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Augmented reality, not new but reaching its time!

AugmentedReality

Picture the super cool Iron Man viewfinder where he can see data or draw lines on the top of the image of the landscape as the background. That is the most massive concept of Augmented Reality (AR) I can think about. Imagine instead of the Iron Man suit, you take your ipad and use it as a portable window which allows you to see things imposible to find with the naked eye.

Go further! Make you iPad smaller and use it as a transparent mini-screen in front of you eye (Google Glass) to avoid holding the iPad all around the world like a crazy guy (or girl!) to see location based discounts or opportunities. All of this examples mixing real and a virtual environments to interact with both in ways we have not done so far.

AR is not a new concept, but I know that now – with mobile devices in so many hands- we are ready for it and the its use will be applied in marketing, sales, gaming, travel, education, design…, name it!

Maybe the next big change? Who will be ahead succesfully moving this through the “chasm” from early adopters to pragmatists and become rich out of it?

 I have my ideas, do you???

Remember the basics and keep learning

It has been a long time since the last post. Many many things have happened during this year, but those experiences have only made Twiiga stronger from the inside and ready to start all over again sharing all those changes, analysis and new thoughts.

This first new post will be very different to the previous ones, because it is about forgetting all the business strategy for a moment and take a look into the technology core, but questioning how much do we really understand it. I found myself thinking about it this afternoon while watching this video in TED , where Shimon Schocken talks about the Nand2Tetris Project.

This project is about building a functional computer starting from NAND gates to a functional computer. He talks about how much this project is able to open the eyes of people who thought understood computers and how self-learning change their life. I just felt inspired and so excited to get into this adventure. No grades, no money no fame in return, just learning.

Certainly, it looks like I do not have the time right now to build a new computer from scratch, but I remembered that this is what Twiiga was about when it started: A great excuse for self-learning, about what I love, every week and every day.

You too can start today, either with a complex NAND2Tetris project or a simple weekly reading from a source of your choice, is not important how as long as you JUST KEEP LEARNING.

Strategy terms you should know, but you are embarrassed to ask

Sometimes strategy looks more like a diffuse ideal than like a clear and concrete plan because the complexity of expressing such a broad idea. To be able to both explain and understand any given strategy there are some terms that should be clearly defined to ensure that everybody is talking about the same thing. I found a very useful explanation in a book called “Exploring Corporate Strategy” by Johnson, Scholes and Whittington, which I will use as a basis for this post because I liked the proposal and I think it is clear enough to be used as a solid start.

I put the terms together in 5 groups, which are shown in figure 1 below. They serve as well as a great check-list to define a strategy because all of them together complement each other to form a pretty complete strategic proposal.

Figure 1: Strategy proposal groups

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To explain every term, I will talk about projects, but remember that this can be used for anything else. It could be from a small project to a whole company… whatever you need, just change the word “project” for whatever you are designing your strategy for. To support the explanation, I will add the example I found in the book I mentioned before: Improving fitness.

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Who am I?

1.- Mission

This is the purpose of the project, what we want to achieve. For a company, it should define “what business are we in”. It has to be totally aligned with the values and limited by the scope and boundaries of the project definition. This must satisfy the stakeholders’ expectations and motivate both employees and customers to be part of it.

  • Question: What is our greatest end?
  • Review frequency: It should be a medium-long term definition (i.e. 5-10 years), unless a change of paradigm is needed.
  • Example: Be healthy and fit

2.- Vision (strategic intend)

It is an aspiration or the desired future state. The way I see it, is as clear image of how we want our project to look like. It has to be so clear, that we should be able to represent it in a picture, hang it on the wall and look at it in each decision to make the choices that will only take us closer to that vision. That vision will be the focus of the strategy and the efforts of all the stakeholders involved.

  • Question: How will it look when it reaches perfection?
  • Review frequency: The same as the mission, it should be a medium-long term definition (i.e. 5-10 years), unless a change of paradigm is needed.
  • Example: Run a marathon

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Where should I start (or where am I going)?

3.- Goal(s)

It is the general aim of the project which has to be aligned with the mission (purpose). It will be a qualitative and maybe general target to pursuit which will take us closer to our vision. They might be more than one and they set the priorities and focus when tradeoffs have to be made, which might as well change with time. Hence, setting the right goals in the right order will take us to reach our vision and accomplish our mission.

  • Question: What should we accomplish now to get closer to your vision?
  • Review frequency: Goals can be changed as often as needed triggered by either deadlines or completion. In a company it could be every quarter, in a project or department maybe even every month or week.
  • Example: Lose weight and strengthen muscles

4.- Objective(s)

It is a quantification of the goal which will give a clear idea about how does “good” look like.

  • Question: Talking about our goal, how does “good” looks like? (numbers and dates!)
  • Review frequency: Most likely it will change with the goal, but sometimes it could change more often representing stages or phases of a wide goal.
  • Example: Lose 5Kg by September 1 and run the marathon next year

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What do I have to achieve it?

5.- Strategic capability

This one is the resources and competences that you have (or need) to reach goals and objectives towards your vision and mission. If they are unique they become competitive advantages and are the tools you will use to add value and differentiate from competitors.

  • Question: What do we have to reach our goals (or objectives) better? Is it unique?
  • Review frequency: These might change with goals as well, but many of them will stay constant on a longer term if mission and vision do not change. However, they must be reviewed with a some frequency considering competition and customer behaviours.
  • Example: Proximity to a fitness centre, successful diet

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How do I achieve it?

6.- Strategies

This one is about the long-term direction of the team or organisation and the actions to be taken. It is the result of putting together the previous questions generating a conceptual plan on: how to use the strategic capabilities to meet the objectives and goals which will take us to our vision and achieve our mission. Like in chess, you will have to plan the steps to follow, their sequence, the needed resources, the expected response of both competitors and customers and contingency plans if something does not go as expected. Strategy is the plan to reach the vision which may comprise the sequence of many different goals and objectives and the plan to make them work in that sequence.

  • Question: What plan should we follow?
  • Review frequency: Strategy should be revisited at least once a year, considering changes in competitive landscape, customer behaviour and/or our strategic capabilities.
  • Example: Exercise regularly, compete in half marathons, stick to the diet.

7.- Business Model -> How do I achieve it?

It is the flow of the activities between the participating parties and their roles and responsibilities. It describes the structure of the product (or service) as well as the activities and information flows. The business model is the materialisation of the strategy in a clear operation plan to use the current strategic capabilities to meet the objectives and goals which will take us to our vision and achieve our mission.

  • Question: How do we execute the plan?
  • Review frequency: Business model is a long-term definition, and might only change if the long-term strategy changes. Therefore, it should be revisited once a year and be aware that big changes might be painful.
  • Example: Join a running club

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Am I doing it right?

8.- Control

It is the monitoring to define whether the strategy is right to achieve the goals and objectives. It defines effectiveness and might suggest opportunities of improvement.

  • Question: How can we know if we are doing the right thing?
  • Review frequency: This one depends a lot on the life cycle of the goals, objectives and strategy. Some of them will need close monitoring and some of them will need some time to show any kind of response.
  • Example: Monitor weight, km run, times. Consider other strategies if the progress is not satisfactory.

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This is a combination of the definitions in the literature I mentioned before and my own perspective, however it is important to clarify that there is no standard or official definition or boundaries between terms. Most of the time, each organization or person uses them according to subjective definitions. That is the reason why I strongly recommend to clarify them before starting any discussion based on them.

Tech Trends 2011 (2nd part)

This is the second part of the post “Tech Trends 2011” where I wrote about the second set of five trends I have summarised from my holidays thoughts. Again, if you have questions about the terminology of customers (techies, visionaries, pragmatists, conservatives and sceptics), you can find a more detailed definition in the post called “Technology Adoption Life Cycle: Popularity in different markets”.

I hope you enjoy it!

Customisation

We all have different needs and wants and, especially in the consumer technology, customisation becomes crucial to own the consumer’s attention and preference. The capability to set both outside and inside of our technology according to our needs and personality gives us the opportunity not only to improve our life in the ways we really need, but also to show the image we want and even make public a theme for what we stand for. Apple started with the concept of see consumer technology as almost jewellery, but personalised jewellery goes further. Conservatives maybe do not care a lot about this one, but if you want to hit pragmatists, visionaries and techies, it is definitely crucial.

Interact in natural ways and virtualisation

Normally we communicate to the technology through traditional input and output devices such as keyboard, mouse, screen, etc. They have been around for a long time now and it is impressive how a whole new generation has born apparently just knowing how to use them. In more recent years new ways to interact have became popular such as touch screens and motion sensing devices (like the one of the Kinect). This trend goes towards that direction interacting in more natural ways with visual and voice recognition, gestures and many forms of augmented reality. We will do more ordinary things with technology and it will understand better our natural ways of communications making it more accessible and easy to use.

Content and developers

Long time ago, technology business was all about hardware to which consumers where attracted by the tech specs of a device, it was all about the power of the device. Today hardware has lost most of its importance and the attractiveness of the new consumer technology devices is focused in the content that is reachable with the device. Music, videos, and apps are the most typical examples. That is the reason why the ecosystem around a product became so important. This involves not only the partnerships with companies who offer this content, but also the creation of independent developers’ communities who will design all kinds of applications for the product became crucial . Mobiles, computers, tablets, browsers, social networks, etc… all of them become stronger and more attractive as they have the access to content and developers finding strong synergies with the “Technology in the entertainment” trend.

Emerging markets

The importance of emerging markets for technology is similar to that of other industries. Developed countries have more access to products and innovation, most of the consumers are more knowable about what they can acquire and there are enough players in the competitors landscape to choose from. On the contrary, emerging markets have been left behind because the disposable income is lower and they appear to represent a less attractive market because of the risk that they represent in some cases, resulting in a lower technology offer. However, that is changing, and even when the % of attractive costumers per country is lower in the emerging markets than in developed countries, the total number of attractive costumers in the former is considerable higher in many cases. Emerging markets typically jump stages of the technology like in some places of Africa, where they jumped the stage of the land lines and are going directly to the mobiles. Emerging markets represent an opportunity to become the first technology offer for those costumers, being the opportunity to the first incumbent to gain popularity, trust and a strong brand in a maybe low profit but extremely high revenue market.

Patents

Patents have been always an important asset of a company and a crucial way of protect the research and development investments for a company. Companies spend billions to create, defend and acquire them. The war of patents (demands, acquisitions, etc) we have seen in the last years has taken my attention and I am afraid that there is the risk that they could stop the innovation more than help to develop more evolution if it gets out of control, however they have to exist. The recent acquisition of Motorola mobile services by Google was an interesting heads up of how important patents are today to stay competitive. In this acquisition the later acquired around 17K phone-related patents with which it has has now put itself on more of a level footing with its competitors. That is the importance and power that patents are.

Tech Trends 2011

During my holidays these last weeks, I thought a lot about where the consumer technology is and where is it going. How will the next big thing look like? I summarised these thoughts in 10 trends that I think the tech industry is following. Some of them have been around for a while but they will continue being core part of what we will see in the future. Many of them (if not all) are inter-connected and find synergies with each other.

Since I got excited the post resulted too big again, therefore I divided it into two posts of five trends each. If you have questions about the terminology of customers (techies, visionaries, pragmatists, conservatives and sceptics), you can find a more detailed definition in the post called “Technology Adoption Life Cycle: Popularity in different markets”.

Mobile, mobile, mobile

Mobiles and Laptops have been around for a while and Smartphones are now the first device we think about when we talk about mobility. This year Tablets became huge and have filled the space not only between Smartphones and Laptops, but also between conservatives and techies. Mobility is satisfying our need to be connected everywhere and all the time. This trend is one of those that has been happening for a while now, but will only increase in importance and all the technology to be developed will definitely have to include mobility in its concept somehow to work out.

Social networks: Sharing as primary metric

If you are reading this blog, most likely you “get” the social networks, but think about it as if today were 10 years ago and how it has changed the way we interact in many ways. Social Networks have exponentiated the need of share what is happening in our lives, what we like (or do not like) and what we believe and think. This trend has found incredible synergies with the mobile-trend and now it is a very intimate (and controversially public) part of our lives. Social Networks´ Sharing woke up a whole world of new social life and image with new motivations, rules and expectations that has became one of the most important vehicles of information for personal, entertainment, commercial and even political ends.

Data driven daily decisions

Some years ago, to choose what I would wear any given day, I would only look through the window and make my decisions. Today I open the weather webpage, check the max and min temperature, review the wind speed, the rain probability and amount; then check everything again in the hour-by-hour forecast before making my final choice… which by the way takes me in total only 5mins. Many of us do similar stuff with traffic before choosing a route to work, make a purchase, plan a trip or make a reservation in a new restaurant. This trend has also found synergies to the previous two (mobility and social network) with which we can see what other customers like us have experienced or do, giving to the customer an opinion power that it had never before.

Consolidation and integration

Today we have a phone to make calls, a computer to work and surf the Internet and a TV to watch videos. Every day we use more the phone like a computer, the computer like a TV or a phone and the TV like the other two. All of them are converging in the way we use them and soon it will be difficult to tell the difference between them. We will always need a small display for our pocket, a medium one for the desk and a big one for the living room, but the brain of those displays will end being the same. Maybe it will be a super-powerful mobile in our pocket which we will be able to connect to the appropriate display wherever we are to consume content in the cloud avoiding the need of huge storage capabilities. Talking about integration, it is happening with all the services we use with different providers. Today we read our email in one webpage, have our to-do list in a different one, check the weather in a different place and look for maps somewhere else (etc.). All of them will end being connected to each other and giving you integral and relevant information considering all you behaviours and needs.

Technology in the entertainment

Technology has improved work like anything else before, today each employee can do a lot more per hour than it was feasible years ago. However, entertainment is a big focus and driver of consumer technology; from toys for kids to all kind of toys for grownups, technology is used in new ways to make our life more fun. Music, videos and games are only some examples of the wide options we have to never be bored at home or on the move, giving us the chance to share the experience with our favourite social network and through all kind of devices available. Once more, there are tons of synergies with the previous trends.

More about trends in the next post “Tech Trends (2nd part)

Technology Adoption Life Cycle: Popularity in different markets

It is far from being a secret that the technology industry is one of the fastest businesses out there. Paradigms, expectations and needs change as fast as the different companies innovate and offer tons of futuristic products that allow us to experiment things that we have never imagined before and we did not know that we needed so badly until we got them. It is not always easy to keep the other areas of our life (law, culture, customs, etc) aligned with the new technologies on the reach of any person in the world. Technology companies know all this, and they know as well that the only way to keep competitive advantage is to lead innovation of tomorrow with higher standards than yesterday. That is why this industry is so exciting, because since years ago it has only sped up and I do not see it slowing down any time soon.

These characteristics make the technology adoption life cycle a very fast, fragile and particular evolution. A great product is an indispensable start, but it is not enough to hit the ground and become popular enough to reach mass markets without careful implementation and continuous renewal (improvement).

 

Technology Adoption Life Cycle

In the figure below you can find the product cycle graph divided in 5 stages; the adoption of the technology starts from left and expands towards right as time and product development moves forward until the potential of the product is reached. Some products will reach the “Majority” markets; some will end up dying in the early stages. The “chasm” is a critical and extremely important point to which I will come back in a couple of paragraphs.

Figure 1: Technology Adoption Life Cycle

 

Stage one is when a product is a new born. It is adopted by techies who want to learn and try a future product. They are willing to try incomplete alpha test products and help with feedback to complete the development in return to access to the newest innovation, however they expect this access for free.

Stage two is when the product has reached a stage when it can be sold to the visionaries who look for competitive advantage and revolutionary breakthrough. They are not very price sensitive and have outstanding imagination for possible applications of the product. They are willing to take the risk of adopt a slightly incomplete product and take responsibility to adapt it to their needs themselves as long as they have rapid time-to-market, high degree of customisation and technical support.

Stage three is the first step to hit mass markets. Pragmatists look for productivity and improvement of their activities, but they need proven application of the technology they will adopt. They want to be mass market leaders owning innovation that is already proven, recommended by trusted sources (visionaries are not trusted sources) and is ready for large implementation with fairly clear product applications, objectives and targets.

Stage four is when mass market is completely achieved. Conservatives adopt the new product to keep competitive advantage and avoid being left behind. They are risk adverse, price sensitive and they will adopt only technologies that have been widely proven and recommended by trustworthy sources. They expect ready-to-use products and value added at minimal extra cost (or no extra cost at all) and with absolutely clear product applications, objectives and targets.

Stage five is just the rest of the market which will be reached only in extremely weird cases. The Sceptics are those who do not really like change and want to keep their life the way it is. They do not believe that the new product will improve their lives and chose to discourage adoption with contrary arguments. They normally do not become a customer at all.

 

The Chasm

The most critical point among these five stages is called the chasm. This is the point in which the target market of the product changes from visionaries (stage 2) to pragmatist (stage 3). It is this point where the target consumer change from adventurous, risk taker, innovator, big spender, and proud to be different that “the rest” to prudent, risk adverse, expectation driven, budget focused and part of the herd driven. We want to reach this costumer at some point, because they are the mass market that will trigger our product’s revenues to the sky.

The chasm divides two really different target markets and it is really easy to get stuck in it because when a product reaches this point both groups may be discouraged to keep adopting the new product. On one side, visionaries may not be longer interested in the product because they will not be first one to adopt it and the competitive advantage is too low. On the other side, pragmatists will see a product that is still unfinished and not yet adopted by the heard that gives them security and trust.

Crossing the Chasm

When a new product approaches the chasm, it normally is about 80% of what the complete finished product would look like to, that is fine for visionaries, but pragmatists will never be comfortable with it. It might be extremely tempting to try to have a complete product for the whole Pragmatists market to generate the most of revenues in less time. However, there is a high risk that you might end adding only the most common requests to your product and never fulfil one customer’s wish list. This strategy will not bring Pragmatists onboard because they will not accept less than a 100% finished product for them.

Therefore, in order to cross the chasm successfully the product has to be revisited, target a specific segment of the Pragmatists (niche) and be completely finished for that segment. This will allow the product to hit the ground in that particular niche and start generating trustworthy successful stories in the pragmatists’ area. This experience will be used later to expand the product to more niches afterwards.

A “Chasm Crisis” is a series of bad decisions and actions caused by not reaching revenues targets and other commitments. Therefore, it is important to remember that this strategy implies the revenues will not follow the levels of adoption curve shown in the figure, but it will go a lot slower at the beginning catching up as more niches are reached before making commitments and establish targets. From my point of view it is a small price in return of a higher “right of succeed” crossing this important gate.

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Done! And now what?

Now: renovation, innovation, evolution, iteration… In a business like the technology industry the only constant is change and all these stages will happen a lot faster than in any other industry. To keep a product growing, it has to be subject of continuous improvement every time it looks like a finished product finding new paradigms and applications. Only so it will stay alive running through stages 1 to 4 over and over and moving forward.

Google+ Quick Overview

Google+: I am truly curious. Yesterday I noticed the new black bar on the top or the search engine, but there was no much information about it, until news about Google+ started running around. To use the site, you will find it on that black bar, clicking on the “+You” link. As Google has done before, for now the access is only through invitations and it is not clear how long will it take to be open for all the public.

I am truly curious. Yesterday I noticed the new black bar on the top or the search engine, but there was no much information about it, until news about Google+ started running around. To use the site, you will find it on that black bar, clicking on the “+You” link. As Google has done before, for now the access is only through invitations and it is not clear how long will it take to be open for all the public.

It looks like a social network with your profile and a news streaming. I have not had the chance to use it yet, therefore for now I can only write about some of the features that are public already, my opinion and wishes. A deeper analysis will have to wait until I try it myself

 

Google+ Features:

  • Circles: Yeap, some sort of groups.
    • The cool side: The idea of these groups is that you can manage your social life according to these circles. You do not have to have two different accounts to manage different images -let’s say professional and friends image. If you want to share something more personal, you can only share it with the circles that you choose. I am sure there are more than a couple of  “social drama” events that could been avoided in the past with this.
    • The challenge: Make the management of different streamings so easy that it does not mean too much work for the user.
  • Sparkles: Is a “content to share” search engine.
    • The cool side: According to Google is about “Nerding out”. I loved the concept because it is true. We do not share because we think our friends are interested, but because we are passionate about something and we want to show it to everybody else (“nerding out”).  It shows results driven by your interests, becoming a useful source of content sharing without leaving Google+.
    • The challenge: Transmit the concept to the users and motivate them to use it instead of their traditional sources of content.
  • Hangouts: Is a free group video-chat.
    • The cool side: Whenever you have some free time, you just post that you are available to chat or that you are having a conversation where more people of the circle can jump in. It is like if you meet some friend at the mall and you let all your common friends know in case they want to stop by.
    • The challenge: For some people have been complicated get used to the group chats, and many people are not that comfortable using video-conferences. Both things together in one, may take some change-resistance work to become popular, but it will happen and I am sure it will be very useful.
  • Instant Upload: Automatic upload of all your mobile pictures and videos to a private album.
    • The cool side: You will have everything in the cloud, as a back up and ready to share it whenever you want with an easy click.
    • The challenge: On one hand, we are still used to choose carefully what we upload -even to private albums- because of privacy terms and conditions. And on the other, the mobile data service providers are starting to limit the data allowance in some countries, so this feature could be dangerous for the customers affected by the limited services.
  • Huddle: Is a multi-platform group chat app for mobiles with a terminal in your computer through Google+.
    • The cool side: Multi-platform is the magic word. Keep contact with your friends or family without problems of whether they have a smartphone or the smartphone’s brand they use. It is like taking the best of BB (instant-always-on group chat), Whatsapp (multi-platform) and Skype (mobile-to-computer chat) in one place.
    • The challenge: People is already using those other services, therefore the success of this feature will depend on users changing to this platform. Anyway, this challenge is common for the whole Google+.

 

So, is this one more product of Google? Or does it have a bigger job in Google’s ecosystem?

If you spend some time researching about Google’s products,  you may become curios about why Google has so many great proposals, all in different sites and not really intuitive to find in some cases. In my first research, I found around 50 products (and there are many more if you go to the Labs site), all different, most of them with some sort of social sharing capability, but all independent from each other. So, why not integrate all of them in some sort of “Dashboard” or “Hub”, where all those independent products that have their own social network could get together in one. iGoogle looks like the attempt to be this “Dashboard”, but it is still missing the integrating social sharing features. These features are a must first to leverage the full potential of the synergies of all the products together, and then to motivate people to use it. This morning reading about Google+, I got the feeling that we are close to see something similar.

There will be tons of opinions about Google+ during these days. Many of those opinions will be about how bad is the idea of making another social network and a recount of what happened with Google Buzz and Wave. However, that is the logic and immediate reaction. However I would suggest to think deeper and look to a bigger picture and potential: All those products that Google has developed and we use today, may find in this site the opportunity to work all together, transforming what we may call now another “Social Network” into a HUB of linked products and services, with controlled social sharing features. Personally, I would love to see that happen and how far can it go.

 

Now what?

Keep your eyes wide open because it will be extremely interesting to see if the landscape moves, and if it does so, how it finds a new shape.

PS. If you want to read more about it, or try to get an invitation, here is the link.

 

Update (3/07/11):

I have been trying it for some days now, and it looks great. For now I just want to update that not all the features I talk about in this post are fully available, but I guess Google will release them in the next weeks. As far as I have seen, the mobile chat “Huddle” does not have the multi-platform feature yet. Besides that… so far, so good!

If you need an invitation, let me know in your comments with your Gmail username and I can send you one. Google Apps accounts do not work yet :S

A full review soon!

Palm and RIM: Lessons to never forget

About seven weeks ago, when RIM’s stock was $53.83 (28/04/11), they announced their reduced revenues objectives for the quarter resulting in a 14% drop in their stock price from one day to the other. Last Thursday the news announced that RIM did not hit those reduced targets of revenues dropping their stock price again 21% (from$34.78 on 16/06/11 to $27.24 on 17/06/11). The cumulative lost only from April to today is more than 49%!

About seven weeks ago, when RIM’s stock was $53.83 (28/04/11), they announced their reduced revenues objectives for the quarter resulting in a 14% drop in their stock price from one day to the other. Last Thursday the news announced that RIM did not hit those reduced targets of revenues dropping their stock price again 21% (from $34.78 on 16/06/11 to $27.24 on 17/06/11). The cumulative lost only from April to today is more than 49%!

I have been thinking about this the whole weekend. How a company like RIM, with a product like the Blackberry did just lost the momentum like this? Did not the Palm story serve as example of what can happens if there is no continuous innovation?

 

Palm (1992-2010)

My first almost-Smartphone was a Treo 680. I was travelling in the US for work and I bought it in the Atlanta airport spending in an impulse a considerable percentage of my monthly salary. I just got totally in love with it. It was the first phone which I could connect to the computer and use for actually useful things: Manage my agenda, manage my contacts, use a great to-do list and download useful applications! I used to get everyday to the office and connect my phone in its cool dock, synchronise it and just have all that important information wherever I go. The best part? There were tons and tons of developers’ sites where I could find applications for anything I could need.

Sounds familiar? I know, but it was 2006. There was no iPhone, no Blackberry (no at least for the normal people, only my Associated Director had a company’s one with an American number) and no Android for sure. This entire new world was just a super smart business model that just happened without much planning from anybody. It just became manifest spontaneously, started working well and actually became the base idea of the ecosystems we know today.

If only Palm had seen it… Palm was the king of the mobile devices and had everything to become the master of the Smartphones! It had the hardware, the mobile expertise, a passionate developers’ community and the customers ready to try anything from that brand because we knew we needed something, but we needed them to propose ideas of what that could be.

But they fell asleep… Palm did not invest enough in innovation for hardware or design, and never updated the operating system properly. Competition saw the big market change and arrived to take their piece with their best proposal, which was great. Palm tried to catch up with the Pam Pre, but it was too late. Most of their value customers (including me), had already moved to Blackberry or iPhone. By January 2009, when the Pre was presented, Android was already up and running and the iTunes store had 15’000 very high quality applications with 500M downloads. Palm never got recovered from this, and in April 2010, HP announced Palm’s acquisition for only $1.2B.

They had it, they owned it… and they let it go. Just like that.

 

RIM (1998 – still going!)

Now… What about Blackberry? The first Blackberry I saw was the pearl, and it was launched in 2006 as well. It became a big player first in the business world because its security standard and the email everywhere (without synchronising with a wire to the computer!). Then the physical keyboard and the super useful BBmessenger made it popular to all kind of customers of any age, changing their customer base drastically and growing revenues. I found out that my university started to borrow Blackberries to the students during the time of their undergrad studies… I can imagine how many of these students became addicted to the connectivity and bought their own device just after graduation. Only that university has 12K students, reapplying that was brilliant!

There are only two ways of competing for market share: Price or differentiation. This market is about Smartphones, which are very personal and intimate devices which we consider as part of our personality. Besides there are Smartphones for many different acquisition powers, for the value customers (higher margins) price is a negotiable thing, but differentiation is what will drive the choice of purchase (and engagement!). We are willing to sacrifice other things in order to get the mobile we want. Therefore, for a big player in a market like this, competitors like this and a speed like this, to have one or two differentiators and just harvest revenues for ever is a not a sustainable option.

However RIM kind of thought it could be. They continued the formula trusting in their email, keyboard and closed chat system. It worked great for a while! When I got my first Android, I kept the Blackberry only to be connected to the chat and write long emails from there. My youngest brother and his friends were dying for an iPhone, but chose to stay with Blackberry because of the same reasons. However, slowly we got used to the capacitive keyboard, Whatsapp became the most popular multi-platform chat, there are 14B Apps available for iPhone and 3B for Android this year, the experience surfing the Internet net is much more comfortable with a big capacitive screen and the design of the iPhone and all the Android Phones is just too good.

Blackberry figured it out a bit late when few chances of recovering are still available. As far as I see, they will have to either get another brilliant differentiator idea, or return to the “business” niche market where they are strong and can protect with all their strengths.

As part of the efforts RIM have started, they redesigned their Storm model and re-called it Torch, which is a bit late to the party but is much better than previous models, and could have a chance for a decent piece of the cake against iPhone and Android. The design of the Torch is good, but what about the main differentiators? The BBmessenger, email and keyboard differentiators are becoming less important every day; the extreme security is not a choice factor for a normal user and the few available Apps for BB is a growing disadvantage (only 3M Apps). The Playbook is out now, and is trying to become part of the Smartphone experience, but that is another thing that Palm tried years ago and did not work. Maybe we were just not ready for it at that time, but there is the chance it is not such a good idea (maybe a good topic for another post).

RIM is waking up and they have to choose carefully their next steps. However I really hope they can recover and give a new turn to the market, which is what crisis are good for. It would be a shame to lose one of the big players in the Smartphones competitive landscape, because those players mean options for us (the customers) and motivators for all the other players to keep creating breath taking products and experiences for us.

 

Google’s AdSense and AdWords smart Business Model

We all know Google’s search engine, those who do know more about the industry know that Google really makes most of its revenue from advertisement, but I am not sure if many people are aware of how big that business is for them. People feels more directly in touch by other products like Google Maps, Gmail, YouTube, Chrome or Android, all of them free services. All those products plus some other represent only 4% of the revenues of Google, while the other 96% comes directly from advertising.

How is this good business? It really is. Advertising generated more than $28B last fiscal year for Google, which is the biggest advertisement company in the world. It is that big because its services reach hundreds of millions of people though all those free services we use every day one way or the other. It is all about where we, the consumers, choose to put our attention. That is not easy at all! We are too used to advertisement and we have developed superb skills to ignore the information we did not asked for. When we watch TV we have developed tons of strategies to avoid watching TV commercials, when we drive we chose not to see the billboards, we do not even read the leaflets in our mail box and we just know which e-mails are spam deleting them even before opening them. Potential customers’ attention is the scarcest resource in the advertisement world. And that happened because advertisement is just a pain!  …isn’t it?

Or maybe it does not have to be a pain… what if we just get the advertisement we need? If I am planning a trip to Egypt and I am looking for a plane ticket to Cairo next month, I would be grateful to a friend who gives me the 2×1 coupon he got last week. Am I right? The same coupon would be just a piece of trash if I were in a different time of my life or looking for a different destination. How many times are we that lucky? Well, there is where Google’s strategy has been so successful, turning pieces of useless information for some into gold for the right people. That strategy is called: “relevance”.

This strategy has been around for a long time now, but still evolving and expanding tough. Even when this is not new, it is important to understand other parts of Google’s business model. For that reason I want to explain how it works for those that are not familiar with it, include with my thoughts, and why not, add quick test at the end of the post.

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Making the magic happen: AdSense and AdWords

  • The seller: Designs its campaign using adds in different formats (text, images, videos or interactive ads) and he registers it with Google AdWords “buying” keywords that would best define the product or service they offer.
  • The customer: Basically, us. We are just users that have a normal Internet life surfing in the Web and searching for what we need to find today. Every time we search for something it is registered and Google can know in what we are interested these days.
  • Owners of space: These are blogs, any other site that we visit because we are interested in whatever they have to share with us or all the other free Google like maps, YouTube or Android Apps. These guys have our attention and they know the value of their space. Therefore they register with AdSense for text and image ads and Google Display for video and interactive ads, to offer this space and make some revenues out of it.

On back stage, Google matches your interests and the main topic of the search or site you are in with the Keywords bought by the sellers. Using that match and an auction system Google designates which adds you will see in your sponsored search results and in your next visit to a place which has an AdSense/Display space.

This way, Google gets revenues from the sellers leveraging their wide Network and matching algorithm. The space owners get some commission for offering the right space. The sellers achieve a more effective campaign because their ads are exposed to potential customers more likely to be converted than with traditional methods, they only Google pay by click (no by exhibition!) and have tons of analytics tools to target their campaign better. And we, the customers, are most likely to find useful information out from the ads because we already asked for it before.

In my experience, I was truly impressed the first time I saw ads so directed to me. To be honest, at the beginning I felt a bit watched, but if you think about it, it is a great strategy. Technology is making easier and easier to customise products and services, and the fulfilment of individual needs is an important trend. If this algorithm keeps evolving, one day advertising will stop being a necessary evil as it is for many today, and will become a reward for us in exchange of the information we share about ourselves more and more every day.

While that happens, I am adding a couple of ads at the end of this post (just before the comments form) which may be different for each reader according to your last searches. Let me know through your comments… what is Google offering you today?

 

Microsoft Overview FY09-10: External Factors and Future

This is the third part of the overview of Microsoft for fiscal year 2009-2010 based in the content of the annual report for the period between 1 of July 2009 and 30 of June 2010. This annual report was published on 30 of July 2010.

The review is divided in three posts: Profile and Results, Financial Performance and External Factors and Future (this one).

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General influencers in Microsoft’s performance

  • Generally the highest quarterly revenue happens on the second quarter because of the corporate calendar year-end (licences) spending trends and holyday season spending by consumers (gaming)
  • Entertainment and Devices division has of course a peak during the holiday shopping season (because all the Xmas presents, I guess)
  • Global macroeconomic factors have a strong correlation to demand of software, services hardware, and online offerings.
  • Technological innovation is the foundation of their long-term growth, where they face competition of other vendors of proprietary and open source vendors
  • Last year revenues increased mainly because strong sales of Windows 7 and the PC market improvement in comparison with the previous year. It will be interesting to see what happens this year with the tablet boom.

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Future

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Areas of growth:

  • Cloud Computing: Microsoft considers this the next big wave of transformation with which computer will become a limitless platform to connecting people to information. In line with this vision, Microsoft has invested $8.7 billion in R&D and will dedicate 90% of their engineering force to cloud computing (from 70% last year). Microsoft has wide experience in cloud computing services with more than 15 years with Hotmail, 300 million people using Windows live sending 10 billion messages through Hotmail and MSN messenger, and more than 25 million subscribers to Xbox live. Microsoft will continue growing its online platform focused in consumers, service providers, enterprises and government delivering cloud solutions that span the complete range of business needs.
  • Product portfolio advances: During the fiscal year Microsoft launched Windows 7 that sold 175 million copies by the time the annual report was out, Windows Live cloud services, Office 2010 with Office Web Apps with more than 9 million beta customers, IT professional services, Online Services such as Bing that gained 4 points of share, Windows phone 7, Internet Explorer 9 and, my personal favourite, Kinect for Xbox 360.
  • Record financial performance: The last fiscal year Microsoft has reached a record of sales with an increase of 7% from the last year, operating income grew by 18%, diluted earnings per share jumped 30% and returned almost $16 billion to shareholders. Every business segment had double-digit grow during the last quarter of the fiscal year.

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R&D and the future for Microsoft

Microsoft has been investing around 14.33% in average of its revenue in R&D during the last three years to support innovation focused in emerging technology trends and breakthroughs. The principal countries where R&D happens are US, Canada, China, Denmark, England, India, Ireland and Israel. There are four principal opportunities identified by Microsoft:

  • Cloud computing: Microsoft wants to develop their cloud computing ecosystem to position their brand in virtualisation, management and security identity delivering end-to-end experiences to connect users in new ways through all their lives (home, work, mobile, etc).
  • Natural interfaces: Microsoft has the feeling that there will be dramatic changes in how the users will interact with technology. That is the base of Kinect concept. Some examples are touch, gestures, handwriting and speech recognition. This change in “interaction paradigms” will make technology easier to manage, more intuitive and open new markets.
  • New scenario innovation in key industries: There are some key industries in which Microsoft sees and opportunity to improve service and offer. Those are healthcare, environmental sustainability and education.
  • Intelligent computing: Computing has been becoming intelligent since some time now, but Microsoft will continue investing in systems that learn about their users, its preferences and its past to anticipate its future to make them more productive. This is not really new now, but there is a lot more that Microsoft has to do to catch up in this.

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Planned use of capital:

According to the annual report, Microsoft is planning to invest in sales, marketing, product support infrastructure, existing and advanced areas of technology, as well as additions to property and equipment. Existing cash, cash equivalents and short term investments together with new funds from operations will be enough to meet operating requirements, regular quarterly dividends, debt repayment schedules and share repurchase.

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Twiiga’s opinion

Microsoft is a huge company which has been asleep for a while in the comfortable zone of licences, which for sure is good enough money to develop a $Bs business. I am extremely glad to see this giant waking up and starting the engines that they have been warming up for several months already. The new mobile operating system, the awesome Kinect and, some days ago, the acquisition announcement of Skype make me think that we will see this giant giving battle in new fields for it. Looking at the four points of development in Microsoft’s future, I can see a clear advantage in the cloud computing exploiting online office, and in natural interfaces through the technology developed for Kinect which is starting to be expanded to many other applications.

Talking about revenues, the highest revenue stream still comes from licences, especially Office. What could be the future of it? It could be extremely tempting to develop official Office applications for other platforms such as iOS or Android because of the huge market that these two platforms could mean for the licences business. However, having them only for Windows is a great opportunity for differentiation for Microsoft´s OS in the market of for mobiles and tablets. I think that it is potentially their most important strength in catching up for the medium future and take a decent piece of the mobile platforms’ cake. Think about this, if you have used a Windows’ Computer with Office all your life, would you not evaluate the option of just having a phone and/or a tablet with the same OS and tools? It would be completely compatible from the core and there is no risk of fight with formats or communication among devices. I know, in the case of Office, other developers are already offering limited versions of Office compatible with those platforms, but a person without the confidence of deal with some technical complexity or a company that has Windows platform in all their system may take Microsoft’s choice. Imagine the Motorola Atrix 4G concept but using Windows… An still cloud office could be an alternative to capture some of the other platforms market.

The recent announcement of the purchase of Skype is impressive and really shows the compromise to offer better products to the consumers. The price they paid for Skype is extremely high, $8.5B which is about 400 times Skype’s operating income. This acquisition does not have the objective of generate more revenues to Microsoft by itself, but its real value is in the synergies that they can create with existing products. It will be a popular differentiator for Xbox, mobiles, tablets, etc. and bring benefits through those channels. Will Microsoft make it exclusive for their products as well?

All these are long topics that can take pages and pages each, but that will be in a different post.