Sunday, May 9, 2010


Stage set for Google-Apple mobile duel

Google will start the New Year with a mobile product announcement, setting the stage for what is turning into a showdown with its former ally Apple over mobile

computing devices. The search group revealed earlier this month that it

had issued employees with a mobile device to test, though it did not give details.

It disclosed that it would hold an event at its headquarters in Silicon Valley next

Tuesday for a mobile announcement, prompting speculation that the device

would be unveiled.

The prospect of the first mobile handset in which Google has had a strong hand in

the design has caused intense interest in tech circles amid expectations that

Apple will also announce its first larger-screen mobile tablet device next month.

There was "almost a land grab going on" among device makers as they vied to be

the "gatekeeper" for the latest generation of internet services, said Ashok Kumar,

an analyst at Northeast Securities who was among the first to report that Google

was planning its own gadget.

By announcing a Google phone ahead of Apple's tablet, the internet company had

a chance to steal its rival's thunder and build a following for its first Googlebranded

consumer device, Mr Kumar said.

However, some analysts warned that if it created a rival gadget, Google would

alienate other mobile handset makers that have used its Android mobile

operating system in their own products.

"If they're doing their own phone, it's really a dumb idea," Ken Dulaney, an

analyst at Gartner, said.

Rather than produce its own phone, Google was more likely to put its name on

the device and have influence over its software, Mr Delaney said.

The test, he said, would be whether it took control of the handset inventory,

making it the effective producer, or whether it left that with HTC, which is

reported to be manufacturing the device.

Smart phones based on Google's open-source Android software, which first

appeared 14 months ago, have emerged as some of the strongest challengers to

Apple's iPhone.

Mr Kumar warned that unless Google controlled all the elements of a handset,

from the hardware design to the user interface, it was unlikely to be able to

produce as distinctive a product as the iPhone, and risked losing more ground to


Unlike Microsoft, which sells a version of Windows for smartphones, Google does

not charge for the use of Android and so would not jeopardize any commercial

relationships by selling its own handset.

Will Rupert Murdoch's News corp. bring to an End the Era

of Free Content?

The internet revolution since the late nineties brought

with it a steady flow of free content – whether news,

pictures, videos or music. But if moves being made by

media mogul Rupert Murdoch are any indication, we

may soon be seeing the end of 'free'dom.

Online newspapers like the Wall Street Journal and

Financial Times already charge for a part of their content which is highly

analytical and premium in nature. Soon, newspapers and journals may follow

suit, with paid subscription becoming the order of the day. With the coming of the

New Year, several publications including the New York Times may launch their fee

structure for the access to internet content.

Leading the way, Rupert Murdoch is charging subscription on the WSJ and plans

to do the same for other elements of his media empire as well. Earlier reports

indicate that he is in keen to work out a partnership with a single search engine

to make access to the WSJ's content available rather than letting all search

engines crawl through his content database. Hulu, a video streaming site that

currently runs some television shows online for free, may soon switch over to a

subscription model as well.


(5) of (8)

There are also reports that magazine publishers are banding together to create a

content version of the iTunes store, where readers can pay to access piecemeal

content, most of which the magazines are currently giving away for free. And God

forbid, but media companies are even planning to charge for the apps on iPhones

and other mobile devices that they release.

So is this really where freebies end and only paying customers stay? What has

brought about this change?

Media companies building online content always relied heavily on the advertising

content to generate revenues for them to continue making profits. The down turn

has seen all that come to an end, with advertising going into a tailspin and media

rates that companies are willing to pay dipping to levels where they no longer

sustain the publication. Content providers now have no option but to shrink, shut

down or find alternative ways to stay afloat. And their target is an audience that

has spent over a decade in the realm of free content.

However, industry experts are still skeptical of the move as many of the

publications announcing such moves are still to show concrete steps towards their

implementation. Even those industry executives advocating these moves are

cautious about how they plan to implement them.

However, one thing is clear: content providers no longer see pay walls as

something that will stifle viewership or reduce traffic to their site. In the words of

one expert, content companies are now performing the equivalent of trying to put

toothpaste back inside the tube. The one thing that cannot be denied is that a

hard look at realities is coming in, and is influencing change in attitude towards

content, though what shape that change will take is still unclear.

Content digitalization has hit revenues everywhere, starting first with the music

industry, and now video content. Publishers that believed online advertising

would continue to grow as the scope of the internet expanded are now coming

face to face with the harsh realities. But on the other hand, experiences with

trying to control content in case of the music and video segments have shown

that the moment cash barriers are put up, content goes illegal. Illegal music

downloads today far outstrip the paid downloads, in spite of the success of a few

ventures like iTunes. And cable television is headed the same way, with most

program content being found on video sharing sites across the net.

The challenge today is more for established media, as the newcomers on the

block are unhampered by their fixed investments of the past, and can still afford

to survive with free content. The question remains on which portion will dominate

the internet space in the coming two years, and 2010 may well be the year of

consumers actually dipping into their pockets for content.

Will India's Telecom Industry Survive the Death Spiral of

Dropping Call Rates?

In June this year, the launch of Tata DoCoMo's GSM service brought with it a new challenge to the Indian telecom sector – per second billing. DoCoMo's new

tariff plans announced a billing rate of just 1 paisa per second. This was in a market that has just seen the advent of a new set of players which increases

the number of service providers in each circle from the previous 7-8 to over 12. Three months later, DoCoMo followed up by announcing the one paisa per

character Diet SMS plan, with no charge for spaces. On November 22, it

extended one paisa billing to roaming services as well.

The fallout has been obvious. Competitors in every circle have had no choice but

to follow suit, leading to a price war that seems to have no end. Fledgling service

provider MTS, owned by Systema Shyam Telecom, which has so far launched

only in Karnataka, has dropped to half paisa per second. Market leader Bharti

Airtel also launched the one paisa plan from October 30. It even took its lowered

rates overseas, wherein US customers using its calling cards to make calls to

India pay only 1 paisa per second.

According to the company's MD and Chairman, they are not happy with the way

tariffs are shaping up, but claim to be helpless as the tariff war was not launched

by them, but they had no choice but to respond. As a result, the telecom sector's

revenues and profits have plunged in the last quarter ending September 2009.

Even the public sector telcos BSNL and MTNL have been forced to fall in line.

MTNL launched a half-paisa per second plan for in-network calls and one paisa

per second for out of network calls.

According to industry reports, the revenue figures across the industry for the

quarter ending September 2009 were at Rs.38,755 crore, lower than the figures

in December 2008, which stood at Rs.39,408 crore, in spite of the fact that the

overall subscriber base was lower by 125 million in the latter case. This is

primarily due to the fact that the markets now have 13 operators fighting for

market share when the market can support 4 to 5. The fight is likely to get

compounded when mobile number portability (MNP) is introduced from December

31. This allows users to move between service providers without having to

surrender their number. This is likely to remove the last barrier that currently

prevents users from switching between service providers, and push up churn

rates to as high as 8.0% per month.

How to Kill a Brand on the Day of Its Launch?

Management history is replete with examples of companies getting their marketing communication, strategy and even products wrong when they enter new markets. But few will be able to match the speed with which Haagen-Dazs has managed to do it. They probably hold the record for the speed with which they put the proverbial foot in the proverbial mouth, destroying their brand in the process. The company's trial launch in India was scheduled last Friday. The company, through a franchisee opened its first

outlet in a South Delhi mall. With an eye on projecting itself as an international brand, the company put up a banner which said "Exclusive Preview for International

Travelers", and below that "Access Restricted to

Holders of International Passports".

Taking the sign at its literal meaning, ushers reportedly turned away a number of

Indian customers, though the company later claimed this was due to

overcrowding of the outlet. Apparently, the company wanted to convey the

message that consumers can now experience international flavors in India, but

the choice of words conveyed a totally different impression.

One of the people turned away took a snap of the sign and passed it on to a

blogger friend, who posted it on Facebook and tweeted it to his journalist and

blogger friends. In a matter of hours, the picture and attached message went

around not only the country but the world, with responses coming in from as far

away as Australia. Leaving the company officials with red faces and scrambling to

control the damage. A matter of hours saw the brand's reputation in tatters, and

the repercussions are likely to be heavy. One wonders how many heads will roll

at the company, franchise and the creative agency. General Mills India which

manages the brand in the country was forced to issue a public apology the very

next day.

Marketers when launching a new brand are very conscious that the first image is

often the last image. Launch strategies, plans and execution are very carefully

laid out in advance, to ensure the best possible results. Months of preparation go

into a launch, and all of it goes down the drain with one incident. Brand loyalty in

today's age is fickle at best, and any negative implication is removed at the

earliest signs of trouble, as can be seen from the sponsors' responses to Tiger

Woods' extra-marital affairs coming out in the open. Sponsors like Accenture

and Gatorade have promptly dropped him from their advertising. Gatorade, a

part of Pepsico, has announced the decision to discontinue a product they had

launched specifically in his name.

With the economy already at a low, companies are fighting hard to retain marketshare

and profitability. Companies and especially marketing departments need to

be very careful on how they manage their marketing and communications. A

mistake, like the one made by Haagen-Dazs, can cost the company the market

and take years to repair. And melt their ice-cream before they have a chance to

sell it.

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