Estrella Aparicio

Alphabet - the matrix company for Google

2015-08-12T02:38:00.001-07:00

News came yesterday out of the blue. It was very surprise some highlights in newspaper saying "Google changes its name", did it? In fact, it did not, what the company has done is a step that was claimed, it makes completely sense for the company strategy.

What had Google become?
The company has an amazing policy that encourages new innovative projects to the point that Google itself had become a proper incubator making projects that although relevant and disruptive, they look part away from the rest of the products of the company that are more focus on Internet.

Google has become a source of talent, innovation is part of everyday life in the company: new products, new projects, new acquisitions...all the ecosystem was almost ready but execution. Do not forget the IT Giant requires processes for everything, all the big companies do it and it is an advantage in some cases. However, when it comes to a start-up or incubators processes can be an stopper for projects speed up.

The new organization

Seven companies under a matrix, traditional and main Google products will continue under the same brand and will count for more than 90% of the revenue, whereas new line of business such as fiber, capital investment, appliances and medical will be under its own brand. Google X will born to cover innovative project, it would stand as the start-up of Alphabet, an incubator for disruptive products such as Google Glass, the company will be the perfect ecosystem, providing talent (coming from Google employees) and the agility that is needed.

With it, Google will keep the brand as most of the people understand, financially talking it will be core for the group business and will be separated of those that constitute a cost (not profitable).

By all means, the new structure is more logic, organized and will ease the management of the entire Group to drive success for all the brands.

MINK: the make-up printer

2015-03-19T17:02:00.002-07:00

"Create any type of makeup, from powders to cream to lipstick" - Grace Choi´s works caught my total attention when reading about the TechCrunch's Disrupt conference in May 2014. She had had the brilliant idea of inventing a make-up printer! Yes, you are reading correctly, a 3D printer for make-up that she called Mink.

Why Grace came up with this idea? She found out beauty industry makes tons of money by simple things such as colors. Most of the retails provide a short range of colors, the most sellable ones (due to the fact that price is lower when the volume acquired is high). Some shops provide a very large number of colors perceived as premium, so price are high. Grace had this problem when she figure out in commons groceries it can not be found make-up for Asian people so she decide that everyone should have access to the right or desirable colors regardless they were very popular or not. Just because it has to be with pigmentation, nothing else there is not right to charge more for what has the same manufacturing cost.

As she has been an inventor for long time and had experience in manufacturing she created this product and started this innovative hardware company.

PRODUCT

The prototype size is still big compared with the size of printers in the market but this is something that she definitely is going to work on.
It works pretty much the same than a normal printer, a color can be selected from a doc, camera, etc, and pasted in photoshop, for example. The rest is the normal print function of any software once Mink is configured us a printer. Of course, instead of paper raw material for eye shadows or lipsticks takes place.

Because the printer works with pigmentation, common cosmetic products are involved in here. Just the same chemical products that you can find in any make-up shop but in your own home, simple as that. Therefore, it is FDA-approved (beauty regulation), the difference is that the end user has freedom to decide the colors, instead of being imposed by the beauty corporations.

Grace defines Mink for girls between 13 and 21 years old that wants to experiment and discover make-up. However, there are other segments of women that could be targets: for example, women that like to see changes in themselves or match the eye shadows with the wearing clothes.

PRICE

Retail price is set up to $300 dollars, which is very high for a teenagers, the consumer target. It is true that on average, people expend around this amount per year in make-up products but it is a huge investment made at once for an average teenager. Therefore, few suggestions Grace could do related to it: either she downs the price to $99 for example, which seems to be the "magic electronic device price", or she makes other price models such as a monthly fee. She also can build a value added creating an ecosystem in which the printer is the affordable core and charge more for the cartridges, software applications, raw material...although these would be other business line to be developed.

PROMOTION

By all means, social networks are the channels more used by Mink to promote the product. The plan is to reach beauty bloggers and influences that could help with the brand awareness. Internet press also helps when Mink is mentioned and the brand encourages people to get invitation through their web site.

PLACE

Without being commercialized yet there are many approaches that could be implemented, since Mink´s web site with its own online shop to any ecommerce website compatible (such as Amazon, ebay or any electronic online shops) to electronic brick and mortar.

The pyramidal sales structure or model of sale such as companies like Termomix could work very well. Teenagers trust people like them, so if the sale representative is a teenager then conversion rates could be much higher than with any shop assistant.

STRENGTHS

Mink creates a new market and eventually could disrupt the traditional beauty market by making big corporations to change their business models and adapt to the new changes.
It attempts to provide any color in make-up at a commodity price from home, which nobody else can do.

WEAKNESSES

More tests should be made in different type of skins before putting the product into the market, not only to avoid problems, such as undetected allergies, that could damage the brand but also to build product credibility and security.

OPPORTUNITIES

Mink has plenty of development options: organic cartridges for more healthy and less chemical products, raw material line (with different quality and attributes), software application that add value to the product, etc,

THREATS

Beauty industry is very powerful and big corporation and not going to passively observe how somebody disrupt their business models. Even though they are not the first mover, they have their brand awareness and possibility of develop and implement a new strategy very quick that could put
Mink in the oblivion. Mink speed is very important to reach market share quickly and sharply, brand awareness thorough social network can be crucial for the success of this company and market adoption, despite being teenagers and digital natives, could be low.

Nevertheless, whatever happens what is true is Mink has been a very innovative company with a clear vision of disruption that once more time shows technology can not have limits entering in new market with new uses.

HELP ME WITH MY EXPERIMENT!!

2014-09-11T11:19:00.000-07:00

This is an experiment and I will like you to help me, it will take you less than a minute!!!! Let´s start:

Close your eyes, think about this words during 5 seconds: Customer Care Service

Write down, few words that express what you have thought, what feelings you have had, your opinion about it ...
Close your eyes again, think about this words during 5 seconds: Customer Experience
Now, write down few words that express what you have thought, your opinion, feelings...

Can you tell me the difference? Place your comment on the post and share with your friends!!! Let´s see if the conclusions surprise us!!

No deal, better than a bad deal

2013-11-14T06:50:00.000-08:00

Why people are so afraid of facing some situations that are not comfortable for them? It seem a bit crazy but this situations, thoughts, alternatives, when are not probable does not seem they have disappeared. Even a little chance still exists for them to happen. So, why people tend to run away of it, avoid talk about it or thinking and analyze it?

Believe me, nothing will change for doing this exercise. Putting yourself in the shoes of any possible (while little) scenario will not provoke them to happen, neither does it for them to disappear. So, what can you get from it? Simple, be prepared. Be ready and have margin for taking actions and minimize the impact, the risk and of course the pain.

Some sales people are afraid to make questions such as budget, decision making process, or ask customer for commitment because they do not want to hear what they do not like. In other words, they do not want to ask a question that lead them to an scenario that they do not desire. Unfortunately, what it does is postpone an event to happen but it will happen anyway because at the end of the day the question has to be made anyway. The later you ask, the bigger investment you have done, and do not ask for the opportunity cost! For that reason it is important to get all the pictures clear.

How do you get ready?

- Analyze the different scenarios and think the action you want to take in any case.

- Have a conversation with your target and see what are their expectation in any case.

- Whenever there is a conflict of interest we need to work out there:

o Evaluate how important is it for you and how important is it for your target.

o Analyze things that you can give away in any scenario for getting your goal and how much they cost you.

o Explore how much value this things create to your target.

- Qualified out: this is a very important step, whenever the value that you creates does not justified the expectation that the customer has, qualify out. Ask the right question, be secure of asking them and understand the situation very well in order to get into a conclusion. Don´t be afraid of telling the customer you do not see it to go further.

- Write down your plan for any scenario:

o What are you going to do?

o Identify the risks.

o Develop a contingency plan.

o Define your limits – what is the less you want to get. Do not accept anything below your limits.

- Negotiation: You start your negotiation in the moment that you start knowing what the other party wants and showing what you want. So start from the beginning, from the first conversation and approach!

Remember, no deal is better than a bad deal.

SAAS: Future or present?

2013-03-21T01:12:00.003-07:00

SAAS is not the future, stop saying that!! I heard that everyday from sales people. If I were their customers, I would tell them - then call me when we get into the future.-

I wake up everyday and check my personal emails on my mobile while having breakfast - what am I using? - Software As A Service.
Then I go into Twitter and Facebook and see what the people hang up for - what am I using? - Software As A Service.
Then I go into my Amazon account and buy my gift for the Dad´s Day and do the online shop on Tesco.- What am I using? Again, Software As A Service.

After, I go into my online bank account to make a transfer and ...- again SAAS.

So, is it really the future? or the present? The fact is that we all use SAAS everyday but for some reason we keep saying is the future.

Markets are very different from one to another. While is true that some market are a way behind, specially talking about companies using SAAS as business solution, it does not mean that SAAS is not the present, something that they can already use. In fact, they should do so in a daily base, as in people in their personal life. Why is that? Because it is as simple as changing from writing with a pen to use a typewriter. It is just evolution, an improvement, advantages, benefits.

What should a company invest in infrastructure any time they want a better software that request it for? Or why they should limit themselves to the current infrastructure they are using and not having the opportunity of getting better software for their business?
Why do they need to spend money on maintenance? or Having people dedicated to maintain those platforms?
Why they need to suffer from a painful migration any time there is a new version or upgrade of the software?
Why they need to do such initial investment in a platform and keep themselves within this vendor as a married would be?
One of the most important ones....what about customers care? What is the incentive for companies to provide better customer services to companies that pay a subscription and those that acquire perpetual license?

Certainly, C´s level in companies are the one to make the decision whether they go into the cloud or stick to the traditional business model of Software. If I were one of them I would have a very clear opinion on it: I would chose the one that allows my business to move further and faster, the one that would not leave me a way behind my competitors, the one that would be the right to be nowadays, that answers the new business models and are disruptive in the market, that helps my organization be stronger.

Realistically, the IT strategy is not going to be the value differentiators for most companies but could be the cause of running behind other market players.

I am big, but not in Social Media

2013-03-03T15:27:00.001-08:00

By all means, does social media have an impact in Companies, it is not something new. But, how many of them measure the impact that it has to them? Are they taking the best advantage of Social Media for the Organization?

I have seen many companies failure comes when it has to define a social media strategy and it is not defining it. The first thing when something is having a huge impact and affects to the company, competitors, market,etc, is to react: no matters how you do it but do it. Unless the company is not behind any of its competitors or the market, at the end of the day it just follows a trend. That is why most of the companies "go social", understanding it as being present in the social networks. But for what? Why the company wants to be there? Why is that so important, just being? Do not forget Social media is just another channel, probably the most powerful one nowadays, but it is a channel so being present is not enough.

Then, companies start having activities, different activities coming from different departments (sales, marketing, public relation, ...). Sometimes, they do not even coordinate this initiatives which end up with companies having different Facebook pages created by different departments, or just a Facebook page in which everybody publish without even control that the content is in different languages. I have seen crazy things coming from companies that I have being following feeling there is any message that arrives to me!! Feeling confuse for not understanding what they try to transmit to me or giving me promotions that were not even apply to the geographical place I was at that moment. Sometime is confusing, while there are companies which are getting huge advantage from social media, others are a way behind despite being big companies.

It is very surprising that social media strategy has not been defined in many important and big companies and now is when most of them are getting aware of it. However, there is a previous step that I still miss when talking to some companies about it: there is not governance for social media within the company.

Everybody wants to do something, any department has an objective set up in social media...but nobody is coordinating and consolidating it into a single strategy, the strategy that would suit for the company, that it is aligned with it. As a result, the company is not getting return of social media. Board of directors and financial directors do not see the value on that, as a consequence budgets are not increased and it is something that do not acquire enough importance. Big companies...but not in social media.
No matters whether your operations in social media are centralized in a single team or in different departments but synergies need to be solved. Communication among the company groups is absolutely essential, coordination and understanding of the different initiatives that want to be run allows companies to get advantage of economy of scale and save costs.

Remember, word-of-mouth spreads faster in social media than in real life so it can not be ignored. However, an effective strategy is the one that matches and answers to the brand, it is not the one that invest more money neither do it the one that has more creative and innovative campaigns.

Well-known successful strategies have Governance to guarantee it. Despite having being incredible segmented (by products, departments, promotions, activities, geographical situation, etc) still they sound as one voice, the company voice, one brand...one message that arrives to us, the users without making any confusion.

...Follow the right process.

What is Cloud to me?

2013-02-20T01:55:00.000-08:00

Imagine that you either detect a new need in your business or find a way of improving some part of your business that if you solve it, it will have a positive impact in your net income. Sounds good, doesn´t it?

You feel very motivated, your ambition increases sharply and you start thinking on, the results, the benefits and all the good things are going to come along to such improvement. Great! You now have your business strategy definition and you need to translate it into a plan to execute, study the proposal in depth. Oh,oh! What happens? You release the impact it has in your system and the changes/expansions you need to do. And them one word come to your mind: ROI.

Does it make sense? How much do I expect to get from this project? Which results or impact do I expect?
What happens if it does not work? What happens if I do not get what I expected?

Sometimes, the answer to the first questions is obvious. Most of the IT projects that are regretted are due to the second question. Why? Because in that situation the company would have made an investment without the return expected: infrastructure expansion, increase of resource in maintenance, time consume during the development and execution of the project, etc. Of course it is translated in cost, but what is it behind that is RISK. It is what can determine whether or not to go with a project.

So what is cloud? It is a way of having an IT solution that would have an impact in your business by soften the risk run. How?

By reducing cost and efforts of maintenance.
By reducing the economic impact of the initial investment.
By increasing the freedom to give up a project when it is not producing the results expected.

Ask the security, where is your money safer: in a bank or under your mattress? In a place with lot of security process that are even improving every day or in a vulnerable place that the only barrier existing is a door that would not stop somebody with intention of stealing your money.

What your business gets in exchange of a project in the cloud?

Improvement of business processes.
Better Competitive advantage.
Positive impact in your financial statement.

Definitely, the cloud is innovation, a tremendous technological advance, a huge step into the future.

Mutually Explore: Successful Sales

2013-02-11T15:28:00.003-08:00

Let me ask you something, your first thoughts when receiving a sales call, what is your reaction?

Most of the people in someway regret having picked up the phone at this time. Why is it? Probably you can think in thousand of most important things to do than listening a sales rep, specially if you are in a C's level.

Shouldn't be it a good experience? I mean, somebody calling you for a propose that could bring value to the company and make it more profitable should be good news! People should be looking forward for it!! However, it is not. Ask somebody, how many of the sales calls they receive are productive or positive for them? How many have ended up of them buying the product? Maybe THIS is part of the reason "sales reps TALKING ABOUT THE PRODUCT and DO NOT LISTENING too much of what the customer can say".

Customers are not stupid so do not try to push them to buy your product because they would do not so unless it is something that fits to them, and clearly it should not be any push on it, it just happens naturally. So, what is your role as a sales person? Simply, make sure you understand the customer expectations, challenges and goals. Why you are there for? Ask yourself a question: how do you like your customers feel about you? Another sale representative, a consultant or an advisor? The different between them is the level of trust built with the customer. For me is clear, I want them to treat me as an advisor and it requests a long term strategy, a long term relationship...and we end up to the starting point: do I want to push my product to them? There is no win in this deal!! No in the long term.

Unfortunately, no many sales people share this vision and this is why sales calls are not appealed to most C's level.

Next time you make a sales call try to be an advisor, build this trust and answer yourself: if I had a solution for this person right now, would he be willing to buy it from me? Could I leverage what I have done with him since the beginning of the talk? If the answer is yes you are in the right path to turn out into a sale.

At the end of the day we are sales people. We do business by helping people. We do business by understanding what people need or can gain.

Starting your digital business: Customers or users?

2012-11-24T11:44:00.000-08:00

I had a conversation recently about the most important things for starting a digital business. Each one can have their own opinion: whether or not having customers is the key factor. Well ... firstly I would say, what does "having customers" means?

Of course you need to consider "the customer", the people that you attempt to reach but it does not mean that you have already reached them! In fact, you may only have define your target customer and where to find it based on research you have already done. Expectations of the sales can be calculated and it is up to you if you want to wait until have certain number of customers for reducing the risk. Am I saying reducing your risk? Well ... you may not run the risk but instead you miss the train.

In my opinion, the first thing to do is to have control of your business. What could be the worst case when you lunch a company? No sales. If you do not sale there is not income, but you still have expenses, fixed expenses that do not depend on the number of sales. Therefore, the first thing to keep in mind is "How long my company will survive without having any customer?" When you have the answer, you know how long can it takes for you (at maximum) to bring customers to the company. So, yes, you can lunch a company without customers it would depend on the initial capital investment how long it could remain like that.

Once you know the risk that you can take, you are able to evaluate which is more important: is it bringing customers that provide revenue to the company or having users and launch your business?

It could seem a bit confuse but I will explain the difference as I understand it. Customers for me is related to revenue and the business model, however, users are potential target for your Product (no your business model, and just one of the 4 P's). You can have users without having a business model, just remember Facebook, Foursquare or Twitter when they started. For them it was more important to engage users quickly rather than having revenue. Why? The advantage of being the first mover. Many digital business success just because they started first. Word of the mouth works much faster online than offline, so speed is key. When it comes to social media it becomes even more crucial. Facebook's main asset is the number of users it has. The most important thing is the network each one has, switching social applications for users means losing their personal networks and build new ones in other provider. The pain is too high compare with the benefit that they can get in other social app.

Just give a thought about it, if you are thinking to start a digital business my advise would be: define your target, know how long time you have before going to bankrupt in the worst scenario. Know your value preposition and your competitive advantage very well. Do not wait to go to the market and have a clear plan that covers the 4P's. Don't be afraid, believe in your dream.

Thereafter, think about how you are going to evaluate your success!!!

Getting Sales Reps on board with the Product Management

2012-10-23T12:46:00.002-07:00

A Product Manager needs to coordinate people from different department and makes sure they work toward a common goal. It may seem easy but it can be the nightmare for a lot of professionals.

For getting people on board it is necessary to know their own interest. More than what they can bring to you is what they can get or expect from the job done, and it is here when companies fail. Let's analyse the sale department as an example.

Selling, which is translated into money. This is the thinking of sales organisations so do not try to go further with them, just talk their language: "$$$". This is perfect for the first part of the equation of a Project Manager: the selling - I want my product to be sold as much as possible and I have the sale force walking on the same path than me "boosting sales". For a Product Manager means not only money but also success, both personal and professional, for an Account Manager means more commission in the next payslip. Different visions that can coexist in the same work environment.

But what happens with the other part of the equation? Getting valuable feedback, one that has been analyse, real conclusions written down and aligned with the real situation in the market. How much can a Product Manager trust the feedback coming from Sales? How can they persuade sale force for getting relevant information from them?

Think about it, put yourself in the shoes of a sales representative: Obviously, you will care about costumer relationship when it comes to personal relationship. You want to keep your customer happy because they rely on you, they trust you and you want it to continue as it is the way sales can be made in a long term, by trust. However, sales professionals tend to have a very short term vision and it is, in part, due to the way they are compensated (and I am coming back again to the language mentioned earlier: "$$$"). Targets are set up quarterly, maybe yearly but never exceed a fiscal cycle. So, why a sale person does care about giving relevant feedback for a product which next release will be in a period bigger than a year, while they are struggling with reaching their quarterly target? The fact is that compensation is money and the opportunity cost of expending time in the feedback wins. The target is the immediate priority, not something that can produce value to them in one or two years, the important thing is now!! Not two years time ahead!! Who cares about it?

In fact, the high employee turnover rate in the sale department is the decisive factor that has a clear impact in the short term vision. Why am I care for giving feedback that could have an impact in the future company sales? I may not be here! And if I am not here, I will probably be in the competence!! Therefore, the attitude of sale staff is not very positive for doing this input, it is more about time consuming than value produced to them.

So, what will be the solution for getting them on board? Some people thing it could be a KPI correlated to it. But I think it would not be enough, it would be a key point for them to fill feedback reports but the quality of the information could not be good.

One of the solution could come from the Sales Managers, what if they had a feedback target? What if they have to provide general lines of the product their reps are selling and the actions taking into the market? They will probably persuade their team by evaluating their reps regarding the feedback quality. At the end of the day it would be a kind of pressure (but effective pressure) for the rep to collaborate on it.

Cold calling? No thanks. The value to Sales Force

2012-09-12T11:06:00.000-07:00

If you are a experience professional into sales you know what I am talking about when I say "cold calls". You had probably made a lot of them in the past, what is more, you may still make some of them. For those who have not had this experience I am going to tell you an story:

Imagine that I give you a phone number, probably you do not get anything else from be ... perhaps a name if you are lucky but with any guarantee that this person exists or still works in this company and...what about the position he holds? ... Buddy, you are requesting too much!! This is a typical situation that lot of people from sales need to face every day. The question is "how to break the ice"?

By all means, could it be the most difficult part of telesales: engage the prospect having very little or no information. Statistically, call callings gets around a 5% success rate, in other words, somebody needs to do 100 calls in order to get around 5 success calls out of it. Could not it be improved? Well, something has to be with "how to break the ice".

For all of us is very difficult to deal with uncertainty. As human being, we get nervous facing situations in which access to information is not as we will like. Having this gaps is translated in lack of control which is showed in the tone of our voice and perceived for those who are listening us.

Fortunately, sales world has rapidly changed and the digital work has something to be on it. Why? Because we talk about information, this is what Internet brings to us, filling the gap of uncertainty. Nowadays, we can research about a company, having a look at the web site, news about it, users comments, followers, etc. Anything that can give you a topic for "breaking the ice" and get into a conversation with your prospect while shows an interest for the company coming from you.

And what about the prospect? If you know only the name, no worries, type it in Google and the information comes up!! Suddenly, Mark Tompson who you knew works for the Company A is a Graduate in Business by the Oxford University and a Harvard MBA who has 10 years of experience in 3 different companies working as Controller, Financial Director and ending up as CFO. He also has a twitter account that shows you how keen he is on Football and Basketball. Moreover, you discover he was in Brazil last week and had a dinner in Rodizio Restaurant because he did a checking on Foresquare.

Few seconds separates call calling from having a conversation in which you would feel confident and increase your chances of success. Few seconds...and the computer, the door to the digital world, to the information. Now, my question is, how much would the success rate of your calls increase by this approach? Do you wanna try to measure it?

Virgin Mobile UK. Alive or dead?

2012-02-12T10:58:00.000-08:00

Virgin Mobile UK has experienced a tremendous success since 2004 with a clear and outstanding competitive advantage. However, for how long could it be maintained?

The telecom industry in the UK in 2004  

Despite UK was a mature market with more than 100% penetration in SIMs cards it continued being attractive for new players. Although there was a decrease in voice traffic, wireless demand growth was positive, which indicated a higher demand in data services (SMS, SMM, etc). There was a forecast trend of convergence of media, fixed and mobile telecoms as a new generation of services, which could be a potential substitute that would offer a larger number of more sophisticate services and would result in a complete transformation of the industry. In 2004, customers have a significant power, 90% of new consumers came from the prepaid segment. As the market reached maturity, operators strategies became to focus on retain customers. VM reached a 10-year agreement for the use of T-Mobile network including 3G networks for with VM was a virtual carrier highly dependent of its partners. In terms of rivalry, there were four main competitors in the market and VM had a market share of 8.4%. There was dimension rather than pricing competition and VM stand for its competitive advantage: customers’ services, brand attractiveness and best network quality.

Virgin’s mobile value proposition and it's success

VM targets 18-35 years old prepaid segment and delivers the following values:

· Value of money: Their pricing was significantly cheaper that the other four major players in the market. In addition, Virgin created a simple approach of pricing for customer to understand. Lots of these initiatives where very well accepted in the market and VM took the advantage of being the first mover (abolishing pick rates, unexpired vouchers, e-top up).

· Excellent customer services: Staff at VM is highly motivated and talented. Most of the employees have been through the experience of being VM customer previously. VM corporate culture is unique and built with a clear communication and monitoring throughout the entire company from staff to managers. VM culture is “jean and T-shirt” and the organization is very flat, which encourage people to participate in decision-making process, be evolved with the company or even become part of it with the possibility of acquiring company shares, one of the large amount of benefits for employees. There were also parties, leisure and charity activity to evolve not only the personnel but also their families within the company. As a result, employees are happy and well motivated and excel in their labor of customer services.

· Quality network: VM delivered high quality due to the benefit of the partnership with T-Mobile.

· Innovation: The Company took the first mover advantage in new services with the intention of making life easier for customers and creates new information services as entertainment, celebrity gossip, music or sport. It also won in innovation for being the first company to offer products through high street stores, which allows it to reduce commission cost as well (40-50% of sales from retail specialist to only 22%).

· Brand attractiveness: Communication of a stylish, provocative and irreverent brand by using high-profile sponsorship (music and sports). In fact, VM customer had some kind of exclusivity services such as the possibility of acquiring concert ticket before they were on sale. TV promotion was very successful too and won several awards.

VM could deliver its value preposition due to an effective management of cost:

· Partnership with T-Mobile: The Company reduced fixed cost using T-Mobile networks, therefore, less risk and higher economies of scales. Also, it leads to Customer acquisitions cheaper than the competitors. These reductions of cost were key for the strategy, which was focused on brand loyalty, excellent customer service and new services.

· Distribution channels cost: High street stores were charging less commission that specialized stores. In addition, VM started developing its Internet channel which costs are much lower than the traditional channels.

How easy is it to copy this offer?  

VM offer has a series of elements that are relatively easy to copy. In fact, competitors in UK in 2005 had copied some of those elements. However, it outstands for its main assets and what could be the pillar of its competitive advantage: its excellent costumer services and customer experience. This is the result of its unique corporate culture, which is very difficult to duplicate. In addition, change the corporate culture is a tremendous complex task and is a long process.

How can virgin maintain its competitive advantage?

Although most of the competitors entered in a price war, Virgin Mobile should not get into that, as its strategy is different. The company competes in customer services, value of money and innovative services. In order to maintain the competitive advantage, VM should focus on the main driver that has allowed doing so, costs reduction.

· Building other distribution channel: Internet is a trend in the long run. Recreate the essence of the company through the Internet, the company, the culture and offering services and customer services at a much cheaper price but aligned with the strategy of VM. The investment needed is much lower than any other distribution channel.

· Targeting other segment: Despite VM value preposition, customer target is very sensitive to price and the reason why VM customers and revenues went down sharply. However, VM has been targeting a very specific niche of the market. There are other segments in the market, less sensitive to price that could be attracted by the value added. Therefore, VM should explore customer contract sector and even young Companies and start-ups.

· Creating new services: Since VM has to pay a fixed rate to T-mobile for the capacity of the network, its main focus should be maximize its efficiency and uses. A decrease in outbound voice and SMS yields produced a considerable reduction in the company gross margin and the forecast for 2005 was negatively too. For that reason, VM should focus on creating new innovative services that encourage customer to use the network and enough value for them being willing to pay. For example, the creation of context and transmission to the handset (music, videos, etc), in such a case the company should develop a marketing plan to increase customer adoption of this type of services. In addition, its approach not only is aligned with its strategy but also will be an advantage when the forecast trend of media, mobile telecom and fixed converge.

· Extension of the agreement with T- Mobile: Considering that the convergence will pass in the future, it should be convenient for VM to reach an agreement for the fixed lines as well. Therefore, VM would be ready for making the conversion and take advantage, once again, of being innovative and the first mover.

Apple or Android? Developing an App for that

2012-01-28T03:47:00.000-08:00

Apple Store: On one hand, it is an attractive platform, apple has sold more than 100 million of IOS devices (iphone, ipod and ipad) and it is expected to continue growing not only with potential new consumers who are thinking of buying an apple mobile device but also with current consumers who want the latest product version (e.g. new iphone version). Apple mobile devices have the advantage of using the same OS. Furthermore, applications can be run from any apple mobile device having only one version of source code. With 5 billion of application installed by users in the first 2 years, apple platform become the most successful platform in terms of downloads. It also represents a potential source of revenues, as 70% of it is redirected to the owner of the application development. On the other hand, apple has a process of reviewing any application before acceptance. It means that there is uncertainty about the time that the application could be launched as well as risk for not getting approval. Moreover, apple maintains rights for removing applications and updates even after approval so there is no guarantee for an application owner to get the ROI.

App Store is leader of the market. It is a robust platform that provides high quality products. However, the process of reviewing is tedious and companies can not get in touch with apple before the first review in order to evaluate whether the application fill apple requirements and restrictions and could be added to the platform. As iOS is the same for any kind of device, the introduction of a new one in future allows apple having all the applications in the platform available for these device too, which gives Apple a clear competitive advantage. The major threat Apple platform needs to face is the fact that it can be only used by a brand of device, whereas other platforms have created an ecosystem in which a user can have different devices from different brands and still use the same platform for all of them.

Apple platform

Android: it was created as an open source license OS, which means that it can be customized. It also has fewer restrictions that Apple and a more large range of devices (open handset alliance) in which the OS can be run. In addition, it is deployed for many carriers (For example, sprint, AT&T, Varizon and T-Mobile in US). There are other publishers that can distribute the applications and post submission is done immediately, which gives certainty about time line for the application developers. In addition, Android is experienced a rapid growth and can be a potential competitor of iOS, growth expectations are also on the applications downloads. However, Android has still a small market with only one third of what apple has. Furthermore, each device needs a different implementation of applications so the economy of scale is very low. Finally, some OCR requests special versions of the OS and cannot be run in some device, which can create confusion in the users.

Android major strength is the open handset alliance that can allow them gain market share, as they are not restricted to a single device. It could bring them higher opportunities, as hardware industry is moving rapidly. The main weakness that they would need to overcome is the needs of third parties (carriers) for distributing updates of the OS and applications because it increased the lead-time to arrive to the users. They also have a poor control system that could lead to release no quality application. Major threat comes by allowing manufactures to customize the OS source code. It creates fragmentations that could lead to incompatibilities in devices with future versions of OS and applications.

What platform I would chose if I had to develop and App?

I would go for Apple store because bank target market is easily found in Apple (align in customers). Despite the restrictions, it offers a more robust system and quality, which is also align with the bank business. Moreover, I consider that the fragmentation threat is a potential problem for Android that could lead to users switching to iphone. The iphone market is more secure to continue.

Android platform

SAAS - Benefits of the new business model

2011-10-29T05:06:00.000-07:00

Cloud computing has provided an extraordinary revolution in the software industry. Not only the nature of the products (they do not need to be installed in the customer's computer) but also the complete business model definition and the way it is accounting for customers.

In general terms, common strengths that lead to the use of this new type of software are:

Portability: You can use it from any type of device and computer, independently of the O.S or the hardware you use.
Accessibility: You can access through the Internet from everywhere.
Quick implementation: even if we are talking about big application projects, the time of installation is reduced sharply.
Price: Most of them have moved to a monthly subscription model rather than an expensive license model that this type of companies were using before.

But what have changed for it being possible? I have mentioned it in previous posts, there was a barrier for software moving to the Internet, the browsers, in particular the speed of the browsers that could not offer an acceptable performance of the applications in the cloud.

However, since it changes, companies can use SAAS in a daily basis, which has a huge impact in their financial accounting records. These new models account to companies as expenses rather than investments, although the amount is much less. Let's think about a company that has moved all the software and applications to the cloud so it uses them as a monthly service. Some implications are software is one of the quickest asset to depreciate, so it affects to the financial performance of the company at some extend. With SAAS they record it as expenses and do not need to allocate budget for maintenance and support of the software. In addition, it costs less money to the company, specially considering the value of money in time and depreciation.

But it is not only beneficial for the customer. What about the seller? What he gets underneath of revenues? Without doubts, Information. Customers are running applications in the seller system and despite he guarantees exclusive access to customers' information, sellers still can track customers' behaviour, something that could not be done when applications were installed in customers hardware. Therefore, sellers can have a much better understanding of customer needs by knowing the use they do to their system, analyse engagement and timeline, know devices from which they access, etc. These is a valuable information that brings an outstanding benefits to the seller and help them to improve, adapt and customise their products.

SAAS is part of the software companies' product portfolio nowadays and it seems to be broadly accepted by customers so far. What is more, software companies have realised the opportunity cost of license and the large number of companies that could pay a monthly fee. One more time, the long tail can be applied in there. Lot of general business (new accounts) that would produces more revenues that key accounts to software companies.

Mark Zuckerberg a leader tackling Google+

2011-08-13T04:29:00.000-07:00

Since Mark Zuckerberg created his profile in Google+ I have read lot of different comments. I do not understand why people is surprised. As a CEO, Would not you try to be ahead of any movement in the market and try to react quickly against a threat? I strongly believe he is being smart, not only for creating this profile but also for the way he has done.

You can not avoid competitions and that someone copy your idea. In fact, you should be proud of it because that is a sign that your idea is great. What makes your business survive in a long run is who you tackle competitions and react to them.
I do not think that Mark's legs were shaking when he heard about Google's new project. In fact, he had surly been thought many time that it would happen and studied how Facebook must react to it. As CEO I would have acted exactly the same, as soon as I heard about it, I would go and create my own profile. Why? Because Google is a giant and represent a huge threat. I would like to study my big competitor, what it has done better, to have the experience myself and my own opinion. Also I would ask opinion makers in my company to do the same in order to prepare for a strategist response. But this is not something new, in any industry companies do the same. Why is it different? Evidences, people have the prove of you doing it.

Google+ profiles are public, which is different to Facebook in which you can choose whether you want to be found or not. That is part of the privacy that some people desire and enough reason for them not creating an account in the new social network. However, it did not stop Mark to do so, it was more important to know the competition that the fact everybody would know he had a profile.
It is not the first time Mark has a public profile in some kind of competitor, he showed some activity in his twitter account before he created his Public page in Facebook in March 2009. Thereafter, his communication channel switched to his company and has been maintained since. In the case of Google+, probably for precaution or avoiding confusion, he has not showed any public activity.

I personally think that if he had written something public, it could have turned out as a weakness in his leadership. People would be questioning why he started using his competitor and it would make stronger Google+ against Facebook. However, the way he has done, he has been able to transmit a clear message to me: "I am here to know what Google has done by myself, open to see the experience and learn for continuing working and make my business better". For me it clearly shows his leadership. It is a very smart and fearless approach. A person who keeps his feet on the ground and does not hesitate to take any actions concerning to his business. He knows what he wants and how can reach it. Therefore, if you may ask me, no, I was not surprise at all of his actions. In fact, one more time Mark transmitted me his entrepreneur image.

Could Google+ overthrow Facebook?

2011-08-11T04:07:00.000-07:00

"Why?" That was the first question that come up to my mind when I discover Google+ about a month ago. Why a social network? Why is it so similar to Facebook? Why is it maintained as a close network an people need invitations for it? But let's start from the beginning to understand the current market and the strategy of the company.

I joined Google+ at the beginning of July, when it had about 10 million users. What surprised me at first was the similarity with Facebook with a huge potential improvement: I felt much more control with privacy, I could share things to whom I wanted much more easier and make this decision in real time. Therefore, privacy was not about setting and configuration, it was part of the process of sharing. But is it enough to overthrow Facebook? Clearly, although Google had launched what seemed an improved product to compete to Facebook in future, the leader of social networks had still the main assets that make these businesses succeed: users. But for how long?

This is not the first time that we see Google launching a product as an strategy movement. Chrome is a clear example: the reason for Chrome lies behind the idea of boosting Google Docs that required browsers with higher speed. The strategy was creating an open source browser more quicker that those available in the market so competitors could copy it and the company would overcome the barrier for its products. In the same way, Google+ could be an strategist product. If Google can engage people in its social network, it could be a great marketing channel to promote the use of any other products, many people do not even know the large portfolio and acquisitions of Google.

Why this strategy now? It has to be mention that Google revenues stream is advertisements. As it happens in traditional value chains, companies want to display its ads where people are, where they can find more audience. There are two parameters to consider: number of users and time spend for users in the web site. In that sense, Facebook is the clear winner. So, Google+ could also be a response to the market situation and a mean to maintain its current sustainable business model.

How to copy a product
Take a product and make it better, this is something that companies do all the time. Even Facebook did, the social network was a copy of Friendster. Friendster's system had very bad performance and Facebook took advantage of it. The strategy followed by Facebook was starting as a close network, first in Harvard University and expanded to other Universities later, always with control and maintaining the performance of the system.
When a company copy a product, maintaining control is crucial. The reason is they are not doing something new so users expect some value added. In the case of Google+, as it has said before, easier privacy control seems to be the extra value.
Clearly, Google studied indeed its competitor, identified its weaknesses and waited just to the right moment to launch it under control in a close network, starting for the presumers and people highly passionate of technology (the influencers of Internet). Then, it left them the choice of who is coming the next with a limit of invitation sent. These people immediately started talking about the product so people knew it even before they get their invitation. That was exactly my case, I had a complete session with Enrique Dans at IE Business School in which we covered Google+ just a couple of days after the launch, at that time I had not my invitation yet but I started being curious about it.
Therefore, Google followed an outstanding strategy while maintained control of capacity: creating expectation and brand awareness before actually people can experience the product while making sure that the system highly supports the amount of users and performs excellent with this amount.

People know Google+ but where is the people?
Google+ could target those users that left Facebook due to their concerns about privacy, however, Facebook still has 500 million active users. For gaining market share and be leader in the market Google+ need those users. The question is how many of them are willing to migrate? Obviously, people tend to reject changes but Google+ has been the social network which has experienced the faster growth in very little time. In my opinion it has to be with the fact that a lot of people have Google accounts. Google maintain an unique account per user among its portfolio of products. It mitigates the pain and makes much more easier for users start using a new Google product.

Now, Google+ counts with about 25 million users, enough number for seeing some sign of increasing activity per user. In my opinion it could be a period of time in which users would still maintain both profile Facebook's and Google+'s but at the end only one would be the winner.
What needs to happen next for creating this competition is an enrichment of Google+ with users' content, otherwise there will not be a battle and Google+ will be just other product failure.

Factors that could make Google+ win
One of the disadvantage of being one of the first movers in the market (let's consider Facebook one of them) is that users are unexperienced, they learn while they use the product. In Facebook case, it has led in many case to large amount of spam. Large amounts of data that simply are too much for many users.
Right now, users are experts, know and understand social networks perfectly. Therefore, some people could see Google+ as a point of starting again, of getting a rid of this amount of feeds that they receive per minute in a very easy way.

Other potential factor of success is the integration of privacy management in circles across other products. It could boots the use of the social network: one channel, many products and absolutely control of the own content. For example, I could upload a video in youtube either through the web site or Google+ and choose which circles could have access to it. The same with my pictures in Picasa, or even my Docs. However, so far it does not seem enough reason for people to change their behaviour. In fact, the majority of my contacts in Google+ only have set the profile but they do not show any activity. So what could be done to engage people?

Looking at the trends of Social Games and how it engages users, why does Google+ not go for it? Just the same than Foursquare does: give points for the relevance and use of the application. A way to award users anytime that they show any activity. For example, a user could receive one point for posting a comment, an external link or comment in a friend post. In case their activity came from a Google product they could receive extra points. They also could be awarded any time someone press +1 or leave a comment in their posts. People could also evaluate other users, being more relevant opinions of users in their circles, which could be also a measure for avoiding spam. Moreover, Google+ could continue its growth by giving points for recommending friends. Therefore, users would compete to be relevant in their circles while would get engaged with the social network.

Probably the answer is with Google and the large amount of data that they have from us. We will have to wait to see how the company leverages these data. Whether Google+ will overthrow the giant of social networks or not is still uncertain but I strongly believe it has a lot of potential. Its success depends on the rapid response of the company to engage users with this new product.

Open Source Innovation at Mozilla Corporation

2011-08-06T15:52:00.000-07:00

Mozilla is a non-profit organization of open source software company that promote innovation and opportunity on the web. With a large community form by employees (250 in 2009) and volunteers (200,000 in 2007) that cooperate together for bringing customer-oriented products quickly into the market Mozilla has gained a lot of reputation. Firefox, its main product, is the second leader among browsers with a market share of 24.23%. However, the changing market brings some concerns about the future of the company.

INNOVATION AT MOZILLA

Mozilla does an open source innovation, it means that they bring the whole community and encourage members to be part of the innovation process. This open approach has as main advantage the input from outside the company and collaboration among members in either product developments or marketing and promotion of products.

Product development: Members can collaborate at any stage of the product development as well as cost reduction in personnel. The company bring the opportunity to participate in 11 area of interest. Members can access to project that are in development in each of the area and find piece of work to be done and the time estimation for any of those (min, hours, weeks or more). By having this flexibility the potential of collaboration is higher as any member can find something that is adapted to their time available. Concerns in the needs of superior kind of leadership: Managing a community of volunteers requires skills to persuade and encourage them for working as a team and get the work done. It is very sensitive and difficult to direct and manage people without roles and regulations when they are not part of the staff of the company. Mozilla solves in part this problem with open-weekly meetings in which the committee of the project assigned task and co-ordinates the work. Also, participants that have proved their value and potential are awarded with higher level of leadership. The main concern could be what would happen when Baker leaves Mozilla. So far she has proved to be an icon for developers and the community may depend strongly of her leadership so the risk could come when she leaves the company, find a substitute that manage the innovation process successful is a big challenge.

Marketing and promotion: Mozilla transmits to the community the sense of promoting Firefox (their main product). The initiative of Dotzler with Spreadfirefox.com had an enormous acceptance and was a high success the company achieved. This innovative form evolving the community for promoting Firefox by encourage the community to put the download button in blogs and web sites was a successful marketing approach. Also, they encouraged donatives from members to advertise the product in newspapers (New York Times) or other member activities such as FastestFirefox.com (guerrilla video promotions), communitystore.mozilla.org (for users to create and sell t-shirts), Mozillalabs.com (for getting feedback from the community) and campus reps (for promoting Firefox among students by word-of-mouth). Loss of control: Although the spread of this approach apart of innovative was very efficient, it brings a clear concern about the damage it could make to the brand in case of inappropriate use of the resource or approach for promoting Firefox. Therefore, legality and some track control or supervision is needed in order to guarantee a good result and mitigate this risk.

CHALLENGES

Threats of competition: Although Firefox is the second leader in the browsers market, Safari (Apple) and Chrome (Google) are gaining market share quickly. Those are the biggest software companies and leaders in any other business line they have. In the future, while they are gaining market share, Firefox can lose its so Mozilla needs to come up with a strategy for facing this situations.

Gaining market share: Mozilla market share is still growing and the reason why developers are making sure their web development works with this browser. Firefox has been highly adopted by the community of developers, unlike mainstream users segment where the penetration is still lower. Mozilla needs to gain market share among users that are not tech as part of its strategy for facing its competitors, which are becoming very popular among mainstream users.

Google contract: The main source of Mozilla revenues is based on a contract with Google for providing the search bar in the browser, in exchange Google share part of the revenues from ads that come through a search made from the browser. However, since Google Chrome was launched there are a lot of doubts whether the giant will renew it or not. Therefore, Mozilla needs to find new ways of revenues such as version of Firefox for mobile phones (Nokia).

Other challenge could be whether to go for an IPO or not. So far, Mozilla does not have intention of it but if Google finished its contract with them, Mozilla may need to rise their funds and IPO could be a possibility that will give them a lot of potential for growing and expand the business.

NEW STEPS

Considering Mozilla as a software company and its main product FireFox, cloud computing would be the best way for the company to compete into the current and future market. Competitors are developing potential ecosystems with their operating systems and offering large number of application (develop by the community they have). However, those applications need to be downloaded and installed in users devices. Since the trend in IT is moving to the cloud, Mozilla can not only move its current products but also develop its own ecosystem of functionalities (let’s called web applications) that could be accessible from FireFox. The company has currently an innovative resource called mozilla drumbeat which goal is to create awesome “web and world”. Members can connect with other members, share their projects and collaborate together. If Mozilla combined its resource as a repository with FireFox, users could have access to a searching directory of web applications from the browser without the need to install them in their device. Combining this approach with the development of Firefox for mobile device (iphone, ipad, tablets, etc) would definitely bring a lot of opportunities for the company to get market share and would create a competitive advantage over its current competitors.

The Virgin Group: Filling in the Value Gap

2011-08-05T15:37:00.000-07:00

Success factors

Virgin Group success is based on different factors, but the most influent are the CEO, Richard Brandson and the corporate culture. Brandson is a charismatic and entrepreneur individual that has been able to transmit his personality to the whole organization, which makes the company reputation and identity unique. Virgin creates value for ‘money, quality, fun, innovation and a sense of competitive challenge’. The company operates as venture capitalist in which business unit operates independently but under the same umbrella, the Virgin Group.

Virgin Atlantic Airways

As airlines is a mature market, Virgin focus on improving services and create value for customers. Traditionally, it looked for opportunities where customers received poor deal and the competition was complacent. However, since 2004, Virgin had a more CSR brand marketing strategy. For example, in 2005 when the earthquake in Pakistan, it operated a humanitarian aid flight to there. Also, it volunteered a Boeing 747, with no passengers, for a test of biofuels in 2008 that the company is expecting to use. The future seems to go for a merge with other airlines companies such as Air France-KLM and Delta Air Lines.

Virgin Trains

By December 2004 Virgin Trains had replaced all the rolling stock it had inherited from British Rail, it planned to replace all the trains but the project had gone over budget and was cut back. Despite the problems, Virgin added value to customers such as the introduction of WiFi in 2010.

Virgin money

In 2004, Virgin group acquired 50% of the stakes and become the owner of the 100% of the company. Since then it has been prersuading to move from a finalcial services to a bank services. With the purchase of the Church House Trust in 2010 the company has received a banking license and is planning to expand into this sector. In addition, Virgin has expanded this business line oversea by making agreements and partnerships with banks such as Westpac Banking Corporation, CitiBank or ABSA. In 2010 the USA subsidiary was dissolved and Virgin money withdrew from the US market.

Virgin cola

Although the market share of soft drinks increased 9% in 2004, Virgin sales remained static. The expansion to US was a failure. Even in the UK market it verily counts with a 3% of the market share and never made a profit. Despite it, the company expanded to other countries in Asia (where has been more accepted) and Europe. It continue to struggle due to the high competition with Coca-Cola and Pepsi, prove of it is that its Facebook page only counts with 342 fans despite having created innovative flavors such as vanilla-cola.

Virgin Galactic: The future?

The group have launched a new and innovative business line for being an astronaut to venture into the space. The ticket price is $200,000 for a safety venture that starts with two or three days of preparation with the crew, following by the climb to 50,000 feet following by the journey to the space.

Innovation Process at Virgin

Traditionally, Virgin innovation has come from the business itself rather than from products. The CEO was the starting point for creating value through the introduction of new ideas, practices or even business models. Branson claims that challenging the rules of the mature industry and looking at new markets in a different way is how the company differentiates.

Nowadays, Virgin has a customer interface approach. Its innovation comes from how they get into consumers building a two-way channel communication. Virgin seeks for create customer experience and link it to the brand positioning. In order to do it, Virgin has created a section in its web site called entrepreneur to encourage people to provide with new ideas for products, services or business lines to the company. This resource of open innovation works perfectly aligned with the mission and the strategy of the company. “Got a big idea?” provides the values shared for any innovative idea and oriented to the user for creating its business proposal. As it is a very decentralized organization and each business unit works independently, the first people to contact are business developers of this particular unit. They are responsible of deciding which ideas would be implemented as part of the entrepreneurial culture. Sometimes an idea can not be suitable for a business unit, but it may be for another. Therefore, Virgin maintains a second review centralized in the Corporate Development at Virgin Management. The decision made is if it fits with the company and the potential for being implemented for other business unit. In that case, the idea is archived and any business unit has access to these resource. Therefore, innovation is supported to the whole organization whether they pick up a whole idea from there or used it in their brainstorming as inspiration. Considering the level of innovation of the company, ideas are erased after two years. The reason why it is keeping is due to economic reason (a business unit may don’t have the economic resource immediately), it may be a relevant idea after a while or can give a sight of unsatisfied services.

Overall, the open approach is essential in Virgin to success in its customer-based strategy. Using customer-driven innovation also brings new lines for continuing expanding Virgin businesses.

References

http://www.wikipedia.com

www.facebook.com

www.thefreelibrary.com

www.virgingalactic.com

utwt.blogspot.com

brandfailures.blogspot.com

Zynga, social gaming

2011-08-04T08:12:00.000-07:00

Zynga success is based on the marketing mix strategy: It targets a broadly casual player audience, from inexpert users to more advance users who are willing to pay in order to play at higher levels. Also the choice of Facebook as channel to get their games to users, Zanga CEO took advantage of the social media build application for developers which provided him access to million of users. The company also succeeded by engaging users to play more times but spend less time per session. Also price, simplicity and interaction are other success factors, the games were free, easy-to-use and were integrated into the essence of the social network so players could interact with their friends and see their performances in the games. The company used viral mechanisms for promoting the games and delivers the social aspect of the game to users, such as posting histories on Facebook users’ walls. It attracted and engaged users’ friends. In addition, the spread of word-of-mouth was high as players were encouraged to invite other friends and were awarded with things that otherwise would have take them more time, better performance and even purchase virtual goods. In addition, products were continuing adapted (bi-weekly releases) from the users perspective, getting feedback and trying to accomplish to their suggestions. In addition, the company had a strategy based on acquisitions that allows it to increase the portfolio of games quickly.

Social Gaming differentiates by connecting users and makes them interact with others. It is convenience as users can play at any time from everywhere with an Internet connexion. The main different with social gaming is that they attend to engage users to play more times but the game sessions are very short.

The future seems to be toward mobile: smartphones (Android, Iphone, Blackberry, etc), tablets, ipad, etc. The market of these devices are increasing sharply and with platform such as App Store or Android, the future of game could be monetized, games will tend to have better graphic and evolve user location in the game.

Zynga’s strategy could be track based on different KPIs metrics: total visitors, number of games play per user, unique visitors, number of visit per users, source (organic, friend’s wall, friend recommendation from the game), time spend in a session, grade of the network of friends per users, users’ feedback, money spent per users. By analyzing those metric and their correlations it gives Zynga the context to monitor their strategy.

Facebook counts with 500 million active users. Being realistic not all of them are going to play games. If it is considered also that Zynga competition is high, it seems obvious that they need to expand to other channels. I strongly believe that there is a huge opportunity in the mobile market. Therefore, Zynga should develop its games for other platforms such as Android and Apple Store. If they improve the context of the game, graphic and develop higher quality of products it could sell them through this channels and has a source of revenue there that will allow them to reach 500 million users while growing profitability.

On the one hand, Zynga highly depends on Facebook since it is the user provider for the company. As Zynga distributes the game through Facebook platforms, the third party has plenty of control and power over the games. On the other hand, Facebook concerns about games performance and how its interaction within the social network could affect its own company. For that reasons, a partnership in which the two companies agree in common goals and approach while sharing responsibilities and profits would work very well for them, specially if Facebook finally launches its payment system.

The nature of the WWW is evolving web services to move to the cloud, being on the Internet and become social. The trend is to the Web 3.0, which means that data would be used to customized web site, users data recorded would be used by intelligence process in order to provide more relevance of the web to them. Casual player will probably prefer closed models and play with friends as an entertainment, while advanced player who are experts would probably prefer open models where they can play with other player at their level although they don’t know each other in real life.

TeliaSonera, an strategy analysis of Scandinavian Telecom

2011-07-30T03:18:00.000-07:00

Teliasonera born at the beginning of 2003 with 8.6 million fixed line subscribers and pro forma revenues of €8.8 billion for 2002 (40% was land telephony, 30% mobile telephony). The company was also leader Internet provider in Sweden (1.3 million customers) and in Finland. Although Telia took over Sonera, the company has maintaining the two core brands until May 2011, when they united themselves under one common symbol and identity. . Despite Sweden and Finland are the largest revenue markets, the company extensive holdings throughout the Scandinavian and Baltic regions, Turkey, Soviet Union, Russia, Spain, etc. At the end of the first quarter of 2011 it had achieved 157 million subscriptions and had over 29,000 employees worldwide. Financial data show EBITDA of €4,059 million and a growth of earning per share of 13% year over year.

TeliaSonera provides network access and telecommunication services that help people and companies communicate in an easy, efficient and environmentally friendly way[1]. Its competitive advantage combines local excellence and international strength and delivers a world-class customer experience as value preposition. This combination has brought groundbreaking 4G, a world-class fibre network and introduced 3G at Mount Everest. It also commits to continue to drive the information society and to constantly take our customers one step further.

The company is the firth largest operator in Europe and continue investing in high quality networks to meet demand for bandwidth, deliver superior customer experience and ensure customers access to the best solution available.

Broadband Services Strategy

Telia Sonera comprises market-leading brands across Nordic and Baltic countries and has a strong position in the international carrier market. Primary goal for the company is growth based on transformation, migrate fixed telephony customers to new services, change the business-to-business (B2B) sale approach, create a world class service company and improve efficiency and capitalise on its developing market (mobile) assets[2].

Triple play

It migrated the fixed voice customers to mobile and IP-based services as people chose to no have a traditional fixed line and turned out to mobile phone services and Internet telephony, VoIP. Therefore, the company started to offer triple play (voice, broadband and TV) for which the increased bandwidth was very important. This strategy decision provided a most efficient access to service fixed locations in regions where fixed networks already existed and wireless technologies were being implemented for increased coverage where fixed network presence was not economically feasible.

The company focus on the TV as a driver of broadband growth, being the center of the digital home for all kinds of Internet interaction. Total number of TV subscriptions reached 867,000 in 2008 (324,000 in Sweden, it largest market). The same year IPTV offers 17 additional channels and on-demand services. In order to acquire new consumers it offered a initial free-of-charge trial period which turn out in a big success as 70% of the Swedish IPTV customers become paying customers. TV created value to users with a range of new services that they were willing to pay: VoD, Telia’s online video store and time-shift TV.

Smart broadband

Teliasonera was the first operator in the world in launching smart broadband. With an intelligent box that connects data, sound and voice equipment brought the opportunity for customers to do more than surfing on the net. Currently, the company is looking for increasing reach and capacity with new technologies and solutions that allow users to extend their Internet connection and make it portable.

Business solutions

The company also combined business customers solutions with CSR and started offering new communication tools that allow business customers have virtual meeting services and exchange documents and video presentations which are unlimited available. Companies started reducing travel cost and lower carbon dioxide emission, which is a big awareness among Scandinavian countries. Tele-conferencing services are offered through TelePresence, a new generation of virtual meeting service developed by Cisco in which participants can access remote via a link. Teliasonera focus particularly on security for data communication, which is crucial for companies and also provides the possibility of improving their customer service through video and tele-presence services.

International carrier market

TeliaSonera provides high network quality and the fastest IP and cross-border services. It is the leader in Europe with its global IP network to 85% of all European broadband service providers.

Gaming

In 2008, TeliaSonera launched a new and unique service, Telia Game Subscription, therefore users can easily download them to their computers from Telia’s gaming portal paying a monthly fee. In addition, it is open, anyone can subscribe even if they are not customers.

Investment on higher speed

TeliaSonera migration from traditional fixed services to mobile and IP-based services requires high investments and costs. For that reason, it is crucial that operations are managed in a efficient manner. Improvement stands as a priority for the company. Therefore, broadband networks are modernized using fast fiber and increasing capacity of the transport network in areas of high population and demand while in others with low density of population instead of land line mobile networks are being developed.

Improved customer service

Despite having increased customer satisfaction in most Scandinavian markets during the last years, it is still one of the priorities for the company. It has a large customer base and is awake of the importance of maintaining them[3].

5 forces analysis

Buyer Power

Scandinavian countries are very mature markets, mobile penetration is extremely high and customers base is stable. In addition, consumers are more expert and their behaviour in choosing a telecom company highly depends on the value added to them. On the other hand, in growth markets that are less developed mobile penetration is low and consumers are gradually assuming the same behaviour. They choose an operator based on the mobile network infrastructures that deliver better voice and text transmission.

Supplier Power

Most of the suppliers are technological companies worldwide. Partnerships and having good relations with the suppliers is important, especially because most of them also offer other services such as support and exclusivity deals.

Barriers to entry

Although TeliaSonera owns land infrastructure in Sweden and Finland, they have to share it with the rest of players by law. In more immature markets, penetration into the market is low and the potential of the market attracts a large number of new players.

Threat of substitutes

In mature countries there is not threat of substitutes product as TeliaSonera is pioneer in technology. In developing countries fixed line infrastructures are very low and operators are only setting mobile networks.

Rivalry

Despite high competition in the home markets from broadband fibre, TeliaSonera is, by all means, leader of the Scandinavian markets. In other less developed countries rivalry is higher so operators are trying to increase number of customers and mobile usage.

SWOT analysis

Strengths

TeliaSonera stands for being market leader in Scandinavian countries and have a strong position in other international markets. As Sweden and Finland are the most mature telecom markets, the company is pioneer in technology and take advantage of it in less developed markets.

Despite being an international group with a global strategy it manages to operate as a local company understanding customers needs.

Weaknesses

Complex operations prevent TeliaSonera compete on efficiency. Long time-to-market cycles, concerns around service roll-out, and the processes and timeliness of fault reporting and problem handling continue being the biggest issues of the company. In addition, intellectual IP and knowledge on how systems and processes worked reside with individuals.

Opportunities

Development of new technology and new services that allows users’ connect to Internet at any time, from anywhere and from all kinds of terminals. It would also increase the number of new applications and the use of services and content, which is nowadays more demanded than voice traffic.

In growth markets where mobile penetration is low the opportunity continue being the acquisition of new customers. However, these markets that only count with mobile infrastructure will become more mature and consumers behaviour will become as it is in Scandinavian countries. Therefore, the challenge now is building high-speed and high-quality mobile networks that support the current services that they are offering with broadband.

Treatments

Convergence between media, entertainment and IT industry allows for new business models and new players that try to position themselves on the content and service markets. Especially the mobile market competition is increasing as everyone is focusing on acquire strong position. Also, partnership become more complicated for TeliaSonera as there are companies that can be both competitors and partners. In addition, services are linked more to terminals and applications than to transmission. Pricing models are difficult to understand and it could produce customers switch to other operators if it happens to communicate an easier model. Other treatments are changes in regulation, in particular, rules for pricing access to the network. Moreover, it is different in each country where TeliaSonera has invested in infrastructures[4].

Recommendation

TeliaSonera needs to improve customer services and simplify processes. They have multiple legacy systems for maintaining network data, consistency issues and does not exist a unified methods and processes for managing, ordering and provisioning products and services. Overall, there is a lack of common business processes across different departments with high manual activity. In order to overcome these weaknesses the company need to introduce a unified network inventory solution and more automation to provisioning activities. It also needs to change to a Commercial-off-the-shelf solution based.

The company needs to invest in R&D and have quality and speed improvements in mobile networks as the highest priority. Since the market trend is moving in that way, TeliaSonera needs to attend for it in order to maintain its leadership.

Opportunities for growth are in merging countries, therefore the company needs to gain customers base and encourage mobile usage. Customers will become more expert in the services. Once complex services and smart broadband landed to these countries the mobile improvements would have been done and TeliaSonera could gain leadership.

It is also important that TeliaSonera seeks for a model that allows them maintain suppliers relationship while they are competitors too. Partnership contracts and commitment agreements between both companies could be the solutions.

Finally, the company should define an easier pricing model that customers understand well and avoid the possibility of a competitor gaining market share.

[1] Company brief. www.teliasonera.com

[2] OVUM. Teliasonera transforming its business

[3] TeliaSonera Annual Report – Company Description

[4] TeliaSonera web site.

Corporate communication in social web: Air Europa case

2011-06-20T18:35:00.000-07:00

One of the implications of the Web becoming social is how it affects to corporations. Nowadays, more and more enterprises are realising how important is for them to monitor what it is said about them and have a strategy to react to it to avoid situations such as the example of Air Europa with Enrique Dans, The famous spanish blogger wrote an open letter to the CEO of Air Europa complaining about the services received in a trip from Shanghai to Madrid that he booked with the airline. The post received three times more visitors that in a normal day and became such relevant that appeared as the third results in a search with "Air Europa" as keywords. So how a company should react to that? Is there any way to neutralise this comments?

In the case of Air Europe, the worse thing the company can do is ignore the comments. Firstly, we are talking about a blog that is read by hundreds of people every day. Secondly, word-of-mouth spreads any massage quicker on the Internet that any other mean so a rapid response is crucial for mitigate the damage. If I were the CEO of Air Europe the first thing I would make sure is that the company starts a conversation, that answer these comments. It is very important to show that customers opinions really matters to the organisation. But how to start? Who should be responsible for it? I believe, by all means, the CEO is the one that should be answering. Firstly, Enrique Dans wrote the letter to him, anyone else in the company so in the same manner he should respond Enrique. Moreover, the article was written in his blog so the CEO should also answer there, using the same channel. With it, he would make sure that everyone who read the post can also read the answer. In addition, it shows that company care about customer satisfaction.

How to create a conversation?

Show your sensitiveness for customer, listening and understand him (apologise about the treatment received by the company).
Provide and explanation of each of the points the customer complains about (why it happened, what are the responsibilities of the Air Europa, what has failed and why).
Update the customer on his blog in any step further about the actions taken against the other air line company (anything that is responsibility by contract between the two Airlines).
Improve the customer services of Air Europe with standards procedures of communications with customers in any further case that may happen and communicate them on the customer blog.
Compensate the customer (return his money back, give him discounts or free services in his next fight with the company).

Obviously, there are situations that can not be avoided, things that may happen that can affect negatively to the company but the most important thing is how the company communicate and how engages customers in the conversation as the way to minimise damage. The Web has become social and it has moved the power from companies to customers as they can reach and influence other easily. Companies that understand it are the one that will survive in the new era.

Kindle's: market disruption?

2011-06-05T16:19:00.000-07:00

Amazon sells more eBooks than paper books: "Amazon has announced a huge milestone in their eBook endeavors. More profitable than peddling pulp, they now sell more literature of the digital variety."

In November 2007, Amazon introduced its digital book reader, Kindle, and started selling ebooks. By February 2010 Amazon announced that they were selling six kindle versions for every 10 hard copies and by July 2010, kindle book sales surpassed hardcover book sales. After only four years this revolutionary device is disrupting on Amazon traditional business.

eBook sales grew 193% between January and August 2010, about $89.8 million in 2009 to $263 million in 2010. It reaches 9.03% of the total consumer book sales according to the Association of American Publishers.

The e-book success is based on convenience rather than price, people can have thousands of book into a single device. But what is interesting is how it affects to the value chain: before authors and agents needed a publisher for getting their books into retailers. Their role mostly was printing the books, promotion and distribution to the retailers. Contrary, with the digital format their role is not relevant anymore, they act as intermediaries between authors and retailers. It has provoked authors and agents work directly with retailers, who extend their control over the relationship with customers. This is the case of Amazon, which has seen this opportunity and reached exclusive deals to create books with Wylie Agency. Since Amazon started selling ebooks, it offers a 70% rate to pass to the authors and publisher in other to guarantee digital books accrue to authors. Now, that they are starting to reach this exclusivity deals directly with the agencies, could it end in a cut of ebook prices?

On the hardware side, advances in technology are constantly happening. The most recently, new ultra-high resolution E-Ink displays rival the fidelity of laser-printed paper. Cost of technology goes down constantly, for example, the basic kindle was launched for $259 and in June of 2010 it drops to $189, the kindle WI-FI has a cost of $139.

In my opinion, considering its offer of 950000 books for less than $12 it is, by no means, strange they have sold more than 7 million kindle devices so far. Due to the huge success Amazon released kindle software for other portables device (iphone, ipad, etc) and PCs (Windows, Mac). At the end of the day, the key point is Whispernet, a net owned by Amazon that gives access to the broad repository of the company is what has make Kindle succeed. In addition, with the strategy of getting direct deals with agents and authors I would not be surprised that we see the price of Amazon e-book cutting down. Competitors also would copy the model and publishers would be definitely out of the market. In addition, I believe it is a matter of time that Amazon or any of its competitors launch a new device under $100, which would definitely move the ebook industry further.

E-books have arrived to stay, with WI-FI connections from device the future is also in social media and interaction among users, for example, elibraries sharing books within a group of users and a lot of new innovative options that are not possible with paper books.

TV towards Internet web 3.0

2011-06-05T13:07:00.000-07:00

"Spanish youngest prefer Internet to TV . A report developed by OCENDI reveals that 30% of youngest between 18 and 25 years old prefer Internet as entertainment mean against 14% that chose TV and 20% go for the cinema. In the segment between 14 and 17 years old it has been found that 54% think that Internet is the best channel for entertainment".

TV step by step is been merged with the Internet, but still there is a challenge of engaging audience in all the segments:

Audience segments

Clearly, Internet is growing in all the segment. However, while 65% of people under 30 years all use it as the main channel (even over TV), the gap in other segments specially people over 65 years old is still huge.

On the one hand, it is claimed that the main reason why there is a switch among youngest is the fact that Internet provide access to more innovative project that TV does not allow. However, it does not explain the growth in the other segments. Some other source from 2008-2009 shows a high correlation between DVR adoption and advertisement revenue lost:

Traditional TV revenue model is based on ads. People started acquiring DVRs to stop watching massive ads break i which most of them were not even relevant for them to start watching their favourite series and programs without being disturbed. Consequently, the TV audience decreased and ads revenues do so. The trend definitely has moved to VoD services.

On the other hand, there are some trends that are moving TV toward Internet that can not be ignored:

Social Networks: Discussions about the TV programs attract people in real time and help to increase loyalty among the audience. A survey shows that 20% of people (from a total of 1586) share their opinions before, during the program emission and after. A lot of channels have incorporated interaction with social media (such as Facebook) while people are watching programs on real time.
Web 2.0: Taking advantage of the interaction between users, TVs allows comments and opinions about programs.
Mobile TV: for example, Antena3, a Spanish channel that created in June what is called "modo salon", a VoD web application with HD quality that can be used from PCs. Recently, this free service has been adapted to other devices (ipad). Therefore, TV is not any more about sitting in front of the living room device but watching your favourite programs from wherever you are.

In Spain, although private TV channels are creating their channel on the Internet, their revenue models continue being advertisement but with a noticeable difference: ads do not interrupt the emission of a program broadcasted, instead they are played at the beginning of the videos or post as banners on the web site so users are much less disturbed with this approach.

Other TVs have explored new business models (subscription fee, single episode fee, etc) for the digital convergence:

IBM source

So how is going to be the future for TV? There are two key drivers that will dead to TV industry disruption: Open content access and highly involved media consumers:

IBM source

As it can be seen the TV industry is , by all means, changing and new challenges are concerning the industry. Base on the analysis above, I strongly believe that TV on internet is a disruption model and it is a matter of time that all the segment adopt the trend of youngest.

In my opinion, Spanish TV would not change their revenue model but they will use intelligence software process to adapt those ads and show to users what could be relevant for them. In addition, with the new technologies marketers are creating new ways for making ads more interesting so they would not be annoying anymore.

Nowadays, TV channels web sites are becoming more interactive for users. The future is moving into Web 3.0 in which TV leverages users data in order to show them customised contents according to their preferences. The challenge for Spanish TV channels now is to increase the content they offer to a large repository of exclusive content. In a long term, I believe they will expand to 3D content offered, and why not, interaction among users through social media in which they may have the challenge of change the sequence of event in an series episode for example. Overall, digital TV on the Internet opens a lot of opportunities that would not be possible with the analog system.

Video streaming revenues? In for a dime, in for a dollar

2011-06-04T19:50:00.001-07:00

"Netflix has plans for expanding to different countries across Europe, Spain among them. However, the company is reconsidering this country due to, what it calls, abusive royalty rates "

A lot of people have wondered why Netflix does not arrive to Spain. The company have been planing to do so since december 2010. Netflix is an american provider of on-demand internet streaming video in the US and Canada, and flat rate DVD-by-mail in the US. The company revenues reached more that $2 million in december 2010. Expansion plans across Europe will take place during the current year, however, the company is reconsidering to come to Spain. The reason is the rates applied in Spain for the emission of cinematographic productions, which are twice or three time higher than any other country such as Germany or France.
In Spain, general tariffs for the use of movies in interactive digital nets registered in SGAE is 2%. It gives the right to distribute movies to the public on the Internet whether it is streaming visualisation or download. But what probably is stopping Netflix is the fact that this 2% is applied to any income generated for the service, including not only users fees but also advertisements or any kind of revenue source. The amount to pay to SGAE would be registered as expensive in their P&L account, which now is about 3% of its total revenues. In addition to that, there would be also an extra cost of dubbing the movie to Spanish.

Netflix financial statement

Author royalties rates are very different in the traditional value change. Video clubs pay depending on the size of the property as well as the number of vending machines they have for expending the DVDs.

They pay 50% more of those tariffs if they have the vending machine integrated in the local and for independent machines they pay 52,43 €. The machine capacity varies but it is up to 2500 DVDs.

Spanish Government with the Sinde Law and ASGAE with its tariff rates are definitely creating barriers for companies such a Netflix to enter in the market. Business models like the example explain,which charges $7.99 subscription to users for a flat access to the repository of films is difficult to sustain with the Spanish red tape. Consequently, a lot of illegal web site are created and piracy levels of the country stands as the highest in Europe. Therefore, I question the effectiveness of current approach for digital distribution.

As it can be seen the different between the traditional and digital movie distribution is huge, at least in Spain. In addition, traditional video clubs have also other source of revenues (such as CD and DVD sales, snacks and crisp, soft drinks, etc) and ASGAE has never asked for it. Why? Because obviously it does not make sense it is not part of the author rights.

Although I understand that new business models in digital distribution of movies could be based on ads, I don't think the ASGAE should charge for it. The organisation has to protect author rights and advertisements are not part of their work. ASGAE has seen a huge potential in video streaming services and now that it can't stop it so why not taking advantage of it? In for a dime, in for a dollar.

I strongly believe that they should set fixed price as well based on the number of subscription or the number of films the web site offers. I am not say that it is the best option but at least it seems more like it is currently done in the traditional chain. While the situation continue as it is, regulation are motivating even more to piracy, a lot of people are willing to pay a subscription fee as Netflix one, what it does not make sense is the current approach: fighting against digital content distribution is simply a fight lost.

A questioned increase in consoles sales. Are the trend changing?

2011-06-04T13:58:00.000-07:00

NPD: "Riding on the lucrative Easter shopping season -- as well as the sales ofMortal Kombat and Portal 2 -- the U.S. video game industry saw a 20 percent increase in April over what was reported last year, according to The NPD Group".

Looking at the revenues of March compared with lars year we see and overall decrease of 3.9% in sales. It can be attributed to the fact that in 2010 the Easter was in March whereas in 2011 has been in April. Video Games industry is very seasonal and registers the highest level of sales in Christmas and Easter. However, looking at the numbers inside we see an increase in hardware and accessories, while the decrease was only in Software. Why is it?

Añadir leyenda

http://www.gamasutra.com/

Traditional value chain in video games has different players:

Software developers: game creators.

Publishers: Companies that sell video games products and promote them (software).

Console Vendors: Hardware creators

Retailers: distributors to the end users.

Publishers created software adapted to each console vendors, who had the power as publishers could not create a game without them, console vendors could choose among different publishers.

However, digital advances have allowed greater number of people having online access. Nowadays, there is a strong increase in broadband and high-speed internet access. It has open a new door for online gaming expansion, which has been forecasted to reach $11.8 billion by 2012. So how is it affect to the value chain?

In the old business model, games are sold via retailers, which keep a total of 13.4% of the total amount spend by consumers. With online games, retails are eliminated out and shipping costs so. Therefore, game companies do not longer have to share revenues and profits with retailers. That explains why software unit sales from January to March were down 6.6% in the last year and the average of software was also down over 3%. As video game companies do not have to share margin with retailers, they can even cut down price without seen their margin affected.

Hardware was also forecasted to decrease its margin as they received a fee per copy sold by the publisher for its particular console.

But what could happen with the hardware if games move online? Platforms would be created in the cloud, that means that games are run in a server rather that in the console. It also brings other advantage to video game companies: portability across device. Therefore, users could play games from any device (playstation3, xbox 360, wii, NDS, iphone, ipad, PC, etc), using different interface to adapt the game to each device the exclusivity of the game does not exist longer for manufactures. Consequently, the power would be moved from console vendors to publishers (video game companies).

Also other portable devices (iOS and Android) have entered into the video game market. As it is shown in the graphs below, sales dropped from 2009 to 2010 for any console model:

From 2009 to 2010 market share move to iOS and android mobile device, which affect to playstation and nintendo DS:

In my opinion, the increase in sales in hardware in April 2011 is due to the fact that Nintendo launched its 3DS and an increase of sales in Xbox 360, PSP and PS3 for Easter, which was in April this year. I think we need to wait for figures of the next 6-7 months in order to draw conclusions whether the trend is changed or not. What is truth is that manufacture are moving toward a vertical integration with games. Companies like Xbox and playstation3 have created online platforms (Xbox live and playstation3 live) that allows multiplayer games on the Net, buy games, etc. They are seeking for new business models such as selling virtual items, avatars, etc. Clearly, the industry is changing and console manufactures have understood the digital movement toward internet. In addition, those platforms are generating large amount of revenues for the companies, for example, Xbox live generates $10.6 million in March 2010. The future of consoles in my opinion have not finished, what it's happening is a transformation with the entry of new device for games that are taking market share, specially among casual players (who are not experts and do not distinguish among the differential value of consoles and other mobile device). However, if consoles manufacture, especially the high-end price consoles, can create their online platform with new business models in which they also can continue offering exclusive games, they could maintain their competitive advantage in the market and survive despite the entry of cheapest device.