Google is All Advertising, All the Time!

This graph says a lot about what advertising means to Google..

So, where does Android fit in to Google's portfolio of capabilities and relationships?

Is Motorola acquisition at around $12B the best use of Google's finances?

About Google and Platforms

Please follow the link and read Steve Yegge's post about Google and platforms. The article is extremely long but touches many of the concepts we have covered so far in all our IS classes. Totally worth it.

https://plus.google.com/112678702228711889851/posts/eVeouesvaVX

PS: The original post was removed by the author, here you can find his latest posts https://plus.google.com/110981030061712822816/posts

Interesting Business Model from a Polish Gaming Company

Check this video. This guys are pre-selling their game for $1.

Their goal is to pre-sell 10M copies. If they hit the mark they will donate 10% of the $10M to charity, if they don't make it they will donate the whole amount collected.

I guess the model is similar to the Minecraft model but their product looks way more complicated.

http://www.youtube.com/watch?v=GrwCd4oeuXc

Lessons from Microsoft & Apple Applied to Energy

I’ve been struggling to find a way to connect the lessons learned from Microsoft and Apple to the energy company I chose for our project (PG&E, a utility in California). In class, Professor Venkatraman mentioned that vertical integration is giving way to horizontal layers with specialized capabilities and that winning requires dominating a layer and connecting across layers. As far as I can tell, PG&E is fighting this and is doing the opposite. The company is involved in almost every aspect of the energy industry from power generation to metering to energy efficiency consulting. I don’t believe they are leading the sector in any of these efforts, which leads me to believe that they haven’t “won” in the way discussed in class.

A large part of this is due to the fact that PG&E, like other utilities, essentially has a regulated monopoly over their region so perhaps some of the same rules don’t apply. They don’t necessarily need to dominate their layer because they don’t seem to face a great deal of competition. However, with the increasing number of Independent Service Operators participating in the market and local initiatives (like this one) aiming to give residents more options when it comes to power generation, it would be wise of PG&E to look at the lessons that can be learned from Microsoft and Apple. There may come a time when PG&E doesn’t have the government regulated “edge” over their competitors and unless they narrow their focus and excel at certain capabilities, they could potentially fall behind.

Lessons from Apple & Microsoft

What I took away from Apple and Microsoft was the enormous potential of cooperation amidst a highly competitive environment. In a competitive relationship that includes derogatory commercials, a rabid fan-base, and the occasional lawsuit Microsoft and Apple managed to come together and form a partnership that was beneficial not only to each of the companies but also to consumers.
Microsoft made an investment that allowed Apple to fund its R&D which led to its enormous growth and brought Microsoft Office on Apple products up to par with its Windows counterpart. Apple opened its platform to Internet Explorer and gave up what would come to be ridiculously valuable non-voting stock.
This partnership made both companies stronger and it can serve as an example for the financial industry. The major banks like Bank of America and Chase have seen their ability to charge fees seriously reduced through government regulation. They have resorted to charging new fees to recoup some of that lost revenue which has been met... less than enthusiastically. But the banks, namely Bank of America, Chase and Wells Fargo have partnered to open up a new market, well new for them anyway. clearXchange is the big banks answer to Paypal. It will allow person to person payments in an attempt to capture the enormous market that Paypal has until now basically owned.
The banks face some challenges, namely getting people to switch to clearXchange from Paypal. It will be interesting to see where this partnership goes in the future, will the banks be able to put aside their competitive spirit long enough to create a viable payment network that could rival Paypal?

Healthcare value chain

Given the complexity of the healthcare industry, it is a bit complicated to devise a value chain based stack model for the industry. This in part stems from the fact that the information flow is across different layers and not linear. We try to visualize the industry in two perspectives. First, based on care and second, based on Information flow.

Care Stack:

As far as care is concerned, the first step in the process will be the discovery of drugs through biological / molecular research. This research is then taken forward by the Bio-pharma companies. Medical devices such as Diagnostic devices, Information recording devices (ECG), etc can also be seen in this layer of the stack. This is then passed on to the patients through the providers. The position of the payers could be a bit complicated since they cannot be visualized as the consumers of the service or care. However, they play a critical role in facilitating the care delivery to the patients. Thus, the stack can be visualized as below.

Information Stack:

Having tried to understand the industry from the care delivery perspective, we tried to map the information flow in the industry. The firms we have chosen fit into multiple layers on this stack. However, we would be concentrating on products specific to one or more layers in the stack.

Lesson From Apple: iTunes

In the late 1990's and early 2000's, the music industry was in complete disarray: album sales were dropping precipitously, piracy was rampant, and the RIAA lost control of their IP. The digital revolution of music had begun and the RIAA was not ready for it and was unwilling to accept the new landscape.

Last spring IS 710 belabored the idea of what a "platform" is and how to create a platform to bring two parties together. Enter Apple, which had no prior expertise or experience in music. They created iTunes which established an innovative method for digital music distribution that allowed the RIAA to control their IP and consumers to purchase digital tracks of music. The genius behind iTunes was that it was inherently simple for the user to manage, purchase, and listen to their digital libraries. However, what I did not realize until last week was that Apple had a stranglehold on the two "new" layers (digital rights management and software) that allowed the company to have a dominant position over the layer between (content). Apple became such a dominant player that the RIAA became enraged by the terms and conditions, such as pricing, as well as the power they lost to Apple over time. iTunes really changed the behavior of consumers by setting a new pricing strategy ($0.99 per track) and allowing them to only purchase songs they wanted, rather than an entire album. iTunes was created with the consumer in mind at the expense of the RIAA, but the RIAA agreed nevertheless. The RIAA was begging for mercy and was willing to do anything to stop the bleeding and Apple was there with a golden ticket. Knowing what has transpired since 2001, do you think the RIAA would have made the same deal?

Lessons learned from Apple

One of the most important lessons learned from Apple, was how important their model of vertical integration has been for their success. Of the top technology companies in the world, most of them are dedicated to software or hardware only. Apple is the only company that has successfully managed to be a hardware, software, services and retail company. This vertical integration has allowed for Apple to be able to control all of the critical paths of the supply chain for its product.

As the following article notes (http://techland.time.com/2011/07/01/why-competing-with-apple-is-so-difficult/) it is very difficult for other companies to try to compete with the Apple experience because while Apple has control over the hardware, software and services of their products, most other companies only control one of the components and depend on others for the rest.

Well, That Was Qwik!

Interesting move by Netflix, deciding to cancel its split into separate DVD (Qwikster) and Streaming (Netflix) companies (TechCrunch Article on Topic). I think that there are a bunch of lessons to be learned out of this one.

It seems as though Netflix failed big time in one of two areas: either it didn't do sufficient market research to know that its clientele would hate going to two different sites to watch movies, or the company does not trust the market research it conducted. Either way, this is a massive misstep and makes the once business case-worthy company seem pedestrian. The initial move to split DVD rental revenues from streaming revenues makes some sense, and the company was probably right to ignore the outcry from penny-pinching customers who didn't want to pay more for the same service. But this time, the customer has challenged one of Netflix's fundamental strategies moving forward and CEO Reed Hastings apologetically folded. Not a great sign of power.

So what's the next move? Does Netflix simply maintain its current infrastructure, with DVD rentals and streaming on the same site under different subscription plans? Will the DVD rental business fizzle out over the next few years as consumers turn more toward streaming and digital copies? What happens to Netflix's massive inventory of DVDs if rentals go by the wayside? And why hasn't anything been mentioned about the video game rental plan (a la GameFly) since that notorious letter over the summer?

It's going to be interesting to see where Netflix goes from here, but there is definitely a huge chink in the armor now.

Lessons from Apple

One of the best lessons that I have learned from Apple is that a successful product introduction is not about having the best technology or being the first to market. A successful product introduction is about introducing the right technology in the right time, as is the case with the iPad.

I think Apple has learned from their mistakes, such as when they introduced the Newton and it was a failure. The technology was awesome, but the environment wasn't right. Also, with the iPod, they were by no means the first to market, but they had better technology and people were already comfortable with digital music. The introduction of the iPod confirms the fact that they introduce products at the right time.

Lastly, the iPhone was successful because of the data transfer speeds available on wireless networks at the time of introduction. Had they introduced this product before, it would just have been another competitor to Nokia, and not the incredible force that they became. Here is a historical map of product introductions from Apple.

As you can see, Apple introduced very innovative products that were not very successful before Steve Jobs got fired. I believe this allowed Steve to reflect on his failures and when he came back he introduced very successful products at a time when they were needed and would be a success. Farewell Steve.

A lesson from Apple and Microsoft

In the AllThingsD interview, Bill Gates spoke about how he put his bets on his belief that the GUI based interface was going to take over the character based interface for PCs during 1980s. Similarly, Steve Jobs, after his comeback at Apple, saw the futility of competing with Microsoft on PC business and invented new areas of innovation beginning with music and ipod.

In both these cases, these leaders took a long ( and perhaps risky ) position on the opportunities  and invested in their belief much before any of the other companies did. I believe that the reason both Apple and Microsoft have been successful is that the bets these companies took for what would work in future turned out to be right. When their view of future did not turn out to be right, or if they were late in responding to the trend, they struggled. For example, after the windows and office success, Microsoft did not take similar long term view of internet and hence it was no longer an innovator on internet and web technologies.

I would argue that the lesson in strategy here is that to become wildly successful, you need to have a view on where things are going in future and put your money in those areas. Assuming that the execution is correct, if your view seemed is right, it will result in windfall, otherwise it is tough luck.

Customers cannot tell you what they need !

As we look back at how Steve Jobs transformed not just Apple but also the way technology can impact our lives, It is hard to ignore the fact that he was a visionary who in a sense decided and designed what we wanted. A person who did not believe in market research, he, in a way, defined what inception points ought to be at what point in time. I came across this article from the Apple evangelist Guy Kawasaki and thought it to be a good read.

http://blog.guykawasaki.com/#axzz1aKhYrJd4

A few other things which I felt really good, on the lines of discussions that we had in our previous class.

http://www.cnet.com/8301-30976_1-20117353-10348864/reporters-roundtable-guy-kawasaki-on-what-we-learned-from-steve-jobs/

http://guykawasaki.typepad.com/TheMacintoshWay.pdf

Hard to believe, the visionary leader who shook up the Mammoth Microsoft is no more. We miss you Steve..R.I.P ...