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
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.
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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
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