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Intel gets inspired by Apple in more ways than one!

Posted on Wednesday, Jul 6th 2005

Intel in movies? Mercury News reports: Intel is getting into the movie business, and fighting illegal downloading at the same time. The Santa Clara chip giant said today that it’s investing in a venture set up by actor Morgan Freeman that will encourage legal distribution of independent films over the Web. Intel didn’t say how much it was investing. The venture, ClickStar, will aim to release the indie films on the Internet at the same time they’re shown in theaters. “Our goal is to deliver first-run premium entertainment to film fans around the world and to make film easier to buy than to pirate,” Freeman said in a statement. Not to mention all the microprocessors Intel will sell when all those indie movie fans upgrade their computers.

MovieLink, CinemaNow, and now ClickStar are all movie download sites. The Movielink service is owned and operated by Movielink, LLC, a joint venture of Metro-Goldwyn-Mayer Studios, Paramount Pictures, Sony Pictures Entertainment, Universal Studios and Warner Bros. Studios. Movielink draws its content offerings from the vast libraries of those studios as well as Walt Disney Pictures, Miramax, Artisan and others on a non-exclusive basis.

MovieLink has apparently not got much traction for two reasons:

(1) It takes way too long to download a film
(2) Once you download on your PC, there is no wireless PC-to-TV connection to watch it on the TV easily

Wonder what is going on in Intel’s head, to fix these two adoption road-blocks on the Video-on-Demand roadmap and what Morgan Freeman knows, that the major studios don’t!

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Tech Buy-Out: Skill gap analysis

Posted on Monday, Jul 4th 2005

Until recently, LBO has been a fairly straightforward financial re-engineering game. Now, with Tech LBOs, however, the business will need to be quite different.

The Buy-out funds that are eyeing Tech lack expertise beyond financial re-engineering. Typically, the LBO fund managers are transactional people, and do not have operating backgrounds – the recent recruitment of Vivek Paul, former CEO of Wipro by TPG being an exception to this general rule. Hence, the leverage points via organizational surgery, market strategy changes, channel strategy revamping, company / product line repositioning – are somewhat foreign concepts, and considered too risky. But, Tech being the fast-moving beast that it is, all these techniques are necessary to maneuver the turbulent waters of the business.

Add to that the potential of acquisition-leverage. The excessive availability of venture money chasing a few good deals has created an enormous number of venture-funded little companies that have not a prayer of offering returns on the investments of their VCs. These, however, are fertile grounds to hunt in, for an aging or ailing company, looking for an infusion of potency drugs. But to figure out which drug will work on what patient, one needs to be a savvy strategist – a skill more present in the traditional early-stage venture investment world.

Rumbles can be heard on both sides of the business today, as both the VCs and the Buy-out guys are waking up to the potential of Tech Buy-outs. The larger venture funds are trying to figure out LBO methods, while the Buy-out guys are assessing how to bring strategic leverage into their portfolios.

This trend leads me to separate out Tech LBO as a category, so that I can address specific deal ideas, as well as surgery methods more concretely.

Stay tuned!

Rage of the tortured child

Posted on Sunday, Jul 3rd 2005

“That tiny ember of rage flared bright and on dry regrets caught hold.”

I went to an opening at Hosfeld gallery in San Francisco recently. The art did not register in me. This strand of poetry did.

The Leadership literature is rife with stories of children from broken homes, tortured childhoods, abuse and abandonment, all leading up to destinies larger than average lives. Many psychiatrists say that it is almost necessary to have a feeling of inadequacy in the past driving you, to continue performing and reaching for more, more, and more.

Imagine this. A boy of five waits for his mother after school. All the other children from his kindergarten class have left at least an hour back. The mother does not show up. She has forgotten. The scene gets repeated day after day after day … She is not quite there. She is never there.

This child grew up to become one of the most admired CEOs in the technology business.

Examples abound. Steve Jobs and Larry Ellison are both raised by adopted parents, subconsciously longing for validation and belonging. Along the way, over-compensating, both with extraordinary achievements, and unbearable antics.

Said once, a monk in Calcutta: Discontent is Divine.

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Pixar: Animation = ?: Online Shopping

Posted on Wednesday, Jun 29th 2005

The online world has changed in the last ten years from a basic user experience to a vastly more involved and integrated user experience. And yet, the online shopping experience is still fairly basic, elementary, and non-experiential. In brick-and-mortar commerce, store design is considered an art, and how a customer is drawn into the store experience is a good combination of art and science. Aesthetics play a big role, but so does customer understanding, personalized touches, and sophisticated brand management.

In the dotcom heydeys of 1999, I did an e-commerce startup, Uuma, positioned to provide a personalized clothing and accessories store to busy professional women who had a huge time-challenge, but were still style-conscious. My size, my colors, my shape, my style, … you get the idea. At the core of the concept was our enormous research on how In-store Personal Shoppers operate. Whom do they target? How do they remember their clients? How do they sell, up-sell, and cross-sell? What is the experience that they offer to the customer?

I have always believed in segmentation. Deep, precise, accurate segmentation of the target customer base always lets you be very precise about the needs of the market, and the corresponding solution. Diamond merchant Blue Nile did a good job of this, and came up with unusual conclusions: their main audience for selling diamonds online is MEN. Geeky, shy men who are uncomfortable going to shop for engagements rings. Red Envelope has done a sordid job of segmentation, which reflects in their business fundamentals.

Beyond the basics, however, today’s experiential shopping opportunity online has become many times richer and more attractive. Broadband has become ubiquitous. Publishing tools are orders of magnitude more sophisticated, easy, and accessible, and visual merchandising needs to correspondingly evolve to the next level. eBay, Yahoo, BlueNile – all have fairly limited experiential shopping capability, and lack creativity in personalization. Amazon has done well with personalization in its category, but their over-dependence on collaborative filtering is, in my view, a mistake. [Collaborative Filtering allows them to recommend “others who bought … also bought …”]

I am still waiting for that ultimate online shopping experience … what Pixar has done to Animation, I hope, someone will do to Online Shopping!

India, Inc.: Wake up!

Posted on Tuesday, Jun 21st 2005

Today’s Journal reports: “Chinese appliance maker Qingdao Haier Ltd. and private-equity funds Blackstone Group and Bain Capital have sent Maytag Corp. an indication of interest, potentially setting off a bidding war for the ailing Iowa icon. Maytag said it has received a “preliminary nonbinding proposal” from the three parties to acquire the U.S. appliance maker for $16 a share, or $1.28 billion, in cash. ” Not long ago, Chinese company Lenovo acquired IBM’s PC Business.

What the Chinese are doing is applying leveraged buy-outs on big, fat, powerful American brands reeling under margin pressures, and “leveraging” what they do really well: low-cost manufacturing to shave the fat off, while at the same time gaining access to brand power and distribution channels. Add to that the looming opportunity of a downright humongous domestic market, and the leverage becomes enormous!

This leads me to wonder how long India, Inc. will remain asleep at the wheels? I have been writing about LBO opportunities using India (Epiphany, Saba) publicly, and have had numerous discussions on the subject privately with various relevant people.

Software is India’s LBO opportunity. For God’s sake, guys, take advantage of it with some delicious savvy that I observe in the Chinese, and do not, in the Indians!

Batman Begins

Posted on Sunday, Jun 19th 2005

I had posed a question: “What does it take to raise a high performance child?” in Einstein’s Mother. Batman Begins answers some portions of that question, and qualifies surprisingly well, as a successful Edutainment product that resonates with the Affluenza crowd.

A review by Roger Ebert highlights the storyline and the human aspect. To me, the most exciting phenomena in the film are the following:

The film is smack in the middle of the Affluenza target audience. However, Bruce Wayne’s willingness to renounce Affluenza and seek a greater destiny serves as an excellent role-model. Wayne, the seeker, pursues gutsy life experiences, ventures into the unknown and way out of his comfort zone, all the way to the snowy peaks of the Himalayas. Chris Nolan, the Director, offers a testimonial to the Asian Martial Arts that include precise, robust mind-training, conquering fear, and learning to focus. Read, Discipline.

I found it deeply reassuring that finally a blockbuster action film has come about that unambiguously captures the imagination of the Affluenza generation, but also resonates an essential message: Being a superhero is hard work! And Bruce Wayne, indeed is the icon of that message – a role model – inspiring, smart, thoughtful, intellectual, and extremely hard working.

Amidst the VoIP action

Posted on Saturday, Jun 18th 2005

Acquisitions, partnerships, new product announcements – the week has been rife with activity in VoIP and Video-over-IP. Yahoo acquires DialPad. Skype announces vSkype. Needless to say, there will be more activity, as Microsoft and Google ramp up further in the upcoming months. Skype goes to Google?

Michael Dertouzos, former Director of MIT’s Lab for Computer Science (LCS) wrote a book not long before he died: The Unfinished Revolution on the premise of human-centric computing. “Imagine a new breed of counseling exchanges between the rich people of the West, who are often troubled by depression, divorce, and family problems, and the poor people of the East, who seem to counterbalance lack of money with strong family ties and inner peace.”

Julie Landry at Newschools Venture Fund recently sent me this excerpt : “Somit Basak’s tutoring style is hardly unusual. The engineering graduate spices up lessons with games, offers rewards for excellent performance, and tries to keep his students’ interest by linking the math formulas they struggle with to real-life examples they can relate to. Unlike most tutors, however, Mr. Basak lives thousands of miles away from his students – he is a New Delhi resident who goes to work at 6 a.m. so that he can chat with American students doing their homework around dinnertime.

Americans have slowly grown accustomed to the idea that the people who answer their customer-service and computer-help calls may be on the other side of the globe. Now, some students may find their tutor works there, too. While the industry is still relatively tiny, India’s abundance of math and engineering graduates – willing to teach from a distance for far less money than their American counterparts – has made the country an attractive resource for some US tutoring firms.” (Christian Science Monitor)

Take it a step further. VoIP, Video-OIP enables urban doctors treat rural patients in Ashok Jhunjhunwala’s experiments: “Sixty-year old Palaniammal, a resident of Melur, a village 600 kilometres from Chennai, seems like the most unlikely candidate to be endorsing the benefits of information technology. Barely literate, she has hardly stepped out of her village in her lifetime and is as alien to the concept of IT as it can get.

Yet Palaniammal has become an example of how information technology can help lives in rural India. Palaniammal suffered from a problem in her eyes, which could not be cured by the local doctor. Though unable to muster the trip to the town hospital, Palaniammal, however, made it to a Web kiosk down the road in her village. There, pictures of her eyes were clicked with a Webcam and mailed to the reputed Aravind eye hospital in Chennai.

Subsequent to a video-conferencing between the patient in Melur and the doctor in Chennai, and with the help of supporting photographs, the ailment was diagnosed and treatment prescribed. Since then more than 1000 patients in small villages across Chennai have been diagnosed and treated using Web kiosks. Bringing the information technology and its benefits to rural India is one of the biggest challenges for advocates of wider usage of IT in India. About 700 million people live in India’s villages and they have at times no access to education or telephones. But one group, led by Dr Ashok Jhunjhunwala, a professor at the department of electrical engineering in the Indian Institute of Technology, Madras, is showing how it can be done.”

Three use-cases driving killer-apps of VoIP and Video-OIP. The World Bank and United Nations: next summit with Semel, Schmidt, Yang, Page, Brin, and … Gates, of course!

Advergames: Cross Technologists and Story-tellers

Posted on Monday, Jun 13th 2005

Brand engagement takes on a whole new form, as Advertisers begin leveraging technology and computer gaming.

From the current Economist: Gaming: As young people spend less time watching television and more time online and playing games, advertisers have devised a new way to reach them. CROSS the popularity of a new medium with the demands of advertisers, and the result can be a whole new genre of entertainment. In the 1930s, the sponsorship of radio serials by makers of household-cleaning products led to the soap opera. Listeners were enthralled by episodic, melodramatic storylines, and advertisers were guaranteed a big audience. Today, the same thing is happening with another new medium. Video games have been crossed with advertising to produce a new genre: the advergame.

Adverfilms are already starting to show up in movie theaters, a Stella Artois sponsored series of short films being shown at the Landmark theaters being a good example. Advergames is a similarly powerful phenomenon that will draw budgets away from traditional print or television advertising, and focus it in on brand engagement mechanisms with orders of magnitude higher returns.

“Richard Schlasberg, a Coca-Cola marketing manager based in Hellerup, Denmark, says the beverage-maker, long a fervent believer in television advertising, is now siphoning funds from its TV budget to maintain a regularly updated suite of games. A 30-second prime-time slot on American television can cost half a million dollars, whereas an advergame rarely costs more than $50,000 to develop and can be posted on the internet for months or years. Mr Schlasberg notes that, with television, potential drinkers just stare, briefly, at Coca-Cola. With advergames, consumers are “actually playing you”, he says, and they then associate the brand with fun.”

$500,000 versus $50,000 – simple equation. More sophisticated Advergames may cost upto $500,000, since the other piece of the value equation still is a huge win: 30-seconds versus months / years.

Those who stand to gain from this phenomenon, like in Adverfilms and Edutainment, are still the most creative content producers. Opportunities also exist for business model innovations, whereby the content producer takes a fee for every click-through.