Long time ago, at a supremely formative juncture of his life, Steve Jobs had visited India. It was an experience that had touched him deeply, moved him unexpectedly, and changed him fundamentally.
In light of that, Apple’s recent departure after 2 months of experimentation with an India operation seems rather callous.
No one knows the WHY. I don’t know either. I knew that Sina Tamaddon and Jean Marie Hulot were exploring the option of setting up a development center in India. This scrapped unit is not a development unit, but a call center. Also to be noted is that Jean Marie has since left Apple, one of the several high level departures (along with Jon Rubenstein, Avi Tevanian, Nancy Heinen).
I do have some thoughts on why Bangalore is (was) about the worst location choice that Apple could have possibly made.
Apple is a cult. Employees drink the water that trickles down from the fountain, after washing Steve Jobs’ feet. In Indian religious terminology, this is called Charanamrita (literal translation: the ambrosia that flows from the feet of the Lord). This presupposes the fact that Apple enjoys tremendous employee loyalty. Jobs expects ultimate loyalty from everyone (he offers loyalty to no one, but that’s a different topic).
This culture would NEVER fit with Bangalore’s mercenary Information Technology / BPO workers. They don’t even know how to spell loyalty. They couldn’t care less about cults. Show me the money is the mantra that prevails at the end of the day, and the best Apple could have hoped for, is a 600 person call center with 40%-60% churn.
Against that backdrop, Apple, I suspect, felt lost.
The mistake Apple made, I think, is Bangalore.
There are other places in India where people’s emotions run high, loyalty IS valued and offered to those who deserve it. Passion comes before Price. It is there, that Apple could have found its soul connection.
Not in the cultural desert of Bangalore.
Interesting article in WSJ on the pros and cons of a generation growing up on Video Games, mainly showcasing the advantages of Video Games in developmental issues, including value system.
The author cites a game called The Sims Franchise as a prime example: “You have to have a job to buy food and things, and if you don’t go to work, you get fired,” she said matter-of-factly. “And if you spend all your money buying stuff, you have to make more.” Thanks to The Sims, Mr. Reynolds says, his daughter now knows how to budget and how to read an income statement. In SimWorld, he notes, “narcissism, hedonism and impulsiveness are punished” and “traditional middle-class virtues, like thrift and planning, generally pay off.”
I recently heard about a project from Pam Kato, who worked on it : Re-Mission™
HopeLab‘s first project is Re-Mission™ — a video game developed for adolescents and young adults with cancer. Re-Mission is a challenging, 3D “shooter” with 20 levels that takes the player on a journey through the bodies of young patients with different kinds of cancer. Players control a nanobot named Roxxi who destroys cancer cells, battles bacterial infections, and manages realistic, lifethreatening side effects associated with cancer.
HopeLab conducted a randomized, controlled trial to test the effect of Re-Mission on treatment adherence, cancer-related knowledge, self-efficacy, and quality of life among adolescents and young adults with cancer. Three hundred and seventy five male and female cancer patients aged 13 – 29 were enrolled at 34 medical centers in the US, Canada and Australia, and randomly assigned to receive PCs pre-loaded with a popular video game only or that same control video game plus Re-Mission. Study results, which were presented in March of 2006 at peer-reviewed scientific meetings, indicate that playing Re-Mission produced significant increases in quality of life, self-efficacy, and cancer-related knowledge for adolescents and young adults with cancer. In addition, young people who played Re-Mission maintained higher blood levels of chemotherapy and showed higher rates of antibiotic utilization than those in the control group, both results suggesting that Re-Mission helps patients adhere to cancer therapy regimens.
This project has been masterminded and funded by Pam Omidyar from her foundation.
I had writtent a few pieces earlier: Screenwriters and the Electronic Gaming Bubble and Advergames: Cross Technologists and Story-tellers. In general, my thesis on the Gaming business is that the “title” financing model is trickier, whereas, “Advergames” is a very powerful, lower risk model, whereby the entire marketing muscle of a major brand can be behind a game. And if such games are nuanced towards “good”, then even better.
So, the screenwriters who are thinking about getting into the interactive storytelling / gaming business, should look towards Advergaming for a steady flow of work. Talent agents, hence, need to build relationships with Advertising Agencies, to help their clients access this channel.
And while all this gets sorted out, I quite like Ms. Omidyar’s model of bringing together video game developers and animators, cancer experts, cell biologists, psychologists, and young people with cancer themselves to create Re-Mission. Similar cross-discipline collaboration, I am sure, can create exciting new “stories”, much different from the standard and predictable Hollywood faire.
Read this review of Deepa Mehta’s Water (2006) by Tribune critic Michael Wilmington, and go see the film. I have nothing to add to the review, and recommend it with all my heart.
Recently, the film based on Dan Brown’s acclaimed novel Da Vinci Code was released amidst great fanfare and well-deserved bad reviews on May 19th. As of today, the movie has grossed $148 Million in the US and $465 Million worldwide. Needless to say, it benefited enormously from the immense popularity of the book, and people were simply curious. The production budget was $125 Million. Only in its second week, this film will, likely, reap much higher returns in its lifetime.
In contrast, this truly beautiful and moving independent film by Deepa Mehta called Water was released on April 28, and so far has done a paltry $1.5 Million. I don’t know the production budget for this project. I am sure it is quite small. Will this film ramp up as the word of mouth develops? Unclear, since the theme is sad and heavy. It might, if an Oscar Nomination kicks in, but that won’t be for a while, still.
Here are some comparables:
In 1992, an independent Chinese film called Raise the Red Lantern did $2.6 Million.
In 2002, Mira Nair’s Monsoon Wedding did a total US gross of ~$14 Million, with a production budget of $160 K, returning a whopping 86x.
Note, that these numbers were from the pre-social-media generation on the Internet.
Today, the potential for marketing niche films using the Internet, is enormous. To start with, putting a few video clips of the beautiful Lisa Ray on YouTube would be a good idea. Working the Blog circuits would also help. For DVD rentals, of course, Netflix has become a very viable way to do segmented marketing to a specific audience (people who have viewed one or both of the above films, for example, are likely candidates).
I am sad to see that the distributors of this film are not terribly savvy about Internet marketing. This is such a beautiful film, and it truly is reminiscinent of Satyajit Ray’s Apu Trilogy (Pather Panchali, Aparajito, Apur Sansar). I would love to see it reach a wider audience.
Well, just as I was pointing to TiVO’s spinning, last night’s earnings report and following conference call issues indications that TiVO is indeed thinking about licensing its software and getting out of the complete dependency on the low-margin hardware game. Read this article on the topic.
But let’s go back to the future. In light of the promising court results, the company can now get excited about TiVo knockoffs from competing manufacturers like Cisco (Nasdaq: CSCO). You see, if lawsuits force rival DVR makers to pay homage to TiVo’s patents, every wannabe TiVo box could be upgraded with Tivo-provided software, belatedly making it into the Real Thing.
It’s a beautiful plan. Someone else gets to worry about manufacturing and the thin-to-negative margins of selling hardware, while customers still get the full TiVo experience and the company itself rakes in patent-backed licensing revenue. Customer acquisition costs fall through the floor, margins go through the roof, and both revenue and profits should grow in between.
TiVO has recently won a lawsuit against Echostar, which puts its fundamental innovation in a protected position, and now allows for an IP and Technology licensing strategy.
Finally, it accounts for an exit strategy into Comcast, for example, who is dead serious about building a sustainable edge in Home Entertainment and the future of television, and putting a significant emphasis on software as the place to build new core competency in.
More of the same is not the answer, but TIVO seems to think it is. WSJ reports: TiVo, which has consistently lost money, continues to spend aggressively to find subscribers for its DVR products and service, as large cable and satellite television companies compete with their own low-cost DVR offerings. Earlier this year, TiVo began offering its DVR device free to customers who commit to between one- and three-year service plans, with a monthly subscription of $16.95 to $19.95.
Nowehere is the “spinning” more apparent than a recently issued job search for a new Chief Marketing Officer (CMO):
« Proven Performance in a Consumer Subscription Business The ideal candidate will have a proven track record of delivering results as a decisive, action-oriented marketing executive who has led high growth consumer subscription or similar services business. This will be evidenced by brand building metrics, subscriber growth, reduction in cost-per-acquisition, reduction in churn and successful new product introductions. Monthly subscription service experience, online & offline marketing experience and experience forecasting and managing to aggressive subscriber acquisition and retention goals is essential.
‘« Demonstrated Success in Growing Market Presence: The ideal candidate will have demonstrated an ability to marshal market and competitive analysis, immediate customer feedback, and competitive analysis to deliver creative product launch, demand generation programs, and ¡’Guerilla¡¿ and ¡’self-funding¡¿ tactical marketing (e.g. events and alternative media.) to impact subscriber growth and retention.
‘« Creative Marketing Strategy and Execution: The ideal candidate has previously been in a significant line-marketing role, overseeing a sizable marketing budget. The individual will have experience with disciplines of marketing such as product positioning, pricing, advertising/media, promotion, distribution, etc. This executive will have demonstrated his or her ability to assess market dynamics and quickly course-correct when necessary. A track record of superior execution is a must. This executive will have demonstrated the ability to innovate new approaches to address the challenges that face consumer electronics retailers such as customer education, sales training, salespeople turnover and increasing competition.
‘« Passion for Brand and Customer Experience: As shown by the ability to develop a vision, to become a credible evangelizer of this message and to communicate it in a compelling way. This will be shown by the ability to grasp the needs of both the consumer and the retailer, to translate those needs into action and to motivate the organization into the implementation phase. He/She should be a credible evangelizer of the consumer message and communicate his/her vision in a compelling way.
This indicates, they are staying with the same business model. I would argue that the business model of TiVO needs to change fundamentally. Long time back, Steve Jobs had to can his beautifully designed and branded NeXT Computer in favor of a software ONLY strategy. TiVO should look into that as a case study, and get out of the commodity hardware category, especially one in which prices drop rapidly, as competition increases.
WSJ reports on the just announced eBAY-Yahoo partnership. In early trading on the Nasdaq Stock Market, Yahoo shares rose $1.14, or 3.6%, to $32.93 and eBay jumped $2.50, or 8.3%, to $32.70, clearly indicating that the market likes eBAY’s moves closer to Yahoo.
There are two exclusive components to this deal : Yahoo will be the exclusive provider of all graphical search ads on eBAY sites, indicating that eBAY’s forays into online contextual advertising are likely to now go somewhere. Also, Paypal as the exclusive payment solution for Yahoo’s online wallet efforts bode well for eBAY.
This is clearly a deal that eBAY needs much more than Yahoo, but the benefits to Yahoo must not be overlooked. Here are two:
Putting a check on the search advertising revenue flow from eBAY to Google and channeling a large percentage of that revenue into Yahoo itself is equivalent winning one of the Internet’s largest accounts against the largest competitor. eBAY’s search really sucks. I am sure, Yahoo can add some throttle into that effort. For example, in looking for clothes, I only want to see inventory / listings in Petite sizes (0,2,4). If Yahoo can tie-in MyYahoo with eBAY, and make the search capability really precise, that would be fantastic for MyYahoo users. Clickthrough rates are likely to get wildly higher.
Also, from the point-of-view of eBAY PowerSellers, by and large, they should also have Yahoo! Stores to up-sell and cross-sell their merchandise to existing customers, while using eBAY to acquire new customers. The complaint from eBAy sellers today is that it has become a very expensive channel. If eBAY could address some of these concerns, become a lead generator for Yahoo! Stores, and work out some sort of a revenue sharing arrangement that makes sense for all concerned, it would be a good idea. This will cause eBAY to cannibalize their own auction business. However, if they don’t pay attention, PowerSellers will automatically set up independent shops on the web, advertise on Google via Adwords, and bypass eBAy altogether, as they become more sophisticated web merchants.
However, if eBAY and Yahoo team up on Stores, and acknowledge the PowerSeller concerns, while augmenting Seller incentives by making Yahoo Search Marketing and Stores a part of the offering, they could together make the long term look a lot more exciting.
Finally, here is a thought: the piece of the equation that has made the Internet such a powerful ecommerce vehicle is efficient drop-ship capabilities offered by Fedex, UPS, et. al. Just like Paypal is an essential part of the eBAY foodchain, Fedex is too!
So what about Fedex+eBAY?
To me, it makes a great deal more sense than Skype!
eBAY itself may have lots of woes, but it surely has empowered many entrepreneurs to build extremely lucrative small cash businesses.
These businesses do not qualify as Web 2.0. They should. They stay under the radar of Venture Funds and Angels. Some of them shouldn’t.
Read this article from Entrepreneur magazine about 10 eBAY Millionaires. From Diamonds and Jewelry to eBAY consignment shops, these businesses have been bootstrapped effectively, and are now creating great returns for their entrepreneurs.
Also, some books to read, if you are considering your own eBAY / Web 2.0 business:
1000 Best Powerseller Secrets by Greg Holden
Secrets of eBAY Millionaires by Greg Holden
What to Sell on eBAY and Where to Get It by Chris Malta
Read this analysis from JP Morgan on why Yahoo and eBAY should merge. I have been advocating YahooBAY for months. My first piece on the topic was written on October 26, 2005. A month back, WSJ did a lengthy piece on eBAY’s conversations with Yahoo and MSN.
I am keeping my eBAY holdings with the hope that this merger will take place.
Multi-Billion Dollar Question: Who is the right CEO for the combined entity? Probably neither Meg nor Terry … If there were ever a complex merger integration, this would certainly be one. Who has the experience to pull this off efficiently? I am sure Russell Reynolds et. al. are working out their prospective candidate lists …