paved with many bottlenecks and coordination across the different software entities is a key to make the system work. Such frictions are inevitable. Microsoft and Adobe should work together for the sake of the customer.

Yahoo and Video Uploading Service

2006-05-31T22:04:00.000-04:00

2006 will be marked as the year of social networking and video-uploading-and-sharing. In fact, they may be the same as more social networking sites allow uploading of text (blogs), pictures, podcasts and videos.

The video phenomenon started with YouTube--with a tagline Broadcast Yourself. Then Google Video followed suit. Now, Yahoo is joining the race.
WSJ reported that: "Video-sharing start-up YouTube Inc. says consumers watch more than 50 million videos a day on its site and upload more than 50,000 videos to YouTube daily." the same article also noted that: "Americans are increasing the amount of video they watch on the Web. Consumers viewed 3.7 billion Web video streams in March, with each viewer watching around 100 minutes of video content on average, according to research firm comScore Networks Inc."

Apple itunes allows video sharing (video streaming) to a local network. MySpace allows videos to be uploaded as well. Clearly, there are other sites. If you want a quick comparison of the top ten sites by one reviewer, you can go here.
For a creative rendering of video related to a product (ipod), see here.

So, will Yahoo's new service be different? or just one more of the same? Worth watching.

Monetizing Social Networks Thanks to Google

2006-05-31T21:29:00.000-04:00

One of the thorniest issues in recent years is about monetizing social network initiatives--now that MySpace, Yahoo/360, blogger and others have taken off. People often ask: why do people contribute to social networks (especially open source movements? While there are non-monetary reasons (such as reputation or self-satisfaction), I have always felt that monetary mechanisms will simply accelerate network-based communities. But, micropayments are expensive to set up till now.

What's changed? Google AdSense API. According to Google:

The AdSense API is ideal for developers whose users create their own web content through web hosting, web publishing, blogging, and social networking applications.
Now individual bloggers or contributors to a community network can receive fair royalties. If you like to read more about it, the first case study--not surprisingly-- is

Blogger. I wonder how MySpace and Yahoo/360 will react? What about all the user-generated content in other sites?

Interesting issues to ponder.

Google sees more partnerships, not major mergers

2006-05-31T17:54:00.000-04:00

IS THIS ANY SURPRISE BASED ON WHAT WE TALKED ABOUT?

By Eric Auchard May 31, 2006

SAN FRANCISCO (Reuters) - Google Inc. believes that big-name partnerships instead of major merger deals remain the best way to expand its customer base, executives of the Web search leader reiterated on Wednesday.

"M&A (mergers and acquisitions) as a method to acquire traffic has not historically worked," Chief Executive Eric Schmidt told Wall Street analysts on a conference call but added: "Again, we would never rule something like that out."

"It (M&A) is a bad business strategy ... and it is not consistent with Google's values and culture anyway," Schmidt said of Google's preference to build markets itself rather than buy its way into them. He was responding to an analyst's question.

His comments follow recent speculation on Wall Street that the Internet industry is poised for consolidation among some of the biggest players in response to slowing growth rates and the in-roads Google's success in Web advertising have made.

Google had $8.43 billion in cash at the end of March, which could be used to fund acquisitions. However, to date, it has been reserving most of its cash for investments in computers and datacenters to handle a growing number of services.

Partnerships with AOL LLC on advertising, Japanese mobile phone company KDDI Corp. in mobile phones and Dell Inc. on computers remain the preferred method for expansion beyond its own internal efforts, Schmidt said.

"The answer is partnerships," he declared.

Executives of the Mountain View, California-based company declined to comment when grilled by analysts on whether partnership deals would always add to Google's cash holdings within one year of an agreement.

In particular, Google officials had no comment on the pricing structure of the partnership announced last week with computer maker, Dell, which analysts have speculated involves Google making big-upfront payments to Dell to win prominent placement for its Web search and other services on Dell PCs.

"It's better if we don't comment on any of the rumors about pricing," Schmidt said. He repeatedly said that Google's agreement was covered by confidentiality agreement.
The deal could mark a milestone for Google, which historically has incurred little upfront cost to attract customers to its services. Instead, it has shared a portion of advertising revenue with partners who drive traffic its way.

Google Chief Financial Officer George Reyes promised the Dell deal would prove cash-positive over the course of the multiyear transaction, but declined to answer a point-blank question about its first-year impact on Google finances.

"Clearly the terms of Dell deal span out over several years," Reyes said. "It will certainly be cash-positive over the course of the transaction," he said.

The conference call with analysts is part of a new push by Google to improve relations with Wall Street, which has been irritated by Google's steadfast refusal to comment on its financial outlook, in contrast to many high-growth companies.

Joga in Action

2006-05-31T08:16:00.000-04:00

As the FIFA Worldcup 2006 gets underway, the Joga Community is also gearing up.
See if you find a good summary comparison of official versus unofficial community networks in action. Will Google + Nike (unofficial community) beat Yahoo + FIFA (official community) in terms of the fan buzz and interactions?

Emergent Ecosystems in Practice: ipod + Yahoo Local

2006-05-28T12:15:00.000-04:00

One of the distinguishing characteristics of the network era is emergent ecosystems: linkages formed as third party use APIs from one or more entities to create new innovations without any formal governance mechanisms. This is different from designed ecosystems through formal alliances, cross-equity linkages and agreements.

Here's an example of emergent ecosystem in action using Apple ipod and Yahoo local. This allows you to get directions on your ipod based on Yahoo Local (Maps).

How it works?

The website www.ipod-directions.com is very simple to use. Just like using Yahoo Maps, you would enter your starting and destination address in the corresponding online form. Once you have entered your start and destination information, simply click on “Verify Directions” to make sure that you’ll be given correct and accurate driving directions. Your very last step is to click on the button “Get Directions” and the website will prompt you to download a ZIP* file that contains your driving directions. All that’s left to do is to make sure you extract the ZIP file to your iTunes Photo Folder, connect your iPod to your computer, sync your iPod and then you’re ready to roll!

This program is easy to use for any event when you are in the need for driving directions to any location in the US or Canada, and best of all, it’s FREE!

The ipod+Nike announcement earlier was about designed ecosystem with both parties joining together in a common press release. Here, the website clearly states that "Yahoo! Maps and Apple iPod are in no way affiliated with this service."

I am confident that it will be just a matter of days before we see this functionality emerge using Google Maps. This is the power of innovation in emergent ecosystems.

The management message: In addition to mapping your designed ecosystems, understand the pattern of emergent ecosystems.

Goolge preinstalled on Dell computers

2006-05-28T05:28:00.000-04:00

Google responsed to the new Internet Explorer 7 (preinstalled Microsoft search engine) with partnering with Dell . The new Dell computers should have Google desktop search and Google toolbar. Additionally, Google is the default search engine in Dell computers.

The new partnership shows again new possibilities of partnering across layers and strategic decisions against competitors!

Tracking The High Definition DVD Wars

2006-05-26T18:28:00.000-04:00

Most business school students go through the historical discussions of VHS verus Betamax in the consumer electronics industry (Video Casettle Recorders). Now, we have another battle underway right in front of our eyes: the HD-DVD Wars.

Now you can track the impact of network effects based on sales at Amazon using this website. Clearly, the generalizability is limited because the data comes from one source (Amazon). See if you find other sites and data sources that can be used to develop a more comprehensive understanding of the standards war.

Unlike the VCR war, we now have the functionality to track the winner-vs-loser in near real time. This is the Network Era!

Yahoo + Ebay + Skype

2006-05-26T02:20:00.000-04:00

Yahoo (400 mio user) and Ebay (200 mio user) are partnering in online advertising, online pay services and online communication to improve their position against Google and Microsoft. Yahoo will be the preferred search engine in Ebay and will be integrated in the Ebay toolbar. Ebay on the other hand will be the preferred service provider for Yahoo-online pay services.

Skype will also be involved in the cooperation, but no details have been announced yet. But in my opinion, it would be a great feature, if VoIP is integrated in search result (e.g. if with search results a "call-button" would be displayed)

Nike + ipod

2006-05-24T17:29:00.000-04:00

Another example of convergence announced today as Nike and Apple launched a new kind of integration between athletic footwear and ipod. I think it is an exciting partnership between two creative companies.

The new Nike+ Air Zoom Moire is the first footwear designed to talk to iPod. Nike plans to make many of its leading footwear styles Nike+ ready, connecting millions of consumers to the Nike+iPod experience. With the Nike+ footwear connected to iPod nano through the Nike+iPod Sport Kit, information on time, distance, calories burned and pace is stored on iPod and displayed on the screen; real-time audible feedback also is provided through headphones. The kit includes an in-shoe sensor and a receiver that attaches to iPod. A new Nike Sport Music section on the iTunes® Music Store and a new nikeplus.com personal service site help maximize the Nike+iPod experience

For those interested in knowin gmore details, I suggest that you take a look at the detailed patent application that has been made public now.
ipod integration with automobile started with BMW and many cars now have ipod integration.

Watch for reactions from Reebok/Adidas and Sony. It's natural that we will see imitative initiatives as we get more connected and networked.

Motorola Unveils Q Smartphone

2006-05-23T17:30:00.000-04:00

This is interesting timing given what was discussed at Boston University's First Annual International Tech Strategy Business Case Competition which was sponsored by Motorola!

By a WALL STREET JOURNAL Staff ReporterMay 23, 2006; Page D2

Motorola Inc. yesterday unveiled its Q smartphone, an ultrathin, Bluetooth-enabled device that includes a phone, a music-and-video player, email and desktop functions.
Motorola Q

The Q enters a crowded field dominated by Research In Motion Ltd.'s Blackberry and Palm Inc.'s Treo smartphones. Samsung Corp. and Nokia Corp. have similar devices, which target the lucrative corporate market.

Motorola said the Q, which runs Microsoft Corp.'s Windows Mobile 5.0 software, will be available May 31 for customers of Verizon Wireless, a joint venture of Verizon Communications Inc. and Britain's Vodafone Group PLC.

A version running on technology compatible with Cingular Wireless will be available at the end of the year, although Motorola didn't specifically name the carrier. Cingular Wireless is a joint venture of AT&T Inc. and BellSouth Corp.
WALL STREET JOURNAL VIDEO

Motorola CEO Ed Zander1 talks about the future of mobile Internet and his company's new Q smartphone.

While the Q will initially target corporate customers, Motorola Chief Executive Ed Zander sees more potential for the device.

The Schaumburg, Ill., mobile-phone and wireless-communications company has spent roughly two years developing the device, which was expected earlier in the year.

Google: Is it over diversifying?

2006-05-22T13:29:00.000-04:00

One of the lessons that we learn from looking at conglomerates in the industrial era is over diversification--going far away from the core business. It has been called by many different names--conglomerate diversification, unrelated diversification and so on. Academic studies have documented the pitfalls of conglomerate diversification that stray far away from a firm's core competence.

I was stuck by the breakdown of Google's hits posted by Richard MacManus from hitwise. Google (mainpage) has 80% of share of Google properties. If you add Gmail and Google Image search (which account for 15%), you get to about 95%. The remaining 5% is made up of 17 subdomains within Google.

This raises a question: should Google even bother with the other 17 subdomains? The answer is yes--because it is in the best spirit of ambidexterity: working to maximize current operations while creating future capabilities. Successful companies fail not because they do not execute well. They fail because they are trapped into thinking that their success will prevail over time. They succumb to their competency traps.

We can not (and should not) look at Google Lans with 0.01% share of Google properties as anything but the fact that few care to even visit Google Labs and have an early peek into the product/service pipeline.

More important is the fact that these are all somehow related (at least to me) to Google's core business. It is not like the unrelated conglomerate diversification that we saw in the 1970s and 1980s. I posted earlier about Google's ambidexierity. This chart simply reinforces their underlying focus on balancing today and tomorrow.

Understanding diversification in the post-industrial age is an interesting and useful challenge. This table should be interpreted in a way beyond share of visitors to Google properties.

Hub start-up will back up data files for $5 a month

2006-05-22T11:10:00.000-04:00

We predicted that online data storage was on its way when we developed our stack for 2010! Let's see if Comcast or Verizon decide to get into this game, which is also what we predicted would happen! A player as large as these could quickly eliminate this start-up!

By Hiawatha Bray, Globe Staff May 20, 2006

Everybody knows they're supposed to make backup copies of their computer files; hardly anybody does it. ''If you ask them why, the answer is simple," said Boston entrepreneur David Friend. ''If it was cheap and simple I'd do it."

Problem solved, claims Friend. His new company, Carbonite Inc., will back up any Internet-connected computer in the world for $5 a month, no matter how much information is stored on the machine's hard drive.

Friend and his colleagues have developed a small, simple piece of software that sits on the user's computer and uploads files to a remote storage facility in New York. Even people with little knowledge of computers can set up a Carbonite account in a few minutes. ''We're decidedly not a techie solution," said Friend, who compared the system's simplicity to that of Apple Computer Inc's iPod music players. ''We think of ourselves as the iPod of backup."

Once installed, it may take days for the Carbonite software to complete the initial data backup. That's because with most home Internet connections, dial-up or broadband, data upload speed is much slower than download speed. But all future updates are much faster, because the software will only transmit new or modified files. All files are encrypted to protect customer privacy.

Internet-based file backup is nothing new, but other companies charge higher prices for larger backup capacity. Friend, an engineer who previously founded Sonexis Inc., a Tewksbury maker of teleconferencing gear, said that with today's cheap data storage, Carbonite can afford to offer flat-rate pricing.

He estimated that the average user will back up about eight gigabytes of data. Friend doesn't worry about the inevitable users who'll upload hundreds of gigabytes of data. ''We'll make money on 98 percent of the users and lose money on 2 percent," he said. Besides, he added, ''storage costs are dropping like a stone, so a guy who's an unprofitable customer now will be OK next year."

Michael Cai, director of broadband and gaming research at Parks Associates, a research firm in Dallas, said that Carbonite doesn't face much competition. ''Right now the online storage and backup market is still nascent," he said. ''There aren't that many subscribers yet."

But Cai said Carbonite won't stand much of a chance if major Internet providers like Verizon Communications Inc. offer online backups to their subscribers.

That prospect doesn't faze Friend, who said he has talked to Internet providers about offering Carbonite subscriptions to their customers as a premium upgrade.

Google Dreams (well.. Dreamlines using Google Images)

2006-05-20T18:35:00.000-04:00

Try this site with your set of words. (hint: try Boston RedSox or Google or Microsoft)

What is this site? According to the designers..

Dreamlines is a non-linear, interactive visual experience. The user enters
one or more words that define the subject of a dream he would like to dream. The
system looks in the Web for images related to those words, and takes them as
input to generate an ambiguous painting, in perpetual change, where elements
fuse into one another, in a process analogous to memory and free association.
The system has been developed in Java and PHP. First, a PHP script makes a
Google image search of the words entered by the user. Then, the Java applet
retrieves the images one by one, and uses them as input to generate an
ever-changing drawing.

The pictures are never actually shown. The drawing
itself is produced by 1500 autonomous particles in perpetual movement. The last
image loaded serves as a sort of virtual terrain for them. The direction and
speed of each particle is given, at each step, by the color values of the pixel
they are stepping on. Different sets of formulas translate the hue, saturation
and brightness of the pixel in angle and velocity values for the particle. The
path of each particle is traced to the screen, and this forms the output seen by
the user.

Thus, the work is at the same time a study on population dynamics,
or on the emergent behavior of a multitude of very simple autonomous agents.
Who is dreaming? The user, or the Internet itself? In a certain way, both.
The program generates a personal moving picture, unique, unpredictable, and
forever gone when it is finished, just like dreams. But that dream is made out
of pieces taken form the subconscious of the whole net, gathered by some words
of the user and the obscure logic of searching algorithms.
_______________________________________________
Is this simply another way to mash-up Google images? How can this be refined? What other uses and applications do you see?

Google Talk and Nokia

2006-05-20T08:21:00.000-04:00

Nokia announced that a the next software upgrade will include google talk. The program allows messaging as well as VoIP. The Nokia Tablet 770 uses the WiFi instead of normal mobile net infrastructure.

What happen if Google now offers a UMTS (3G) mobile flatrate? Do we need telecommunication providers anymore and will the industry change as seen with fixed line market?

a video on Google (in dutch; English subtitles)

2006-05-19T18:38:00.000-04:00

From Bala Iyer...
This video is a good overview. Dutch video but subtitles in English. Have fun.

Cross-functional Innovation and Implementation at Google

2006-05-19T07:38:00.000-04:00

We discussed Google's 70-20-10 as ways to balance experimentation and execution. It sounds good in theory but what does it really mean in practice. What if the ideas you are working on is to be implemented by someone in some other department. What happens to the traditional turf battles and th enot-invented-here philosophy that exists in most (if not all) companies.

Here's a post about how one Googler used his 20% time in practice. While we cannot (and should not) generalize from this one case, there are useful lessons here.

Wal-Mart Growth Patterns (VIsualization)

2006-05-18T22:32:00.000-04:00

Here is a good visualization of Wal-Mart's Growth (look at red dots and blue dots representing new and old stores). It has interesting parallels to the Microsoft evolution (based on the support from new and establied ISVs). Thanks to Espen Anderson for this link.

If you find other visualizations pertaining to the network era, post them on the blog. Thanks.

Dell to use AMD Chips

2006-05-18T18:30:00.000-04:00

I remember remarking when Apple-Intel relationship was announced that Dell-AMD will not be far behind. It looks like Dell will announce soon that it will offer servers on the AMD chips. Well, servers are a start and it will not be too long before we see Dell computers on AMD.

These two moves further reinforce that the competitive battleground is shifting away from the lower levels of the stack. Here, we will find that there will be further consolidation and fewer exclusive linkages as companies go for efficiency.

VeriSign Buys GeoTrust - We predicted this!

2006-05-18T18:14:00.000-04:00

May17, 2006 10:08 a.m.

Relationships are forming right now!

VeriSign Inc. agreed to buy closely held GeoTrust Inc., a supplier of tools used to secure online transactions, for $125 million in cash. Needham, Mass.-based GeoTrust provides digital certificates used for e-commerce transactions and identity verification. Verisign, which also sells digital certificates, said GeoTrust's 9,000 direct resellers will bolster its business. VeriSign said it expects to close the deal in the second half of the year.

-Wall Street Journal Online

Google Trends

2006-05-13T14:24:00.000-04:00

We discussed Google is not just a search engine. It is an advertising engine that has the potential to radically shift the value in many sectors and industries. It uses data at its core to make big thing shappen. The most recent example is Google Trends. Take a look at it and see what this could mean in the network era...
Here's a snapshot of comparison of searches involving Yankees and Redsox. (see the spike during 2004 World Series frenzy). Now, try with different brands (example: Coke versus Pepsi). Does this search-related buzz imply anything? How could it be monetized?

TV Ads: Watch it? Skip it? Interact With it?

2006-05-13T13:50:00.000-04:00

We have gone from an era of watching TV ads (without choice) to an era of skipping ads (thanks to Tivo and DVRs). Now it looks like, we are entering an era of interacting with the TV ad much like we do with a computer. This is inevitable given the convergence underway.

Tivo has unveiled its first interactive TV ad. According to Techweb..The application, called the Lexus Car Configuration Tool, will be available on a broadband-connected TiVo Series2 digital video recorder. TiVo and Lexus are hoping that people interested in luxury cars will take a break from their TV watching and play with the tool that allows them to customize a 2007 Lexus ES 350. In addition, the ad provides information on the model, a slideshow and the option to find a local dealer and schedule a test drive.

I think this is an experiment worth tracking because this also has implications for improved precision in the measurement of the impact of advertisements.

Will MSN, Yahoo and Google be far behind as they jockey to show superiority of IP Television.

Thomas Pink and ipod

2006-05-13T13:36:00.000-04:00

Thomas Pink is a high-end shirtmaker (owned by LVMH). You may wonder why this firm is relevant for the network era. It's simply because it's latest product is the commuter shirt. According to Thomas Pink:

The Commuter shirt has a special concealed pocket for mp3 player and hidden casing for headphone wires as well as a clever cuff pocket for credit or travel
cards.
When high-end shirts recognize the pervasive use of gadgets, the network era has arrived...

Google, Nokia to Launch Internet Browsing Device

2006-05-12T12:45:00.000-04:00

The relationships are quickly forming!

Google, Nokia to LaunchInternet Browsing Device

By CASSELL BRYAN-LOWMay 12, 2006 11:53 a.m.

Google Inc. is teaming up with handset maker Nokia Corp., in a move that could help propel the Internet company into mobile communications.

The companies plan to launch a version of Nokia's hand-held Internet browsing device ready loaded with Google's Google Talk service, which enables users to have voice conversations and exchange instant messages, according to a person familiar with the plans. The device, which relies on short-range technology known as Wi-Fi rather than cellphone networks, isn't a cellphone.

The companies, which plan to announce the partnership on Tuesday, expect the device to go on sale globally and cost about €300, or about $390, the person said. Nokia also is talking to other companies about incorporating their Internet communication software onto the device.
The device is an upgrade to a product Nokia first launched in September called the Nokia 770 Internet Tablet. The device was the Espoo, Finland, company's first mobile device that isn't also a cellphone. Slightly larger than most personal organizers, it has a wide, high-resolution screen intended for easy Web-page browsing. It also plays video and music.

Write to Cassell Bryan-Low at cassell.bryan-low@wsj.com

Google Notebook

2006-05-11T11:45:00.000-04:00

Why am I not surprised?

Google has announced that it will launch Google Notebook as a personal browser tool that lets you clip text, images, and links from the pages you're searching, save clippings to an online notebook, and then selectively share notebooks with others.

I see it is an important building block for exchanging information and idea. Google hinted at this functionality earlier with Google News (that can be personalized) and shared (see my Google newspage as an example). Google has already made it easy to link calendars within a community.

Notebook could emerge as a useful mechanism for sharing what we search (web pages) and how we utilize search (clipped text and images). Worth taking a look at the functionality when it is actually launched in a week or so.

Early peek into the screenshots are located here . This screenshot is interesting if you notice what you can search on the search toolbar: search your notebook or all public notebooks. Soon, I expect the functionality of searching notebooks of my friends (or even specialized categorizations). .

Welcome to Google Community!

Visualization of Data to Understand Network Evolution

2006-05-11T11:40:00.000-04:00

This seems to be an interesting site to take a look at to understand how we can better visualize complex and detailed data. Gapminder is a Swedish foundation that develops information technology for provision of free statistics in new visual and animated ways. What I found interesting was that Google hosts the software on its servers. It seems to have started with a focus on world development indicators. There is a video of a talk by one of the Gapminder researcher if you are interested to learn more.

But I started wondering if there is a possibility of adapting it to visualize networks of the kinds that we explored in class--especially if we get a collaborative initiative with some of the data providers.

Love to hear what others think after you have had a chance to take a look at it.

Jonathan Schwartz Blog and the MS-MBA Program

2006-05-10T15:12:00.000-04:00

Jonathan Schwartz, CEO of Sun blogged on his appointment of Greg Papadopoulos as CTO and EVP (R&D) of Sun. His comment in the opening paragraph caught my attention:

The customer made an interesting point - his job was getting more technical.
A change from a few years ago, when his priority was big web traffic deals and
traditional business development. The customer was a technologist to start,
so he was in his comfort zone, but it had become increasingly obvious that
the next generation of differentiation on the web was going to come from technology innovation - not just good BD or branding. (bold mine)

This is yet another observation about the importance of our MS-MBA program on the growing interconnection between business and IT. Read the blog and see the arguments in favor of systems architecture as an important part of shaping business architecture.

Now, if only there are more CEOs that agree with Jonathan Schwartz.... I am sure that it will happen soon.

The Battle of the Boxes

2006-05-10T02:07:00.000-04:00

Read this interesting article on video game wars. It's a bit amusing to see Nintendo squeeze into the scene with a surprise machine which seems to have much less to offer (except a likely low price), in comparison to the sophisticated hardware in the Xbox 360 and PS3. The only downside to more players joining in, is the addition of more standards and platforms, which creates confusion.

I'm also surprised that Sony actually allowed Microsoft to get a year's lead (= 10 million users) on this! Microsoft, on the other hand, seems to have a good plan in place to maintain the lead, with its typical but intelligent strategy of employing network effects in its favor: it plans to link gaming to Windows PCs and mobile phones. It would be interesting to see which way these "boxes" are headed.

Apple beats Apple Corps

2006-05-08T14:16:00.000-04:00

The Beatles record label lost its suit against Apple. The decison sided with Apple becasue they did not overtly use the apple logo in relation to music. Instead they used the logo to identify the site and the itunes store. That sounds like a fair assesment to me.

It will be interesting to see if the Beatles put their catalog on Itunes. One would think they would be foolish not to. Itunes has established themselves as a strong hub in the network. They currently control the majority of the product and the deepest list of customers.

Disney's promotion agreement with McDonald's ends

2006-05-08T14:12:00.000-04:00

What does this mean for these two companies in the Network Era?

Disney's promotion agreement with McDonald's ends
By Los Angeles Times May 8, 2006

For 10 years, Walt Disney Co. and McDonald's appeared to have the perfect marriage. Happy Meals bore little figurines of Nemo, Mr. Incredible, and 101 Dalmatians.
But no more. This is one relationship that's ending because of the children.
Disney is not renewing its cross-promotional pact with the fast-food giant, which comes to a close with this summer's release of ''Cars" and ''Pirates of the Caribbean: Dead Man's Chest." The reason in part, say multiple high-ranking sources within Disney, is that the company that prides itself on being family friendly wants to distance itself from fast food -- and its links to the epidemic of childhood obesity.

Disney's not the only studio that thinks french fries loaded with trans fats may be too hot to handle.

DreamWorks is working with McDonald's to promote ''Shrek 3," due out in 2007. But according to one top-level source inside the studio, there is internal debate about whether the lovable green ogre should steer clear of Chicken McNuggets and Big Macs in favor of the healthier fare on McDonald's menu, such as salads. (Shrek is, after all, overweight.)

The end of the Happy Meal partnership comes at a time when the processed- and fast-food industries are under fire on a number of fronts because of growing concerns about expanding waistlines, particularly among youngsters. Just last week, former President Clinton succeeded in yanking sugary sodas from elementary school campuses.

But some say the more discreet actions of the entertainment industry ultimately could have a greater influence, especially if other corporate giants follow suit.

''I think it would have impact in contributing to the cultural change that is necessary," said Dr. J. Michael McGinnis, chairman of a National Academy of Science panel that just released a study showing how food marketing adversely affects children's diets. ''The committee thought it was important for the use of cartoon characters that appeal to children only to be used in the marketing of healthy products."

One of the industry's most prominent critics, ''Fast Food Nation" author Eric Schlosser, said it will be ''hugely significant" if Hollywood walks away from Happy Meals. ''It will put more pressure on McDonald's to change what they sell in Happy Meals. The obesity issue would be irrelevant if the food in the Happy Meals was healthy."

Sources on both sides of the agreement say the parting of the ways was mutual. And it's not a complete divorce, either. McDonald's fare will continue to be a staple in Disney's theme parks. Disney also is leaving open the possibility of McDonald's promotions geared toward adults.
Disney released a statement praising its decadeslong relationship with McDonald's, adding: ''While our contract with them will expire at the end of the year, we look forward to a more flexible, nonexclusive relationship where we will be working with them on a case by case basis."
Dean Barrett, senior vice president of global marketing for McDonald's, agreed. ''Our relationship was ongoing before the agreement and will continue after. We've had great success. There's great entertainment value with us and Disney, and I would think that would continue for years to come."

Barrett said that the only factor that really has changed is the exclusivity of the relationship -- McDonald's is now free to partner with other studios. Hence McDonald's new, two-year agreement with DreamWorks, beginning with ''Shrek 3." DreamWorks declined to comment.
Disney has not signed any new deals with fast-food providers.

Industry analysts say the breakup will force both Disney and McDonald's to find new promotional outlets.

Restaurant analysts don't believe McDonald's bottom line will suffer if other studios and toy companies pick up where Disney left off. Kids might not even notice.

IF KIDS DON'T NOTICE WHAT WAS THE RELATIONSHIP WORTH IN THE FIRST PLACE?

McDonald's and Disney

2006-05-08T14:04:00.000-04:00

One thing we didn't talk about was social pressure that might change the dynamics of the layers (Hatten covers this a little in Risk Management). Given the increasing focus on Childhood Obesity, it seems that Disney has decided that it might be best to alter their relationship with McDonalds. Previously Disney was the primary sponsor of the Happy Meal. The Happy Meal has recently come under fire for contributing to the Obesity problem.

The interesting angle for our class is to look how this changes the layers. Disney has ended their exclusive relationship with McDonalds but has suggested that they will engage on a case by case basis. The risk here is that McDonalds finds another partner and locks Disney out. However, given the hot potato obesity issue it is likely that this will not happen (unless McDonalds surprises everyone and totally revamps their menu).

Disney gains power in this deal because they are no longer tied into a contract with the fading McDonalds. McDonalds may have once been a hub, but the social pressures are changing the layers. I am not sure that Disney has that many other options so they were forced to leave the door open for a possible return. I wonder if there will be any measurable effect on the sale of Happy Meals.

TiVo in the Network Era

2006-05-05T09:23:00.000-04:00

Background

TiVo currently operates in both hardware and software layers of the media and entertainment stack. Creator of the now ubiquitous digital video recorder, TiVo initially targeted consumers with the value proposition of “taking back control of your television.” Specifically they focused on the DVR’s unique functionality which allows users to pause and rewind and fast-forward recorded television as well as skip advertisements with the touch of a button.

Early Hurdles

TiVo initially partnered with subscription-based satellite TV provider DirectTV to bring advanced functionality to the service. On the other hand, cable providers refused to bundle Tivo with their service in reaction to TiVo’s positioning as a “ad skipping device.” At the same time TiVo’s direct competitor ReplayTV automatically removed commercials from recorded programs using a feature called “Adskip.” ReplayTV was sued by the networks, bankrupting its parent corporation Sonicblue. TiVo, by indirectly letting users skip commercials, was seen as a threat to their business model though no legal action was taken. Cable operators would later break ranks with the networks and change their opinion on DVRs.

Competition in the hardware layer

Echostar, owned by DirecTV rival Dish Network, developed an OEM digital video recorder and licensed this technology to other hardware OEMs. These OEMs were contracted by the local cable operators to develop PVRs for customer use. Cable companies began offering PVRs to customers for an additional monthly fee (~$15) and no upfront payment. TiVo sold its hardware in electronics retailers for upwards of $250. There was serious danger of TiVo’s hardware market becoming commoditized. Users of TiVo, however, remained loyal proponents of its user interface and information sorting/program recommending features which were lacking in the “hardware-only” PVRs offered by cable operator OEMs.

Tivo’s reaction

TiVo reacted to threats in the harware layer in several ways. First, it sued Echostar and recently won damages of over $75 million. Secondly, it partnered with online movie distributors Netflix and Blockbuster to provide its software and information frontend. Third, it adjusted its sales model by moving customer costs from up-front hardware sales to a more expensive subscription model with free hardware. This parallels the market realities as TiVo’s hardware position is untenable and the real value it offers is in its proprietary software. TiVo just recently penned a deal with longtime rival Comcast to offer branded PVRs to Comcast customers.

Long-Term Recommendations

TiVo will ultimately have to leave the hardware layer – too many competitors have found ways around the TiVo patents. The concept of DVR/PVR is not unique, any personal computer with a TV input can perform the same task and, in fact, Microsoft is moving into this space with its Media Center operating system. As television moves from the current networks and cable distribution, the software layer will gain in importance and TiVo is a leader in this category. Continued partnering with new content distributors as a program aggregator will allow TiVo to leverage its strengths in software and information services. TiVo should move quickly to secure partnerships that will allow it to be the hub when IP TV and digital distribution arrive.

Challenges

Competition from other “value-added data aggregators” such as Google and AOL in the software layer will be fierce in the future. With its advanced software, TiVo is ahead of the demand curve – mainstream America hasn’t yet seen the real need for TV program data aggregation. TiVo’s greatest challenge is staying solvent until the market and industry layer makeup catch up with the service TiVo is offering.

Visitors to Our Website

2006-05-04T15:10:00.000-04:00

I thought you may be interested in seeing the location of visitors to our website. The counter is on the left column. I posted this only on April 29, 2006. Keep blogging: The network era is just starting. I hope you are enjoying reading the other student blogs on the companies as well.. Thanks.

Microsoft Chases Online Ad Revenue With AdCenter

2006-05-04T11:17:00.000-04:00

Microsoft is finally shifting from being a software company into a provider of online media... more competition for Google!!!

Microsoft Chases Online Ad Revenue With AdCenter

apple locks in the $0.99

2006-05-03T13:26:00.000-04:00

As I mentioned in my analysis, Apple needs to be careful to lock in their content providers. According to the Globe, it looks like they have held back the record labels and will maintain the $0.99 price point.

Winning in the Network Era for WaMu

2006-05-02T14:21:00.000-04:00

Financial Services is the largest industry in the world in terms of earning and market capitalization, accounting for 20.3% of the S & P Index; it is comprised of some of the most profitable companies in the world. While the industry is composed of hundreds of companies representing numerous sectors of financial services, the larger companies have historically grown through mergers and acquisitions, thus creating an extremely vertically integrated industry as depicted in the stack below:

Company Profile: Established in 1889, Washington Mutual plays in every layer of the stack. WaMu conducts its business operations through two divisions: Consumer and Commercial Group.

The Consumer Group offers products and services to consumers and is comprised of two business divisions:

Retail and Financial Services:
-Offers deposit and other banking products and services to consumers and middle market businesses
-Manages and services home equity and consumer loan portfolios
-Provides investment advisory and brokerage services with over 600 financial consultants

Mortgage Banking:
-Offers home loan products
-Offers insurance products to complement the mortgage loan process

The Commercial Group offers financing to developers, investors, mortgage bankers and homebuilders for acquisition or construction of multifamily dwellings, commercial properties and new homes. Additionally the Commercial Group originates, sells and services multi-family and other commercial real estate loans

WaMu is the 6th largest retail bank providing financial services for consumers and middle market businesses. Including its subsidiaries, "The Company" has a stong distribution channel with almost 2000 retail banking stores, 341 retail mortgage offices, 40 multi-family lending office and online banking. As the nation's leading multi-family lender, WaMu is also a top tier mortgage lender with a strong track record of credit risk management. (Source: www.datamonitor.com)

As the Network Era becomes more apparent in the financial services industry, the focus on Payment Processing is changing the competitive landscape:

While all financial service institutions are adjusting to the influences of technology and the Internet, WaMu has a history of being an early innovator. In 1962, WaMu installed the first advanced computer system in a bank on the west coast. In the 70's, WaMu established the first shared cash machine network in the nation and helped establish the first Pay-by-Phone telephone banking program.

WaMu has integrated online banking capabilities into their consumer and business divisions. Providing full banking functionality through the web includes accessing account information, performing virtual transactions and providing other banking services. As the Network Era will continue to influence the financial services industry in the future, WaMu must establish and maintain strategic relationships and alliances with new players in the stack for the transition towards emerging payment processing mechanisms.

Web Services/Software Development: Creating an integrated relationship with the players in this level are critical for WaMu, as direct client interaction with web services and software influence customer satisfaction. Applications which provide intuitive, efficient and user-friendly solutions must also serve a dual purpose of streamlining data integrity, data gathering and information processing operations. WaMu utilizes iPlanet software, a company resulting from the Sun Microsystems-Netscape alliance. iPlanet software provides Washington Mutual with an organizational and architectural model to connect its internal legacy systems with its many e-commerce initiatives.

IT Security: With the emergence of online banking, financial service institutions have had to extend their privacy and security capabilities. WaMu's enhanced online security, to protect and secure their customer's accounts with cutting edge technology, is achieved with eSphinx, a product from RSA Cyota Consumer Solutions, a division of RSA Security Inc. Maintaining a relationship with Cyota will ensure WaMu's different portfolio of customers and transactions have the strongest multi-facted authentication measures while providing minimal impact to the user experience.

Online Payment Processors: WaMu has recently extended its contract with First Data and STAR Network for providing authorization and payment processing. First Data and STAR's Internet commerce solutions are extending WaMu's online capabilities. While new, emerging players such as PayPal dominate the online payment processing space, WaMu is happy to sit back and let it's strategic partners compete.

In conclusion, WaMu has taken steps to sustain it's position in the competitive landscape of the financial services industry. Further, in the Network Era, the organization's commitment to strategic relationships in web services, software development, IT security and online payment processing will allow WaMu to compete in the online playing field.

MobiTV Strategy

2006-05-02T01:52:00.000-04:00

Executive Summary

As the mobile television industry emerges, there are several big questions that will make or break startups trying to catch a piece of the next big trend.

Will users pay to watch television on mobile devices? On one hand, research indicates that there will be 125 million mobile TV subscribers by 2010. But on the other hand, catchy mobile technologies have been attracting attention for years without gaining traction with the customers.

Furthermore, given a customer base, how will mobile television be commercialized, in terms of business model, content and technology?

Lastly, can a standardized business model be reached and who will carve up the proceeds? Since broadcasters own the content and mobile operators own the devices and usually the customer relation, is it possible to wrestle a significant revenue share away from these powerful entities, and still enable everyone to work together?

If the first question is favorable for the industry, MobiTV has a great first mover advantage on the second question. Yet, in order to win in this networking era, MobiTV must continue to position itself with the best partnerships, and must make sure that when the industry emerges, MobiTV is the delivery standard of choice. Otherwise, there will be no leveraging point with which to battle the operators and opposing technologies or business models will wipe the company out. Already, competitive technologies, splintering operators, and powerful broadcasters all threaten to squash the startup before it reaches the big time. However, as the only company with a significant mobile television customer base, MobiTV is currently in a favorable position.

About the Company

MobiTV is the only company that provides mobile television and radio service worldwide over cellular, WiFi, and broadband. Founded in 1999 and launched in 2003, they recently reached over 1 million paying subscribers, a number which has doubled in the last six months. Furthermore, they are the only mobile television service in the US with any significant customer base, and I believe they are the market leader when viewed worldwide.

While I do not believe MobiTV has reached profitability yet (they are private so financial information is hard to come by), their revenues are growing quickly. 2005 reached $20M in revenue, which is twice that of 2004. With an estimated average of about 300,000 subscribers throughout 2005, and a $10/month subscription fee, I am assuming that MobiTV relies almost exclusively on subscription fee for revenue and not on any advertising revenue.

In the words of CEO Dr. Phillip Alvelda: “our vision is to deliver the best possible live television experience to consumers, across a range of devices and networks." Thus, MobiTV’s service is basically the market leader as a content aggregator. They offer many premium channels (ESPN, NBC, ABC, Fox News, etc.) over a wide range of devices. The service is not proprietary to any device or mobile operator, however, only certain service providers offer MobiTV. For instance, Sprint customers and Cingular customers in the US can purchase MobiTV for $10/month, but Verizon Wireless customers cannot.

The content MobiTV provides is a range of live television including sports, weather, and news, in addition to static content such as cartoon episodes, movie trailers, and music videos. The company also offers a radio service.

Industry

As it stands now, advanced mobile technologies are failing to offer mobile operators significant incomes. With 2 billion paying mobile phone customers, finding the killer application is a huge question. Television could be the answer (for Orange), but based on an old media and revolving around broadcasting as opposed to unicasting (specific to the customer), mobile television is not the ideal mobile technology savior. However, offering a television service that enables interactivity and customized content or at least advertising because of the delivery vehicle to personal mobile devices offers significant hope for long term profitability.

Yet to achieve this idealistic picture, the industry needs to actually grow up. Currently there are competing standards and a range of business models, any of which could win and significantly change the entire industry. Thus, there is no “industry shift” to be aware of, but rather an unknown tidal wave, that could go any which direction should the mobile television industry become established.

Here’s how the process works:

Digital video signals are compressed and formatted to fit the small screens by MobiTV
The user requests and accesses the MobiTV servers over the public Internet (through a mobile phone application or desktop application) to obtain access to the mobile TV content
The compressed video is sent in IP packets over the public Internet directly to the user’s handset, using the mobile's carrier network for the "last leg" (or AT&T WiFi access points)
The mobile user communicates directly with the MobiTV servers, no additional hardware or software is required on the networks of the mobile carriers to offer the service
The mobile TV access and delivery processes are essentially the same as the video streaming technology that has been in use for many years over wireline Internet connections. Essentially, the role of the mobile carrier’s network in delivering mobile TV services is similar to the role played by an Internet Service Provider (ISP) network in a typical Internet application such as video streaming.

Thus, the first major influence on the winner is the chosen technology standard to deliver content.

Current Delivery System Technologies for Broadcasting:

1) DMB has been adopted in South Korea and Japan

2) Digital Video Broadcast (DVB) favored in Europe, is the closest to a worldwide standard

3) MediaFlo from Qualcom is being rolled out in the US

MobiTV has opted to act agnostic in this arena, and therefore can operate on any broadcasting technology. Since the company only obtains, packages, and then distributes the content, the actually delivery is done by the operator on whatever technology is available. This is a favorable position for MobiTV to be in, not having to bet on a single technology to emerge as the worldwide standard or risk a disruptive technology to ruin the process. On the other hand, it likely introduces complexities in maintaining compatibility across the different delivery systems. However, I am guessing that the complexity may be completely absorbed by the data networks of carriers, since they are responsible for ultimately sending the TV programming.

However, where MobiTV has already picked a side is on the desktop arena. By partnering with Microsoft this month, MobiTV has committed to the Microsoft digital rights management package. This move allows MobiTV to offer its mobile television content to all Windows XP computers, as well as Windows Mobile devices.

"By combining MobiTV's premium content lineup with the Windows Mobile and Windows Media platforms, consumers will be able to easily access rich television-viewing experiences on their Windows XP-based PCs or Windows Mobile-powered devices."

While mobile device users with Palm OS or Windows Mobile can both use MobiTV, only Microsoft XP users have access in the laptop industry. This alignment and support for the Windows digital rights management package could be caused by Apple’s iTunes and video iPod being viewed as a major threat. More on this in the partnership section.

Within the industry, competing business and delivery models highlight a power struggle and lack of clarity as to which way the industry should go. According to experts there are three main ways to delivery TV to mobile users:

1) "Push & Store" with local playback

· As with music on iPods, the idea behind Push & Store technology is that users can download their own content from the Internet over home broadband connections for free, or for a small fee, and then load this, via USB links, onto mobile video devices.

· Apple is working with broadcasters to increase the range of shows available

· One major advantage is that shows stored on an iPod can be watched on an underground train or in regions with patchy network coverage

· In addition, TiVo is working on enabling download from your TV to a portable device

· Typically commercialized by selling the content per piece ($2 per episode) and giving most revenue to the content provider

· Another revenue model based on providing the content for free and instead charging for traditional advertising, or skip-resistant advertising.

2) Streaming over 3G mobile data networks

· Mobile TV services delivered via 3G streaming are similar to media-file download services (like ring tones) offered by all operators today, apart from the fact that the TV feed is in real time

· At the moment, mobile TV is mostly streamed over 3G networks. But sending an individual data stream to each viewer is inefficient and will be unsustainable in the long run if mobile TV takes off.

· Mobile operators could form a consortium and build a shared network to provide mobile television using advanced mobile technologies

· In addition, existing television broadcasters could build such networks and cut out mobile operators

· Typically commercialized via the traditional advertising technique with spots inside the streaming content, and most of the revenues split between the content provider and the mobile operator. In addition, subscribers pay a $10/month fee to use the service that would otherwise be part of their cable television package.

· MobiTV also provides additional revenue potential with commercial only channels that allow interaction and are linked to other channels

3) Dedicated mobile broadcast networks.

· In addition, there is also serious interest in dedicated, terrestrial mobile TV broadcast networks, with several operators around the world now involved in small-scale trials.

· This could also be offered through satellite, much like satellite radio

· Some mobile operators are already buying broadcasters to trial this offering

· Commercialization technique still emerging

Interestingly enough, a study of the current television industry (earlier in the blog) indicated a trend toward anytime television as opposed to appointment television, which would favor the “push & store” method. However, the streaming over 3G is the mobile method of choice at the moment. A quick analysis shows that the streaming content is the only way for live or appointment television to be shown. Thus, it should not be surprising that MobiTV’s premium channels specialize in this live content with minimal sitcom type providers of content. On the other hand, Apple recently partnered with ABC/Disney to provide popular shows not restricted by appointments that suit with their strong push & store capabilities.

MobiTV can compete in either arena, steaming or push & store, but obviously their strong suit is streaming because such functionality is not available to iPods (yet). The last alternative, dedicated mobile broadcast networks, would very much work against MobiTV in that broadcasters would no longer require MobiTV to package and deliver their content. In this scenario, mobile television would very much look like the days of pre-cable TV when anyone can tune into any of the major networks. It is possible MobiTV could still win in this world by positioning itself as the aggregator of all other content, meaning content not popular enough to warrant its own broadcast or financial backed to enable broadcasting. Thus, MobiTV could become the “cable provider” for mobile television era. More on this in the partnerships section.

According to CMO of MobiTV: There will be room for some time for both unicast mobile TV, which is what MobiTV provides, as well as broadcast TV to mobile phones. Eventually, he says, there will be a synergy between the two so that carrier networks could handoff unicast shows to a broadcast network if there were capacity issues. MobiTV's technology could use either a cellular network or a digital video broadcast-handheld (DVB-H) network.

Competition

Apple iTunes & Video iPod:

Obviously a big threat despite using a different methodology for the moment. It is possible that iTunes could capture the market for non-streaming video, leaving only live and interactive TV for players like MobiTV. Furthermore, Apple could become an MVNO and enter the streaming market as well, and enter it with force wielding a large library of content and brand name.

Re-broadcast recorded DVR/Tivo/PC content to your mobile device:

Sling Media Mobile and TiVo Mobile:

As a rising star, Sling Media has popularized re-broadcasting your DVR content to your computer or any other internet location. But now, the startup is introducing a mobile application that allows your DVR content to be transferred to mobile phones and PDAs. This is just another push & store alternative, but having already paid for the content with a cable television subscription, it makes financial sense for the user, as opposed to paying for a cable subscription for home and a mobile subscription as well.

Orb Networks

Re-broadcast any PC stored content (pictures, videos, etc) to your phone. Mobile television enabled with a media center such that your television programs are stored to your PC. (FREE)

Alternatives to MobiTV’s content

Sprint TV, Verizon VCast, and Cingular + REAL Networks are the mobile operators trying to own this space and cut out content aggregators like MobiTV (however Sprint offers MobiTV as well). If mobile operators can obtain and repackage the content, then there is no space for MobiTV to play in. Each offering is different, but primarily the mobile operator either includes the TV service with enhanced data plans, or charges a subscription fee like MobiTV and then adds on extra fees for premium content like HBO.

Other startups such as GoTV, PacketVideo and SmartVideo are bringing limited video content to phones.

San Diego-based Qualcomm, which makes chips for phones, and Houston-based Crown Castle International, which has 12,000 broadcast towers, are testing systems to send TV signals from towers right to cell phones.

MobiTV enjoys a first mover advantage over the competition, but could be a victim of committing too early to technology. Newer technologies such as those offered by Sprint TV enable quicker transfers, less congestion for the mobile operators, less data loss for the customers. I am guessing that is part of the reason why Sprint was able to offer Sprint TV having already introduced MobiTV to Sprint users.

Partnerships – To Keep a Piece of the Pie

The threats to MobiTV are very real and substantial. It is possible that users will be slow to adopt, or might not ever significantly adopt television on limiting mobile devices. If they are open to the idea, are they willing to pay enough for it that there is still a piece of the pie after mobile operators and broadcasters take their share?

MobiTV currently holds the only significant mobile television consumer base, and if they can maintain that advantage then they can leverage it for more power when negotiating with the operators and the broadcasters. However, the key is maintaining customers and I see that through 1 of 3 options. Either they are the ultimate source for premium content, the only source for long tale content, or they are the best provider of anytime-anywhere.

If MobiTV can be the best content aggregator, then customers will be drawn to them when looking to fulfill mobile television needs. However, to get to this spot MobiTV needs to work closely with the broadcasters which means they begin to lose some of the power they are trying to build. Instead, MobiTV could take the approach that satellite radio stations have done and skip the broadcasters (or the stations) and go straight to the content providers. For streaming television the premium content is then NFL, MLB, FIFA, Connie Cheung, Regis and Kathy, etc. Partnering as the exclusive provider of full major league baseball coverage could be a huge leverage point for MobiTV. But it goes back to the question would users actually watch an entire baseball game on a mobile device, or would they rather an ESPN broadcast. This suggests the ESPN partnership is more valuable, and I agree, but it doesn’t help the power struggle when ESPN decides to take the majority share of the revenue. Or even worse, if broadcasters are the reason why MobiTV has a user base in the first place, then when they all decide to move to broadcasting straight to mobile devices and bypass the middleman, MobiTV fails.

The second option is to become the long tale provider of content, in that MobiTV aggregates so much content that users are attracted because they have it all. This would give them power over the broadcasters and the mobile operators because then MobiTV has users and content that are otherwise unavailable. To get to this position, MobiTV might look to partner with Google, the internet masters of this space. Already Google Video is aggregating a large library, and they have the resources to continue. If MobiTV can arrange a partnership and thus multiple its library content immensely, that could be very valuable. Yet this library of content is push & store content not the streaming content that makes MobiTV standout. So the partnership and strategy is not ideal, and furthermore MobiTV needs to evaluate exactly what it is providing to Google to see how important the relationship with MobiTV is to Google. As a company that can repackage, and has relationships with many mobile operators for delivery, MobiTV provides some valuable service. Thus, this is one possibility.

However, my advice is to look towards the third strategy, being the best at anytime-anywhere. MobiTV is already the only company offering television on cellular, WiFi, and broadband. Users pay for easy access, and if MobiTV can establish itself as the best provider of television no matter where you are, then users will sign-up for the reduced hassle of having to worry about a player for the laptop, a player for phone, a player when your in the bar/stadium/airport or a different one for at home. Ideally, MobiTV would also be your traditional television subscription, such that you only sign-up for one. Thus, a partnership with Comcast or TimeWarner is my strongest recommendation. Users would be much more likely to pay an extra $5-$10 on top of their current cable subscription to take a subset of their channels with them on the move, then having to deal with yet another television provider. In addition, if MobiTV can get dual-branded service then they will be building an even better customer base that can be leveraged when negotiating the business model with mobile operators and broadcasters. And if MobiTV is in your house, then that will be a huge claim when the industry starts to shake out and choose which delivery model and technology is the winner. A similar partnership could be done with DIRECTV, yet they are probably looking to the satellite broadcasting to mobile delivery methodology, and may not want to lock in a partnership that skips broadcasting.

Partnerships – To Battle Push & Store

Streaming content to mobile devices offers interactive options that are not available with the push & store methodology. It is these options that really hold the future for mobile television. Quiz shows, upload-able content, voting, viewed influenced content or results, all are possibilities with live streaming content that don’t have the same impact with static downloaded content. Positioning MobiTV to be a leader within this space is the challenge. Two of my thoughts are gaming companies and reality content producers. I believe Mark Brunett is considered the master of the reality TV content space. Perhaps MobiTV teaming up with him could help produce an innovative show tailored to the strengths of unicast streaming to user’s mobile devices. Another alternative is a partnership with EA. Electronic Arts is a master of interactive sports gaming and has rights to sports characters. Combining interactive sports with actual sports casts on a mobile device could produce content attractive of both the television fan base and the gaming community.

Increasing the popularity of live and interactive television shows is the best competitive strategy against push & store threats. Alternatively, MobiTV could accept the delivery mechanism even more, and partner with Apple competition. They have already started doing this with the Microsoft partnership, accepting the Microsoft digital rights management as opposed to iTunes. They could go even further and partner with TiVo, becoming the repacking agent and distribution arm for TiVo to push user content to mobile devices. Apple requires users to identify, purchase, and then download content. A TiVo + MobiTV solution would utilizes the user’s existing cable service for the content, TiVo’s “season pass” service which automatically records and downloads your content, and MobiTV to get it to your mobile device. This partnership could be a direct move against Apple’s methodology.

In all, MobiTV has some serious hurdles to overcome and is playing in space with very powerful entities. Any mistakes or slowdowns will likely mean the industry, the technology, and the user base will all pass the company. However, if they can continue a market leadership position with the biggest customer base, then they are positioned for great success.

google and miscrosoft: tussle over new IE browser

2006-05-01T10:27:00.000-04:00

It is funny to me that when I read this article I looked up into the upper right hand corner of my browesr and said to myself "What are tey talking about" that search box is there already. Then I realized that I stopped using IE a long time ago and converted to Firefox.

In Firefox, the search box in question allows the user to easily choose a search provider. I quess the microsoft one (in typical microsoft fashion) makes it a little more difficult to change.

I am not sure how I feel about Goggle's complaint. On one hand I think that it wouldn't matter so much if Microsoft didn't control the OS (and by default most of the browsers). But on the other hand I ask why would it matter? Google is trying to play the same game by paying Dell to put a Google bar on every Dell pc.

They both know that the easier it is to use something (and the easier it is to get to it), they more likley it is that someone will use it. Since Google's website really has little value beyond search (playing devil's advocate here) they must realize that a web user will not find it a destination site and if they can skip going there, they will. Hence the battle over search bars in the browser. Microsoft owns the property and would like to landscape it they way they want. Google wants them to give them a little bit so the user can have some choice.

It is an interesting battle. If Firefox could take over the market we wouldn't need to worry about it anymore. Maybe there is the secret, beat Microsoft at the product game. Make a better product and work out deals with the pc makers to have it installed by default. Fight Microsoft on their own turf rather than complaining when they lock you out (And I realize that I just inferred that Firefox and Google are the same, which isn't true but maybe it should be).

Tom Friedman's Other Side of Outsourcing Video

2006-04-30T09:58:00.000-04:00

I blogged on Tom Friedman's video in my other blog. It provides a peek into the social impact of offshoring based on Tom Friedman's visit to India. I used it in the Winter Intensives but this may be of interest to others as well.

People Tagging

2006-04-29T20:59:00.000-04:00

RateItAll.com

It seems to me 'people tagging' will help people increase and diversify their informal networks, which are more useful and efficient than formal ones.
==================================================================================

Online Social Network RateItAll.com Introduces People Tagging

RateItAll.com, an online social network and ratings community, announced that it has launched a "people tagging" feature that allows its members to tag themselves with keywords related to their interests, and then be searchable by those keyword tags.

San Francisco, CA (PRWEB) April 29, 2006 -- Online ratings community and social network RateItAll, Inc. ( www.rateitall.com ) today announced that it had introduced a People Tagging feature to its community of nearly 200,000 registered reviewers.

The RateItAll People Tagging feature allows RateItAll members to “tag” themselves with one word keywords via their profile pages. These keyword tags might represent a reviewer’s areas of expertise, areas of interest, and/or group affiliations.

People Tags are displayed publicly on each RateItAll member’s profile page. Clicking on a People Tag immediately displays all reviewers who have tagged themselves with that particular keyword, as well as a snapshot of all recent reviews posted by those reviewers.

“We think People Tags will be a neat way for our members to keep track of what their various sub communities are talking about, or to track the reviews of experts in specific areas,” said RateItAll President Lawrence Coburn. “This feature will also be helpful in helping members of our community discover like-minded individuals.”

Reviewers will also be searchable by keyword tag. For example, a people tag search for the word “Photography” will display all the reviewers who have tagged themselves as expert or interested in photography, as well as their associated reviews.

“People Tagging is just one more way for individuals in our community to slice and dice our database of reviews to display content in a way that is most useful to their particular needs at that particular time,” said Coburn. “And I think that we’re just scratching the surface as to what this feature could be used for – I’m very curious as to what our members will come up with.”

TD Ameritrade

2006-04-28T21:58:00.000-04:00

In our presentation of our prediction of the financial services industry in 2010, we highlighted the shift towards the "mobile-enabled" online trading model, as visible in the "Financial Services 2010" snapshot below. Under such circumstances, relationships with mobile service manufacturers and application developers would become critical. A first mover would get a significant and sustainable advantage due to the dynamics of the industry. I have visualized the best, worst and most likely scenarios for TD Ameritrade Holding Corporation below:

Best case scenario: Industry moves towards mobile-enabled online trading. TD Ameritrade is able to foresee this and is the first mover to integrate online trading using mobile devices. This gives it a huge lead over its competitors, which take time to jump onto the mobile bandwagon. By the time the competition follows suit, TD Ameritrade has already established itself in a dominant position. Its position is fortified by the partnerships established and the barriers to entry owing to customer loyalty. It continues its trend of aggressive M&A (Datamonitor report, 2005) and acquires companies specializing in other financial services, which it is able to incorporate into the "mobile-ready" setup.

Worst case scenario: TD Ameritrade fails to see the mobile-enabled S-curve ahead and is late to react to it. Competitors have already taken the lead by the time TD Ameritrade reacts. Given the strong consolidation dynamics in the industry, the company is soon acquired.

Most likely scenario: Owing to its customer centricity and focus on dealing with the unexpected, TD Ameritrade is able to foresee the "mobile-enabled" wave and is proactive in forming the relationships with mobile service manufacturers and application developers. By this time, Fidelity, which is big on using advanced technology for competitive advantage, has already started taking similar steps. This propels both companies ahead of the rest of the competition. Both companies get into heavy M&A activity, consolidating the industry further - and finally settle into their own niches, differentiated by the financial services they specialize in.

The recommendation for TD Ameritrade is short and simple: detect the upcoming change and act proactively to gain the first mover advantage, as described in the best case scenario.

itunes into 2010

2006-04-28T19:37:00.000-04:00

Let me begin by saying that this industry is much larger and more competitive than I had thought but Apple and Itunes dominate. Apple shipped 8.5 million ipods in their second quarter of fiscal 2006. Apple also sold 250 million songs via Itunes between 1/10/2006 and 2/24/2006.

I would say that that is dominance. Their ability to sell songs grows everytime they sell an ipod. Additionally, every song (or video, or podcast, or movie) they add to Itunes increases the potential of selling additional ipods. This cycle is facilitated by the tight relationship between itunes and ipods. Apple has relied on the Digital Millennium Copyright Act to prevent people from making software to convert itunes downloads for use on other devices. The act was intended to prevent illegal copying has had an unintended benefit for Apple and had effectively locked out their competition.

The DMCA isn't the only thing working in Apple's favor. As is normal for an Apple product the designs are flawless. Both the ipod device and the itunes software are considered to be state of the art tools. None of the dozen or so competitive devices has the same feel or ease of use. The only complaint against the ipod is the high cost. But Apple is extracting the value that developing a superior product allows. In a sense, you get what you pay for. Apple has also worked to extend the number of products in their line and provide a variety of price points. Overall, Apple has built a trust relationship with their customers and their customers are willing to pay handsomely for it.

It is widely believed (and reported) that Apple doesn't make much profit from the sale of songs on Itunes. But, even if the profit is only $0.04 it begins to add up when you sell over a billion songs. Itunes has become a volume game, the more they sell, the more they use the infrastructure to their advantage. Apple makes up for lack of Itunes profit by a 27% margin on the ipod devices. In fact, when the record companies were recently trying to renegotiate the Apple content contracts they were asking for a cut of the sale of ipods. That is a pretty creative on the part of the record companies.

As I mentioned in my "itunes the user experience" post, Apple has incorporated a number of community building features into the Itunes software. That is a good thing because this industry is about to change and Apple may need all of the help they can get.

Earlier I mentioned that the industry is more competitive than I had thought. I discovered this while attempting to build a 2006 stack . I don't have relative sizes or company sizes but I can estimate them quickly. Apple sells anywhere from 75% to 90% of the mp3 devices on the market. That would then give them a power position in the song download market (250 million songs in 6 weeks is a quick $250ish million). Here is the stack that I pulled together:

2006 Online Music Services

Layer	Sub Layer	Companies
Devices		Apple Ipod, IRiver, Creative, Archos, SanDisk, Sony, Philips, Motorola, Sony Ericsson, Nokia, Motorola,
Online Music Services	Free	Live Music Archives, Cnet
Online Music Services	Subscription	Itunes, Amazon, Audible, BuyMusic, eMusic, MusicMatch on Demand, Napster to Go, Napster + XM, MSN, Rhapsody to Go, Virgin Digital Red Pass, Yahoo Music Unlimited to Go, Sony Connect
Record Labels		EMI, Sony/BMG, Universal, Warner Bros., Thousands of Independents

I broke out devices (mp3 players), Online music services and record labels. As it turns out, the record labels aren't as big an issue as I thought they might be. Apple certainly has some type of preferential treatment given that they advertise 2 million songs and their larger competitors advertise between 1 and 1.5 million. It seems that even Sony was able to make arrangements to sell EMI and Universal songs on their Sony Connect website. As such I am prepared to admit that record labels are important but they don't seem to have much power. If the contracts are up for re-negotiation (like the initial discussions in Japan where Sony decided to pass on Itunes distribution) the record labels could cause trouble but they will have to decide if Itunes will help them sell more than they could sell without them.

I will not spend a lot of time on devices accept to mention again that Apple has locked out the other devices. This works ok today because the Ipod dominates the market but if this begins to shift or a better device hits the market, Apple may need to alter this approach. The most likely occurrence is a gradual shift to cell phones that double as mp3 players. Currently Apple has a Motorola device and Sony has an Ericsson device that will work with the respective download sites and play mp3s. As seamless mobility begins to become a reality Apple will need to re-consider their proprietary approach.

Before I move on to the competition, I would like to quickly mention the Apple Itunes situation in France. The French National Assembly recent passed a bill that requires Apple to open its software codes such that their competitors devices will be able to play songs downloaded from Itunes. This may spell big changes for Apple.

Now I am going to briefly cover the service offerings provided by the other download sites. I have broken them into two categories. The first is purchase and the second is subscription. In a purchase plan, the customer buys ownership of each song they would like to own. In a subscription, the customer agrees to pay a monthly fee and is given access to the catalog if songs. If the "to Go" subscription is purchased the user is able to copy the songs to their portable mp3 device. In either subscription mode, once the customer stops paying the monthly fee they are no longer able to listen to the songs. In the case of the songs copied to a portable device, they are programmed to expire at the end of a 30 day period and must be resynched with a valid subscription.

One thing that I learned is that most of the download companies require some sort of installation and of course a registration (and payment authorization) before you can begin to download.

Free

Live Music Archives Â This is one of my favorite music sites. It offers free, fan recorded, live concert downloads. The main restriction is that bands must approve the public distribution oftheirr songs. There a quite a few popular bands who have concerts available.

Purchase

Audible.com Â This one doesn't fit because they don't sell music, instead they sell Audio books. Thintersticeng this is that the books are variable priced but there is a subscription membership opportunity that will save you 30% on your purchases. There are numerous membership levels that carry a variety of discounts and free purchase credits. Subscribers alsreceiveve a daily audio wsj or nytimes.

Audio LunchBox Â This site offers downloads for Independent bands. Once you purchase the song there are no drm restrictions and you can distribute the song rather freely.

BuyMusic Â This site is part of the Buy.com family. They have over 900,000 songs and the Top 25 songs are $0.79. The songs are not ipod compatible.

MSN Â Offers over 1 million legal downloads. Coincidentally it requires windows media playerqualifieslfies for Microsoft play for sure. The songs are $.99 each. Oddly, MSN advertises for the Rhapsody music service.

MusicMatch Music StoreÂ The Music Match store offers 1,000,000 songs for $0.99. It requires Music Match Jukebox and interfaces with Microsoft play 4 sure. It says that music can be reached any pc but I might be mistaken. They offer a personalized recommendation engine.

Napster Light Â Once you register for Napster and download the software you can access the Napster Light store and chose from 1,500,000 songs for $0.99,. The service requires Windows IE and media player required.

Virgin Digital Music Store Â The Virgin store is not ipod compatible. They offer songs from 15,000 record labels for $0.99 each.

WalMart Â WalMart offers your choice of 1 million songs for 88 cents. The service requires installed software and Microsoft IE. All songs are Microsoft play for sure certified. WalMart offers exclusive live content.

Music.yahoo.com Â This site requires special yahoo software and offers 1 million songs and internet radio. The songs sell for $0.99 each.

Sony Connect Â The Sony Store only supports Sony devices. They lack the content of itunes but have a broad selection. The site does not mention quantity of songs but the do offer songs from non-Sony record labels. The price is $0.99 per song or you can buy a whole album. The music downloads are in a proprietary Sony music format. The site requires internet explorer and the use of a the connect player software. I found that Sony offers a 6% commission for affiliate referrals plus a $1.50 payment for a cash transaction (that seems to be too much for a $0.99 song).

Subscription

eMusic Â This site offers 1,000,000 songs and says that they have 1,000,000 downloads per month. The offer music from Independent record labels. Their subscriptithreeme in threee levels that each offer a fixed number of song downloads.

MusicMatch On Demand Â MusicMatch offers 900,000 songs for $4.99 perservice The serivce works on any pc and requires a broadband internet connection.

Napster Â Offers 1,500,000 songs for 9.95 per month. It requires Windows IE and media player. The songs are Microsoft play 4 sure certifiedworks service wirks with any pc. They offer a personalized recommendation engine and a purchase option that allows you to keep songs permanently.

Napster to Go Â This service is just like Napster except it allows you to load your songs to an mp3 player. The service is a little more expensive and costs $14.95 per month. The songs will expire once the subscription ends.

Rhapsody Â Offers 1,500,000 songs for download. If you download the software you can listen to 25 free full songs per month. You can also use the software to listen to radio stations. The service is very similar to same as napster but it uses real audio. They say that they work with ipods.

Rhapsody Unlimited Â Rhapsody Unlimited is an upgrade from Rhapsody and allows unlimited downloads from 1,500,000 songs for $9.99.

Rhapsody to Go Â Just like Napster to Go, this service allows you to download songs to your mp3 player. They will expire in a month and must be ÂrenewedÂ.

Virgin Digital Red Pass Â This is an extension to the Virgin download store . They do not support Ipods and they allow unlimited downloads from 15,000 record labels for $7.99 per month.

Yahoo Music Unlimited - The Yahoo subscription service is $6.99 per month for unlimited listening to over 1 million songs (if pre paid for the year it is only $4.99 per month).

Yahoo Music Unlimited to Go Â For $9.99 per month you get the same songs as yahoo but are able to load them to an mp3 player.

Other

Billboard Â Billboard has a website which lists the current Billboard rankings. If you cliconn the purchase cd icone you are linked to mysimon. This seems like a potential opportunity for any number of download sites.

2010 Online Music Services

My 2010 stack doesn't change much. I have no way of knowing what will emerge in the device space. As I mentioned earlier, I suspect that we will see a device convergence and pds'a, mp3 players and cell phone will continue to merge. Given the shift towards "online all the time", one would expect that if mp3 players and cellphones do not merge, mp3 players will have embedded networking technology of some type (possibly a rimstyle connection or maybe a true ip connected wireless card).

I do believe that the download websites will incorporate so much content that it would be wise for any/all of the music information providers to merge or align witBecausenload provider. Becasue of this I have removed the information layer. I also expect that each of the download sites will track and store information about their udeveloplowing thepreferencepe stronger preferrence indicators over time.

Finally, I think that the download purchase option will disappear. From a download provider and subscriptionrspective a subcription service makes more sdramatic would have a dramatice effect on the record becauseand the artists becasue the entire revenue sharing model will collapse. Currently, artists are paid for a song or album purchase. If the model shift they will have to set some type of relative value. It couldn't becausey per use basis becasue the consumer wouldn't be interested in paying multiple times. That might be a more equitable system though.

Layer	Sub Layer	Companies
Devices		Apple Ipod, IRiver, Creative, Archos, SanDisk, Sony, Philips, Motorola, Sony Ericsson, Nokia, Motorola,
Online Music Services	Free	Live Music Archives, Cnet
Online Music Services	Subscription	Itunes, Amazon, Audible, BuyMusic, eMusic, MusicMatch on Demand, Napster to Go, Napster + XM, MSN, Rhapsody to Go, Virgin Digital Red Pass, Yahoo Music Unlimited to Go, Sony Connect
Record Labels		EMI, Sony/BMG, Universal, Warner Bros., Thousands of Independents

Apple recommendations:

As I consider the next four years, I come to a few conclusions (one makes me happy, one doesn't, the last I don't care so much about). First, as much as I dread the fact that we are shifting away from music ownership the signs indicate that in the near future music downloads will over take cds as a mechanism for music distribution. As this occurs it is likely that consumers will move towards subscriptions.

Second, as devices converge and become network connected new service will evolve. A good example of this is the soon to be r. The service is reported to offer 50 hours of "saved" content ansatellite access to the satelite radio channels.

Third, as services like Amazons S3 emerge and consumers are given the opportunity to store data online, media devices will be expected to connect to the content. Once again, seamless mobility and the wireless world will enable anytime anywhere content consumption. It shouldn't matter where the data is, the expansion of wireless connectivity should allow its access.

As Apple looks to the future it should prepare for these changes by:

The subscriprecedenceat will take precidence. In the short term, Apple should experiment with a few subscription trials. Steve Jobs is hesitant to move in this direction but it is unlikely that the industry will not continue to move in thatsimplicityn.
Simplicty is also critical. Apple has excelled at delivering the best products but they have made their name by making them easier to use and more reliable than anything else on the market. Apple needs to stay focused on improving their product features and functions while at the same time keeping it simple.
Apple's fixed price pricing strategy was brilliant. Not only was it simple but it was priced right and inspired people to consider paying for music again.
Finally and probably the most difficult recommendation, Apple needs to consider relaxing its proprietary ipod/itunes interconnection. It is possible that Apple can maintain its product dominance but as devices continue to converge that will be increasingly difficult. Especially as cellphones and XM radio devices increasingly enter the picture. The further away the industry moves from a stand alone mp3 player, the more difficult it will be for Apple to keep theinitiald.
One intial suggestion for Apple would be to begin testing a cellphone or wireless subscription format where the content is stored on a central server and distributed to the device on demand. It may not be possible given the current state of technology or it may not be practical in the long term but every indication we have seen indicates that this is the direction that will emerge over the next four years.

PS. I forgot to mention that Apple has to keep their eye on their customers. That blog that I uncovered a few days ago points out a potential customer trust issue. As the competition struggles to catch up to Apple, they will put the hard seel on their porducts and consumers may be looking for a reason to migrate. In an attempt to retain their customers, Apple needs to make their data privacy clear and do everything they can to make sure they don't run into the same "tracking" issues that trapped Sony late last year.

HealthCare Industry: Aetna's Strategy for EMRs

2006-04-28T18:44:00.000-04:00

Executive Summary

Electronic Medical Records (EMRs) is the electronic version of Patient’s medical history which includes patient’s full clinical experience, including appointment scheduling, office visits, labs, health maintenance, referrals, authorizations and medications. Providing a reliable and instantaneous source of health information, EMRs enhance patient care, improves efficiency, increases profitability and help health care providers stay current and compliant with industry standards and regulations including CMS and HIPAA.

Aetna Inc., a Health Insurance major of US can leverage the benefits of EMRs to improve operational efficiency and in turn enhance its service capabilities. At present Aetna maintains medical information of individual members in a variety of formats and at several locations. EMRs would enable Aetna to decouple the medical information from various areas and deploy it in one location. Such a restructuring will further streamline Aetna’s internal processes and ensure consistency and coherence of information flow. On the other hand, Aetna can now cash in on the EMRs to plan its future products and services by having a closer insight into its customer segments and their respective requirements. On the same lines, we evaluate future scenarios for Aetna and observe that investing into EMRs is a strategic move for Aetna, which has a series of short term and long term benefits. Aetna can not only drive its operational costs down, but also can leverage the EMRS to make more accurate and swift decision in terms of launching new products and service in the future.

Aetna Inc. Company Profile:
(www.aetna.com)

Aetna (NYSE: ΑET) is one of the nation's leaders in health care, dental, pharmacy, group life, disability, and long-term care insurance and employee benefits. Dedicated to helping people achieve health and financial security, Aetna puts information and helpful resources to work for its members to help them make better-informed decisions about their health care. With over 40 million members, Aetna partners with more than 735,000 health care professionals, 437,000 primary care doctors and specialists and 4,373 hospitals to provide its members broad range of insurance and employee benefits

Being the nation’s first full-service health insurer to offer a consumer-directed health plans, Aetna continues to lead the way with in the Health Insurance Industry. Aetna offers a wide array of programs and services that help control rising employee benefits costs while striving to improve the quality of health care, such as case management; disease management and patient safety programs; integrated medical, dental, pharmaceutical, behavioral health and disability information.

Aetna’s customers are employers and not the individuals. The employers are classifies as Small, Medium or Large/National depending on the number of employees in the payroll. Operational in 50 states of US and around 26 countries, Aetna services a broad range of customers from small, mid-sized and large multi-site national employers. Aetna serves its international customers through its “Global benefits program” which can be availed in selected countries across the globe.

Aetna’s EMR Touch Points:

The figure above highlights the operational areas of Aetna which are directly impacted by the medical records of Patients. There may be several other business processes which are indirectly impacted by the medical records of patients. Of the fours key business segments with in the company viz. Product, Plan, Members and Claims, the business units dealing with Members enrollment and Claim Processing are directly impacted by the EMR technology. The medical information in these domains serves as the basis of several key business decisions in these domains with in the company. These business domains rely on the medical information of the individuals to accomplish a variety of objectives as follows:

Assessment of policy premiums

The medical information of individuals is used to determine the risk associated with individuals as well as the employer as a whole. For instance, a Metal Foundry has higher average risk of injury than a Software Company. Hence a Software company employee will have a lower premium as compared to Foundry employee for same health coverage.

Selection of Healthcare products

Depending on the medical records of individuals, Aetna offers different combination of products and services to its customers. For instance, 40+ yrs old working near a furnace will require coverage against skin and eye damage more than 40+ yrs old working in an academic institute.

Settlement of Claims

Finally, while honoring a claim Aetna needs to validate whether a particular member actually got served by a health care provider for a valid reason as per the negotiated contract. In this process EMRs can significantly reduce the operational cost by providing single point access to this information.

Future Scenarios:

The present state of Healthcare industry entails low popularity of EMRs and high overall HealthCare costs. The past trends of HealthCare industry focus heavily on reducing the Healthcare costs and increasing the total number of individual and business customers. While on the one hand EMRs empower healthcare providers to achieve lower operational costs, on the other hand EMRs also shift the power to consumers in terms of choosing the best and most reasonable healthcare provider. Based on the two key drivers of the industry viz. “Healthcare cost” and “Popularity of EMRs” we can generate two possible futuristic scenarios for a Health insurance company. The first scenario entails high health cost along with increased popularity of EMRs. This scenario has a short term implication and is most likely to happen in the industry. Once EMRs gain popularity the industry is likely to witness lower healthcare cost in the long run, which leads to the second scenario which has Low healthcare cost as well as high EMR popularity and usage. Immaterial of which path the industry matures in the future i.e. among Path 1, 2 or Path 3, its in the best interest for a Healthcare insurance provider to plan ahead for EMRs and making strategic moves to unleash the potential of EMRs.

Low Hanging Fruit for Aetna:

As highlighted above, Aetna has the medical information segregated across Member and Claims business units. This information needs constant and ongoing maintenance in terms retaining the most recent view of the individual medical information. The primary source of this information is Employers or the Healthcare providers. The information has to be synced up at a particular frequency in order to effective and useful.

At the present state of operations, Aetna employees a group of professionals around all the touch points where medical information is maintained. Such an operation is not only cost intensive to Aetna but also slow and prone to errors. Switching to EMRs as the primary source of medical information will enable Aetna to take advantage of the technology in order to reduce costs and increase the efficiency of operations. At current state of systems, there are several loose strings not only in terms of misinterpreted medical information but also in terms of obsolete medical information. Overall, EMRs value proposition overshadows the initial costs and a worthy long term investment.

Recommendations and Next Steps:

Business Process Reengineering

The EMRs have a long term benefit and the best way to capitalize on the EMRs technology is to re-engineer the various business processes and IT support systems to integrate the EMRs in to Aetna’s operations. The present state of Aetna’s operations entails scattered patient’s medical information across business units. The first step is to assess the current state and identify the areas where medical information is used/processed/stored. Once we have a handle on the as-is state, the next step is to identify the alternate ways of feeding the medical information across the impacted areas. This could be done either through services or through restricted access to EMR information.

Strategy Consultation

The present of Aetna reveals that the business and IT systems are complicated and convoluted. In such a situation seeking consultation from well-known strategy consulting firms is a viable starting point. Once we are clear on the strategic road map for both short term and long term, we can then plan the allocation of resources and time in the direction of achieving the strategic goals.

IBM in Healthcare

2006-04-28T18:16:00.000-04:00

IBM Overview

IBM is the largest information technology company in the world, housing the most number of patents compared to any other tech company. Computer hardware has always been synonymous with the IBM brand. Traditionally, servers and mainframes have made up the bulk of IBM’s revenues. As competition grew, the hardware business became a commodity market which IBM was fighting a losing battle. This culminated in a $4.7B loss in 1992 - the largest single loss of a corporation at the time, which resulted in the dismissal of the CEO. As Lou Gerstner took over the helm in 1993, he shifted the focus of IBM from hardware and technology to software and services, resulting in one of the greatest turnaround story during the 90s. When Sam Palmisamo took over as CEO in 2002, revenues from services were starting to exceed those of traditional hardware. Services was seen as the way of the future as IBM purchased Pricewaterhouse Consulting to form the new IBM Global Services. After the spin off of its increasingly commoditized PC division, IBM has truly transformed itself from merely a hardware company to service provider. No longer confined to just the technology sector, IBM leverages their expertise in technology to transcend markets and at all industries to improve their business processes.

Electronic Medical Records (EMRs)

The latest trend in healthcare is the push towards the digitization of Medical Records, also known as EMRs. Experts on medical-care costs estimate that 10% or more of the $1.7 trillion spent on health care annually could be saved through the use of transferable, electronic records. The idea behind an EMR is much deeper than simply records in an electronic format. That is just the tip of the iceberg. Currently, medical records are stored and owned by hospitals and insurance providers who control a large portion of the power within the healthcare industry as shown in our healthcare stack. With EMRs, records will no longer be owned by a single hospital or insurer. The customer themselves will own the information and thus shifting the power from the healthcare providers to the consumers themselves. With the world being networked, records such as x-rays and up to date medical information can be instantly transported with EMRs. The same information can be pulled up on a patient regardless of location. Drug allergies, medical x-rays and previous treatments can be viewed instantaneously at any hospital. The revenue and power in the future will be dictated by those who own the information. The only question is who will lead in this transformation. Doctors are adverse to change, and hospitals already have a proprietary system in place. A push is needed to facilitate change in this industry.

IBM's Role in Healthcare

IBM entered the healthcare industry in 1999 when they started the life sciences group. As discussed in class, network effects and the information age makes it very obvious for the need for massive computing power. Huge amounts of data needs to be collected, sorted and stored for EMRs. Today, IBM is in a perfect position to facilitate the push into EMR. With its army of researchers and expertise in technology, their business consulting arm can analyze processes and provide the healthcare industry with the tools they need to move into the future of EMRs. IBM also recently purchased Healthlink, one of the largest IT consultant companies specifically for the healthcare industry. This gives IBM the ability to select, strategize, implement and optimize processes within the healthcare industry. IBM currently is working with hospitals across the country on pilot projects to demonstrate how records can be transferred between locations based on open standards.

IBM's future - Taking advantage of the Network Era

As the need for computing power increases, IBM is in a unique position to provide the tools needed to move into the future. With an extensive background in technology and research, no other company is better positioned to ride this wave. Accenture is the closest competitor, but they lack the technological expertise that IBM has to offer. Laying the infrastructure has always been IBM’s forte and the healthcare industry is no different. As network externalities take place for the increasing use of EMR, the next wave will be the ability to data mine the mountains of information to analyze trends and patterns in genomics as well as diseases. This will lead to preventive medical care and personalized medicine in the future. IBM has the ability to provide the algorithms for data mining and solutions for more computing power if needed. Of course the road is never easy with competition and changing technology. IBM has to watch the landscape for smaller more nimble companies that might encroach its space in the services sector.

IBM website states that “IBM is helping clients manage an explosion of data. Accelerate discovery and development. Reduce costs. Respond to compliance and security mandates. Improve diagnoses and patient care.”

With this in mind, IBM must continue to leverage their technological expertise to push EMRs. There are no standards in place for the use of EMRs. IBM should set open standards which will allow information to flow freely. The future of IBM is services, and therefore they should take advantage of the large healthcare industry by packaging specific healthcare solutions optimized for EMRs. Privacy issues will arise as a result of EMRs and IBM should fully take advantage by offering privacy consultancy and solutions. IBM must also broaden its offerings to not only the hospitals and insurers but every player in the healthcare stack. Creating a single open platform across the stack will allow for efficient transfer of data between each company and will allow for the seamless integration of data for the healthcare industry.

Hottest Spot in the TV Industry: YouTube- the Video Social Network

2006-04-28T17:04:00.000-04:00

The Popularity of YouTube

YouTube, founded in January 2005 by Chad Hurley and Steve Chen, both former employees of PayPal (among the first 20), has attracted 9.1 million users, generating 30 million video views and receiving 35,000 video uploads per day as of February of 2006 according to an article in the April 10 issue of Business Week. This site allows people to upload videos and to share and search contents with ease. This is due to growing broadband penetration and technological advancements, giving amateur video makers an opportunity to show their work. YouTube is designed to let anyone participate in the contribution of content, so in addition to the amateur home videos from around the world, people can also find clips from old and current TV shows and movies, essentially anything, on the YouTube site. This is why YouTube has become so successful within a very short time. (It allows customers to find the videos that can’t be found in stores or seen on traditional TV networks or cable channels). The most important element of YouTube is that this start-up knows what its customers want and it tries to avoid pounding its customers advertising.

Current Challenges and Competitors

Because anyone can freely upload videos onto its website, YouTube’s users can upload clips that are still under copyright, such as music and sport videos, current news, movies and TV shows, though this might put YouTube at risk of copyright infringement. In addition to this challenge, YouTube is also facing direct competition from other video-sharing social websites, especially Google Video and MySpace.com.

Google Video:
So far, YouTube has far better options for people to share videos than any other Web 2.0 video sites, including Google Video. However, taking advantage of its user-base of 80 million, Google Video can easily obtain partnerships with top-tier content providers, such as Sony, NBC, and CBS, and then provide more old/new and high quality TV shows to meet the long tail demands. In addition, Google always manages to improve its products to become slicker and more powerful. The company has recently posted a position hiring for "an Interactive TV Product Manager and Sofware Engineers with experience in 'emerging TV standards' and 'deploying robust, high-volume applications for consumer devices'", and revealed its vision: TV commercials contextually targeted to a program's content, and Interactive TV social network.

My Space:
MySpace Video is not nearly as robust in terms of content and functionality as YouTube - it appears to be mostly homemade videos, and searching for video content is not as easy. However, MySpace is aggressively promoting their video capabilities within the site. It has more than 73 million registered users, and this allows easy access to videos, and attracts independent video makers and advertisers. MySpace is the leading source of traffic for YouTube, accounting for 23% of its upstream visits for the week ending April 1, 2006 according to Hitwise data. It makes sense that MySpace would launch its own video service. Now that MySpace is owned by News Corp, it has the perfect distribution mechanism for Fox content, and could be testing out its video capability with viral videos, which have been so successful for YouTube.

Another challenge, and I think it’s the most significant challenge, is that YouTube, so far, doesn’t have a clear business model yet. They believe people don’t like advertisements while watching videos, so they are moving cautiously toward the ad-based business model. Only until recently did it rely exclusively on a few context-sensitive text ads powered by Google AdSense, and they are planning to bring in more relevant ads to the site.

Moving forward to 2010

Recently, YouTube scored an additional $8million from its backer VC, Sequoia Capital, after an initial $3.5 million last November. Sequoia Capital partner and YouTube board member Roelof Botha said:

“YouTube is at the forefront of a cultural shift in digital media entertainment and media distribution and we are delighted to continue our support. “

Based on our team’s analysis of the entire TV industry, the indexing (information aggregator) layer would catch the most revenue value. So, being such a successful video aggregator with a high expectation from its investor, how should YouTube move forward to 2010 and beyond to maintain its popularity and reach, as well as make money at the same time? Here are some potential scenarios of how the future will play out for YouTube:

1. Best Scenario:
Introduce a brand new business model, such as an innovative ads-supported revenue model and YouTube could get to stay as an individual company and keep its broad base of supporters, and strongly differentiate itself from other video-sharing sites, and lead the culture.

2. Worse Scenario:
Unable to leap the chasm and fail to generate sufficient revenue to keep the company going.

3.Likely Scenario:
It is very likely that YouTube gets bought by other company. In my opinion, companies that would buy YouTube are Yahoo! and MySpace. YouTube’s site capabilities and features are pretty much like flickr, the largest photo-share social network site. So, it is very likely that Yahoo! can integrate YouTube into its product lines. As far as MySpace is concerned, I think both YouTube and MySpace appeal to people from the same segment, that is, people who are more into independent brands, and the non-mainstream subculture. Again, MySpace is the leading source of traffic for YouTube, it is very possible for MySpace to buy YouTube to enhance its video-sharing capabilities.

Therefore, YouTube needs to do the following in order to turn popularity into profit:

1. Create an innovative and suitable business model:

According to Hitwise, the average session time for a visit to YouTube is 14 minutes. So, this site should be an ideal channel for businesses and agents to display their ads. However, one of the main reasons that YouTube is able to generate so much traffic is because there are limited ads bombarding the audiences. People don’t like to see ads when they are watching videos, because it is too distracting. Too many traditional banner ads would probably turn people away. Therefore, ad-placement and timing are important. It looks like video-based advertising is a potential approach, especially the ones done in a consumer-friendly way. Seeing YouTube’s customers are more into independent brands, the ads should be relevant, and tailored toward the preference in this targeted market.

2. Partnerships:

YouTube should build partnerships with TV and movie content providers in order to legally post their clips and trailers before or after they have been broadcasted. Again, YouTube needs to carefully choose the companies/brands they will partner with, and avoid content that is too main-stream in order to meet its customers’ taste and differentiate itself from competitors, particularly Google Video.

3. Merge with MySpace:

I think many companies are probably waiting to acquire YouTube, since it possesses huge money-making potential. If MySpace is on the list, it would be a great candidate. MySpace has a very similar target segment as YouTube, which is into independent brands and non-mainstream content. By integrating two companies on one platform . a strong business model may be created Furthermore, since News Corporate owns MySpace, it will be convenient and cost-saving for YouTune to obtain TV content.

corporate networking

2006-04-28T15:47:00.000-04:00

Here is an article about Visible Path from CIO magazine. It takes social networking to a big brother level. Instead of linking to your friend it build links based on network traffic. The links get stronger as the communication increases. When you need to find someone you can see who can get you there. It isn't just email that drives the site, publicly avaiable information (such as Hoovers) is also pulled. It sounds interesting but it radically changes the privacy dynamic.

The article

mp3 links

2006-04-28T14:56:00.000-04:00

Here are some mp3 articles that i want to keep track of.

http://www.internetnews.com/ec-news/article.php/3498001

http://www.mp3newswire.net/stories/5002/sandisk.html

http://www.mp3newswire.net/stories/2004/mp3boom.html

http://www.macobserver.com/article/2003/12/30.1.shtml

http://www.digitalmusicnews.com/
samsung and apple partnership
nokia digital music phone
xm portable
legal issues with artist royalties

http://www.engadget.com/2004/10/13/92-of-new-hard-drive-based-mp3-players-sold-are-ipods/

http://arstechnica.com/news.ars/post/20060109-5936.html
explosive growth of downloads in music sales, 2004 - 2.3%, 2005 - 7.3% market share

http://digital-lifestyles.info/display_page.asp?section=business&id=2881
"MP3 technology helped boost the audio and accessories markets in 2005. With the introduction of video playback capability, MP3 player sales surged 200 percent in 2005 to $3 billion. Trends in 2006 should be no different," he added.

http://www.atpm.com/11.08/bloggable.shtml
Let’s spend more time looking at economic theory’s non-comprehension of the iPod and user experience. The latest instant-classic example? Free Napster. A student survey at the University of Rochester found that even when students have Napster service for free apparently they still choose the iTunes Music Store—at 99 cents a track. How many, do you ask? Yes, that’s right. 70 percent. The survey also found no students in the sample who had purchased songs from Napster to put in their permanent collection; for that, they turned to Apple. So much for brand loyalty. And, yes, it defies Economics 101. Why would you use Napster’s service but then buy the tracks outright from Apple? Oh, that’s right, the part of Econ they always forget, that people won’t pay for substandard products.

http://www.cio-today.com/crm/story.xhtml?story_title=MP--Sales-Heading-for-Stratosphere&story_id=31326&category=crm

http://www.cio-today.com/story.xhtml?story_id=13000003AMXW
complexity <> trust

http://www.cio-today.com/story.xhtml?story_id=130000037JEC
apple dominates but could lose, to who?

http://www.cio-today.com/story.xhtml?story_id=13000003A0VG
ipod restrictions, ties between layers.

In a free market, that wouldn't be so bad. Manufacturers of competing MP3 players, such as Sony, Creative and Samsung, could provide software to automatically convert the music to a compatible format. But that would be illegal, thanks to a little-known law called the Digital Millennium Copyright Act, which Congress passed in 1998.

The DMCA was billed as an antipiracy measure. It prohibits anyone from "circumventing" a copy protection scheme such as that used to scramble songs from the iTunes store, or from creating software to do so. It was hoped that those restrictions would prevent hackers from unscrambling music or movies and uploading them to the Internet.

Turbine Entertainment goes to the Next Level

2006-04-27T23:04:00.000-04:00

Turbine Entertainment is one of the few independent studios in the business of Massively Multiplayer Games (MMOGs), and bills itself as "the largest privately-held online game studio in North America." Even with substantial licenses such as Dungeons & Dragons and Lord of the Rings, Turbine faces deep-pocketed competition from companies such as Sony Online Entertainment, Korean juggernaut NCSoft, and 800-lb gorilla Blizzard Entertainment (a subsidiary of Vivendi Universal).

Turbine is part of an emerging industry that lives and breathes the network economy; how else do you value virtual goods? In order to succeed, however, this company will need not only profitable products and business fundamentals, but also a deep understanding of the industry structure and emerging trends that will shape their business.

Video gaming is a "blockbuster" industry, driven by the remarkable sales of a few hits and the break-even sales (or losses) of the vast majority. With this in mind, it is no wonder that a basic network stack shows deep vertical structures in the industry. Much like the movie industry, publishers assemble portfolios of products to reduce risk while hoping for a hit. (Note that Atari is Turbine's publisher for Dungeons & Dragons Online.) Blizzard is the notable exception to this rule, as World of Warcraft has climbed to over 5 Million subscribers this year.

In order to compete against the heavy hitters, there are three trends that Turbine should invest in:

1. Be a publisher; build a portfolio. One-hit wonders are the lifeblood of studio, but they often mean that a company survives project to project. A portfolio of products distributes that risk, and the publishers role adds another few percentage points of revenue in the deal. In the last few years NCSoft has invested heavily heavily in acquisitions, resulting in City of Heroes, Guild Wars and Auto Assault. SOE has launched a bundled package of MMOGs. The right range of products will provide the flexibility to deliver a new generation; the right platform will keep players with one network.

2. Start porting; be device-friendly. Trends in music and video consumption clearly show that consumers are doing more to shift where and when they are entertained. While MMOGs often require heavy computing power, high resolution and streamlined UI for player communication, the latest generation of consoles is signaling that viable multiplayer environments are here -- complete with voice chat. NCSoft has shown the way with Final Fantasy XI, a game which has been compatible with the PC, PS2, and now XBox360. Flexibility in devices and interfaces will prepare Turbine for the next level of consumer demand.

3. Leverage external resources; use APIs and Open Source. Fans of gaming have consistently shown a deep technical grasp and passion for the industry. The results of this have ranged from independent first-person shooter modding projects to content development for games like Neverwinter Nights or Morrowind. Blizzard took this one step further when they established APIs so that fans could deeply modify their user interface, in effect building new client programs to interact with World of Warcraft; hundreds of these clients are now available. Mod development is only the beginning of a larger trend in user-created code and content.

The opportunity for a company like Turbine is to find products (especially infrastructure) that need to scale, and open those to a community of developers. Community members get to contribute to their favorite game platforms and showcase their skills; the company gets to leverage rapid (and inexpensive) development while focusing on core products. APIs and open source provide a doorway to resources that are not described in the industry stack today.

Future of WebMD

2006-04-27T22:10:00.000-04:00

Emdeon (Formerly WebMD)

April 17, 2006

Quan M. Nguyen

Current Landscape

Currently within the healthcare sector, much of power resides within the service and healthcare providers. These two providers dictate to employers the service

s offered as well as work with healthcare solutions to provide added value to the back to the payers and hence the patients. The new player within this industry is the web portal, with WebMD being the primary player. WebMD initial goals are to provide information for patients, making it easier for them to make various health decisions.

Changes to the Sector

The Electronic Medical Record has become the new disrupting technology within the healthcare sector. The EMR provides the healthcare industry the ability to have a consolidated data record for each patient. This record would include all health care records from physicians, hospitals, and health insurance providers. This record would change how patients decide on doctors as well as allow providers the ability to analyze data to help reduce health costs. Payers would then be able to change their selection process of health insurance providers.

Future Landcape

The future landscape of the healthcare is dictated by the addition of EMR’s. Currently the providers had much of the power and revenue stream. In the future, the power is shifted towards the payers and patients. This is due to the empowerment of the patient having the EMR as reference to any medical issue that may arise. The patient can now analyze their health care to others as well as examine common health care practices. Payers will now be able to dictate to providers specific performance metrics to providers to ensure that their employees are taken care of health wise. Within the sector, privacy issues arise as well as a need to central data repository to handle this data. Many discussions will take place in who will maintain and secure the EMR. Players such as WebMD have the opportunity to increase their power and revenue share in this future landscape.

WebMD Overview

"WebMD is the leading provider of health information and services to consumers and healthcare professionals. The online healthcare information, decision-support applications and communications services that we provide: -help consumers take an active role in managing their health by providing objective healthcare information and lifestyle information. -make it easier for physicians and healthcare professionals to access clinical reference sources, stay abreast of the latest clinical information, learn about new treatment options, earn continuing medical education credits and communicate with peers. -enable employers and health plans to provide their employees and plan members with access to personalized heath and benefit information and decision support technology that helps them make informed benefit, provider and treatment choices."

WebMD is currently one segment out of the 4 segments integrated into Emdeon. 4 Segments of Emdeon are Emdeon Business Services, Emdeon Practice Services, WebMD Health, and Porex.

Description of Emdeon 4 Segments (From www.emdeon.com)

Emdeon Business Services provides revenue cycle management and clinical communication solutions that enable payers, providers and patients to improve healthcare business processes. Emdeon Practice Services provides physician practice management and electronic health record software and services that increase practice efficiency and enhance patient care.

WebMD Health provides health information services for consumers and physicians through our public online portals, and for employees and health plan members through our private online portals.

Porex is a developer, manufacturer and distributor of proprietary porous plastic products and components used in healthcare, industrial and consumer applications.

Moving away from just being a web company, WebMD changed their name to Emdeon Corporation. This move can be attributed to the move into business and practice services. WebMD is most likely the face of Emdeon to the typical patient in providing health information services. The 2 segments, Business and Practice Services show their willingness to move into additional avenues of revenue. With the increase interest in Electronic Medical Records, Emdeon is attempting to position themselves as one of the major players within the healthcare sector. Recently, WebMD/Emdion created a partnership with Dell in providing Dell employees with Electronic Health Records. This along with their continued exposure with WebMD, Emdeon can become a possible warehouse for all patients, physicians, payers, and providers in terms of the medical record. Although privacy is a major concern, this risk offers a greater reward in terms of Emdeon’s profitability. Emdeon could then compete with consultant companies such as Accenture and IBM Services in terms of supporting the payers and providers in terms of support as well as providing an outlet for the physicians and patients in viewing new medical information and history of care.

Suggestions Moving Forward

I believe that Emdeon must position their WebMD segment to patients and physicians in the fore front. WebMD can be the Google of the healthcare sector. They can then position themselves with providers and payers, pushing the brand awareness of WebMD. By bundling this service with their other core segments, Practice and Business Services, they can combine information between the segments to provide the ultimate warehouse for anyone in the healthcare sector. I believe that the WebMD segment is the key to their success. If patients understand that WebMD is the place to go to find any information about medicine, physicians, and other provider information, I believe that the hospital health systems and other health care players will be more willing to work with WebMD and other Emdeon business segments.

With the push of the electronic medical record in the healthcare sector, Emdeon’s data competency makes them a perfect fit in getting themselves firmly entrenched in the electronic medical record race. Their Business Segments are setup to handle all aspects of the electronic medical record. Initially, Emdeon should work on getting the initial electronic medical record started. They can work with getting patients and providers connected and initial medical information together. This can then allow them to add in the physicians and then the actual medical history from hospital systems and other medical care facilities.

Consequences

The consequences of Emdeon/WebMD failing to taking advantage of the EMR transition in the healthcare sector can be extremely great. Without a added information from their core business, you will see other layers take advantage and strengthen their hold within the healthcare solutions as well as add web solutions to compete with WebMD. The winner in the privacy services layer could also easily take over WebMD’s strength on the web. The web portal layer is already very week in revenue and power compared to the other layers in the health care sector. WebMD can ill advise not working themselves into the EMR competition to grow the Emdeon and WebMD name.

Amazon's Future (Expanded)

2006-04-27T20:27:00.000-04:00

When Jeff Bezos originally envisioned Amazon he thought that the Internet would enable a new business model. He knew that no physical store could contain every book catalogued but you could build a virtual store that could list all of these books. His original plan was to leverage the Internet to avoid the expense and hassle of dealing with inventory by linking directly with distributors to fulfill orders. In essence Amazon would simply control the “Information provider” layer by listing books for sale and would link with other companies to handle the rest of the functions. Unfortunately, one of his first discoveries was that if he wanted to provide a good customer experience and to get a good price on product he would have to build and operate warehouses. This lesson was repeated at almost every level in the stack to the point where Amazon has brought almost every competency in the stack in house.

Warehousing: They have built one of the most efficient and advanced warehouses of any retail operation. They turn their inventory 20 times a year whereas the typical turn in retail is about 15 times a year. In the past three years they have lowered the cost of operating their warehouses from 20% of revenues to less than 10%. They are leveraging their warehousing and fulfillment competencies to provide these services to other sellers as evidenced by the Amazon Advantage program in which sellers can ship units to the Amazon warehouse and Amazon takes care of the sale. For this service Amazon takes 55% of the sale price.

Customer Service: Amazon has a customer service center that is the envy of the industry, in fact they provide customer service to most of their partners such as Target and Office Depot. Like warehousing, this was a competency that Bezos never intended to develop but found it necessary to provide the positive customer experience he envisioned.

Payment: Amazon’s 1 click payment system, while subject to some controversy, has been patented, and provides some stickiness for their site. I was not able to find information as to which company they were using to process credit cards but I’m assuming this is not one of the things they do in-house.

eCommerce Platform: Amazon offers its e-commerce platform to large resellers such as Target, Office Depot, Virgin Entertainment Group, and Borders.com. For smaller sellers they offer zShops and an auction site. In this area they have strong competition such as Microsoft, IBM, and Oracle, but what separates Amazon is that they are able to offer their customers cross promotional opportunities with other sellers using the Amazon platform. This is something that none of the other platforms offer.

Delivery: Amazon has very strong relationships with FedEx, UPS, and USPS to deliver product by traditional means. To lock in customers they offer Amazon Prime where you pay $79 to get free two day shipping on select products, discounted upgrade to 1 day shipping, and free standard shipping. Amazon is also entering into the digital content delivery arena with a subsidiary called CustomFlix. CustomFlix allows customers to send or upload digital content and then CustomFlix digitizes the content and either burns it onto CD or puts it in a streaming format to be sold on Amazon. This should scare companies like Netflix or Napster since this is most likely the first small glimpse of Amazon’s strategy for selling digital media content.

If you can’t wait for shipping Amazon has teamed up with Borders to offer same day in-store pickup. Right now they only offer this service through Borders for books, videos or CDs but what if they were to offer this service for other items such as big screen TV’s or other things that are difficult or expensive to warehouse and ship. A retailer like Best Buy might be incentivized to use this to gain an advantage over a competitor like Circuit City. Amazon might even strike a deal whereby the store will deliver to the customers house. Extrapolating this out, could Amazon strike deals with enough partners whereby these partners essentially become the fulfillment arm of Amazon and Amazon no longer has to worry about warehousing, fulfillment or delivery?

Information Provider: Amazon’s ability to use and provide information in the form of their recommendation engine is without peer. Any robust commercial e-commerce site records the users click stream, pages visited, items purchased, etc., and most will do some limited analysis. Amazon goes deeper and wider in this analysis to not only look at what you’ve purchased and where you’ve been but culls information from all of its users to develop a profile of your shopping habits, and then recommends items you might be interested in. We see the network effect in action indirectly here, the more people that use the site and the more information they collect, the better the recommendation they can make. A more direct manifestation of network effects is seen in the user’s recommendations and ratings of product, the wish list, wedding registry, and baby registry features. The one thing that Amazon does not provide, in terms of information, is independent product reviews. This is left to sites like CNet, ZDnet, and PCMag.com.

Amazon is clearly capturing value by specializing, and building industry leading competencies, in many of the layers in the stack, but they are also building value by integrating across the layers. Unlike Microsoft, Amazon is not developing a closed system, in fact they are opening up all of the “guts” of Amazon to web developers to see what interesting new applications might come from this. This makes sense since innovation will likely come from startups and small companies. The most common use of the Amazon web services is grabbing the product image and details from the Amazon site and placing it on your site. But their web services go far beyond just providing product information. One of the newest services is their S3, or Simple Storage Service, which provides hosted storage services that they say can be used to store and retrieve any amount of data, at any time, from anywhere on the web. They also offer their e-commerce services which allows developers to essentially built a slightly scaled down version of the Amazon site including customer reviews and detailed product information.

By providing these services they are allowing new entrants the ability to store, sell, and deliver content to end users. This means that content producers won’t have to worry about paying to build those competencies they can concentrate on producing content and Amazon takes care of the rest. So Amazon is lowering the cost of market entry for content providers and at the same time raising the switching costs. Not only will content producers have access to best in class eCommerce platform, warehousing, shipping, and customer service but they can harness the power of the network with the recommendation engine and the user rating system.

Does opening up Amazon’s functionality to web developers ensure that they will be the platform of choice on which new sites are built? Amazon has three critical components already in place in order to make that happen; 1) They are allowing nearly free access to their core asset, the e-commerce platform, 2) they have started to offer hosted storage services, which seems to be for developers but it’s not too far of a stretch to imagine that they will offer this service to individuals for all content. In fact they already have a service called “Digital Locker” that allows individuals to store their eBooks, eDocs, and music and video files. 3) Their CustomFlix service enables a publisher to simply give Amazon a copy of the media they want to sell and they take care of the rest. There is no need to worry about duplication, hosting, warehousing, or delivering product.

Future Strategies:

Amazon creates a storage space for users to store all of their content. They could set up a iTunes killer where users would buy music or video on the Amazon site, or on any other site, but instead of downloading it they would store the music at Amazon. Users would be able to access this content wherever, and on whatever, they wanted and would not be tied to a single device such as the iPod since in the near future wireless access should be ubiquitous enough and fast enough to allow this. Based on what you have stored at your site, Amazon could make recommendations as to what other products you might be interested in and send that directly to the device where you could automatically purchase it.

I could imagine one form of this service taking the form of a Myspace-like account. Users could create their profile, list their favorite movies, books, etc., and use the storage to host some of these files. I’m imagining this as an organic recommendation engine. Where the existing recommendation engine distills the actions of many people into a single recommendation this would essentially be giving recommendations from your friends. The danger of commercializing this site too much is that you lose the viral nature that makes Myspace so successful.

Amazon becomes the premier content aggregator. Amazon already has a huge video library of virtually every CD and video made. With the creation of CustomFlix it seems likely that in the future they won’t take physical product from the content producers but will only take a single digital master and replicate it as needed. This accomplishes a number of goals; first it means that Amazon can serve that content in any form that the users needs, either a mobile streaming, online, or physical format. Amazon would not need to acquire any content companies such as Netflix or Napster, they would already own this content. Next it would mean that they wouldn’t need to support and manage such an extensive system of warehouses. Of course physical products such as a CD player still need to be stored and shipped, but the solution to this is to build relationships with physical retailers, just as they have with Borders.com, to offer in store delivery.

Amazon separates its core competencies into separate subsidiaries. I think the interesting part of this strategy is that they would be going back to the model that Jeff Bezos originally had in mind. The reason Amazon built warehouses and customer service facilities in the first place was that they weren’t able to get the level of service they wanted with out making these investments. They are already providing many of these other competencies, such as warehousing, as a service and by breaking these out into separate subsidiaries they may be able to grow each company by extending their reach to new customers who would not have previously used Amazon for these functions. Specifically they could break out their customer service and warehousing functions. This would rid the company of a tremendous overhead costs of these service centers and it would allow these subsidiaries to service some of Amazon’s competitors.

Amazon extends its reach into physical retail. We’ve already seen this with Amazon’s in-store pickup partnership with Borders. I mentioned above that they might partner with other retailers to extend this pick up service, but they could take it one step further and provide their product information either in store or via wireless device. Imagine you’re shopping at Best Buy and you log into the Best Buy site, powered by Amazon, and you can find information about each product complete with user reviews and ratings. With the press of a button you make your purchase using Amazon’s 1-click purchase technology and you pick up the item in store, or arrange to have it shipped to you.

Besides enriching the shopping experience the real value of deploying this technology is that it gives you a way to track customer behavior. Other than being able to capture information about customer purchases, it has been impossible to track customers in a physical store in the same way you can follow their click path online. By integrating this online component with the physical store retailers could gain previously unknowable information and allow them to maximize revenues through better product placement or product pairing.

Best case scenario: Amazon is able to leverage its access to media content to build the most extensive library of downloadable or streamable content. Users purchase the content which is then stored remotely, to be accessed anywhere, anytime, and on any device the user chooses. Competitors like iTunes, Napster, and Netflix become irrelevant since they cannot provide the same breadth of content as Amazon. The ability to store your video, audio, eBooks, eDocs, and other digital products all in one place creates switching costs that lock customers in to Amazon.

By providing the hybrid retail/online platform described above to physical stores, Amazon becomes tightly integrated with leading retailers across all retail segments. This partnership enables Amazon to be able to offer in store pickup for almost all of the items they sell. Once they have established enough partnerships they are able to significantly reduce the amount of inventory they need to warehouse and items they need to ship, greatly reducing overhead.

Worst case scenario: The online retail market becomes even more fragmented than it is today with consumers looking more to opinion leaders and social networks for recommendations on what to purchase and where to purchase it. Customers still visit Amazon to check out the consumer reviews but then go elsewhere to purchase products. As fewer and fewer people purchase from Amazon their user recommendations become less relevant and their recommendation engine becomes less accurate. Amazon actually facilitates this increasing fragmentation by opening up it core assets through web services. More and more smaller retailers now have access to the same powerful platform as Amazon and use it to build their own custom branded stores. Every person with a blog or Myspace account becomes a merchant and people find others in their network from which to purchase items. Amazon becomes the fulfillment arm of retail and loses the value of the network.

Large retailers such as OfficeDepot, Target, and Borders follow Toys R Us’ lead and break their contracts with Amazon since they are unhappy with the amount of value that Amazon is extracting fro the relationship. These large retailers build their own sites on proprietary platforms and begin to compete directly with Amazon. Customers continue to go to Amazon to do research but then visit stores to make a purchase.

Most likely scenario: Amazon continues to be the dominant player in online retail, using its ever deepening knowledge of customers to provide ever more personalized product suggestions. Developers user their web services to pull product information to their own websites but instead of creating traditional ecommerce sites which drive sales to Amazon, developers are creating mashups between Amazon and search and mapping engines. These mashups allow users to get product information from Amazon and then find the lowest price through the search engines and find the closest store through the mapping engine. The increased revenues that Amazon had hoped for by opening up their API’s never develop. Amazon begins charging for their web services leading to a stall in developer adoption.

Amazon expands its online storage strategy to consumers and provides at least 1GB of storage. Users can purchase videos and music from Amazon and store it online or they can upload their own content. Due to contractual limitations with the content producers Amazon does not have the rights to distribute their entire catalog which allows competitors like iTunes and Napster to stay in business.

Revised Letter to CEO - E*Trade

2006-04-27T13:29:00.000-04:00

Dear: Mitchell H. Caplan, CEO - E*Trade

As the world transitions from an industrialized based economy to a networked one, how is E*Trade position to compete? Consumers are beginning to demand customized experiences that meet their specific financial needs and there is massive consolidation in financial services industry and in discount brokerage, in particular. With your firm’s failed attempt to purchase Ameritrade the stakes of the game have increased.

According to TDAmeritrade’s CEO, Joe Moglia, in a recent interview the number of online brokerage firms has gone from over 200 to 80 and the number of true players in the industry had been reduced to around five. Will your management team be able to hear and properly read the weak signals that consumers are broadcasting and if so will you be able to successfully react to the changing demands of customers to have unlimited access to financial information and their accounts? Are you listening? Will E*Trade be one of the last one’s standing or will it be pushed aside or swallowed up by a multinational financial services conglomerate?

I understand, from yesterday’s press release, that E*Trade produced record profits and earnings in the first quarter of 2006, but the competition is not standing still and in the networked economy it does not take long before the industry has shifted and tipped in another direction. This is why I think my message is so important for you to hear.

In fact your rival TD Ameritrade announced yesterday its Independent Spirit program where the company has promised to provide customized financial solutions for its clients through:

-Comprehensive products and support that allow clients to easily change investments as needed
-Straightforward pricing so clients know what they can expect to pay every time
-Independent research, products and support that allow clients to make decisions in their best interest.

TD Ameritrade is also partnering with Palm to distribute its Palm Treo 650 Smartphone to its customers who open a new account. (See add http://www.ameritrade.com/offer/flat/spotseize_flash.html?start_content=offer&a=omo )

Ameritrade gets it! They realize that they will win if they can provide their customers with customized financial solutions, drive new traffic to their website, and give their members the ability to not only access the financial information they need, but also eventually trade 24 hours a day from a communications device any where in the world!

The scenario of a man walking up to a vending machine and realizing that he doesn’t have any change, but does have his portable communication device to purchase a soda is almost here. Soon customers will be able to remotely connect to their brokerage account, trade stocks, shift money into their online payment account and wireless connect to the vending machine to process their payment and purchase a soda. This is important to E*Trade in many ways but primarily because more trades means more revenues and more profit. A customer who demands these types of services and gets them will remain a satisfied customer of that firm and will share his experiences with others drawing more customers to this firm and further enhancing both the top and bottom lines of the companies that provides these services and customer experiences.

So how do you get in the game? It is important to realize that you don’t have to own all of the technology to pull this off; you just have to form the right partnerships. (See stack below) But remember, it will be these relationships that will determine your success or failure. I recommend beginning to talk to the mobile phone/devices manufacturers and begin to understand which players can provide you with the technology solution that you need. Then you need to consider partnering with an online payment processor, a web/software developer, a data security firm and finally an online advertising group that can drive traffic to your sight. You may already have relationships with some of the vendors in each of these layers, but it is important to assess early in this process whether you have the talent in-house to manage this type of project or whether you need to out source the majority of the tasks necessary to complete this project.

Best Case: You, E*Trade, wake up tomorrow and start thinking about the threat that mobile technology poses to the online trading business model. Then you get your act together and recognize that a major shift is occurring. This gives E*Trade an opportunity to develop a proactive response instead of a reactive one. As the consumer demands to have 24-7 access to her “mobile portfolio”, the companies with the technology and relationships in place to react win a significant portion of the online trading business. These companies not only win the online trading business but they also have access to a large number of new customers that provide them with new opportunities to cross-sell and bundle other basic banking services to these clients and further expand their market share of all financial service products.

Worst Case: E*Trade does nothing. The “mobile portfolio” takes off due to the Millennium Generations demands to trade stocks and access their accounts 24-7. TD Ameritrade has expanded its alliances with the mobile device manufacturers and is positioned to win all of the business. E*Trade loses not only the online trading accounts, but everything that goes with them including: mortgages, home equity loans, money market accounts and credit cards. E*Trade quickly fades away as a viable long-term player in financial services.

Most Likely Scenario: This change will be a little slower to take place and E*Trade is given an opportunity to wait and see a little before it jumps in. The world is changing and financial services is going to be a sector where the strong survive and the weak are quickly pushed to the side. Your competition includes not just the online brokers: TD Ameritrade, Charles Schwab, and Scottrade, but the major financial service power houses like Fidelity and Bank of America as well. These competitors don’t sit back and watch what others, but drive change by listening to customers and quickly responding to their needs. E*Trade had a great quarter, but it still has a lot of work to do.

Good luck!

Grant Morrison

Boston University Graduate School of Management

MBA Class of 2006

BBC Creative Future --> Media Web 2.0

2006-04-26T16:54:00.000-04:00

This may be interesting to the media group as well as to the class as a whole.

BBC in UK has announced an aggressive plan to become a network-era company. Here are some specifics that are interesting.

MY BBCPlayer will be rebranded as BBC iPlayer (I wonder if it is an attempt by BBC to create yet another standard?).
It will focus on user-generated content (blogs and home videos) recognizing the power of social network in how the media industry is being transformed.
Make its entire archives of programs available online on an 'experimental basis.' (will it be streaming or downloadable or purchasable?)
The heart of the new strategy appears to be share, find and play (with share focused on users to create their 'own space and build bbc.co.uk around you.'
Public will be invited and be involved to redesign the webpage to "exploit the funcionality and usability of services such as Flickr, YouTube, Technorati and Wikipedia." (see here).

The entire press-release is here but also reproduced below for easy access..
_________________________

Press Releases
Creative Future - BBC addresses creative challenges of on-demand
Category: BBC; New Media
Date: 25.04.2006 Printable version
The BBC today unveiled Creative Future, a new editorial blueprint designed to deliver more value to audiences over the next six years and turn the BBC's public purposes laid out in the recent Government White Paper into quality content for the on-demand world.

The plans build on opportunities created by new and emerging digital technologies and confront the challenges of seismic shifts in public expectations, lifestyle and behaviours and on building new relationships with audiences and individual households.

Ten teams have, for the past year, been exploring what the world may be like in 2012, what audiences may need and want and what the BBC needs to do about it.

Key recommendations include:

Relaunching the BBC's website to include more personalisation, richer audio-visual and user generated content
Create a new teen brand delivered via existing broadband, TV and radio services, including a new long-running drama and comedy, factual and music content
Create easy access points for audiences via broadband portals around key content areas like Sport, Music, Knowledge Building, Health and Science
Start commissioning more 360 degree cross-platform content
Shift energy and resource into continuous news on TV, radio, broadband and mobile, making News 24 the centre of the TV offering, moving talent to it and breaking stories on it
Improve the quality of Sports and Entertainment journalism and appoint a specialist Sports Editor
Create one single, pan-platform BBC Music Strategy and develop big events like this Autumn's first BBC Electric Proms as well as more personalisation enabling people to create the equivalent of their own radio station
Take entertainment seriously, learn from the world of video games and experiment with commissioning for new platforms
In Drama – create fewer titles with longer runs, find creative space for outstanding writers and cherish the programmes audience love best like EastEnders, Casualty and Holby City
In Comedy – improve the creative pipeline across all platforms, pilot more shows, find new talent and build the big hits for BBC ONE
Give sharper age targets to the CBeebies and CBBC brands and integrate all children's content – including online and radio - under these brands
Pilot a Knowledge Building online project called Eyewitness – History enabling people to record and share their memories and experiences of any day over the last 100 years

Delivering the Royal Television Society's Fleming Memorial Lecture this evening BBC Director-General Mark Thompson will say: "There's a big shock coming.

"The second wave of digital will be far more disruptive than the first and the foundations of traditional media will be swept away, taking us beyond broadcasting. The BBC needs a creative response to the amazing, bewildering, exciting and inspiring changes in both technology and expectations.

"On-demand changes everything. It means we need to rethink the way we conceive, commission, produce, package and distribute our content. This isn't about new services it's about doing what we already do differently.

"The BBC should no longer think of itself as a broadcaster of TV and radio and some new media on the side. We should aim to deliver public service content to our audiences in whatever media and on whatever device makes sense for them, whether they are at home or on the move.

"We can deliver much more public value when we think across all platforms and consider how audiences can find our best content, content that's more relevant, more useful and more valuable to them.

"I see a unique creative opportunity. This new digital world is a better world for public service content than the old one.

"Better because great content will now be available forever. Better because finding it will no longer depend on being in front of the TV or radio at exactly the right moment. Better because, in areas like Knowledge Building, the new digital media will allow a far deeper, richer offer than the BBC has ever been able to deliver before.

"There has never been a better moment to be a public service programme maker - there has never been a better moment to be a public service viewer, listener or user."

Mr Thompson said some of Creative Future could be achieved through existing resources, efficiencies and cutting overheads, but not all. "A strategy which concentrates uncompromisingly on content of the highest quality costs a great deal more than one which mixes outstanding output with repeats and content of low ambition.

"That's why the BBC's bid for more resources to make quality content is the most important line in the whole licence-fee submission. It's what the public wants and expects."

Mr Thompson had earlier told staff around the UK and internationally that the Creative Future plan provided a map for the on-demand future where compelling, content, easier navigation and greater audience understanding were essential. "We need to focus on making great creative content which our audiences love and is relevant to their lives. It is that simple."

But he also warned that unless the BBC worked harder to reach younger audiences and those that felt increasingly distant more effectively, the BBC could lose a generation forever.

"Audiences have enormous choice and they like exercising it. But many feel the BBC is not tuned into their lives. We need to understand our audiences far better, to be more responsive, collaborative and to build deeper relationships with them around fantastic quality content."

The plans have emerged from the year-long Creative Future project, sponsored by Mr Thompson and the BBC's Creative Director Alan Yentob.

The project has involved hundreds of people across the BBC, the independent sector and other industry partners, underpinned by one of the largest audience research and insight initiatives the BBC has ever undertaken.

Ten teams have, for the past year, been exploring what the world may be like in 2012, what audiences may need and want and what the BBC needs to do about it.

Two pieces of work around Audiences and the Beyond Broadcast world, which covered technology and market developments, informed and shaped thinking in all the other content teams - Journalism, Music, Children's & Teens, Sport, Drama, Entertainment, Comedy and Knowledge Building.

Key recommendations by genre

Journalism

A new pan platform journalism strategy, including mobile devices, is already underway, putting 24/7 news on the web, broadband, TV and radio at its heart for unfolding stories as well as analysis.

BBC News 24 has been moved centre stage on TV and key talent are moving to it.

Sport and Entertainment journalism will be improved. Responsiveness and authenticity are important qualities to audiences.

Current affairs will be reshaped and BBC News will work with the education sector to get BBC journalism into secondary schools across the country through initiatives like Schools Question Time.

Sport

Creating a BBC Sport broadband portal with live video and audio, journalism, specialist sports and interactive comment, which builds on the recent success of the Winter Olympics and reflects the diversity of sport across the nations and regions of the UK.

Launching a new flagship Sports News programme on TV, appointing a BBC Sports Editor and phasing out 'portfolio' programmes like Grandstand, a brand which no longer has impact, in favour of BBC Sport branded live events and highlights.

Music

For the first time, a single BBC music strategy across all platforms, with regular cross platform events like this Autumn's Electric Proms, including TV Music Entertainment and commissioning in Radio & Music.

The aim is be the premier destination for unsigned bands and to seize the opportunities of broadband, podcasting and mobile.

Kids & Teens

All children's output, including radio, online and learning will eventually be consolidated under the CBeebies and CBBC brands which will be given tighter audiences targets – up to 6 and 7-11 years respectively.

Create a broadband based teen brand aimed at 12-16 years, including a high volume drama, comedy, music and factual content.

Comedy

Developing the creative pipeline for comedy across all radio and TV networks – local and national - and kickstarting contemporary sitcoms by increasing the number of pilots, investing more in rehearsal time and script development, maximising access through new media and experimenting with bespoke content.

Improving training, nurturing talent, relaunching the comedy website and holding an annual BBC Comedy day for those involved in creating comedy for the BBC.

Drama

Intensifying the pace, energy and emotion of TV dramas, such as the award-winning Bleak House or The Street currently on BBC ONE, while continuing to cherish the big runners like EastEnders and Casualty that audiences love.

Creating more writer-led radio landmarks, opting for fewer TV titles with longer runs and higher audience value, supporting single dramas and writers and experimenting with the drama inherent in gaming and interactive – such as the online drama Jamie Kane.

Entertainment

Deliver more consistent, braver, high production value entertainment on Saturday nights on BBC ONE, plus at least two stripped entertainment events on the channel each year.

More effective piloting, cross media commissioning and closer collaboration with other genres like factual and leisure to build top shows of the future like The Apprentice - from factual entertainment.

Knowledge Building

BBC content which documents the world and inspires audiences to explore, learn and contribute should come as one proposition and be available permanently after transmission. Knowledge Building content should be as big an offer from the BBC as BBC News.

The appeal to people's interests and passions has a long term value so the BBC will rethink its approach, pan platform, to key areas like Natural History, Health and Technology.

It will also pilot Eyewitness – a national grid marking every day over the last 100 years –giving anyone with a story to tell about a particular day the chance to record and share their memories with others.

Consistent themes emerged across the different teams and shaped their recommendations

Cross platform content and commissioning

Building on big ideas and events that can work across platforms as well as on linear channels, while meeting specialist interests via on-demand.

It will mean a different approach to commissioning and integrating key output areas. This will mean following BBC News' multi platform example in Sport, Music, Children's and Knowledge Building content.

Stronger emotional connections

Audiences want more than facts. They also want to be seriously entertained through Drama, Entertainment and Comedy, but also through factual programmes.

Findability

On-demand means content has to have proper labelling (metadata) or it will be hard to find and of no long term value to audiences. Better search tools, branding and navigation are essential, as are clear portals for big content areas like Sport, Music, Natural History, Leisure and Health.

The Young

The audiences of tomorrow currently get too little of real value from the BBC. The BBC needs to think how it engages them and reflect their lives better.

Active audiences

Increasingly, audiences of all ages not only want the choice of what to watch and listen to when they want, they also expect to take part, debate, create and control. Interactivity and user generated content are increasingly important stimuli for the creative process.

Mr Thompson said these and more detailed recommendations in each area were just the beginning of creative renewal.

Mr Thompson said these and more detailed recommendations in each area were just the beginning of creative renewal and would be facilitated by other important initiatives.

These include: feeding more audience insights and research into the creative process and developing new cross platform measurements; also putting technology and its potential at the heart of creative thinking; developing a pan BBC rights strategy; launching a more powerful search tool as bbc.co.uk is upgraded, cracking metadata labelling as a priority and ensuring that the BBC is organisationally and culturally ready to make the Creative Future recommendations real.

Notes to Editors

A full copy of Mark Thompson's RTS Fleming Lecture will be available at 4.00pm,
strictly embargoed until 7.00pm this evening.

A more detailed briefing of each Creative Future workstreams is available via the BBC's Press Office website.
-->
BBC Press Office

itunes the user experience

2006-04-26T09:45:00.000-04:00

Itunes a complementor for the Ipod: Apple is pretty open about their low profit per song. And it is pretty clear to see that they are using Itunes to drive Ipod sales (and vice versa). Given that the Itunes software and delivery model is likely all fixed costs, the costs associated with additional songs sold by Itunes are material costs and paid directly to the record labels (online delivery = small fulfillment costs). We can then conclude that Itunes is a volume game and once Apple covers their fixed costs, every song become pure profit. The more songs Apple sells the more money they make. There is some evidence that they have a affiliation program and do pass along a payment to websites that refer people to specific songs or albums. I am sure that the sale needs to be made in order for Apple to pay.

So what do they do to sell more songs? First, they have embedded the store into the Itunes player. The Itunes webpage requires that Itunes be installed locally. Due to the proprietary nature of the download file, this makes a lot of sense.

Once you get Itunes up and running you notice that the music management software and the store are intertwined. The newest version of the store even has a ministore that rises from the bottom of the screen and offers "advertisements".

The main page of the store is loaded with band and album ads. You can also very quickly find the top selling songs (they list 10 but you can get to the top 100) and the top albums. If you are looking for something they offer a simple search and a power search. In a very creative move, the simple search is part of the main application and can be used to search you music collection when not visiting the music store. When performing a search the results will include any matching music, podcast, audiobook or video.

Once you find a artist the screen splits in the middle. The upper half lists artist information and the bottom half lists the songs (with title, album, time, and price) available for that artist.

The artist information includes the following:

Album notes
Album Rating (driven by customer reviews)
Customer reviews (you can also write one)
In some cases professional reviews
Top 10 artists downloads (option to see more)
Listeners also bought (you see 3 but can click a link and see many more in another window)
Top rated Imixes (I assume only those that include one of these songs)

We will come back to Imixes in a bit but first I want to mention three other functions listed in the artist section: gift this music, artist alert, tell a friend. These (plus Imixes and customer reviews) are the foundation for the burgeoning social network. Both gift this music and tell a friend enable one customer to share with others. Using the artist alert a user can tell Itunes that they are interested in hearing when new tracks are added. The new music Tuesday list is for users who want to know what music is release each week. Using these functions Apple has begun to tie themselves to their customers and their customers with each other.

The Imixes: These things are pretty cool. Any user can create a playlist in their itunes and export it to the itunes store. I think I saw that there are currently over 333,000 Imixes. Basically the Imix gives a user the opportunity to create their own album (or movie soundtrack if you prefer). Once you find an Imix you like you can view and purchase the songs. You can also view other Imix by the same user. And if you really liked it, you could share it with your friends. In a nut shell, Imixes give the user the opportunity to build lists of songs and share them with the community.

Celebrity Playlists: They offer a similar functionality to the Imixes but they are created by celebrities and include a description of how they feel about the song.

Itunes Essentials: Itunes has created their own recommended song lists and published them to the site as the "Essentials".

Itunes Originals: In addition to the Essentials, Itunes offers the Originals series. These seem to be live recordings and possibly unreleased or remixed songs.

Billboard Charts: Itunes also offers the Billboard listings for the Hot 100, Country and R&B. Once within the listings you can purchase the songs. The trouble that I see is that while the charts go back to the 1940's, they stop at 2004 and don't reflect the current charts.

Radio Charts: In contrast, Itunes offers the Radio Chart listings which appear to be more current. We don't have an indication of when they are from but I quickly scanned the 9 radio stations for the Boston area and the songs looked current. But I just noticed the note that said the Radio Charts were powered by Mediabase and were copyright 2004. It would be awesome if they could go real time and reflect the current rotation of the radio station.

Customer Reviews: Much like Amazon, Itunes offers users the ability to review albums. There doesn't seem to be a capacity to rate songs directly (unless it is a single). The big problem here is that the Itunes reviews aren't nearly as good as the Amazon reviews. This could be due to the younger age range of many of the customers. Or it could be that the lower price point doesn't elicit much care when entering a review. In contrast a $50 - $60 item from Amazon might inspire a more well thought out comment. Much like Amazon, Itunes provides users the opportunity to rate the reviews. In the Itunes case, a user is allowed to indicate whether or not the review was "helpful". When checking reviews you can filter by the helpful indication.

Conclusion:It seems like Apple has done the best they can with their community. In the most current version of Itunes, Apple introduced the Mini Store. I will discuss the mini store in another post but I would like to mention briefly that the MiniStore does point out bands that are similar to the band that you have clicked in the Itunes Library.

In trying to tie this together, Apple has introduced a number of key community building functions into their software. They have enabled users to provide preferences (Artist Alert). They have enabled users to interact with each other (customer reviews, imixes, tell a friend and gift this music). They have provided suggestions for other songs to check out (listeners also bought). They release new music every Tuesday and notify people of the new songs via email.

The most current social networking concept that we talked about in class they don't offer is tagging. Tagging would enable them to create user defined searches. Currently the closest they come is through allowing people to search (power search) for genres. There are two limitations in the power search. First the return list is limited to 150 songs. Second some songs could be in multiple genres and the Apple database may not be able to recognize both. Tagging would enable users to custom define key searches and possible create a more robust search process.

breaking down itunes

2006-04-25T22:21:00.000-04:00

Itunes: The Origin
Apple launched Itunes on April 28, 2003. By February 23, 2006 they had sold 1 Billion songs downloads. How did this happen? How did it happen so quickly? Where do they go now?

Wikipedia: Itunes
According to Wikipedia Itunes sold 275,000 songs in its first 18 hours. So it shouldn't surprise us that they 50 million in just under a year. Then they roughly doubled their sales in under 6 months. Then they just about doubled again in 3 months. At that point we had reached December of 2004 and Itunes had been in business for just 20 months. The staggering growth continued: 400 million by May 2005, 850 million by January 2006, and finally 1 billion in February of 2006.

What exactly was Itunes selling? Today, Itunes advertises a 2 million song catalog (not to mention 3,000 videos, 20,000 podcasts and 16,000 audiobooks). All of these songs are available for download at the low price point of $0.99.

How much profit does Apple take? From all accounts it seems like they make around $0.04 per song. In contrast the record labels receive $.60-$0.70 per song and the music publishers take around $0.08. Those numbers put Apple's Itunes site at break even if not a loss leader.

Why would Apple do that? Clearly the game is for Apple to sell more Ipods. The Ipod is a higher ticket item and Apple receives about a 27% margin. It is an interesting approach (and a clear example of network effects) - sell a cool gadget and people want content, provide lots of content and more people will consider the gadget. Once they start the cycle, the trouble will be keeping it energized. Eventually the steam will run down and they need to find more content or build a better gadget (the video ipod is a perfect example of this). Another wrinkle (some might safe beauty) to the Itunes site is that the content's usability is locked into the ipod device. Itunes delivers the content in a proprietary format which is natively playable in the ipod. The standard Itunes software will not talk to other mp3 players. There are software hacks and patches available that will enable itunes to work with other devices but 75% of the mp3 players sold are Ipod so the market is pretty well controlled by Apple.

Where did the content come from? Prior to the Itunes launch in 2003 Steve Jobs entered into US market contracts with the five (now four) major labels: EMI, Universal, Warner Brothers and Sony/BMG (separate in 2003). I am not sure how much content was originally provided to Apple by each of the labels but it was only about 200,000 songs. Today they have 10 times that number. Not too long after launch Apple signed a contract with CdBaby to distribute digital music for the 100,000 independent albums that they are lisenced to sell.

What is Sony thinking? The proprietary nature of the device and the itunes store creates an interesting relationship with Sony. Sony has business units for both music content and devices. By selling through Itunes (which doesn't recognize the Sony devices) Sony has put themselves in an interesting position. In general, all of the record labels would like Itunes to work with more devices because their market would grow but Apple correctly thinks it is foolish for them to change. The Sony situation is complicated because Sony runs their own online music sites (a cd store plus sony connect, itunes and 5 other digital sites). In addition to selling their own digital music, Sony sells devices that compete with the Ipod. The co-optition puts Sony smack in the middle of a situation where every song they license to Itunes may cost them a device sale.

Who holds the power? Jobs struggles with Labels over flat rate pricing
Jobs holds the power

Apple v. Apple I
Apple v. Apple II

Cooperation Required (apple and sony - strange bedfellows)

Downhill Battle

Songs complement the Ipod? Apple gets the Value

Will Amazon challenge Itunes?

Content providers not just the big boys

The Healthcare Industry and SAP

2006-04-25T20:12:00.000-04:00

As we have learned in class, the increasing ability to communicate electronically via increase in bandwidth, connections, and computer processing power has accelerated the transition from the Industrial Age to the Network Era (NE). The resultant technological, financial, and social networks are reshaping the competitive landscape of many industries by being the driving forces behind new trends and disruptions.
Where once competitive advantage lay in a company’s ability to manage its portfolio of products or portfolio of businesses, derivation of competitive advantage in the Network Era has shifted to successfully managing portfolios of capabilities and portfolios of relationships. As such, identification and mitigation of inflection points in a changing competitive landscape becomes extremely important to the survival of incumbent companies and becomes a platform from which new entrants may penetrate a market.

In the healthcare industry, Order Effects of NE-influenced trends and information technologies stand to have significant business impact by shifting the boundaries of functions, causing disintermediation by reconfiguring layers of capabilities, and creating new or consuming old architectural control points. This blog post highlights a few of the inflection points and outlines possible consequences.

SOCIAL NETWORKS & RESULTANT TRENDS
Though nothing new, the use of social networks as a source of information and as a decision making tool has burgeoned with rise of the internet. The growing popularity and facility of use of search engines, email, blogs, wiki’s and social networking sites such as friendster, myspace, the facebook, and linkedin have rendered geographic boundaries obsolete and have given rise to the increased cultural acceptance of seeking advice from people several degrees of separation distant.

Take for example the sheer amount of information that people post about their healthcare experiences on the internet. Though in part hampered in choice by cost or by the healthcare package from one’s job, patients can network with other patients – essentially creating a customer market where one is “shopping” for hospitals or doctors based on evaluations of others. Though currently decentralized, should this trend rise in regularity or a communal data store on physicians and hospitals come into existence, power will shift further into the hands of patients or to their employers who can aggregate information on which service providers their employees wish to use.

In addition to this, sites like Wikipedia, WebMD and The Cancer Blog have become hubs for people seeking information and exchanging advice, exponentially increasing the amount of data points available for making decisions. With doubts on the veracity of information on the internet tempered by both increased acceptance of social i-networks and endorsements from corporations, advocacy groups, or reputable third party organizations, use of these hubs will continue to grow. Traditionally patients would go to their doctors for answers about illnesses or medical conditions (and at most sought a second opinion); with web-based information available from social networks these patients are now able to self-diagnose. I postulate that in the future, doctors will find themselves having to explain less, yet convince more.

TECHNOLOGICAL NETWORKS & RESULTANT TRENDS
As business transformers, NE-influenced technologies are perhaps the most visible means of possible industry disruption. The multiplicative effect of technology and education will increase the amount readily accessible data. I find it easier to delineate my thoughts by highlighting some current trends and their possible outcomes in the table below.

Technology	Today’s Trend	Tomorrow’s Vision
Smart Objects	The i-Pot, The Life Shirt	Seamless integration will allow constant monitoring of at-risk patients
Networked PC’s	Distributed/Grid Computing	Idle pc’s accelerate discovery, exponentially increasing power at the hands of scientists racing to find cures
Video Game Visualization	Rendering the Genome	Networks that straddle traditional industry boundaries (not just video games!) will deliver capabilities which promote understanding of the human genome and other healthcare issues; capabilities that flow across industries will blur the traditional definition of the healthcare industry
Internet-Enabled Robotics	Telesurgery, Remote Presence	Technology and sourcing competencies change the geography of work; Specialists and surgeons will remotely do rounds and perform operations, thus removing geography as a boundary for finding the best healthcare available
Electronic Medical Records	EMR	Easily indexed records increase ability for healthcare providers to network data on patients with similar healthcare issues and thus link more data points for analysis, increasing the chance to discover causality and correlation

Why Should We Care?
These networks are the cause of business transformation – they “impact top-line growth, render current competencies obsolete, shift sources of profit margins, change competitive space, restructure business relationships (complementors, competitors, suppliers, and customers), and possibly creates new business models” (Venkatraman, 2006). With the NE, there is a much more active role of the customer; the customer’s search for data is the starting point which brings networks at the center of value creation. Directly correlated to this is the fact that software and infrastructure is becoming ubiquitous – they are embedded into processes while it is the information and search capabilities that are becoming the focus of value.

So we realize we exist in a Network Era, yet our “business practices lag due to legacy organizational and structural constraints” (Venkatraman, 2006). The question is posed: how do we then manage in a network-centric way and capture value that is being created or shifted? From a Darwinian standpoint, if we don’t adapt we succumb to the fittest.
Recognizing these trends and technologies as inflection points is the first step, but we must also consider the best way to respond to these issues. In class discussions we determined that there are two dominant avenues for value capture – economies of scale created by specialization within layers, and economies of scope created by integration across layers. With this in mind, we are able to prepare stratagems for the individual corporations which we chose to research.

SAP – Adapting to Survive in the Network Era
SAP’s ability to adapt its strategy and business model will be a critical source of competitive advantage against all comers, not just incumbents. There are pressing issues that immediately come to mind. First, I have already established that software and infrastructure is becoming ubiquitous – serious threats to the applications layer of the stack. Second, there are a finite amount of ERP systems that can be sold and delivered. Even if ERP companies like SAP can battle and overcome new best-of-breed solutions and if the companies’ revenue streams can be maintained through services and licensing fees, the only way to grow market share will eventually be acquisition. Continued consolidation will have altered the structure of the industry, leaving fewer, larger players in command.

It is here that cross-industry networks will be of value as the capabilities of SAP ERP systems straddle several (notably healthcare, the focus of this post). Though already playing in the space with healthcare-specific modules, there will be opportunity for further economies of scale. With EMR for example, there is an incredible opportunity for clinical data exchange between healthcare providers, payers, patients, and others with interest in the data, like life scientists and analysts. As mentioned in today’s presentation, first order effects of EMR will ease transfer of data across vast distances and enable electronic governance, provide ease of indexing and put data in a format which will facilitate discovery, reduce costs required for physical storage, and create efficiencies for medical staff.

There are, however, several obstacles to overcome as I wrote in an earlier post:
» Lack of standards for interoperability and ownership issues
» Government policies, security, and privacy issues
» Doctors don’t know what to purchase
» Technology regarding digital imaging may not yet be there
» Clinical and administrative staff may be resistant to disruptive technology

Companies that can capitalize and overcome these obstacles stand to gain value from the move to EMR and subsequent second and third order effects. I propose SAP continue to leverage its brand name and customer base, retaining and acquiring customers while providing further services. This will be done by turning SAP’s module expertise toward developing apps which make possible the aggregation and analysis of data. As such, the SAP module by definition must also be EMR standard and help industry players conform to government policies, security and privacy issues. Where once companies turned to SAP ERP modules for cost efficiency and operational cohesiveness, SAP will be integral to healthcare organizations’ ability to comply with standards. SAP should take an active role in defining the standard of EMR, and will thus be able to add to their product as well as consulting service with regards to compliance and security.

social search

2006-04-25T07:59:00.000-04:00

i briefly skimmed this article so i don't have much to add.
the net is that microsoft is adapting to competitive pressure and changing msn.
the new trend seems to be searching within your social netwrok and asking your friends for assistance.

yahoo has a similar function called yahoo answer that they will be rolling out of beta soon. it has performed beyond their expectations.

article

Google applicants

2006-04-24T23:03:00.000-04:00

So last week I was contacted by a Google recruiter to apply for a really interesting sounding position -- of course, it was looking for 10 yrs experience, so I have no idea why I was contacted in the first place, and not surprised that they did not want to continue the interview for that position -- anyway, the interesting part of the story is that they sent me a questionairre to fill out as an applicant, and it included the following 2 questions:

#8 " Who are Google's top 3-5 competitors threats and why? "
#9 " What 3-5 things (trends, technologies, etc) that pose the largest
threats to Google's business and why? "

First off, a very interesting strategy to accumulate lots of thoughts about threats... but also a unique type of question to qualify ppl on. I'm not real happy with my responses because I didn't feel like putting much thought into it, but here are my answers if anyone is curious:

8) Who are Google's top 3-5 competitors threats and why?

Outside of direct competitors like Yahoo, there are some unique threats that Google should be wary of: MySpace, the government, and Verizon. Googleâs business, while innovative in many areas with products in all types of markets, is sustained based on advertising revenue. Advertising is about having the most valuable real estate, which means the place where the most people are looking. Currently, MySpace has more hits than Google. Should MySpace decide to monetize differently, or expand into other spaces, there are potential issues for Google. Currently, MySpace is becoming the place to search for more personal information, and is rapidly becoming the aggregator of such information, including blogs, videos, pictures, etc. The more searching and aggregating that MySpace does, the more competitive it becomes to Google.
The government, or perhaps just general litigation, is a threat to Google in different ways. Foreign governments, like the China issue, represent competitive roadblocks to Googleâs expansion. Our government represents the potential for reputation ruining litigation. For example, a major press release on privacy violations if Google is forced to turn over someoneâs data (gmail, search patterns, gdrive contents) to the government could ruin a lot of the value added services that Google provides. Privacy is a founding component that many customers are not ready to do without. Furthermore, a high profile investigation by the government into click fraud or other online ad scandals could scare companies aware from online ads, dampening the market.
Finally, Verizon is a competitive threat as it is positioned well in the convergence of wired and wireless access to provide ubiquitous connectivity. With such connectivity, Verizon might be able to dictate the channels users access for content. For instance, a partnering with JumpTap could mean that all Verizon mobile users start with JumpTap's search page instead of Google. Taken to the next level, perhaps all initial contact points for Verizon customers when they are connected is an alternative search page. Another option is if Verizon shifts revenue models, and gives away internet connectivity and they themselves charge for ads just as Google is doing. However, since Verizon already owns so many customers and their mobile or wired access, they start with a competitive stance.

8) Who are Google's top 3-5 competitors threats and why?

Outside of direct competitors like Yahoo, there are some unique threats that Google should be wary of: MySpace, the government, and Verizon. Googleâs business, while innovative in many areas with products in all types of markets, is sustained based on advertising revenue. Advertising is about having the most valuable real estate, which means the place where the most people are looking. Currently, MySpace has more hits than Google. Should MySpace decide to monetize differently, or expand into other spaces, there are potential issues for Google. Currently, MySpace is becoming the place to search for more personal information, and is rapidly becoming the aggregator of such information, including blogs, videos, pictures, etc. The more searching and aggregating that MySpace does, the more competitive it becomes to Google.
The government, or perhaps just general litigation, is a threat to Google in different ways. Foreign governments, like the China issue, represent competitive roadblocks to Googleâs expansion. Our government represents the potential for reputation ruining litigation. For example, a major press release on privacy violations if Google is forced to turn over someoneâs data (gmail, search patterns, gdrive contents) to the government could ruin a lot of the value added services that Google provides. Privacy is a founding component that many customers are not ready to do without. Furthermore, a high profile investigation by the government into click fraud or other online ad scandals could scare companies aware from online ads, dampening the market.
Finally, Verizon is a competitive threat as it is positioned well in the convergence of wired and wireless access to provide ubiquitous connectivity. With such connectivity, Verizon might be able to dictate the channels users access for content. For instance, a partnering with JumpTap could mean that all Verizon mobile users start with JumpTapâs search page instead of Google. Taken to the next level, perhaps all initial contact points for Verizon customers when they are connected is an alternative search page. Another option is if Verizon shifts revenue models, and gives away internet connectivity and they themselves charge for ads just as Google is doing. However, since Verizon already owns so many customers and their mobile or wired access, they start with a competitive stance.

Okay, now I should probably get back to the homework for this class!

Netflix's Future

2006-04-23T11:55:00.000-04:00

Netflix is riding a wave of success, having beaten back Blockbuster's challenge, which many so-called experts claimed would bury the company. Now it faces new challenges.

First, a look at the current state of the DVD industry:

Looking ahead, the landscape will certainly change by 2010. But how? First, a look at potential changes in important layers of capabilities:

The Layers

Physical Sales

This space is clearly at risk with digital downloading on the horizon, but will certainly continue to be a strong element in the stack for collectors, as gifts, the computer-averse, and as impulse buys.

Physical Rental

Netflix’s current home has the most to lose from the advent of digital downloading. The convenience of rental and instantaneous delivery is difficult to match in either the video store or the mail-rental models.

Digital Sales

A new layer only now starting to emerge, this can only succeed as the preferred mode of delivery if it is a cheaper option than physical sales with current technology. Until it is possible to purchase and have the movie instantly available on some transferable technology (like a DVD or memory stick), this will lag behind physical sales as the preferred mode of purchase without a cost advantage. Competing in this layer is only possible with a method of easily delivering the massive movie file to the user. The progress of WiMax and IP TV will likely be critical to this layer’s success, so as to lessen dependence on the cable companies.

Digital Rental

This layer, which has been around for a long time in the form of pay-per-view, is starting to take-off, due to improving on-demand selection and the advent of digital rental through the computer. Unlike the sales space, rentals do not need to be transferable or permanent and are thus more suited to the digital delivery method. But access, as with digital sales, is a prerequisite and thus digital rental will also rely on WiMax and IP TV to make an end-run around the cable companies.

Information

Amazon and Netflix dominate this space due to their recommendation engines, which generate additional sales for both companies and provide stickiness to lock-in consumers, as the engines get better the more a consumer purchases. This set-up also positions both companies to take advantage of the “long-tail” phenomena, the ability for these companies to have massive catalogues of available movies and profit from micro areas of customer interest. In fact, 2/3 of Netflix’s rentals come from its back-catalogue.

With these thoughts in mind, now a look at the individual companies who will play an important role in Netflix's future:

Netflix

Netflix created the online rental market and continues to dominate it today. It also is interested in entering the digital rental market and has an undisclosed partnership with Tivo. The key to Netflix’s advantage is its recommendation engine and customer review system.

Blockbuster

Netflix’s most direct competitor now, Blockbuster has not been successful in challenging Netflix in the online rental area. With that market projected to grow from 5.5 million subscribers to 20 million in the next 5 to 7 years, based on Adams Media Research data, Netflix is well-positioned to overtake Blockbuster. Blockbuster thus far has shown no interested in digital downloads.

Wal-Mart

After selling its online rental service to Netflix, Wal-Mart has not made any further forays into DVD rental. This does not mean that the company will not jump back in with digital downloads, but given that this is out of their core competencies, Wal-Mart would certainly need a partner to make it happen. In the meantime, Wal-Mart continues to dominate physical DVD sales with an estimated 30% of the marke t.

Amazon

The looming shadow of Amazon has scared off many Netflix investors in the past few years, but the online giant has yet to directly enter Netflix’ space. That is about to change, with Amazon starting to offer digital rentals, with the option for the downloader to put the cost of the rental toward purchasing the physical DVD. Movie studio agreement will be critical for this project to succeed, without the digital rights for the major studios, no digital download project can succeed. The other major hurdle to cross is getting the digital file from the computer to the TV screen. This seems likely to be entering the mainstream in the next 5 years. But Amazon still has its recommendation engine, which along with its control over imdb.com, the premier site on the web for movie information, should help it dominate the information layer and potentially the long-tail market. Along with its consumer reviews, these recommendations help create stickiness for Amazon that will increase switching costs the more the service gets used.

Best Buy/Circuit City

These two are lumped together due to their similar business models, which are currently under attack from Wal-Mart (cheaper) and Amazon (better inventory). These retailers have made-up for their declining DVD sales with video games, a trend that will likely continue in the future.

Comcast

The king of cable in the U.S., Comcast would be positioned to make the most money out of on-demand service. The current drawbacks are price, since it is a pay-per-view model a subscription service like Netflix can be more cost-effective, and selection. On-demand currently features mostly new releases and certainly not many of the more obscure titles Netflix has. Compounding the issue is the gap in time between a movie coming out on DVD and being available on-demand, currently around 30 days. One of the core advantages that Comcast and the other cable companies have now is their control of digital access to the TV. This will certainly disappear in the future with the proliferation of wireless networks, WiMax, and IP TV. But for the moment, it presents a problem for Netflix, who needs a way to get digital files to either its partner Tivo, or just to the TV.

MovieLink and CinemaNow

The movie studios attempt to avoid the fate of the record industry, these two companies are starting to offer digital purchase of DVDs and already offer digital rental, but only in pre-determined rental “windows” that coincides with the pay-per-view window. All of the major studios are on-board, but the pricing is out-of-whack. Some have even speculated that the studios want this to fail. If this vertical attempt works, companies like Netflix, Apple, Amazon, and Comcast who want to succeed in the digital download game could be shut-out by a movie industry that controls the digital rights and does not want to share in the profits. But without a significant decrease in price, this attempt is unlikely to succeed. The rental effort will not make any significant dent without a change in philosophy away from rental “windows”.

Apple

With the release of the video iPod, many observers assumed it was only a matter of time before movies became available in the iTunes store. But that has not happened, and with MovieLink and CinemaNow’s recent announcement, it seems unlikely in the near future. Only with the failure of these services will Apple get a chance and by then other players such as Amazon or Netflix may have gotten a strong foothold in the market.

Google

As the current king of search online, Google certainly has a potential part to play in the future of this industry. But exactly that will be is unclear. With its enormous war-chest and expertise, Google could decide to try to enter the digital download market, as it already offers TV shows online.

Toshiba

The champion of HD-DVD, one of the two new formats in the looming DVD format war, Toshiba obviously is banking on their format being victorious. For Netflix, who has already but thought into the upcoming battle, escalating inventory prices and the potential to need to stock both HD-DVD and Blu-Ray, along with the current format, could be a problem.

Sony

Blu-Ray’s creator and a major movie studio, Sony will likely try to learn from its mistakes in the music industry and may be a clear player in the success or failure of MovieLink and CinemaNow.

McDonalds

The fast-food giant has been quietly entering the digital rental market in the past few years, testing out a kiosk model at some of its locations. With this effort now expanding, McDonalds may become a player in the diminishing physical rental space in the future.

With these thoughts in mind, here are some potential scenarios of how the future will play out:

Best Case Scenario

The best case scenario for Netflix is that WiMax explodes as more and more cities follow the example of San Francisco and Philadelphia. This will enable Netflix, either with or without Tivo, to get its content to consumers without worrying about the cable companies. In addition, Blockbuster continues to trip over its own feet, Amazon and Apple cannot secure digital rights from major movie studios soon enough, which allows Netflix to get entrenched in the market. CinemaNow and MovieLink both succeed in their digital sales model, which helps keep Amazon, Apple, and others out of the market, but does not succeed in the digital rental market, since consumers prefer Netflix. The transition from computer to TV is made seamless, this is where the partnership with Tivo can benefit Netflix, and most importantly, Netflix gets no opposition from the major movie studios in its move toward offering downloads.

Worst Case Scenario

WiMax does not take off and cable companies start to charge tolls on their high-speed connections for large files. Blockbuster gets its act together and mounts a serious challenge to Netflix in the mail-delivery rental model in partnership with Amazon. CinemaNow and MovieLink flop and the movie studios cede the space to Amazon and Apple, which allows Amazon to tie a digital rental model to its Blockbuster partnership. Tivo either is bought out or goes bankrupt under competitive pressure and Netflix loses its partnership. In addition, Netflix cannot sort out digital rights issues with the movie studios who are concerned about piracy and is unable to enter the digital download spae at all. There is no clear winner in the DVD format war and Netflix is forced to maintain large quantities of each format to stay competitive with the digital companies who do not have to worry about it. This culminates in Netflix being bought out or driven into bankruptcy.

Likely Scenario

Widespread wireless high-speed Internet will come, but it likely will not happen in the next five years. Blockbuster and Amazon will not enter a partnership, as it seems Amazon wants to focus on digital rentals. CinemaNow and MovieLink will not work due to greed, after a few years of mounting piracy and losses, the movie studios will cede the space to anyone who is willing to pay for the digital rights, letting Apple and Amazon in. The rental space will be a different story, as the movie studios will let companies whose anti-piracy measures are strong enough to offer movies for download. The reason for the different attitude is price. In the rental market the prices from CinemaNow and MovieLink are competitive and the studios do not worry about price decreases affecting their physical rental market. This concern is very real in the sales market, which is why the studios will persist in their attempt to overcharge for digital sales. Netflix will therefore start to offer a digital download option, either to the computer or the consumer’s Tivo box.

The industry will most likely look something like this in 2010:

Netflix therefore needs to do the following:

· Make securing digital rights Netflix’s first priority. In the anticipation of the digital market becoming a major player, Netflix cannot afford to sit back and wait for someone else to do the heavy lifting with the studios.

· In conjunction, make sure that however Netflix delivers its digital content, that content is as piracy proof as possible. This will be a major stumbling block with the studios if Netflix cannot figure it out.

· Carefully monitor the DVD format war and offer popular movies in all formats. Since Netflix is the superior rental product, it cannot afford to alienate customers.

· Continue to improve its recommendation engine and look to add new technology that increases customer experience. Social network effects remain the key to Netflix’s future.

the onion itunes article

2006-04-23T11:54:00.000-04:00

I know they are playing up the "buy your own stuff" from itunes angle but it seems pretty plausible to me.

aren't we headed towards storing all of your content on the web anyway? why not store you home video and music at itunes, your photos at flicker, your office docs at office live and your email at google.

security issues aside, we wouldn't need disk drives anymore. there is a place for everything and everything has its place. we could even store stuff at amazon if we had to.

the thought that it might be pay per use or pay to access is humorous.

onion

working on apple

2006-04-23T11:08:00.000-04:00

As the team works out the solutions for the retail electronics industry, I am trying to figure out how to peel apple. I see there are really four prongs to their attack. First, they have the online apple store. Second, they have the retail apple stores. Third, they have ipod (sold at the first two outlets) and their wildly popular itunes store (which according to the popular press is what made apple cool again - I think they were always cool but their lack of volume made them easy to ignore). Finally, they have the partner alliance network (bestbuy, circuit city, compusa, amazon and pretty much everyone else who has floor space for an ipod display).

In trying to figure out what works well for Apple I found the following article. On first glance it looks like an apple.com page but when you check the URL you see that it is a clever recreation.

The article loops back to our IS 710 exploration of the music industry. When we talked about the music value chain we learned that the music recording and record sales process doesn't feed much of the profit back to the artist because the record labels need to recover the "development" costs. None of this should be new news so I will speed it up a bit.

Technically, Apple and itunes has the where withal to distribute music directly for artists but they built relationships with the record labels. This article comments that by working with the record labels Apple perpetuated the sorry state of revenue flow within the music industry. In fact they may have made it worse because the cost of creating and distributing a CD has been entirely removed (one of the huge things that artists needed from record labels).

If you have been following the itunes vs. beatles lawsuit you may be thinking that itunes needs to work with record labels because if they didn't they would be in clear violation of the agreement they signed with the beatles apple corp (cutting out the middle man puts apple itunes in the record label role).

I don't know if I have an answer but the whole thing reminds me of the recent Onion article that talked about apple moving into the home movie distribution space. While the article sounds a little like google video, the Onion was suggesting that recent changes a Itunes would allow you to buy and download your home videos from Itunes for as little as $1.99. That raises a different question, is it a parody or is it real? It become preposterous when you think that it was probably more about wedding videos than something most people would care to see. But google video allows you to load up your video and sell direct. Should apple go there?

That brings us right back to the tagging and taxonomy discussion. Maybe we have already reached the point that there is an over abundance of stuff out there that prevents us from finding the stuff we really want.

If you made it this far and still care - here is that article.

ebay to create an anti-Google coalition?

2006-04-23T08:17:00.000-04:00

An article published in The Wall Street Journal on Friday, April 21, 2006 hints that eBay is talking with Microsoft and yahoo about possible closer cooperation to counter the threat that it sees from Google (specially with Google Base). We would expect that eBay would do precisely that as part of how it competes to win in the network era.

WSJ reported that:

After years of working closely with the search giant, eBay last year became alarmed as Google started assaulting its turf in multiple ways. In one case, Google launched a classified-advertising service that competes directly with eBay's online auctions and other listings.

This is clearly the area of competitive threat for eBay.

WSJ further rerported that:

Upon hearing of eBay's talks, Google, Mountain View, Calif., offered an olive branch, in the form of a series of proposals designed to tighten the relationship between the two companies. The superiority of Google's search technology makes it a better place to advertise, say people familiar with eBay's thinking.

eBay needs Google's search technology to make its core business perform better. At the same time, Google is using its search technology to extend into its customer (partner)'s core business.

Who needs who more? the relative power position is clear in the short-term: Google is in the driver's seat with its search engine technology. Think back to our discussions of network era through layers of caoabilities with competitive and cooperative linkages. The ideas are applicable beyind hardware-software stacks!

This illustrates a key challenge in the network era: How best to straddle the competition-cooperation boundary? in other words: how to manage the paradox of tight coupling between firms?

Managing the portfolio of relationships to access a portfolio of capabilities is more central than ever before.

Network Effects on Healthcare

2006-04-20T13:10:00.000-04:00

SLIDE DECK OUTLINE
Theme: Network Effects on Healthcare - How Electronic Medical Records (EMR) is Shaping the Industry

1. Opening Slide

2. Intro to Network Era

Define Network Era
Delineate how triangle of laws empowers possibilities

3. Network-Era Influenced Trends on Healthcare

See list of Network Era influenced trends on other post (briefly discuss)
Highlight EMR

4. What is an Electronic Medical Record

Define EMR
Briefly discuss tech

5. Current Landscape of Healthcare (as pertaining to medical records transfer)

Scope of Industry
Current Stack
relative proportion of value
dominant patterns of relationships (vertically & horizontally across layers)

6. EMR Effects

New stack -how do we define distinct layers?
How do new capabilities emerge?
How do relationships link across layers?
Where is cash register, how has it changed?
Caveats (privacy, standardization, etc)
May take more than one slide

7. Reasons Incumbent Companies Should be Concerned

8. Opportunities for New Entrants

9. Conclusion/Questions Slide

Team Project_TV Industry_Draft 1

2006-04-19T21:29:00.000-04:00

1) Shift of Industry Capabilities:

Tivo’s set-top box (DVR) began a revolution in the TV industry. Viewers no longer need to sit in front of the TV at a certain time for a particular TV program. According to a study conducted by Forrester, the broadband internet penetration of North American will surge from 29% in 2004 to 62% in 2010 with near 71 million households in the U.S. having broadband access. In addition, multiple electronic devices – the mobile phone, the video MP3 player, the HD TV, the laptop, and other hand-held devices available for consumers to choose the way they want to watch TV in order to cope with the always-on-the-go life style. Due to all these factors, the IPTV is getting market’s attention, and will become the central media in 2010 for people to view the TV programs. Moreover, Mobile TV will be getting some market share (According to Informa Telecoms & Media, the worldwide mobile TV will be worth $8.4 Billion.).

The shift of time and place in the way people consume TV, as well as seamless connection between multiple devices, change the industry from simply push to pull. Because of this shift, content providers and publishers will increasingly focus on providing diverse content in order to fit different devices and stay competitive. In addition, because of the Internet, it allows independent video makers to distribute their shows. How do customers face the abundant choices of TV content and how does the market serve the long tail market? Our team suggests the information aggregator layer (recommendation/ indexing system) will become the most important capability layer in 2010, and capture the most value in the TV industry.

2) New Revenue Models:

Technologies make it possible for people to skip advertisements, so more and more consumers are willing to pay for the TV they watch. As a result, the combination of free and premium content is co-existing today, and in 2010, money from IPTV subscribers will become a significant part of businesses’ revenue stream. Moreover, the competition between phone companies and cable companies, there will be a package bundling all services that provide customers one single price for telephone, internet connection, TV on-demand, and online-video games to grab the biggest pie possible.

3) The Biggest Winner in 2010:

Our team looks from the perspective of Walt Disney (the tools & content provider, and publisher) and intends to figure out who would be the hub in 2010 for WD to build the networked partnerships. From our capability analysis, we expect that the company who can most understand consumers’ viewing behaviors and preferences, and provide the most slick and robust indexing system will be the hub in the industry. Because of its business model and search technology, Google owns the most intelligence about consumers. Therefore, Google will aim to be the hub for the TV industry, and WD needs to establish relationship with Google and other important information aggregators as well.

Technologies make it possible for people to skip advertisements, so more and more consumers are willing to pay for the TV they watch. As a result, the combination of free and premium content is co-existing today, and in 2010, money from IPTV subscribers will become a significant part of businesses’ revenue stream. Moreover, the competition between phone companies and cable companies, there will be a package bundling all services that provide customers one single price for telephone, internet connection, TV on-demand, and online-video games to grab the biggest pie possible.

Media & Entertainment Team: Aaron, Corrin, Dave, Dominic, Taylor

Google Earth and Adidas

2006-04-18T14:58:00.000-04:00

Remember our discussion about Nike and Google (joga.com)? See this website that features Adidas and Google Earth. Clearly, Google wants to be linked to both Nike and Adidas (guess whose importance is higher in the relationships!).

Take a look at the website: what does it imply for co-branded marketing?

Google TV?

2006-04-18T14:03:00.000-04:00

Interesting blog on why Google TV is a logical extension for Google's service platform in the advertising space. Eric Schmidt's comments are particularly telling:

If we can figure out a way to improve the quality of ads on television with ads that have real value for end-users, we should do it."
The blog also made the following comment that gets at the relative importance of the different business models in the network era:
"It would make sense for Google to create their own branded DVR box that requires users to log in with their Google Account. With the information Google knows about you, it would be easy to display relevant television ads intended for the viewer rather than blanket commercial spots. With this type of model, any business could afford to advertise on TV — that is a very powerful idea."

Bacardi and Coca-Cola use music as part of their marketing mix

2006-04-18T13:46:00.000-04:00

Interesting to see Coca-Cola and Bacardi -- often used together-- separately create ways to use music to market their respective brands. Here's a story on their experiments. This is an example of Peer-to-Peer networks and viral marketing in action.

Coca-Cola's website is Stageside.tv. See alss: mycoke.com

Bacard's website is here. It looks like it can be accessed on PC and on mobile phones.

Think about what this does to marketing in the network era.

Google is #2 in MBA's Wish List of Employers

2006-04-18T13:24:00.000-04:00

Who's #1 in MBA wish list of top employer? -- McKinsey.

Who's #2? Google. It was not even on the list last year. Here's the newsfeed.

Business Models for the Network Era: IBM's POV

2006-04-17T22:06:00.000-04:00

IBM's recent whitepaper based on a study of CEOs in different industries reinforce some of the ideas of business models that we discussed in our class. I urge you to take a look at them to see how they may give you new insights for your industry and company analysis.

The report is available here.

Focus particularly ob Figure 7 which highlights the evolution of industries from internal integration to strategic partnerships to industry networks.

Another report from IBM is also useful as a referece. It is available here.

Take a look at IBM's latest annual report as well. There's a section on innovation.

Google and the DaVici Code

2006-04-17T21:55:00.000-04:00

Yet another way Google is getting linked to movies. See the Games launched in conjunction with the movie launch.

Netflix in Network Era

2006-04-17T21:31:00.000-04:00

Here's a rough sense of where I am at the moment with Netflix. First, the 2006 Industry stack:

The stack does not have relative size of competitors in the layers at the moment. Devices are not in the stack as they are a commodity from Netflix's point of view.

Looking ahead to 2010:

First, the digital layer is emerging. This stack can only occur if the MovieLink and CinemaNow ventures by the major studios fails. These companies just announced that they will start to offer the ability to purchase digital downloads (you could previously only rent). But their price point is too high at $20-$30 a download for a new release. This is a venture seemingly destined to fail and piracy will continue to run rampant. This is the point where Apple, Netflix, Google, and other players can step in and negotiate rights with the studios. Of course, On-Demand will only grow from its current form and be the major offering from the cable companies and DirecTV.

The information layer is also becoming more important. This is where the recommendation engines of both Amazon and Netflix come into play. Currently 2/3 of Netflix rentals come from its back library, many of which are the result of a recommendation. This is also where the community reviews of both sites are included. Amazon also owns IMDB.com, which is the number one choice for movie information on the web.

Devices now come into the stack due to both the new format wars (HDDVD vs. Blu-Ray) and Apple's iPod video players which could play movies as well. The content creators will likely lose ground in this area due to decreased revenue from physical DVD sales and an increase in digital sales. The only reason I projected physical DVD sales to rise slightly are the more expensive new formats.

McDonald's has been experimenting with rental kiosks at its locations and so is included. Amazon is about to begin offering digital downloads with an option to purchase the DVD.

cnet: content provider?

2006-04-17T17:58:00.000-04:00

Here is a quick AP article that tells us CNET will be partnering with TIVO for VOD over cable and apparently by itself to offer the service over the internet.

What content does CNET control that I want? This might take some reasearch, maybe that have some other hidden partnerships (or are owned by a larger company that has content).

No. It looks like CNET is on its own. Here are some examples of their content (which has been available over COX cable).

"Videos range from instructional to informative to entertaining, and are integrated throughout CNET's family of sites, which include CNET.com, News.com, and Download.com, to enhance the user experience.

CNET TV will provide online users and TV viewers a single destination where they can access all of CNET's original video content. Video content includes CNET's popular video franchises such as Insider Secrets, Weekend Project, and First Look from the Labs. For online users, the content will be programmable based on topics of interest, or by selecting a favorite "channel," made up of the CNET franchises. CNET TV will also feature special news reports, coverage of special events such as the Consumer Electronics Show in Las Vegas, user-generated videos, and regularly scheduled programming to keep consumers updated on the day's news and trends."

It doesn't look like much that interests me, but I like the concept.

Here

More

apple itunes and the beatles apple corp

2006-04-17T17:46:00.000-04:00

so we know there has been some battling between apple and apple over an agreement they made in the late '90s. Apparently, the Beatles record label adjust a prior agreement and allowed Apple so start itunes and sell music. When itunes started to sell exclusive songs the two went back to court where the Beatles Apple Corp has accused Apples' itunes of becoming a "music" producer. The Apple Corp solution would be for Apple to remove the apple logo from the itunes store (and pay damages).

An undercurrent to the whole story is that the Beatles do not allow downloads of their music via itunes. Apparently, they are remastering the catalog and will soon make it available via download. One would imagine that those songs will fly off the shelves (an old school retail reference). Since it isn't really crucial to the story we won't spend more than a mention on the fact that Michael Jackson owns a good portion of the Beatles songs (but he may have just sold some to Sony). Someone will make a bunch of cash when the songs hit a legitimate download site.

Here is an article admitting the catalog remaster and eventual availability.

blog your way to a better job

2006-04-17T14:56:00.000-04:00

here is a boston globe article that suggest blogs can increase your job prospects. It seems to work in two ways. First, by regularly blogging you can drive yourself to become an expert in a field. Second, blogging can build your network and you can gain from indirect network effects.

Boston.com

ellison wants the stack

2006-04-17T14:01:00.000-04:00

Here is an AP article based on an interview with Larry Ellison, it appears he wants to own the stack. In hte article he suggests taht Oracle would be better off if they owned an OS. He is said to be considering buying Novell.
Talk about predicting from what we know. All of the Oracle acqusitions and their battle to best microsoft seem to be distracting them from their core business (which if they could get down market a bit should be growing).

The article

Who is "The McKinsey Quarterly" premium member

2006-04-17T13:49:00.000-04:00

"The McKinsey Quarterly" has published this article:

Creation nets: Getting the most from open innovation
A typical large company can no longer rely solely on its own resources. Creation networks are a promising way to move beyond them. (Premium)
http://www.mckinseyquarterly.com/article_abstract.aspx?ar=1766&L2=21&L3=35&srid=17&gp=0

Is somebody premium member, so we are able to get access to this article asap?

Thanks

Corporate Blogging

2006-04-13T14:42:00.000-04:00

We are steadily seeing many Fortune 500 companies with blogs. Here's a useful site. Here's another useful site. I have not seen any good categorization of the different corporate blogs. I am sure companies are puzzled about what they should do about blogging and how it fits in with different mechanisms for communicating with different constituencies. Has anyone seen any useful typology or classification of corporate blogs (than merely listing them)?

Google Calendar and Microsoft Office Suite: The Ongoing Rivalry

2006-04-13T14:28:00.000-04:00

Google's Calendar is live now. Business week notes:

Google Calendar users, for example, could sync their own calendars with those of a spouse and children to more efficiently plan a summer vacation. "Our goal is to reduce the burden of running a calendar," says Google Product Manager Carl Sjogreen. That may be just the start. Google's goal is to make this not just an end product, but rather a platform for organizing events and sharing information...."

Ricahrd MacManus has an interesting blog on how this initiative is to be seen in the broader context of Google creating a set of services that compete against Microsoft's Office. You may remember the conversation we had in class about the management tasks is to understand how and when their current business model (and associated revenue streams) is likely to become obsolete?

Microsoft is not standing still. They are adapting. Office is migrating to the web with more extensive and wide ranging revenue models. It's becoming an interesting battle of business models; the battle is just getting started.

Take a look at the chart in Ricahrd's blog--it serves as a good starting point to begin understanding the competitive dynamics between Google and Microsoft. is Google poised to win? What can Microsoft do to regain its market dominance?

Impossible

2006-04-12T13:36:00.000-04:00

This is an interesting set of quotes, criticisms and negative predictions about technology advancements. They are rather dated (some 200+ years) but they highlight a trend of disbelief. The moral here is that while we struggle with what the network age will bring and who will find a way to overcome the obstacles and take advantage of it, there is no doubt that someone will.

These are some examples of things we take for granted today that were once viewed with a skeptical eye.

predictions

Financial Services Team

2006-04-11T21:41:00.000-04:00

As I mentioned, take a look at the following and examine what their potential roles could be..

1. Paypal
2. Google Payment
3. payment on mobilephones (different versions)
4. Visa/MC/Amex..

Focus on the higher levels (closer to the consumer) and see what the likely changes could be.