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P-A-L-M to the boonies?

Posted on Tuesday, May 24th 2005

Wall Street Journal reports that the two Palms are showing signs of wanting to getting back together.

“PalmOne Inc. said it is acquiring full rights to the “Palm” brand name and will change its name to Palm Inc. later this year. Milpitas, Calif.-based PalmOne also said Tuesday that it has renewed its license of the Palm operating system through 2009. Under the terms of the agreement, palmOne said it will pay PalmSource Inc. minimum royalty payments of $148.5 million, subject to meeting certain milestones.”

Widely reported in the media in the last few days is also PalmSource CEO David Nagel’s departure, which makes one wonder if a reintegration is in the works.

Now, if the combined Palms would then head to the boonies in the developing world, it could be a good win-win for both parties. For more, read yesterday’s post: Boonies may be the next big opportunity!

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Boonies may be the next big opportunity

Posted on Monday, May 23rd 2005

Om Malik wrote a few months back: Indian Telcos head to the Boonies:

“Sunil Bharti Mittal, chairman of India’s second-biggest mobile-phone network, says fishermen on the nation’s southern coast are using their cell phones while at sea to call traders and find out who’s paying the most for lobsters. He’s planning to stop that. Instead, Bharti Tele-Ventures Ltd will offer the fishermen a wireless Internet service that would provide up-to-date prices for their catch and even allow them to book orders from their boats. Doing that, the fishermen ‘will significantly increase their earnings’, he says. Fishermen aren’t the only ones on Mr Mittal’s radar screen. In the next 12 to 24 months, he plans to introduce technology that will enable farmers to monitor weather conditions in real time on their mobile phones.”

SME. SME. SME. Those Farms and Fisheries in India are mostly SMEs. How big are these segments? Large enough to tip the market share war in Wireless OS that today is dominated by the Symbian OS, with its largescale support from Nokia, in favor of some lesser players like Microsoft and PalmSource? Could these grassroots applications for the bottom of the pyramid become killer apps in the quest for seducing the next billion computer / telecom users?

Well done, Microsoft!

Posted on Saturday, May 21st 2005

Brilliant article on a brilliantly conceived and executed product strategy in Time Magazine about Microsoft’s Xbox which starts its journey as a gaming console and will conceivably evolve, over time, to become the ultimate digital entertainment convergence device : Out of the Xbox. Here is an excerpt from the article discussing what Bill Gates has recently learnt from Steve Jobs:

[“Baby Bill” J. ] Allard’s solution was a good example of un-Microsoft thinking. “Guess how you get great design?” he asks. “You don’t try to do it with computer scientists from M.I.T. You don’t try to do it the conventional way one would think about from a Microsoft point of view.” Instead, Allard hired a sculptor from the Rhode Island School of Design and gave him a long leash. The sculptor turned around and hired a dozen extremely expensive boutique design firms to each come up with a design for the new Xbox. He then picked two winners, one from San Francisco and one from Osaka, Japan, and made them work together to build something cool yet approachable–“inviting” was the key concept.

And they have hit the nail on the head this time, it seems – at least on the hardware side.

On the killer app side, the thinking seems to also be evolving in the right direction, to go after a broader set of segments, and away from the original focus on hard-core gamers:

But there’s still a significant demographic that for some reason doesn’t consider wiggling a joystick to pretend they’re shooting somebody a major priority in their lives. To woo this wider group, video games will have to get easier, more approachable, and they will have to expand into genres that don’t yet exist. Most video games are action movies. Where are the romantic comedies? And the dramatic weepies? “We’re not gonna get so everybody in the family loves this thing just with sports and shooters and racers,” Gates admits. “We’re gonna have to fund, both internally and externally, some high-risk genres and see if those can stick. We can’t just stay with the tried and true.” But maybe the new Xbox doesn’t need fancy-dancy games or new, risky genres. Maybe it doesn’t need games at all.

Finally, the more ambitious strategic thinking behind it all:

Let’s not miss what’s happening here. Microsoft, a company known primarily for making highly profitable business software, has put a box in your living room. It entered your house under the humble pretense of being a game machine, a toy for the kids, but it just ate your CD player and your DVD player, and it’s looking hungrily at your telephone. It’s all up in your media cabinet. It’s talking to your iPod, your digital camera, your TV, your stereo, your PC, your credit card and the Internet. It has created a miniature electronic ecosystem inside your home, with itself at the center.

This is why, Microsoft is still an impressive company … they don’t get it, they don’t get it, they don’t get it … and then, one day, they get it. And they get it right. Remember the browser war of the mid-nineties?

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Netflix, look elsewhere!

Posted on Thursday, May 19th 2005

Netflix and Walmart have decided to partner, turning over all of 100,000 Walmart DVD rental customers to Netflix. Not bad, but probably, also, not great!

This is a good block and tackle strategy for Netflix, and it IS good news that at least one of the competitors becomes an ally. But the threats of the other reach-intensive commodity players like Amazon and Blockbuster still loom large over Netflix. My instinct would be to move OUT of the commodity positioning, and find the niche in Independent films, Festival films, Foreign Films, Special Interest categories, and create ethnically / psychographically segmented “groups” of user populations that come to Netflix because what they find at Netflix cannot be found at Blockbuster and Amazon.

It is quite critical for Netflix to be able to preserve the $17.99 / month price-point for 3 DVDs, or else a business model already plagued by low operating margins will trend further down, and may even start losing money. Differentiation is essential.

Netflix needs to think about other revenue streams that brand them better, as well as have higher margins. Such opportunities exist. Netflix, however, doesn’t seem to be finding them. Could it be, that the nerdy DNA comes on the way? Netflix also needs to mix online and offline experiences to create this superior brand experience, but the answer, and here’s a clue, is NOT brick-n-mortar stores!

Screenwriters and the Electronic Gaming Bubble

Posted on Tuesday, May 17th 2005

With the Electronic Gaming bubble bubbling and frothing, with Mobile Entertainment startups snapping up an unusually large share of venture funding dollars, many commodity gaming products will be hitting the market in the next few years. There is, however, an opportunity in this nightmare, for screenwriters who can make the transition from sequential story-telling to interactive story-telling. The opportunity is to help these publishers differentiate their titles.

Perhaps one of the best known examples of interactive story-telling is from Electronic Arts and its new release featuring an original storyline from Academy Award™ nominated screenwriter John Milius (Apocalypse Now, Clear and Present Danger). Medal of Honor: European Assault makes the player the driving force in the struggle to liberate Europe. “You are US Army Lieutenant William Holt, hand-picked by William “Wild Bill” Donovan to be the first field agent of the newly formed Office of Strategic Services-the OSS…”

In the process, you encounter opportunities to learn some World War II European History and Geography, besides the usual fare of hand-eye coordination that video-game publishers tout as benefits.

The sub-segment Mobile Gaming has had the maximum activity of late, with Jamdat’s recent successful IPO, as well as new entrepreneurial energy (and dollars) into Digital Chocolate by Trip Hawkins of Electronic Arts fame. It is a lot trickier to build a compelling storyline for mobile videogames because of the short window, although I for one will not underestimate the creativity of the writers.

Clearly, however, the digital gaming industry is emerging as a new avenue of expression, and consequently, a business opportunity, for the screenwriters vying for the attention of a relatively smallish number of film producers. I am curious to see how both the film industry and the gaming industry evolve further in the next decade, to leverage each other, and how sequential story-telling morphs to embrace interactive story-telling. And finally, I am also curious to see how talent agencies like CAA and William Morris deal with this opportunity, as it becomes mainstream and pervasive.

Silicon Valley: Invite Bob and Harvey Weinstein for a chat

Posted on Sunday, May 15th 2005

New York Times reviewed a small film called Mad Hot Ballroom a few days back: Where the Rumba Is as Much a Part of School as Recess. I recently saw this film at the San Francisco International Film Festival, and found it charming and uplifting. It is a documentary about a bunch of fifth graders in New York City learning to dance the Rhumba, the Foxtrot, the Merengue, and so forth, and then competing for a grand trophy. Many of these kids would otherwise be drawn into drug or crime networks. The film-maker duo are first-time film-makers, just like Zana Briski, who did “Born into Brothels”, about the kids whom she taught photography in the brothels of Calcutta, and that won her an Oscar this year.

These days, many “small films” are making their way into distribution networks, via film festivals, internet marketing, followed by a reasonable DVD business. These are very low budget films brought into fruition by taking advantage of the dramatically enhanced digital production infrastructure that the technology world has produced. Another article from New York Times: New York: ‘Little’ Films grow big visits the subject at length.

So, what is the spec for the next generation film studio? While Los Angeles still reigns supreme as the capital of the film industry, New York seems to be creating a niche for itself in independent “little” films. As Broadband becomes broader and more ubiquitous, what role will Silicon Valley play, to further unshackle the film industry from the clutches of the Hollywood power structure?

Do you need a film studio going forward, unless you are creating big sets for period pieces, or large scale special effect work? If you have a good screenplay on an utterly human topic, and better still, if you have opportunities for product placement, to be able to part-finance the film with an “Advertainment” angle, can you not complete your film without the hoopla of big stars and big expenses?

San Francisco Film Makers: Wake up, and lead the charge. Use the Silicon Valley hinterland to gain yourself advantages in production technology, online distribution and internet marketing.

Netflix: Wake up and give us an option to view all the Tribeca films, the Cannes films, the Montreal films, and all the zillion other film festival films … (I was happy to see advertisements from Akimbo during the San Francisco Film Festival offering all the SFFS movies to its viewers … at least someone is thinking about the opportunity!) … and in the process, create for yourself a bit of differentiation which you sadly lack!

Valley Investors: Wake up and understand businesses like Miramax, ThinkFilm, Killer Films, Universal’s Focus Features and Sony Pictures Classics, and think hard about what leverage can be introduced using the technology / internet angle.

For during times to come, as broadband broadens, Content will be the killer app.

Oh, and here’s a lead …

Posted on Thursday, May 12th 2005

Have a look at Vedika Software.

A little history: Vedika Software Pvt Ltd was formed in Calcutta, India, in late 1987 with an equity base of US$ 20,000. “During the period (late 1980’s), India’s software market was in its infancy. Personal computers were just beginning to become available and subject to more than 200% import duties. This meant that the average Indian buyer paid from four to five times the international market price for a computer. Software development companies generally specialised in supporting large mainframes and mini computers which still relied on tape drives and card punches. Although some personal computers were used at large multi-national companies, PCs had not “invaded” the average Indian business. In such a market, the demand for packaged software was virtually absent. Custom and tailor-made software companies were slowly evolving, but growth was difficult since many popular Western programs were pre-loaded and provided at no cost to end users. Vedika decided to enter the market in order to take advantage of the business of the future — the business of packaged software.”

Vedika focused on the same opportunity that made Billions for Intuit: Shrink-wrapped Financial Accounting Software called FACT, and became the first, and so far only real packaged software success out of the Indian market. If Rajesh Jain’s bet on low-cost PCs works out, then Vedika stands to make a fortune from it, serving the SME customer base.

The Founder & CEO of the company is Arvind Agarwal, whom I have a great deal of respect and admiration for. As far as I know, Arvind has kept the company private for close to 20 years. For VCs looking for strong product company models, my suggestion is, make a trip to Calcutta (now called Kolkata), the erstwhile capital city of British India, and meet Arvind Agarwal. And if Arvind has any desire to take the company Public, or have needs for expansion capital … ooo la la …

Low-cost PCs

Posted on Thursday, May 12th 2005

EE Times reports on the low-cost PC market in India: “Aiming at India residents with no PC experience, Novatium is developing the Nova NetPC, a thin client expected to cost just $100. The PC is now in beta-stage development and will reportedly be maintenance-free and appliance-like. Novatium’ three founders include Analog Devices’ chairman Ray Stata, Ashok Jhunjhunwala of the Indian Institute of Technology, and Indian entrepreneur Rajesh Jain.”

Novatium’s vision: “As you read these lines, 600 million people use computers as an extension of their lives. Yet, this very impressive statistic hides a remarkable market-truth. The benefits of computing have been largely limited to developed markets and the top layer of emerging markets. An untapped vibrant market of atleast 1000,000,000 users exists. For these users, computing must be radically different. Only such an innovation can take the benefits of computing to them. In October 2004, Novatium was formed by three admired visionaries to realise this new world of computing.” Read Rajesh Jain’s analysis of the opportunity with The Next Billion PC Users.

In the last few weeks, I have had conversations with a number of friends in the Venture business about their India strategy. One thing is clear, that, once this next Billion PC Users join the electronic universe, a new generation of market opportunities will open up in a way that we have not even begun to understand yet.

Forget the Enterprise Sales Force and the blue-print for building highly predictable business applications companies with Autodesk, Cisco, and HP as your beta customers.

Think Consumer.

Think SME.