Subba’s Serendipitous moments

August 17, 2010

Google wants to find the next winner in search – Maybe Search 2.0!

Over the weekend, the Wall Street Journal published an interesting interview with Eric Schmidt – CEO of Google and a great tech visionary. Disclosure: I am a great admirer of Eric Schmidt.

The interview comes at an interesting juncture when Android seems to be on a roll powering 200,000 devices a daily and slated to be the dominant operating system on the mobile platform. Yet, of late, the media has been critical of Google, probably taking the cue from a weak stock price. Add to that the mindshare belongs now to Facebook.

Notwithstanding the negative media reports on Google, Eric in this interview shares several new insights about where Google is headed. Some of his insights and quotes are interesting:

Asked to comment on Android being given free as compared to the fat margins made by Apple he says:

"You get a billion people doing something, there’s lots of ways to make money. Absolutely, trust me. We’ll get lots of money for it."

"In general in technology," he says, "if you own a platform that’s valuable, you can monetize it." Example: Google is obliged to share with Apple search revenue generated by iPhone users. On Android, Google gets to keep 100%.”

That difference alone, says Mr. Schmidt, is more than enough to foot the bill for Android’s continued development.

Google’s real challenge though it dominates the search business:

The real challenge is one not yet on most investors’ minds: how to preserve Google’s franchise in Web advertising, the source of almost all its profits, when "search" is outmoded.

The day is coming when the Google search box—and the activity known as Googling—no longer will be at the center of our online lives. Then what? "We’re trying to figure out what the future of search is."

Now that’s what being visionary is all about – not reacting to Wall Street but figuring out the future before Wall Street has had the chance to position you. Maybe he’s taking the cue from Andy Grove’s philosophy of Only the paranoid survive.

 Google’s intriguing aspect of Search 2.0 can be summed neatly as he says:

"We know roughly who you are, roughly what you care about, roughly who your friends are." Google also knows, to within a foot, where you are.

Mr. Schmidt leaves it to a listener to imagine the possibilities of this social search and what its implications could be. In fact, Google is acutely aware that we are on the cusp of a new phenomenon called “Social search” which may be powered by the Facebook phenomena.

Google the creator of targeted advertising believes that it will dominate the category raises the bar:

"The power of individual targeting—the technology will be so good it will be very hard for people to watch or consume something that has not in some sense been tailored for them."

Finally, Eric presents the most intriguing and scary possibility of the future when he says:

"I don’t believe society understands what happens when everything is available, knowable and recorded by everyone all the time," he says. He predicts, apparently seriously, that every young person one day will be entitled automatically to change his or her name on reaching adulthood in order to disown youthful hijinks stored on their friends’ social media sites.

"I mean we really have to think about these things as a society," he adds. "I’m not even talking about the really terrible stuff, terrorism and access to evil things."

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July 15, 2010

Facebook addiction

Filed under: Blogroll,Perspective — Subbaraman Iyer @ 3:20 pm
Tags: ,

The 76-year-old woman walked down the hallway of Clearview Addictions
Clinic, searching for the right department. She passed signs for the
"Heroin Addiction Department (HAD)," the "Smoking Addiction Department
(SAD)" and the "Bingo Addiction Department (BAD)." Then she spotted
the department she was looking for: "Facebook Addiction Department
(FAD)."

It was the busiest department in the clinic, with about three dozen
people filling the waiting room, most of them staring blankly into
their Blackberries and iPhones. A middle-aged man with unkempt hair
was pacing the room, muttering, "I need to milk my cows. I need to
milk my cows."

A twenty-something man was prone on the floor, his face buried in his
hands, while a curly-haired woman comforted him.
"Don’t worry. It’ll be all right."
"I just don’t understand it. I thought my update was LOL-worthy, but
none of my friends even clicked the ‘like’
button."
"How long has it been?"
"Almost five minutes. That’s like five months in the real world."

The 76-year-old woman waited until her name was called, then followed
the receptionist into the office of Alfred Zulu, Facebook Addiction
Counselor.

"Please have a seat, Edna," he said with a warm smile. "And tell me
how it all started."
"Well, it’s all my grandson’s fault. He sent me an invitation to join
Facebook. I had never heard of Facebook before, but I thought it was
something for me, because I usually have my face in a book."
"How soon were you hooked?"
"Faster than you can say ‘create a profile.’ I found myself on
Facebook at least eight times each day — and more times at night.
Sometimes I’d wake up in the middle of the night to check it, just in
case there was an update from one of my new friends in India. My
husband didn’t like that. He said that friendship is a precious thing
and should never be outsourced."

"What do you like most about Facebook?"
"It makes me feel like I have a life. In the real world, I have only
five or six friends, but on Facebook, I have 674.
I’m even friends with Juan Carlos Montoya."
"Who’s he?"
"I don’t know, but he’s got 4,000 friends, so he must be famous."
"Facebook has helped you make some connections, I see."
"Oh yes. I’ve even connected with some of the gals from high school —
I still call them ‘gals.’ I hadn’t heard from some of them in ages, so
it was exciting to look at their profiles and figure out who’s
retired, who’s still working, and who’s had some work done. I love
browsing their photos and reading their updates. I know where they’ve
been on vacation, which movies they’ve watched, and whether they hang
their toilet paper over or under. I’ve also been playing a game with
some of them."
"Let me guess. Farmville?"
"No, Mafia Wars. I’m a Hitman. No one messes with Edna."
"Wouldn’t you rather meet some of your friends in person?"
"No, not really. It’s so much easier on Facebook. We don’t need to
gussy ourselves up. We don’t need to take baths or wear perfume or use
mouthwash. That’s the best thing about Facebook — you can’t smell
anyone. Everyone is attractive, because everyone has picked a good
profile pic. One of the gals is using a profile pic that was taken,
I’m pretty certain, during the Eisenhower Administration. "

"What pic are you using?"
"Well, I spent five hours searching for a profile pic, but couldn’t
find one I really liked. So I decided to visit the local beauty
salon."
"To make yourself look prettier?"
"No, to take a pic of one of the young ladies there. That’s what I’m using."
"Didn’t your friends notice that you look different?"
"Some of them did, but I just told them I’ve been doing lots of yoga."
"When did you realize that your Facebooking might be a problem?"
"I realized it last Sunday night, when I was on Facebook and saw a
message on my wall from my husband: ‘I moved out of the house five
days ago. Just thought you should know.’"
"What did you do?"
"What else? I unfriended him of course!"

October 3, 2009

Salesforce.com into financial applications

Unit 4 Agresso has now teamed up Salesforce.com — the poster boy of SaaS to create FinancialForce.com that will produce SaaS based accounting, and financial management applications.

Well SaaS has been growing, but CFOs are mostly conservative and would not want to the data to be in the cloud. Hence the success of Financialforce.com will be keenly watched.

Now there are several interesting issues that come about with this joint venture.

For a start, it seems that Salesforce.com is a minority investor. Salesforce.com’s presence will undoubtedly create higher visibility for SaaS based financial applications. Hence other vendors will follow suit giving the SaaS proposition a greater momentum. Enterrpise software vendors who offer products in the mid market space like Oracle, Microsoft and SAP will have to respond quickly to this trend.

But with this association, Salesforce.com also seem to be sending mixed signals to its App Exchange partners who use the Salesforce.com’s Force.com platform to build new applications. Well, they could build an application only to realize that Salesforce.com might one day compete with them. Recent acquisitions by Salesforce.com in many of the App Exchange parnters’ businesses have not made Salesforce.com popular with many of the partners. Yet, there’s no compelling SaaS platform currently.

It looks like Salesforce.com needs to clearly clarify its positioning, strategic goals and its partnering model.

October 2, 2009

Cisco’s brilliant acquisition of Tandberg

Recent acquisitions by Dell and Xerox have something in common. Both acquired companies which are far away from their core competencies in an effort to find stable growth. They acquired predominantly U.S. centric IT services firms. I explained my disappointment with Dell’s acquisition of Perot Systems here. Xerox recent acquisition of ACS also evoked a similar thinking in me. It is very difficult for a pure play product / technology organization to blend well with a pure play services organization. The organizational DNA are too different, growth trajectories are quite different, organizational processes lend itself to little synergy. In short, I am not very high on such acquisition moves.

Cisco is different.

Cisco announced an all- cash offer to acquire Tandberg for $ 3 billion. Tandberg — a Norwegian company sells smaller and less priced video conferencing systems. This is a perfect fit for Cisco’s more expensive TelePresence systems which has been a great success. I think this is a brilliant acquisition since Tandberg’s gross margins is 66% and has clients in US and Europe. This acquisition would enable Cisco to sell the Tandberg products to companies which cannot afford the TelePresence. With this acquisition, Cisco would dominate the video conferencing systems for some time. More importantly the acquisition came in quite cheap since Cisco just paid 11% premium over Tandberg’s closing price.

Cisco has always acquired companies that in some way or the other generated more Internet traffic creating in turn demand for its core business — the networking hardware business. The way it is going to unleash its Unified Computing strategy will of course be interesting and one has to wait and see how it provides the synergy to the networking hardware business. Cisco’s ability to shake off entrenched players in fairly established market segments will also be evident in a couple of years.

Over the last 5 years Cisco has acquired 40 companies — both big and small and they have helped Cisco plug the gaps in the technology and product roadmaps admirably well. They also have had little problems integrating them into the Cisco model.

Cisco has $35 billion in cash which means further acquisitions are on the way. I only hope they don’t go with the flavor of the month and acquire another U.S. based IT services firms !

September 30, 2009

Vodafone takes the battle to the mobile phone vendors

A few months back one of analyst friends asked me whether it is possible for the mobile service provider to create their own App Stores and be successful. My opinion to him was they can do it or rather they should do it, else they have not even joined the battle for customer loyalty. The talk turned to Singtel which is one of the largest operator based out of Singapore and it has a global presence due to its joint ventures and acquisitions in many countries. I remember telling him that it should be one of the large operators who will have the reason to do it.

Now Vodafone has done it. Vodafone 360 is a mobile web service that provides music downloads, integration with Facebook and Twitter, and supports several handsets. In a way it is competing with Apple’s App Store, Nokia’s Ovi and other App Stores created by the mobile phone vendors.

Now Vodafone’s Telco 2.0 model (called efficient pipes) is nothing new. A lot of mobile service providers thought about that but shied away from taking the plunge. Now Vodaphone which has over 300 million consumers in over 30 countries has taken the challenge.

As Apple and Nokia increase their emphasis on the App Store and have made a success of it (Apple’s App Store’s success is chronicled here), the mobile service providers can’t afford to be silent spectators.

But whether the service providers with their current competencies would have the ability to build an App store and an application eco-system is a big question.

BlackBerry’s opportunity is now.

I was taken aback when I saw the RIM’s stock suddenly drop 17% last week. By all accounts, it had a strong Q2 results: Q2 revenue was up 37% y-o-y and 2% q-o-q to $3.53 billion on shipment of 8.3 million units. Net income was $475.6 million or $0.83 per share versus $495.5 million, or $0.86 per share last year and $643.0 million, or $1.12 per share in the prior quarter. Gross margin improved to 44.1% from 43.6% last quarter due to reductions in raw material costs and shifts in the product mix. The company ended the quarter with $2.5 billion in cash, up by $78.5 million over last quarter.

It gave a conservative forecast for the quarter ahead. I think the analysts were expecting bigger revenue growth. And this explains why the stock got beaten.

Looking beyond the immediate quarters, RIM faces several strategic challenges and threats — iPhone getting entrenched within the corporate enterprise which was RIM’s sweet spot, imminent price wars with Apple and Palm and the emerging Android phones likely to hit the market anytime.

Unlike Apple, RIM hasn’t made much strides with the App Store. Apple’s success is highlighted here. RIM’s App Store was launched only in April and has seen about 20 million downloads compared to Apple’s 2 billion downloads. It needs some serious work here and may be a cutting edge application. It also needs to pay serious attention to building an application eco system for business applications.

I think their deal with Verizon will be watched with interest as Verizon already has deals with Palm and Motorola’s Android. RIM is apparently coming up with several new models, but the competition is hotting up.

I think the next 2 quarters would be key for RIM to regain the momentum it seems to have lost. The opportunity is now.

Nokia’s decline — indicative of a bigger upheaval?

Just as Apple announced stellar results, Nokia the leading player is showing signs of decline. It has the company of another marquee player in Sony Ericcson. I already described the impact that Apple and RIM are having on other players here. The latest market data just reinforces the view.

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The Western Europe market in Nokia’s backyard and hence the trends here are important. The reason for the significant drop is Nokia doesn’t have the zing of the iPhone or the Blackberry and doesn’t have a great smartphone yet.

Now while the overall market has declined by 6% the smartphone sales were up 25% and about 1.7 millions were shipped. Of the 1.7 million, Apple sold 1.4 million and RIM sold 1.3. phones.

Now to add to Nokia’s troubles, it doesn’t have a significant presence in the U.S. though it has a strong presence in Asia , especially in the large markets like China and India. But with iPhone’s imminent launch in China and RIM’s increased efforts, Nokia has some tough challenges ahead.

The mobile device market is clearly headed for a major upheaval. With Andriod based phones to hit the market (18 models) and several service providers launching their own App Store, we will see interesting things happen.

Disclosure: I am a Nokia user and have admired their management style. One of my early blog posts was about Nokia’s amazing success in India here.

September 23, 2009

Netflix’s “crowdsourcing” approach is a success

I have been following Netflix unique experiment to improve its Web site’s movie recommendation system. This week Netflix announced the winner of a three year contest with the winner BellKore comprising of statisticians, computer scientists, data mining experts netting a cool million dollars.

The rules of the competition was fairly straightforward. The qualification for the prize was that the winning team has to improve by at least 10% the prediction of what movies customers would like as measured against the actual ratings. The teams were grappling with a huge data set of more than 100 million movie ratings.

Over the past three years there have been 44,014 entries from 5,169 teams in 186 countries vying for the top prize

I think with this experiment and with Google’s experiment with crowdsourcing described here, there will be a significant shift towards innovation management. The fact that there exists more intelligence and wisdom and the collective effort outside the company’s eco-system has gained credibility. I expect many such organizations embarking on the contest mode to solve intractable problems.

There are a number of lessons that this contest brings about.

First, it indicates that there can be a marketplace for innovation where companies could post their product development challenges and for an interesting contest, the best brains are willing to compete. It sharpens their own abilities.

Second as the BellKore team and other teams demonstrated there is a willingness for disparate people to actively collaborate. While cooperation and collaboration within many organizations has been challenging, I wonder how such disparate people could come together and collaborate easily for a bigger goal.

Third, for people who believed in having an inhouse R&D and saw that as a competitive advantage, this experiment seeks to blow that myth away.

Note: Netflix Prize 2 would challenge competitors to recommend movies based on demographic and behavioral data.

Dell seeks growth in Perot Systems

Dell made a surprise announcement to acquire Perot systems for close to $4 billion. Perot Systems in a IT services firms, predominantly US centric with government and the health care verticals accounting for over 70% of its revenues. By acquiring Perot Systems, Dell is just trying to follow the footsteps of IBM and HP by being a player in the IT services organization.

In my view, this is not a great step for Dell and I am disappointed. Here are the pros and cons:

Vertical presence: Perot Systems may have a great presence in the U.S. government and healthcare but outside of these verticals and outside U.S. it is a very marginal player. The healthcare sector may see some headwind thanks to the impeding reforms but the healthcare sector has been slow to innovate and have less appetite for new IT technology and services.

Margins: First Perot Systems doesn’t have great margins; in fact its margins are lower than industry standards and the last 6 months the results have been disappointing. For the 6 months ending June 2009, Perot made $59 million on a sales of $1.3 billion, which translates to a net margin of just 4.5%. Last year Perot Systems earned $117 million on sales of $2.8 billion.

Synergy: It is likely that Dell’s plan is to use Perot Systems to undertake IT services within its enterprise customers. This looks tough, as both the organizations have a different sales/engagement model. There is no significant synergy, and no integration issues as well. Dell is a $60 billion business and the Perot IT services business is relatively insignificant.

Strategic fit: While the acquisition gives Dell a services outfit, it is unlikely to be a strong strategic fit. Dell’s competencies are in supply chain, direct marketing, agility to respond and being able to sell volume products. The services business is an entirely different kettle of fish and the verticals where Perot is strong — the government and the healthcare are not noted for being agile. How this acquisition could become the “anchor” acquisition for IT services is difficult for me to understand unless Dell is planning on a roll up strategy to acquire other IT services firms.

With this step Dell also seems to be going on a different path. All trends and figures indicate that Dell’s position is becoming difficult with new areas like cloud computing, SaaS and other developments. Dell needs to bolster its offerings in that space to contend with the likes of Cisco and IBM and the Oracle-Sun combination as all of them are beefing up their offerings on the server space.

A strong product focused organization with its unique DNA and specifically strong organization culture will have to contend with several hiccups to make sense of this acquisition. IBM, HP and other It services organizations are unlikely to be impacted.

September 20, 2009

How to find meaning?

Last week as I was involved in a deep discussion with a good friend of mine, (I also happened to coach him in a difficult professional transition) I had an epiphany. He asked me whether I found the meaning of life.

The question was sudden without any preamble and as he looked deeply in my eyes, I discovered that I have been in a similar quest perhaps all my life. I only don’t know whether I have finished finding the meaning of my own existence.

Meaning is not something that you find as you normally try to find a location in a map. It is not something that you look for as you would for an item in a supermarket.

It is something that one has to build in one’s life. The elements to build it is already there in one’s consciousness. It is built out of one’s own past, out of one’s own talent and aspirations for oneself. It is based on the values that one has developed and what one stand for. It is based on the things that one believes in and out of the things that one cares about in a deep sense.

Now, each of us have to take the elements and combine that into a unique pattern that will resonate with oneself. The discovery of that unique pattern could take years. Once discovered, it becomes precious.

Meaning guides a person and sometimes becomes the raison d’être for one’s existence. It is nourishing and provides the dignity to one’s life.

I also discovered a strange connection between the outcomes of events and the meaning of life. A material success which doesn’t resonate with the meaning in one’s life seems hollow, superficial and doesn’t give much joy. A success that’s congruent with one’s meaning in life gives fulfillment.

Has anyone else found meaning of life? How did you all find it?

I would be curious to know.

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