When a search giant that makes $23 billion a year goes after a group discounting website that makes $500 million a year it raises many questions. But the most important question is how much is it willing to pay? Google, which is reportedly scouting for Groupon, is heard to have put a price tag of about $6 billion for a discounting website, that has absolutely no barriers to entry. But that issue can be discounted by the fact that Groupon has already built terrific traction in its business. Based out of Chicago, the company basically provides bargaining power to its users, and then using that power negotiates and gets discounts from retailers to these users. In the process, its takes a cut. Its a localized business that scales to national or even international level. With around 17 million users in North America alone, Groupon is an undisputed leader in its field although many others such as LivingSocial are catching up. Its easy to see how Groupon fits into Google's ambitions.
A) One of the hottest areas on the Net is location-based social networking done thru mobile devices. FaceBook (500 million users) has this feature, FourSquare (4 million users) is a pioneer and there are many others working in this space. Google has Latitude, which allows users to allow friends to view their location. So location meets retail deals, a white hot deal for mobile users. Google, starved for attention in the social media networking space, will gain immediate access to the installed users of Groupon and then combine them with Latitude to come up with synergies in this space. It will also be a check on FaceBook's check-in and FourSquare's growth.
B) Google gets about 99% of its revenue from ads. Groupon makes money by getting a cut from the retailers to whom it drives customers. Groupon has a large salesforce that constantly negotiates with local businesses for deals. Groupon will give Google leads into local advertising and insights into local spending habits. This ties in well with Google's prime revenue stream, AdWords and AdSense. Targeted search is always good to improve ads in Google. Already small businesses in Europe are complaining that Google is undercutting them by not properly displaying them in search results, so such local learning will help Google better serve its ads.
C) Google Maps, is another product that ties well with Groupon's efforts. Google Latitude is actually based on Maps and this goes back to point A above. You see the synergies?
All this goes back to the main question. How badly does Google want Groupon? As badly as spending the reported $6 billion? This would make it the most expensive acquisition ever for Google, more than the combined price it paid for YouTube and DoubleClick.
Let's see how traditional valuations are done.
1. Discounted Cash Flow: Expected future earnings discounted to present value.
2. Relative value: Finding the market price of similar assets/goods/companies.
3. Option price: Black/Scholes/Merton, lets not even go there.
4. TTM: A multiple of Trailing Twelve Month (TTM) revenues is used for Internet companies (e-commerce 3XTTM and other Internet companies could be more than 3X).
Groupon reportedly makes about $500 million. Maybe $6 billion comes across as a desperation price when trying to use DCF. Using TTM, Groupon could be valued at $1.5 billion (500 * 3). I dont know how you can use 2 and 3 from above to value it. Maybe there is some other style of valuation used by the brainiacs at Google. Groupon has countless imitators, and apparently its repeat use is less meaning low customer loyalty. Although it can boost Google' social media ambitions to some extent, whose to say that someone else like LivingSocial cant scale to current Groupon's size? When it comes to deals, customers usually lose their loyalties. Besides, how does a strong salesforce oriented company integrate with a strong engineering company? I guess, in the end, if A,B,C > 1, then surely $6 or so billions seems ok, considering Groupon's traction and Google's localization ambitions. With Marissa Mayer overseeing the local business now, Google seems pretty darn serious about this space. Groupon deal seems more defensive on Google's part than playing offense. So, essentially its not how badly Google wants Groupon, but how badly its does not want a FaceBook or a Microsoft get Groupon. To this end, $6 billion seems like the right price.
Wednesday, December 1, 2010
Monday, November 15, 2010
The Duplicity of Dairy Management
The Facts: Dairy Management Inc. is a Government department created by the then President Bill Clinton in 1995 which builds on the Dairy Production Stabilization Act, which was drafted around 1983. This almost-privately run department, with a CEO like leader has a single-minded focus. It is to make Americans eat more cheese and drink more milk. As a consequence of its persistent efforts, a typical American in 2010 eats more than 30 pounds of cheese compared to a third of this amount a few decades back.
People born in the 70s were brain washed into believing that drinking milk is essential to good heath. That cheese is high-protein and hence very essential for humans is an ingrained thought to most of us. Various incarnations of butter, cheese, yogurt and milk stare innocuously at us begging us to consume them, across stores. Problem is, nobody tells you that this is a marketing push by the same department whose sister concerns are lambasting the American public to reduce their cheese consumption and raising concerns about growing obesity due to increased cheese consumption.
On the one hand, the department promotes cheese through Pizza and fast food chains and on the other, as recent NY Times research indicates it also promotes reducing cheese consumption for health benefits. Apparently they are feeding the population with subsidized cheap high calories while blasting them to show more restraint and not fall victim to obesity. I am sorry I don't get this at all. A department that has such self-interest in making the most out of its $140 million budget surely is not in a position to talk about obesity. Its easy to see the conflict of interest in this.
The problem is also more inherent to how capitalism has evolved in the last hundred years. While losses, in terms of health-care costs and obesity concerns, have become public, the profits, from rising dairy production, are private. Much like the banks, who keep their profits but rub their losses on public through threats (real or perceived is up to the reader to decide) of systemic collapses, these institutions have the mandate to increase dairy consumption but also "fight" public health concerns.
Except for the astute observer, such things largely go unnoticed by the general public. Praise needs to be bestowed upon NY Times for bringing such issues out. This is exactly what journalism was born to do. In open democracies, transparency only comes from media when our representatives unleash these duplicitous schemes on the public. In the end, its up to us to decide whether eating that double-cheese crusted pizza will increase our health-care bills or not. If we don't show that restraint, I guess we cant criticize the Government for not reforming the health care issues. But what about those marketing campaigns I saw as a kid which made me say cheese? Marketing should be left to the businessmen themselves and not pushed by the Government. If a Govt. Department markets dairy products aggressively, and makes deals with chains like Dominoes, to push more cheese, they have no ground to tell the same public not to eat that cheese.
People born in the 70s were brain washed into believing that drinking milk is essential to good heath. That cheese is high-protein and hence very essential for humans is an ingrained thought to most of us. Various incarnations of butter, cheese, yogurt and milk stare innocuously at us begging us to consume them, across stores. Problem is, nobody tells you that this is a marketing push by the same department whose sister concerns are lambasting the American public to reduce their cheese consumption and raising concerns about growing obesity due to increased cheese consumption.
On the one hand, the department promotes cheese through Pizza and fast food chains and on the other, as recent NY Times research indicates it also promotes reducing cheese consumption for health benefits. Apparently they are feeding the population with subsidized cheap high calories while blasting them to show more restraint and not fall victim to obesity. I am sorry I don't get this at all. A department that has such self-interest in making the most out of its $140 million budget surely is not in a position to talk about obesity. Its easy to see the conflict of interest in this.
The problem is also more inherent to how capitalism has evolved in the last hundred years. While losses, in terms of health-care costs and obesity concerns, have become public, the profits, from rising dairy production, are private. Much like the banks, who keep their profits but rub their losses on public through threats (real or perceived is up to the reader to decide) of systemic collapses, these institutions have the mandate to increase dairy consumption but also "fight" public health concerns.
Except for the astute observer, such things largely go unnoticed by the general public. Praise needs to be bestowed upon NY Times for bringing such issues out. This is exactly what journalism was born to do. In open democracies, transparency only comes from media when our representatives unleash these duplicitous schemes on the public. In the end, its up to us to decide whether eating that double-cheese crusted pizza will increase our health-care bills or not. If we don't show that restraint, I guess we cant criticize the Government for not reforming the health care issues. But what about those marketing campaigns I saw as a kid which made me say cheese? Marketing should be left to the businessmen themselves and not pushed by the Government. If a Govt. Department markets dairy products aggressively, and makes deals with chains like Dominoes, to push more cheese, they have no ground to tell the same public not to eat that cheese.
Wednesday, November 3, 2010
Why Meg Whitman Lost...
Meg Whitman turned eBay into what it is today, the biggest auction site on the planet. I like eBay, I bought loads of stuff there and except a glitch or two, the marketplace mechanism she put in place pretty much works fine. Meg, who oversaw eBay for a long time, has a reputation for being a tough taskmaster and a very very demanding boss. But very few people who were at her level can claim to be the opposite.
Meg, who apparently never cast a vote until she decided to run for Governor of California, lost quite badly yesterday. Badly not only in terms of votes (she polled around 41% to Jerry Brown's 54%, which is a much bigger spread than the surveys had predicted) but also in terms of return on investment. She spent about $160 million in the 2010 election for a job that would pay about $200,000 a year. Surely she was not doing it for the money cause she made more than enough for herself and her family at eBay. Obviously she was running for Governor either because she really wanted to do something for the public or its just her innate leadership drive. Whatever it is, its a pretty bad loss.
Now, had the Governorship of California been auctioned on eBay, she would have been the highest bidder what with a $160 million bid. Nobody would have come close. Of this money, almost $140 million is her own, that's about 10% of what she made at eBay. Ouch, that's a lot for losing an election. Depending on what your interests are, this type of money can do a lot of things. For Meg, she could have generated loads of jobs by simply investing in California. She could have stayed away from the bloodsport she got bludgeoned in. But that's what drive does I guess.
So, here are a few things I think went against her in spite of the scale of monies involved in this election. Please note that this is the largest personal wealth any person has ever spent on any single election in the history of United States.
1. Out of touch: People on the street had no idea who she really is. I mean, tech industry folks like myself or my friends surely know everything there is to know about her in the public domain, but the minimum wage workers? Nope. They think that she is some wealthy corporate person, who lives in a million dollar mansion in the hills and goes around in chauffeur-driven cars. That's never an image that would help those seeking public office. Sadly, Meg could do nothing about it. She is what she is. She is a legal multi-millionaire, a fact she could not take pride in public because people would always say, "hey, you are rich, what do you know about unemployment?". Due to this, a lot of women could not identify with her. This is reflected by the fact that more women voted for Brown than they did for Meg.
2. No participation in democracy: The fact that Meg never voted, deftly exploited by Brown, only hurt her already out of touch image. It made it look like Meg woke up one fine day and realized that she has a few hundred million to throw around and see if she could become a Governor. She has nothing to do anyway, except maybe give a few talks here and there. Lesson: People who want to run for public office in the future, please start voting from now.
3. Foul campaign: The amount of muckraking done by Meg's campaign is just too much. Yes, Brown did some too (that whole "whore" episode was so bad taste) but maybe Meg could have run a cleaner campaign and could have said what she has in mind for California instead of foul-mouthing how bad Brown is for the state? This makes it a lesser of the two evils situation and given the above two problems of being out of touch and never having voted, totally worked against Meg.
4. Money cant buy me love: Again and again, the major point that Brown hit Meg, where it hurt the most is the fact that she was pumping so much money into her campaign. Even people who don't usually vote know how much Meg spent. This has so badly ricoched on her, she never fully recovered from it. A strange victim of her own success.
5. Maid issue: Finally, the last nail in the coffin that sealed her defeat is the whole drama about her using an illegal immigrant as a maid for years. Less said, the more about this issue. This never went down well with the Hispanic community in California and for the right reasons. Lesson: Maybe Meg would have been better off, had she brought this out herself in the beginning of her campaign? Politics is a bloodsport and such skeletons in the closet will be adroitly manipulated by the opponents.
In the Republican wave of 2010, when the house was lost and major Senate gains being made, it must be really disappointing for Meg to loose. Maybe Mark McCormack can update his best-seller on "what they dont teach you at HBS" and include a chapter on "winning the public mandate" since clearly HBS did not teach Meg that. And if he does update, I will bid for the book on eBay.
Meg, who apparently never cast a vote until she decided to run for Governor of California, lost quite badly yesterday. Badly not only in terms of votes (she polled around 41% to Jerry Brown's 54%, which is a much bigger spread than the surveys had predicted) but also in terms of return on investment. She spent about $160 million in the 2010 election for a job that would pay about $200,000 a year. Surely she was not doing it for the money cause she made more than enough for herself and her family at eBay. Obviously she was running for Governor either because she really wanted to do something for the public or its just her innate leadership drive. Whatever it is, its a pretty bad loss.
Now, had the Governorship of California been auctioned on eBay, she would have been the highest bidder what with a $160 million bid. Nobody would have come close. Of this money, almost $140 million is her own, that's about 10% of what she made at eBay. Ouch, that's a lot for losing an election. Depending on what your interests are, this type of money can do a lot of things. For Meg, she could have generated loads of jobs by simply investing in California. She could have stayed away from the bloodsport she got bludgeoned in. But that's what drive does I guess.
So, here are a few things I think went against her in spite of the scale of monies involved in this election. Please note that this is the largest personal wealth any person has ever spent on any single election in the history of United States.
1. Out of touch: People on the street had no idea who she really is. I mean, tech industry folks like myself or my friends surely know everything there is to know about her in the public domain, but the minimum wage workers? Nope. They think that she is some wealthy corporate person, who lives in a million dollar mansion in the hills and goes around in chauffeur-driven cars. That's never an image that would help those seeking public office. Sadly, Meg could do nothing about it. She is what she is. She is a legal multi-millionaire, a fact she could not take pride in public because people would always say, "hey, you are rich, what do you know about unemployment?". Due to this, a lot of women could not identify with her. This is reflected by the fact that more women voted for Brown than they did for Meg.
2. No participation in democracy: The fact that Meg never voted, deftly exploited by Brown, only hurt her already out of touch image. It made it look like Meg woke up one fine day and realized that she has a few hundred million to throw around and see if she could become a Governor. She has nothing to do anyway, except maybe give a few talks here and there. Lesson: People who want to run for public office in the future, please start voting from now.
3. Foul campaign: The amount of muckraking done by Meg's campaign is just too much. Yes, Brown did some too (that whole "whore" episode was so bad taste) but maybe Meg could have run a cleaner campaign and could have said what she has in mind for California instead of foul-mouthing how bad Brown is for the state? This makes it a lesser of the two evils situation and given the above two problems of being out of touch and never having voted, totally worked against Meg.
4. Money cant buy me love: Again and again, the major point that Brown hit Meg, where it hurt the most is the fact that she was pumping so much money into her campaign. Even people who don't usually vote know how much Meg spent. This has so badly ricoched on her, she never fully recovered from it. A strange victim of her own success.
5. Maid issue: Finally, the last nail in the coffin that sealed her defeat is the whole drama about her using an illegal immigrant as a maid for years. Less said, the more about this issue. This never went down well with the Hispanic community in California and for the right reasons. Lesson: Maybe Meg would have been better off, had she brought this out herself in the beginning of her campaign? Politics is a bloodsport and such skeletons in the closet will be adroitly manipulated by the opponents.
In the Republican wave of 2010, when the house was lost and major Senate gains being made, it must be really disappointing for Meg to loose. Maybe Mark McCormack can update his best-seller on "what they dont teach you at HBS" and include a chapter on "winning the public mandate" since clearly HBS did not teach Meg that. And if he does update, I will bid for the book on eBay.
Wednesday, September 8, 2010
Idiot Box = A Smart Box...
I wish I watched more TV. Then, I would have realized that there are many ways to optimize the idiot box. For starters, there is search. To jump from one channel to another, even on a set-top box, is a pain. The distance between two interesting channels is always too much. Second, there is no way for me, as a user, to find out where an interesting program is being beamed unless I check some papers or websites, which I will never do. Takes us back to what we do on the web daily, search. Now, had there been a way to directly search on the TV, the idiot box would become a smart box. Just provide a good search bar somewhere on the screen, damn it. But then, TV's don't have operating systems. So, why not create an O/S for TVs?
That's what Google TV is doing. No, Google will not make the hardware but will partner with TV makers like Sony to pre-install the O/S to make TV's smart. And Google will make small boxes (like set-top boxes) that can be hooked to existing TV's so programs can be made searchable. The Google TV then, will have a built-in browser (Chrome, or some mutant version of it) that will help the user easily navigate through the clutter of content, search through the programs to what the user wants to see, help enable them to record and play these programs later. We cant do this now, although we can record on DVRs and that is why Google TV looks so bloody promising. Where Apple failed, Google goes. While Apple TV was a great idea badly implemented, GTV looks like it will redefine the media business slowly but steadily.
Of course there is YouTube, owned by Google. Legions of people daily use this web video service to upload, and watch videos. Google TV will take advantage of this demographic, which is huge. YouTube is already making money, reportedly about $500 million in 2010. If GTV kicks off, this number will reach the sky because GTV will sync perfectly with YouTube, making watching videos even more easier. We dont have to start laptops and desktops to watch videos anymore. Then there are apps. Super cool apps are being built for Android every single day, and these apps will sit pretty in GTV and enhance and enrich the user's television viewing experience. Bottom line, television is finally going to marry Internet and its all coming together by 2011. Video is the fastest growing media on the Internet (check this: 178 million people watched 33.2 billion videos in just one month recently) and Google is neatly positioned to take advantage of that. In the end, watching television and searching for what we want to see is going to be redefined and very soon.
I wish I watched more TV, I probably would have thought about this whole search-bar-in-a-television business long back. I have my excuse, hope you have yours ;)
That's what Google TV is doing. No, Google will not make the hardware but will partner with TV makers like Sony to pre-install the O/S to make TV's smart. And Google will make small boxes (like set-top boxes) that can be hooked to existing TV's so programs can be made searchable. The Google TV then, will have a built-in browser (Chrome, or some mutant version of it) that will help the user easily navigate through the clutter of content, search through the programs to what the user wants to see, help enable them to record and play these programs later. We cant do this now, although we can record on DVRs and that is why Google TV looks so bloody promising. Where Apple failed, Google goes. While Apple TV was a great idea badly implemented, GTV looks like it will redefine the media business slowly but steadily.
Of course there is YouTube, owned by Google. Legions of people daily use this web video service to upload, and watch videos. Google TV will take advantage of this demographic, which is huge. YouTube is already making money, reportedly about $500 million in 2010. If GTV kicks off, this number will reach the sky because GTV will sync perfectly with YouTube, making watching videos even more easier. We dont have to start laptops and desktops to watch videos anymore. Then there are apps. Super cool apps are being built for Android every single day, and these apps will sit pretty in GTV and enhance and enrich the user's television viewing experience. Bottom line, television is finally going to marry Internet and its all coming together by 2011. Video is the fastest growing media on the Internet (check this: 178 million people watched 33.2 billion videos in just one month recently) and Google is neatly positioned to take advantage of that. In the end, watching television and searching for what we want to see is going to be redefined and very soon.
I wish I watched more TV, I probably would have thought about this whole search-bar-in-a-television business long back. I have my excuse, hope you have yours ;)
Thursday, July 29, 2010
Thoughts on FaceBook's Revenue Model...
Another friend of mine posted more incisive questions to my ramblings on Google's precarious Social Network situation. He asked:
"Search Ads make so much money because the focus on "intent". FB/display ads work on 'brand awareness" and "generating intent". Yes, they are important, but monetizing them is hard. If you try too hard(like in Myspace) you end up pissing your users who leave your site.
What happens when this demographic grows up, or when everyone's FB circle becomes sooo huge that it becomes less useful, or if something better comes along? i.e how sustainable is FB?
Let me start off my trying to explain how Google makes money. Google's revenue model is very straightforward. It makes money through:
1. Advertising
2. Search results
3. Sponsored links
4. AdWords/AdSense
I agree that search ads work beautifully because of 'intent'. This means that more people search, more pennies fall into Google's coffers. On FB, people don't 'search'. Yes they do search for friends and groups etc but they don't search the web, they search within FB. So FB cannot monetize 'intent' as neatly as Google can. Regardless, advertising on FB has been growing like a virus in a petri dish. Lets dig deeper and check FB's revenue model in more detail. Those ads that you see on the right side (to the user) of your FB account brought in about $250 million to $300 million Users dont have to do anything on this (well they can click the Like tab and spread the message). These ads can also be custom targeted. For instance, if I am a fan of Beatles on FB, one of these ads could be Beatles' album or a guitar instruction DVD. I think that this revenue model is here to stay. Next, engagement ads, which need user-interaction and sometimes user endorsements brought in another $100 million or so to FB in 2009. These ads need the users to interact with the ad, they could be games that need to be clicked or puzzles or even quizzes (Haven't we all FB boys taken one of those silly "What animal are you" type quizzes at some point or other?). Next, Gifts and virtual goods brought in another $50 or million or so. These could be those ubiquitous and constant birthday reminders and gift suggestions that FB throws at us (quite surreptitiously). Finally, Microsoft which has an agreement in place with FB and sells around $50 million or so worth of banner ads on FB. Please remember that all these ar 2009 numbers.
So if you look really close, you have see that one through three from Google's revenue model above are applicable to FB in one way or another. FB is also smart enough (until now) to not piss us users off like MySpace (what a horrible site that has become) did. Sponsored links will appear as FB as the number of fan clubs and corporate profile pages grow. I think these corporate sites will bring in more revenues in the future. If for instance, Toyota wants to spread a product safety message or market a new technology, FB community would be a great place for such propaganda. A closed private network within the vast Internet. Revenues will keep flowing from that side. What is left is the mega-selling AdWords/AdSense type programs. Here intent plays a huge role, no doubt but I think its probably a matter of time before FB comes up with its own version of FaceWords and FaceSense programs.
Only a certain section of FB users are active on the site. Even if you take that as 40%, it translates to 200 million active users. The site is only a few years old and from what it was it has dramatically changed. As the users grow up, FB will morph itself into something more suitable to that particular demographic depending on the private network within. Basic services such as email, photos/videos uploading will only increase as the Net usage and speed increase. The users will start uploading more and more data to FB and keep throwing it around opening paths to better image searching (on which Google is working hard, even taking cues from rival Bing). So as the demographic matures so will that section of FB along with it, reinventing itself. The bigger the circle of influence gets, the better it is for FB from the perspective of advertisements. True, there could be a lot of chaff in an individual circle but that is users problem not FB's. Whom you add and what you share on your profile is entirely up to you. Such privacy issues will always remain (Whether its email or FB). The onus is on the user to be diligent about what she puts on the network. The safe bet being the assumption that someone somewhere has a copy of that image/document/whatever you put on the Internet. FB is not an exception to this.
Finally, I believe that FB has gained so much traction that something else coming up is really tough. There are so many social networking sites, its daunting to even keep a track (for an exhaustive list and the number of users on each network, check http://en.wikipedia.org/wiki/List_of_social_networking_websites). But FB is easily the most generic and famous among all these. Mail apps like Hotmail has about 350 million users (Yahoo around 170 million or so and Gmail 140 million or so) but FB has 500 million and growing. How will it sustain this growth or where the next 500 million will come from is tough to answer. It could acquire other budding social networks in Europe, increase presence in Asia/Latin America where it is weaker. It might also move into a different direction in terms of services/apps offered. I guess the possibilities are endless when you have 500 million registered accounts on a single network.
"Search Ads make so much money because the focus on "intent". FB/display ads work on 'brand awareness" and "generating intent". Yes, they are important, but monetizing them is hard. If you try too hard(like in Myspace) you end up pissing your users who leave your site.
What happens when this demographic grows up, or when everyone's FB circle becomes sooo huge that it becomes less useful, or if something better comes along? i.e how sustainable is FB?
Let me start off my trying to explain how Google makes money. Google's revenue model is very straightforward. It makes money through:
1. Advertising
2. Search results
3. Sponsored links
4. AdWords/AdSense
I agree that search ads work beautifully because of 'intent'. This means that more people search, more pennies fall into Google's coffers. On FB, people don't 'search'. Yes they do search for friends and groups etc but they don't search the web, they search within FB. So FB cannot monetize 'intent' as neatly as Google can. Regardless, advertising on FB has been growing like a virus in a petri dish. Lets dig deeper and check FB's revenue model in more detail. Those ads that you see on the right side (to the user) of your FB account brought in about $250 million to $300 million Users dont have to do anything on this (well they can click the Like tab and spread the message). These ads can also be custom targeted. For instance, if I am a fan of Beatles on FB, one of these ads could be Beatles' album or a guitar instruction DVD. I think that this revenue model is here to stay. Next, engagement ads, which need user-interaction and sometimes user endorsements brought in another $100 million or so to FB in 2009. These ads need the users to interact with the ad, they could be games that need to be clicked or puzzles or even quizzes (Haven't we all FB boys taken one of those silly "What animal are you" type quizzes at some point or other?). Next, Gifts and virtual goods brought in another $50 or million or so. These could be those ubiquitous and constant birthday reminders and gift suggestions that FB throws at us (quite surreptitiously). Finally, Microsoft which has an agreement in place with FB and sells around $50 million or so worth of banner ads on FB. Please remember that all these ar 2009 numbers.
So if you look really close, you have see that one through three from Google's revenue model above are applicable to FB in one way or another. FB is also smart enough (until now) to not piss us users off like MySpace (what a horrible site that has become) did. Sponsored links will appear as FB as the number of fan clubs and corporate profile pages grow. I think these corporate sites will bring in more revenues in the future. If for instance, Toyota wants to spread a product safety message or market a new technology, FB community would be a great place for such propaganda. A closed private network within the vast Internet. Revenues will keep flowing from that side. What is left is the mega-selling AdWords/AdSense type programs. Here intent plays a huge role, no doubt but I think its probably a matter of time before FB comes up with its own version of FaceWords and FaceSense programs.
Only a certain section of FB users are active on the site. Even if you take that as 40%, it translates to 200 million active users. The site is only a few years old and from what it was it has dramatically changed. As the users grow up, FB will morph itself into something more suitable to that particular demographic depending on the private network within. Basic services such as email, photos/videos uploading will only increase as the Net usage and speed increase. The users will start uploading more and more data to FB and keep throwing it around opening paths to better image searching (on which Google is working hard, even taking cues from rival Bing). So as the demographic matures so will that section of FB along with it, reinventing itself. The bigger the circle of influence gets, the better it is for FB from the perspective of advertisements. True, there could be a lot of chaff in an individual circle but that is users problem not FB's. Whom you add and what you share on your profile is entirely up to you. Such privacy issues will always remain (Whether its email or FB). The onus is on the user to be diligent about what she puts on the network. The safe bet being the assumption that someone somewhere has a copy of that image/document/whatever you put on the Internet. FB is not an exception to this.
Finally, I believe that FB has gained so much traction that something else coming up is really tough. There are so many social networking sites, its daunting to even keep a track (for an exhaustive list and the number of users on each network, check http://en.wikipedia.org/wiki/List_of_social_networking_websites). But FB is easily the most generic and famous among all these. Mail apps like Hotmail has about 350 million users (Yahoo around 170 million or so and Gmail 140 million or so) but FB has 500 million and growing. How will it sustain this growth or where the next 500 million will come from is tough to answer. It could acquire other budding social networks in Europe, increase presence in Asia/Latin America where it is weaker. It might also move into a different direction in terms of services/apps offered. I guess the possibilities are endless when you have 500 million registered accounts on a single network.
Sunday, July 18, 2010
Why Google Needs A Social Network
A good friend of mine posted a very interesting question to my ramblings on Google's hubris. His question is:
"why does it even matter that google hasn't succeeded in social networking in spite of trying? should an aircraft manufacturer also make cars and succeed at it? should a tv network also make tvs or dvrs? some great companies have found it difficult to break into other related ideas. coke used to own a wine business that went nowhere. is there really a danger that google will become irrelevant if it doesn't do social networking?"
I think it matters a lot that Google makes its presence felt in the social networking space. Lets look at an analogy. Think of Microsoft getting into web browsers in mid-90s. Why did it matter to a O/S company to make browsers? It did because at that time Bill slowly realized that the future of IT industry is shifting from desktops to the Internet. Microsoft had to succeed in not only beating Netscape but also in bettering it (although I prefer Firefox to both). It cunningly reverse-engineered Navigator and bundled it in Office. Had Microsoft not gotten into browsers, it would have lost a great opportunity to make its presence felt in the Internet industry. Wonder how the tech world would have been now. Now that cloud computing is here to stay, it only makes MSFT's moves valid.
Google currently is the top dog when it comes to search. And it makes all its money thanks to its efficient search algorithms (thru Adwords and Adsense programs). But the way I see it, the net is growing into an animal the type of which we haven't seen before. For this animal, search will become a menial task. Don't get me wrong, people will still search and search hard for the net is so easy to get lost. We need a janitor who takes us where we want to go. But that's the role of the janitor, it stops there. Social networks offer the higher end services (if not now, in the future) and will make people stay more in their sites and engage users through various apps. Naturally, advertising dollars will shift to places where people hang more. How people navigate will matter less and where people will navigate to will matter more. Hence, its crazily important that a pure web company like Google has a strong presence in social networks, or it will risk becoming a more menial search service provider (not that its inherently bad or anything). This is exactly why Google is scrambling hard with its botched attempts like Orkut, Wave, Buzz and now something else.
If Coke fails in making wine it hardly matters because wine-making is not Coke's forte. But if Coke fails in expanding into other beverages (like filtered water, flavored water, juices, coke variants like coke zero, healthy beverages etc), it will not grow. Now being stagnant is the enemy of Wall St. Already Coke's market is stagnant. It has two basic choices, expand into new markets (China, India, Latin America) and/or move into new product lines. That's why Coke purchased Vitamin water. For Google, geographical expansion is not as important as paradigm expansion. The net's paradigm is shifting through social networks. Google China can take a hit from Baidu but FB has already gained traction across geographies. It does not matter if Apple is not into creating social networks for a business because Apple is not a net company, its a product company. But Google is a pure-play net company who's raison d'etre is the net. So if the net is moving into social networks, it only makes sense for this net company to have a strong presence in the same.
Had Sun gotten into consumer market (since it had some of the best technology/IP/brainpower) and focused on areas that Dell, HP focused on, it would still have existed today. Sun made halfhearted attempts, failed and paid a big price. If Google misses the social networking boat, I believe, that something similar will happen. For Google, the growth will come from controlling as much of the net as possible and its impossible to do this without a strong presence in social media. With FB and Twitter expanding the way there are, its hard to miss their power in Web 2.0.
I could be totally wrong in all this analysis but I sincerely believe in it. My belief only strengthens when I read/hear more about Google's perseverance in making a mark in social media. For a net company, it has to succeed in this space, or it can remain being an usher.
"why does it even matter that google hasn't succeeded in social networking in spite of trying? should an aircraft manufacturer also make cars and succeed at it? should a tv network also make tvs or dvrs? some great companies have found it difficult to break into other related ideas. coke used to own a wine business that went nowhere. is there really a danger that google will become irrelevant if it doesn't do social networking?"
I think it matters a lot that Google makes its presence felt in the social networking space. Lets look at an analogy. Think of Microsoft getting into web browsers in mid-90s. Why did it matter to a O/S company to make browsers? It did because at that time Bill slowly realized that the future of IT industry is shifting from desktops to the Internet. Microsoft had to succeed in not only beating Netscape but also in bettering it (although I prefer Firefox to both). It cunningly reverse-engineered Navigator and bundled it in Office. Had Microsoft not gotten into browsers, it would have lost a great opportunity to make its presence felt in the Internet industry. Wonder how the tech world would have been now. Now that cloud computing is here to stay, it only makes MSFT's moves valid.
Google currently is the top dog when it comes to search. And it makes all its money thanks to its efficient search algorithms (thru Adwords and Adsense programs). But the way I see it, the net is growing into an animal the type of which we haven't seen before. For this animal, search will become a menial task. Don't get me wrong, people will still search and search hard for the net is so easy to get lost. We need a janitor who takes us where we want to go. But that's the role of the janitor, it stops there. Social networks offer the higher end services (if not now, in the future) and will make people stay more in their sites and engage users through various apps. Naturally, advertising dollars will shift to places where people hang more. How people navigate will matter less and where people will navigate to will matter more. Hence, its crazily important that a pure web company like Google has a strong presence in social networks, or it will risk becoming a more menial search service provider (not that its inherently bad or anything). This is exactly why Google is scrambling hard with its botched attempts like Orkut, Wave, Buzz and now something else.
If Coke fails in making wine it hardly matters because wine-making is not Coke's forte. But if Coke fails in expanding into other beverages (like filtered water, flavored water, juices, coke variants like coke zero, healthy beverages etc), it will not grow. Now being stagnant is the enemy of Wall St. Already Coke's market is stagnant. It has two basic choices, expand into new markets (China, India, Latin America) and/or move into new product lines. That's why Coke purchased Vitamin water. For Google, geographical expansion is not as important as paradigm expansion. The net's paradigm is shifting through social networks. Google China can take a hit from Baidu but FB has already gained traction across geographies. It does not matter if Apple is not into creating social networks for a business because Apple is not a net company, its a product company. But Google is a pure-play net company who's raison d'etre is the net. So if the net is moving into social networks, it only makes sense for this net company to have a strong presence in the same.
Had Sun gotten into consumer market (since it had some of the best technology/IP/brainpower) and focused on areas that Dell, HP focused on, it would still have existed today. Sun made halfhearted attempts, failed and paid a big price. If Google misses the social networking boat, I believe, that something similar will happen. For Google, the growth will come from controlling as much of the net as possible and its impossible to do this without a strong presence in social media. With FB and Twitter expanding the way there are, its hard to miss their power in Web 2.0.
I could be totally wrong in all this analysis but I sincerely believe in it. My belief only strengthens when I read/hear more about Google's perseverance in making a mark in social media. For a net company, it has to succeed in this space, or it can remain being an usher.
Saturday, July 17, 2010
The Hubris of Google
Google, an integral part of our Web life, is hardly making any dent in the most exciting field of social networking. Totally out-shined in this sphere by FaceBook (FB), Twitter, and even Linkedin, Google seems to be scrambling for new ideas to make a mark in this space. Both FB and Twitter have a minuscule of resources Google has. Whether its brainpower or pocket depth, Google outguns these two companies put together and then some. Harvard folks call it disruptive innovation but the term has become so cliched these days that I shudder using it. Also, I am not sure if FB and Twitter are disrupting Google because they don't compete directly (search business I mean). Yet, the amorphous nature of the new economy makes companies like Sony and Microsoft work closely on a few things while being at each others neck's in other areas (example: gaming consoles). Apple and Google shared a lovely relationship before Android was born and caused a bitter divorce. Friends in the morning are foes at night and so on.
Google has a miserable presence in the social networking space. First, there was Orkut, then there was Wave, now its Buzz. Through all these avatars, Google failed to build a viable social network. While Orkut could only get popular amongst a certain section in a certain demographic, Wave totally failed to take off, with Buzz being a stillborn. FB has more than 400 million active users, of whom 50% or above log in, any given day and spend over 500 billion minutes per month on Facebook. That's an awful lot of time (even to waste right?) for any company to capture if it wants to. While I don't want to digress into the sociological consequences of this type of usage, its hard not to notice that. Twitter ended 2009 with just over 75 million user account although a majority of Twitter accounts are inactive, with about 25% of accounts having no followers while around 40% or so of these accounts having never sent a single Tweet. But, Twitter is a white-hot medium for companies in their reaching out efforts. FB supposedly captured around $500 million in revenues in 2009 and is projected to be on the path to becoming a billion dollar (revenues) company in 2010. Advertising money is raining on FB. These are massive numbers for a website that lets people interact in a web 2.0 way. Dell and many other companies use Twitter avidly while FB is a darling of many companies (who end their TV commercials directing users to FB). Web is moving from being a search-able vault to being a private network, which allows users interact through any media (audio, video, files) they like. FB and Twitter are succeeding in building these private networks but Google does the menial task of being a search service provider.
If Google never tried in this space, it would have not mattered. But Google tried, hard. Orkut is a wannabe, it never captured a sizable market in the US or Europe. For some reason, its only famous in Asia and that too among a certain demographic. Google Wave (from a user experience) was a confused product, with no proper utility but some cool features. Who cares if it has sexy technology? As a user, its useless for me. Seems like, Google must have thought "wait a minute, what is FB anyway? It lets people share pictures (we have Picasa), it lets people email (We have Gmail), it lets people share videos (we own YouTube), it lets people update their status (they can do that in Gmail too), so lets put it all together and have a whole web in Wave with a search bar that lets users search the web while they are at it. Sorry, does not work. Wave is a confused and useless product that fails to generate any user interest what-so-ever. Next, Google comes up with Buzz. What is Buzz anyway? I still fail to understand it till today. Is is just mixing Gmail with Wave and then adding Picasa with a search bar on top? But that is Wave. I am lost by this point and I give up trying to define Google's social media initiatives. Bottom line, Google has a confused, botched up and muddled strategy in the single-most interesting aspect of Web 2.0
Google also seems to positively hate FB. I am not surprised. Its like Microsoft banning all its employees from carrying an iPhone. Never underestimate the power of denial. If Steve Ballmer says iPhone is trash compared to a Windows Mobile phone, he means it because he is delirious. If Google's triumvirate management thinks that FB is trash and social media is a trend, they mean it too. Its called, disconnection from reality.
The web is moving into a strange direction. Internet is the ultimate democracy. The whole world saw what happened during Iranian revolution, thanks to Twitter. There are more users on FB than there are human beings in the United States. That is something. Its hard to ignore. More recently, its heard that Google is trying to consolidate Orkut, Wave and Buzz under one single umbrella and give it another shot. But the social media train has left the station and Google is left behind. Nevertheless, Google has terrific new areas to be excited about (such as Smart phones through Android and net-book O/S thru Chrome) and also has a vital role to play in web 2.0 thanks to its YouTube acquisition. If Microsoft could be smart enough to invest in FB, why did Google miss out?
Google, being a hardcore engineering company, is filled with some of the best brain power there is on Earth. There is also some amount of justified pride in being Google, for all the greatness it accomplished in the last decade. But pride can easily turn into hubris. By neglecting this vital medium, Google might have shown what ancient writers have seen in great heroes. Because its so good at what it does, Google never looked at the social media seriously enough and that probably why it failed to build a viable presence in social media. I would love to be proven wrong in the coming few years, but for now social media networks seems to be the hubris for this hero, a sore tendon on the great Achilles.
Google has a miserable presence in the social networking space. First, there was Orkut, then there was Wave, now its Buzz. Through all these avatars, Google failed to build a viable social network. While Orkut could only get popular amongst a certain section in a certain demographic, Wave totally failed to take off, with Buzz being a stillborn. FB has more than 400 million active users, of whom 50% or above log in, any given day and spend over 500 billion minutes per month on Facebook. That's an awful lot of time (even to waste right?) for any company to capture if it wants to. While I don't want to digress into the sociological consequences of this type of usage, its hard not to notice that. Twitter ended 2009 with just over 75 million user account although a majority of Twitter accounts are inactive, with about 25% of accounts having no followers while around 40% or so of these accounts having never sent a single Tweet. But, Twitter is a white-hot medium for companies in their reaching out efforts. FB supposedly captured around $500 million in revenues in 2009 and is projected to be on the path to becoming a billion dollar (revenues) company in 2010. Advertising money is raining on FB. These are massive numbers for a website that lets people interact in a web 2.0 way. Dell and many other companies use Twitter avidly while FB is a darling of many companies (who end their TV commercials directing users to FB). Web is moving from being a search-able vault to being a private network, which allows users interact through any media (audio, video, files) they like. FB and Twitter are succeeding in building these private networks but Google does the menial task of being a search service provider.
If Google never tried in this space, it would have not mattered. But Google tried, hard. Orkut is a wannabe, it never captured a sizable market in the US or Europe. For some reason, its only famous in Asia and that too among a certain demographic. Google Wave (from a user experience) was a confused product, with no proper utility but some cool features. Who cares if it has sexy technology? As a user, its useless for me. Seems like, Google must have thought "wait a minute, what is FB anyway? It lets people share pictures (we have Picasa), it lets people email (We have Gmail), it lets people share videos (we own YouTube), it lets people update their status (they can do that in Gmail too), so lets put it all together and have a whole web in Wave with a search bar that lets users search the web while they are at it. Sorry, does not work. Wave is a confused and useless product that fails to generate any user interest what-so-ever. Next, Google comes up with Buzz. What is Buzz anyway? I still fail to understand it till today. Is is just mixing Gmail with Wave and then adding Picasa with a search bar on top? But that is Wave. I am lost by this point and I give up trying to define Google's social media initiatives. Bottom line, Google has a confused, botched up and muddled strategy in the single-most interesting aspect of Web 2.0
Google also seems to positively hate FB. I am not surprised. Its like Microsoft banning all its employees from carrying an iPhone. Never underestimate the power of denial. If Steve Ballmer says iPhone is trash compared to a Windows Mobile phone, he means it because he is delirious. If Google's triumvirate management thinks that FB is trash and social media is a trend, they mean it too. Its called, disconnection from reality.
The web is moving into a strange direction. Internet is the ultimate democracy. The whole world saw what happened during Iranian revolution, thanks to Twitter. There are more users on FB than there are human beings in the United States. That is something. Its hard to ignore. More recently, its heard that Google is trying to consolidate Orkut, Wave and Buzz under one single umbrella and give it another shot. But the social media train has left the station and Google is left behind. Nevertheless, Google has terrific new areas to be excited about (such as Smart phones through Android and net-book O/S thru Chrome) and also has a vital role to play in web 2.0 thanks to its YouTube acquisition. If Microsoft could be smart enough to invest in FB, why did Google miss out?
Google, being a hardcore engineering company, is filled with some of the best brain power there is on Earth. There is also some amount of justified pride in being Google, for all the greatness it accomplished in the last decade. But pride can easily turn into hubris. By neglecting this vital medium, Google might have shown what ancient writers have seen in great heroes. Because its so good at what it does, Google never looked at the social media seriously enough and that probably why it failed to build a viable presence in social media. I would love to be proven wrong in the coming few years, but for now social media networks seems to be the hubris for this hero, a sore tendon on the great Achilles.
Sunday, June 20, 2010
Killed by Ignition
We are living with legacy transportation systems, while alternatives are available. We are demanding inefficiency while smarter choices exist. These choices will hopefully create a dent in the demand-side of the hydrocarbon value chain and help create an economy that will focus more on fuel that will not end this civilization soon. Driving an SUV in this time and age is like using a mainframe to update my blog. Its like spending $20 per minute calling India from the US while there are alternatives that cost a cent. But when it comes to cars, somehow we are blind to these alternatives. We refuse to believe that smarter choices are available and if we know that smarter choices are available, we refute to promote them.
We need to divorce the internal combustion engine from hydrocarbon energy and we need to do this on a war-footing. An obsolete technology, this engine wastes about 90 cents on a dollar. This is due to the fact that only about 10% of a gallon is used to propel the vehicle/driver forward, while the rest of it is wasted in various operational aspects of the engine ending up as heat and exhaust.
The most simple thing to do is to demand more fuel-efficient vehicles. But we are all caught in the web of form not function, style not substance. Hence, a lot of people think its cool to buy SUV's and sports cars which suck gas like a starving vampire would suck blood. The car companies (especially the big three in the US) are culpable for promoting a lifestyle that derives self-identity from the car a person drives. They stick up some "green" labels on the new vehicles which cunningly display some "sustainable" feature or the other, usually hogwash. Looked beneath the surface, most of these vehicles are made the same. Until the gas prices truly reflect their social cost, consumers will not change their habits. When gas prices fall, the SUV's will come out and when gas prices go up, the demand of hybrids will increase. But we do not understand that these price mechanisms follow the evil calculus of OPEC. These countries manipulate their supply to promote demand. The economics of oil dictate the lives of businessmen and politicians alike. Here is a facet of the oil economics (I found this breakup at http://jb-williams.com/).
Based upon a $3.00 gallon of gasoline, the average break-down is as follows.
Gasoline Retailer $.01 cents per gallon
Oil Company $.08 cents per gallon
Refining $.29 cents per gallon
Marketing/Distribution $.32 cents per gallon
Taxes $.59 cents per gallon
Cost of crude $1.71 per gallon (delivered)
As you can see, the retailer makes nothing, the oil company itself makes wafer-thin margins while the refiners and marketing make close to 20% of the margin. Government gets about the same (20%). Since most of the oil companies are vertically integrated, we can safely assume that about >21% of the cut goes to them while about an equal amount going to the Government. This is the reason why usually Governments do not care too much about reducing oil dependency. Tax money is easy money, it goes into running bloated and inefficient governments. This is why they refuse to make sincere efforts to promote hybrid and electric vehicles. Besides, the car companies have massive lobby operations which help reduce investments into public transport. So the more oil is sold at the retail outlets, the more tax money the Government gets and the more the profits of the oil company and the more dependency on cheap energy (since social cost is not taken into account). This web of dependencies can easily be classified as a socially acceptable drug addiction.
Since we, the people, are alone in this war against oil, there are a few things we can do. First, demand more fuel-efficient and smart cars with engines that do not waste too much fuel. We can promote and invest in companies that are innovating towards this end. Tesla, an electric car company, has been investing bucket loads of money to make a good looking electric car but they are too expensive at the current rates to cater to the mass market. Toyota Prius, Honda and Ford hybrids, while being more affordable are not well liked by consumers for the lack of sex appeal. Again, this is because we put more focus on style than substance. I guess, its up to the car companies to restyle these hybrids and electrics into more likable designs but at the same time, we can make a few style sacrifices as well.
There are a couple of others ways to increase the fuel efficiency of vehicles. The first is by using lighter materials for manufacturing, and this is the department of material science engineers. If spiders can make webs that are stronger than kevlar, I wonder why we cant make a material that is light enough to be fuel-efficient but strong enough to be safe. The second method is by using aerodynamic drag reducers. These drag reducers are perfectly suitable to trucks doing long-hauls and they help improve fuel-efficiency by about 10-15% depending on different studies. Using lighter and stronger materials could be cost-prohibitive which makes drag reducers a more cost-effective and scalable solution. The drag is created because of design issues. Almost all trucks that you see on highways are shaped like big boxes. Not a lot of thought is put into their design. Its easy to see that they are not efficiently designed since more energy is required to move a rectangle or square compared to sleeker shapes. A square has to displace a lot of air and this creates a drag which in turn demands more energy from the engine. There are already companies out there that place smartly designed drag reducers that help reduce this drag. We should have to start using them.
Drag-reducers for trucks and semis and hybrids and electrics are the way to go in the future. These technologies are not rocket science. In fact, these days even rocket science is not rocket science. If we can improve various aspects of our lives by focusing on efficiency, I wonder why we neglect something that is so basic. Transportation is an integral part of modern life. But the methods used for transportation are archaic and even anachronistic. To tolerate an internal combustion engine that wastes 90% of the non-renewable resource put into it is essentially living in apathy. To destroy ecosystems that took thousands of years to come to life because of this apathy, is to kill life by ignition, the ignition of our internal combustion engines.
We need to divorce the internal combustion engine from hydrocarbon energy and we need to do this on a war-footing. An obsolete technology, this engine wastes about 90 cents on a dollar. This is due to the fact that only about 10% of a gallon is used to propel the vehicle/driver forward, while the rest of it is wasted in various operational aspects of the engine ending up as heat and exhaust.
The most simple thing to do is to demand more fuel-efficient vehicles. But we are all caught in the web of form not function, style not substance. Hence, a lot of people think its cool to buy SUV's and sports cars which suck gas like a starving vampire would suck blood. The car companies (especially the big three in the US) are culpable for promoting a lifestyle that derives self-identity from the car a person drives. They stick up some "green" labels on the new vehicles which cunningly display some "sustainable" feature or the other, usually hogwash. Looked beneath the surface, most of these vehicles are made the same. Until the gas prices truly reflect their social cost, consumers will not change their habits. When gas prices fall, the SUV's will come out and when gas prices go up, the demand of hybrids will increase. But we do not understand that these price mechanisms follow the evil calculus of OPEC. These countries manipulate their supply to promote demand. The economics of oil dictate the lives of businessmen and politicians alike. Here is a facet of the oil economics (I found this breakup at http://jb-williams.com/).
Based upon a $3.00 gallon of gasoline, the average break-down is as follows.
Gasoline Retailer $.01 cents per gallon
Oil Company $.08 cents per gallon
Refining $.29 cents per gallon
Marketing/Distribution $.32 cents per gallon
Taxes $.59 cents per gallon
Cost of crude $1.71 per gallon (delivered)
As you can see, the retailer makes nothing, the oil company itself makes wafer-thin margins while the refiners and marketing make close to 20% of the margin. Government gets about the same (20%). Since most of the oil companies are vertically integrated, we can safely assume that about >21% of the cut goes to them while about an equal amount going to the Government. This is the reason why usually Governments do not care too much about reducing oil dependency. Tax money is easy money, it goes into running bloated and inefficient governments. This is why they refuse to make sincere efforts to promote hybrid and electric vehicles. Besides, the car companies have massive lobby operations which help reduce investments into public transport. So the more oil is sold at the retail outlets, the more tax money the Government gets and the more the profits of the oil company and the more dependency on cheap energy (since social cost is not taken into account). This web of dependencies can easily be classified as a socially acceptable drug addiction.
Since we, the people, are alone in this war against oil, there are a few things we can do. First, demand more fuel-efficient and smart cars with engines that do not waste too much fuel. We can promote and invest in companies that are innovating towards this end. Tesla, an electric car company, has been investing bucket loads of money to make a good looking electric car but they are too expensive at the current rates to cater to the mass market. Toyota Prius, Honda and Ford hybrids, while being more affordable are not well liked by consumers for the lack of sex appeal. Again, this is because we put more focus on style than substance. I guess, its up to the car companies to restyle these hybrids and electrics into more likable designs but at the same time, we can make a few style sacrifices as well.
There are a couple of others ways to increase the fuel efficiency of vehicles. The first is by using lighter materials for manufacturing, and this is the department of material science engineers. If spiders can make webs that are stronger than kevlar, I wonder why we cant make a material that is light enough to be fuel-efficient but strong enough to be safe. The second method is by using aerodynamic drag reducers. These drag reducers are perfectly suitable to trucks doing long-hauls and they help improve fuel-efficiency by about 10-15% depending on different studies. Using lighter and stronger materials could be cost-prohibitive which makes drag reducers a more cost-effective and scalable solution. The drag is created because of design issues. Almost all trucks that you see on highways are shaped like big boxes. Not a lot of thought is put into their design. Its easy to see that they are not efficiently designed since more energy is required to move a rectangle or square compared to sleeker shapes. A square has to displace a lot of air and this creates a drag which in turn demands more energy from the engine. There are already companies out there that place smartly designed drag reducers that help reduce this drag. We should have to start using them.
Drag-reducers for trucks and semis and hybrids and electrics are the way to go in the future. These technologies are not rocket science. In fact, these days even rocket science is not rocket science. If we can improve various aspects of our lives by focusing on efficiency, I wonder why we neglect something that is so basic. Transportation is an integral part of modern life. But the methods used for transportation are archaic and even anachronistic. To tolerate an internal combustion engine that wastes 90% of the non-renewable resource put into it is essentially living in apathy. To destroy ecosystems that took thousands of years to come to life because of this apathy, is to kill life by ignition, the ignition of our internal combustion engines.
Friday, June 11, 2010
A Travesty of Education
From my experience of working in the education industry, living in three different countries and meeting students from a cross-section of universities across the world, I can safely observe that the current state of education is in a deep state of disarray. I believe that richer countries like America and Australia can somehow live with this trend because they have built a certain level of efficiency and productivity into their societies and systems but countries in Asia (I will not comment on Africa as I have never been there) will pay a big price if the policy makers there keep playing deaf to the call of the day. Even in countries like the US and UK, which are so advanced in terms of human development compared to the rest of the world, it is deeply troubling to see many schools survive and prosper with sub-standard curriculum's and callous faculties. Whether private or public, these schools have survived mostly because the world economy has been growing post-WW II. Except a few hiccups in the 70s and 90s, mostly the world growth has been positive, till now. Post 2000, the world has been growing exponentially, thanks to China entering WTO in 2001 and India bidding adieu to Hindu rate of growth. This has prompted corporations (mostly based out of US/Europe) to expand and get a large share of their revenues from the growing Asian and Latin American populations, which compensated for the slow growth in their home countries. This has further led to the demand of managerial talent and hence management education. Which has in turn led to the growth of business schools across the world. Entrepreneurs in the private sector and public schools under the aegis of incompetent Government bodies, took advantage of this demand. While some of these schools, a minuscule, are truly thought-leaders, most others are just shops. Public business schools are under-funded and hence under-staffed. They make do with a nonchalance attitude to education. Living life on a quarterly basis with no focus on the longer term aspects of what they are imparting, these schools seldom try sincerely to hear what the travails of students are. Private schools are better equipped to deal with these issues because they are financially independent. But they often care only about the "success" of their alumni and how large the checks these alumni would cut in the future.
Modern education is evolving into a beast. The objective of real education is not to confer degrees with fancy titles. Education, in any discipline should be about kindling the fires of the mind and not filling it with nonsense. Curriculum's should lead students into a direction that allows them to explore the world and see things that are above and beyond the grasp of text books and case studies. It must be about teaching humility and honesty and live a life with fulfillment and contentment. It must fire the imagination and awaken the creativity that has led to so many great innovations in the past few decades. Is it pure chance that most of such innovation came from the streets and not the schools? Is it just a constant coincidence that creativity comes from areas one least expect?
But modern education instead instills either pride or self-doubts in the minds of the student. Pride comes from association and exclusivity. Self-doubts are born out of delinquent pedagogy. From the course structure, to the assessments and the mode of teaching in between, everything has gone wayward and misdirected. Business education is in a bigger state of disgrace as compared to other non-mainstream disciplines. Media is busy with ranking schools based usually on the cliched metrics of salary levels achieved and placements generated while accreditation companies are filled with people who seem disconnected from reality. It does not matter if the top management of the the Enron's, Global Crossings, Lehman Brothers and Satyams of the world were educated at the best schools in the world. Were these people not imparted with values that should have stopped them from doing what they did? Accreditation companies fail miserably in gauging the efficacy of their accreditation just like ratings companies fail to properly predict the bankruptcy of a AAA rated company. Life looks good when these people look down from their high-rise glass buildings but the reality in the schools/companies they rank, rate and accredit is different. Back in the olden days in India, apparently good kings roamed the streets at night, in disguise, so as to see how their citizens are living and what their problems are. Maybe accreditation companies and journalists should enroll as students to see what a travesty modern education has become.
In India, the emphasis in most schools is on rote learning rather than building analytical skills. It is surprising to find that a similar model is followed in most schools in the UK and the US as well. Scranton tests are the enemy of creativity while being a matter of convenience for the faculty. Such tests destroy the soul of education. One can get A's in these tests and fail in the real world. This model of education is akin to missing the forest for the trees. The point of good education is help a person do their job with diligence and propriety while staying within a framework of ethical and moral respectability. This requires analytical skills and a sense of what is right and wrong. Multiple-choice tests cant teach this, only interaction can. It is the duty of the teacher and his/her discretion to think through these issues. Its the job of the teacher to develop values and real knowledge (lets forget wisdom, it cant be learned in a school) in a student. Teachers are responsible for inspiring or destroying the students. Why don't teachers take this to heart? Why do elite schools fail to instill values in their students? Why don't lesser than elite schools focus differentiating themselves by creating such niche?
The problem is not in the schools but in the way society has come to evolve. Focus, from childhood, is put on being "successful" in life, which usually means making money. Big businessmen and successful actors are the role models these days instead of people of character, integrity and selfless leaders. Greed has come to replace altruism, which fell out of fashion decades ago. Media reflects (through movies and fiction) these trends by portraying success as the be all and end all of human life. Every person I talk to, these days reflects a sense of dissatisfaction with his/her current situation regardless of the fact that they have a job, a car and a house. They all want to be somewhere else, do something else and look like someone else. And yes, these are also men and women who come out of good schools and even elite schools. Why does this happen? While elite schools instill "bragging rights" in their students, lesser ones often are left feeling inadequate. Regardless of professional choices, both seem unhappy about their lives in general because they are not "successful" enough. Somebody else has more than you, always. This stress and the ensuing pressure cracks families, neighborhoods and finally nations. Everything begins at the schools. If teachers did their jobs well in the first place, there would have been more secure people in the society. Kids growing up in single parent homes have lesser opportunities to be nurtured compared to kids who grow up with both the parents. But fathers and mothers these days are busy earning bread and promotions so where do they have time to talk to kids? That leaves the teachers to do this job. But sadly, teaching, just like all the other professions, has become a wage job so nobody takes it passionately. If this is the bottom-up analysis for the breakdown of modern education, the top-down looks even more disturbing.
The deans and heads of private and public schools treat their schools and universities as a business. They act and behave like modern day CEOs. You could ask me what the trouble with this attitude is. Here is what is wrong. Education is NOT business, and it should never be. They are two totally separate fields. While business schools impart students with a set of heuristics on how businesses are run, education is actually about uplifting the soul and ennobling. Its another question whether business education can ever be uplifting, but it surely can be ennobling. There are capitalist philosophers and men/women of vision who made this world a better place through merchandise. Whether public or private, elite or street, its about showing such light in the darkness of daily din. If universities are run like businesses, their focus is on profits, growth and power. To obtain these ends, universities will make any compromises. Such compromises could be in quality or in morals. Complete this quarter, update the roaster and file away a few more students, irrespective of how we taught what we taught or why we taught what we taught. So from the teacher to the university, there is nobody who truly cares for the student, which they can do by taking some time out to understand what this individual actually wants. Humans are treated like sheep with no respect paid to their independence and personality.
A large part of my essay is trying to expose the current problems, hence you could ask me what the suggestions are. I do propose a few. More specifically, business schools should revamp their curriculum's to include brave courses on sociological issues and philosophical subjects, not just the usual accounting and marketing rigmarole. There has to be a cross-pollination of ideas in curriculum's. Business schools should include a few art classes to encourage the students to think out of the box for solving business problems. Inter-disciplinary studies are important for enhancing a person's critical thinking. Furthermore, universities should ONLY and STRICTLY be run on a non-profit model and any profit made should be sunk back into building libraries and sports facilities. Teachers should be regularly evaluated irrespective of whether they are tenured or not. Likewise, feedback should be 360 degrees and not just students ranking teachers. Finally, for the younger section and maybe not at the graduate level, home schooling could be an alternative and this is already becoming popular in the Western world. Children could be exposed to classical education and this will enhance their worldview in a way, current curriculum's cannot. While its true that experience is the best form of all educations, its equally important to have a basic training in the functioning of the world. "Ipsa scientia potestas est" or knowledge itself is the real power. All forms of power corrupts, but real knowledge liberates.
Modern education is evolving into a beast. The objective of real education is not to confer degrees with fancy titles. Education, in any discipline should be about kindling the fires of the mind and not filling it with nonsense. Curriculum's should lead students into a direction that allows them to explore the world and see things that are above and beyond the grasp of text books and case studies. It must be about teaching humility and honesty and live a life with fulfillment and contentment. It must fire the imagination and awaken the creativity that has led to so many great innovations in the past few decades. Is it pure chance that most of such innovation came from the streets and not the schools? Is it just a constant coincidence that creativity comes from areas one least expect?
But modern education instead instills either pride or self-doubts in the minds of the student. Pride comes from association and exclusivity. Self-doubts are born out of delinquent pedagogy. From the course structure, to the assessments and the mode of teaching in between, everything has gone wayward and misdirected. Business education is in a bigger state of disgrace as compared to other non-mainstream disciplines. Media is busy with ranking schools based usually on the cliched metrics of salary levels achieved and placements generated while accreditation companies are filled with people who seem disconnected from reality. It does not matter if the top management of the the Enron's, Global Crossings, Lehman Brothers and Satyams of the world were educated at the best schools in the world. Were these people not imparted with values that should have stopped them from doing what they did? Accreditation companies fail miserably in gauging the efficacy of their accreditation just like ratings companies fail to properly predict the bankruptcy of a AAA rated company. Life looks good when these people look down from their high-rise glass buildings but the reality in the schools/companies they rank, rate and accredit is different. Back in the olden days in India, apparently good kings roamed the streets at night, in disguise, so as to see how their citizens are living and what their problems are. Maybe accreditation companies and journalists should enroll as students to see what a travesty modern education has become.
In India, the emphasis in most schools is on rote learning rather than building analytical skills. It is surprising to find that a similar model is followed in most schools in the UK and the US as well. Scranton tests are the enemy of creativity while being a matter of convenience for the faculty. Such tests destroy the soul of education. One can get A's in these tests and fail in the real world. This model of education is akin to missing the forest for the trees. The point of good education is help a person do their job with diligence and propriety while staying within a framework of ethical and moral respectability. This requires analytical skills and a sense of what is right and wrong. Multiple-choice tests cant teach this, only interaction can. It is the duty of the teacher and his/her discretion to think through these issues. Its the job of the teacher to develop values and real knowledge (lets forget wisdom, it cant be learned in a school) in a student. Teachers are responsible for inspiring or destroying the students. Why don't teachers take this to heart? Why do elite schools fail to instill values in their students? Why don't lesser than elite schools focus differentiating themselves by creating such niche?
The problem is not in the schools but in the way society has come to evolve. Focus, from childhood, is put on being "successful" in life, which usually means making money. Big businessmen and successful actors are the role models these days instead of people of character, integrity and selfless leaders. Greed has come to replace altruism, which fell out of fashion decades ago. Media reflects (through movies and fiction) these trends by portraying success as the be all and end all of human life. Every person I talk to, these days reflects a sense of dissatisfaction with his/her current situation regardless of the fact that they have a job, a car and a house. They all want to be somewhere else, do something else and look like someone else. And yes, these are also men and women who come out of good schools and even elite schools. Why does this happen? While elite schools instill "bragging rights" in their students, lesser ones often are left feeling inadequate. Regardless of professional choices, both seem unhappy about their lives in general because they are not "successful" enough. Somebody else has more than you, always. This stress and the ensuing pressure cracks families, neighborhoods and finally nations. Everything begins at the schools. If teachers did their jobs well in the first place, there would have been more secure people in the society. Kids growing up in single parent homes have lesser opportunities to be nurtured compared to kids who grow up with both the parents. But fathers and mothers these days are busy earning bread and promotions so where do they have time to talk to kids? That leaves the teachers to do this job. But sadly, teaching, just like all the other professions, has become a wage job so nobody takes it passionately. If this is the bottom-up analysis for the breakdown of modern education, the top-down looks even more disturbing.
The deans and heads of private and public schools treat their schools and universities as a business. They act and behave like modern day CEOs. You could ask me what the trouble with this attitude is. Here is what is wrong. Education is NOT business, and it should never be. They are two totally separate fields. While business schools impart students with a set of heuristics on how businesses are run, education is actually about uplifting the soul and ennobling. Its another question whether business education can ever be uplifting, but it surely can be ennobling. There are capitalist philosophers and men/women of vision who made this world a better place through merchandise. Whether public or private, elite or street, its about showing such light in the darkness of daily din. If universities are run like businesses, their focus is on profits, growth and power. To obtain these ends, universities will make any compromises. Such compromises could be in quality or in morals. Complete this quarter, update the roaster and file away a few more students, irrespective of how we taught what we taught or why we taught what we taught. So from the teacher to the university, there is nobody who truly cares for the student, which they can do by taking some time out to understand what this individual actually wants. Humans are treated like sheep with no respect paid to their independence and personality.
A large part of my essay is trying to expose the current problems, hence you could ask me what the suggestions are. I do propose a few. More specifically, business schools should revamp their curriculum's to include brave courses on sociological issues and philosophical subjects, not just the usual accounting and marketing rigmarole. There has to be a cross-pollination of ideas in curriculum's. Business schools should include a few art classes to encourage the students to think out of the box for solving business problems. Inter-disciplinary studies are important for enhancing a person's critical thinking. Furthermore, universities should ONLY and STRICTLY be run on a non-profit model and any profit made should be sunk back into building libraries and sports facilities. Teachers should be regularly evaluated irrespective of whether they are tenured or not. Likewise, feedback should be 360 degrees and not just students ranking teachers. Finally, for the younger section and maybe not at the graduate level, home schooling could be an alternative and this is already becoming popular in the Western world. Children could be exposed to classical education and this will enhance their worldview in a way, current curriculum's cannot. While its true that experience is the best form of all educations, its equally important to have a basic training in the functioning of the world. "Ipsa scientia potestas est" or knowledge itself is the real power. All forms of power corrupts, but real knowledge liberates.
Friday, June 4, 2010
The Recall Fiasco
Over the past one year, there have been so many product recalls, spanning various facets of our consumer life, its intimidating to think about the safety of anything we use in our modern lives. In the last one hundred or so years, a multitude of products have entered our daily lives to make us lead a product-centric and contemporocentric lives. But in the past two decades, the escalation has been incredible. People across the World are now regularly bombarded with products and advertisements hundreds of times, everyday. Our lives get shorter as the margins of companies get longer. And as the cycle of innovation reduces, more and more products hit the street. Subliminal and explicit messages pollute our sub-conscious minds making us gullible customers controlled by a puppet master. Someone is selling something constantly, creating an endless feed of commerce interspersed within the already chaotic daily schedules of men, women and children. Here is a fact of modern life, we live in a society which cares more about the shelf life of a product, than the shelf life of a person. Product > Person.
McDonald's, about whom investors have been salivating in the last few years, recalled glasses it started selling in conjunction with Dream Works' franchise flick, Shrek IV. While the ogre is pretty damn popular with kids, his green color has come to signify the greed of cross-product placements and movie-product tie-ins. I know how crazy kids can get about these tie-ins, as in their gullible age they associate everything sold out there with the chirpy, fun-loving nature of the ogre. My nephew used to pester me to get these toys in our visits to the not-so-friendly neighborhood McDonald's. I was amazed at how cunning these companies are in their reach-out efforts to the younger sections. Even kids are neatly market segmented and psycho-graphically profiled. The McDonald's glasses apparently (recalled in the millions, as there are 12 million glasses in the market now), have a lethal chemical cadmium (a carcinogen no less) inside them. Kids drink the already nasty colas (Coke and Pepsi found traces of pesticides in their formulas recently in India) in place of water in a glass made with cadmium and down a hamburger made from a cow that was fed some more lethal hormones. Looks like the entire value chain of our lives is polluted. Will our next generation of men and women turn to aliens in their lifetime, being fed such trash? No wonder the folks of our parent generation have more energy and mental stamina than the kids these days. Fortunately, U.S. Consumer Product Safety Commission found the McDonald's cadmium-tainted glasses in time to even launch a recall. What if it wast found? What about all those other products floating in the market now with some lethal ingredients in their DNA? Where are the testing standards to stop corporations putting carcinogens into our daily lives? How come investors don't cry for safety in products instead of ever-increasing returns? In their eagerness and hastiness to to get tainted products to market in time when their movies hit the screens, the DreamWorks', McDonalds' and Coke's of the world will do anything. They will even allow their manufacturing (usually China, cause its cheap, never mind the quality) facilities to get tainted with carcinogens. Just like all those crackers and peanut butters etc recalled last year as someone found salmonella in some of these products. Essentially, one of us should put ourselves in peril or even die so others will know how bad these products are. Unfortunately, modern industrial production systems are so integrated and so large scale, its impossible to test every product in time to check if everything is safe or not. Please remember the toys from China that were filled with toxic substances. These profit-seeking corporations will not stop at anything for a little extra growth and a nicer quarterly number. Not even the toys of our kids. We were not safe by what we drank or ate and now our kids are not safe by what they play with and the glasses from which they drink their colas.
Update on June 25th. Kellogg recalled some 28 million boxes of its breakfast cereal, Apple Jacks, Corn Pops, Froot Loops and Honey Smacks cereals, due to a "bad smell" coming from the package. Interestingly, the news item only reveals so much about the recall but adds "shares of Kellogg unchanged at end of trading". Look at the apathy of this situation. While we are worrying about the life/death of human beings here, the conclusion of news items talks about the frigging stock price of the company? Is that the only raison d'etre of modern existence?
Toyota, whose production systems and kanban/kaizan processes cause many managements gurus to jizz in their pants, recalled millions of its cars recently. Why? Because the floor mats were disabling drivers to hit brakes or accelerate the cars automatically. There are problems with gas pedals. Imagine sitting in a car that you cant control. Imagine trying to stop the car when you see pedestrians, but instead the car starts racing. All these decades, Toyota, an otherwise smart company because of its focus on innovation and hybrid technologies, was praised high for its ability to advance production processes through just in time (JIT) manufacturing and constant improvement yada yada yada. JIT practice is not a panacea, while it can save inventory costs, it puts a strain on human beings to do things in the last minute, it clogs traffic and finally it responds weakly to variance in demand. I see a link between these methods like JIT and other fancy Japanese words to the recent recalls. Management consultants would like you to believe otherwise, because they sell crappy ideas with fancy words and make fancy bucks doing so. In its quest to increase market share, Toyota might have sent an unfinished product to the market without proper testing. Is this the constant improvement they were doing for last two decades? Most of the major Toyota brands like Prius and others were recalled. Even Lexus, which prides itself in its quality has recalls. Please remember the ads of Lexus extolling its virtues and how cool you are as a person just because you drive a Lexus. Well, if you stay alive driving one that is. And this week Chrysler announced that it is recalling nearly 600,000 Jeep Wranglers and Chrysler/Dodge because of a possible brake fluid leak from front inner fender liners causing friction and a possible loss of brakes not to mention the fire hazard the wiring can cause. We were not safe crossing the road but now we are not safe inside the cars.
Johnson & Johnson, loved by many B school professors who constantly give the cliched example of Tylenol recall in the 70s, recalled Children's Tylenol and Other Children's Medicines in the last few weeks. batches of regular and extra-strength Tylenol, children's Tylenol, eight-hour Tylenol, Tylenol arthritis, Tylenol PM, children's Motrin, Motrin IB, Benadryl Rolaids, Simply Sleep, and St. Joseph's aspirin have been recalled. If you ate them, J&J is sorry about it. Sorry, we had some bacteria in our manufacturing plants and this bacteria (which is resistant to anti-biotic by the way) seeped into the tablets your kids take. I ask, why is there not a revolution already in the streets demanding the heads of people responsible for these things? Is it just enough to start a boycott J&J or Toyota page on FaceBook? Does J&J know about something called testing? According to FDA, problems with these drugs surfaced as early as 2008, but no one bothered to follow up. What kind of manufacturing standards do these companies use? Is it just enough to put anything out, as soon as can? It does not even matter if the consumer dies using the product? Companies don't care about this, because Wall St., does not care. All investors care is about the return on their investment, it does not matter if their kids are taking contaminated medicines of a company in which their parents are investors. Who cares if a few children get sick or even die when the company has been consistently giving returns and meeting quarterly expectations? We were not safe using these drugs in the first place, because they cure the symptoms not the disease. Now, we have to think ten times before we load our kids with Motrin and Tylenol and who knows, maybe J&J will come up with another medicine to cure those who are affected by the contaminated Tylenol. Now, that would be a great business idea, which would make those investors drop their pants and dance.
HP, another paragon of virtues as extolled by gurus, recalled thousands of laptop batteries last week cause they were a fire hazard. Simply put, you or I could be blown to bits by just using a laptop. Why do we need weapons of mass destruction, if we have batteries like that? Why not install them batteries into laptops and gift them to our enemies? Now, since I bought a HP laptop in 2007 (recall period, August of 2007 and July of 2008), my heart skipped a beat and I hastily checked my battery serial number. No, its not in the recall. But yes, the battery overheats like crazy causing either my clunky Windows OS to shutdown, or drive the fan nuts or barbecue my thighs or all. CPSC, the primary safety watchdog for technology in the United States, can be contacted if consumers have problems but what about those laptops that were sent to places like India where finding someone who cares is as hard as finding a snowball in hell? It does not matter right, because HP already booked those laptops into their sales figures, which is reflected in its share price and investors already made their returns. Why care if a few people's lives are jeopardized because their laptops have suddenly turned to landmines. We are not safe by using our "productivity" enhancing gadgets.
We might have to strip ourselves naked and go live in the jungle. Might could be right there but at least there is honesty in such a killing. The above named corporations should be ashamed of themselves for the fact that they will go to any length in their naked pursuit of profit. Investors could care less if these companies make lethal products that masquerade as kids toys or cars or laptops. I don't believe that only a few people who are exposed to these products and endanger their lives will pay the price along with their families and friends. I believe that we are all doomed as long as we think and act like sheep (read consumers). Nobody will question these companies because they are too big. A few heads could fall, business will be back to normal but processes will not change. Investors will only clamor for quarterly performance. Soul searching will not happen and our cars, glasses, laptops, burgers, medicines, and lives will keep getting contaminated until the last day. We will all eventually meet our maker, and hey, I have my defects but I don't want to be recalled just yet. But I'm sick and tired about these companies and their cadmium-tainted souls.
McDonald's, about whom investors have been salivating in the last few years, recalled glasses it started selling in conjunction with Dream Works' franchise flick, Shrek IV. While the ogre is pretty damn popular with kids, his green color has come to signify the greed of cross-product placements and movie-product tie-ins. I know how crazy kids can get about these tie-ins, as in their gullible age they associate everything sold out there with the chirpy, fun-loving nature of the ogre. My nephew used to pester me to get these toys in our visits to the not-so-friendly neighborhood McDonald's. I was amazed at how cunning these companies are in their reach-out efforts to the younger sections. Even kids are neatly market segmented and psycho-graphically profiled. The McDonald's glasses apparently (recalled in the millions, as there are 12 million glasses in the market now), have a lethal chemical cadmium (a carcinogen no less) inside them. Kids drink the already nasty colas (Coke and Pepsi found traces of pesticides in their formulas recently in India) in place of water in a glass made with cadmium and down a hamburger made from a cow that was fed some more lethal hormones. Looks like the entire value chain of our lives is polluted. Will our next generation of men and women turn to aliens in their lifetime, being fed such trash? No wonder the folks of our parent generation have more energy and mental stamina than the kids these days. Fortunately, U.S. Consumer Product Safety Commission found the McDonald's cadmium-tainted glasses in time to even launch a recall. What if it wast found? What about all those other products floating in the market now with some lethal ingredients in their DNA? Where are the testing standards to stop corporations putting carcinogens into our daily lives? How come investors don't cry for safety in products instead of ever-increasing returns? In their eagerness and hastiness to to get tainted products to market in time when their movies hit the screens, the DreamWorks', McDonalds' and Coke's of the world will do anything. They will even allow their manufacturing (usually China, cause its cheap, never mind the quality) facilities to get tainted with carcinogens. Just like all those crackers and peanut butters etc recalled last year as someone found salmonella in some of these products. Essentially, one of us should put ourselves in peril or even die so others will know how bad these products are. Unfortunately, modern industrial production systems are so integrated and so large scale, its impossible to test every product in time to check if everything is safe or not. Please remember the toys from China that were filled with toxic substances. These profit-seeking corporations will not stop at anything for a little extra growth and a nicer quarterly number. Not even the toys of our kids. We were not safe by what we drank or ate and now our kids are not safe by what they play with and the glasses from which they drink their colas.
Update on June 25th. Kellogg recalled some 28 million boxes of its breakfast cereal, Apple Jacks, Corn Pops, Froot Loops and Honey Smacks cereals, due to a "bad smell" coming from the package. Interestingly, the news item only reveals so much about the recall but adds "shares of Kellogg unchanged at end of trading". Look at the apathy of this situation. While we are worrying about the life/death of human beings here, the conclusion of news items talks about the frigging stock price of the company? Is that the only raison d'etre of modern existence?
Toyota, whose production systems and kanban/kaizan processes cause many managements gurus to jizz in their pants, recalled millions of its cars recently. Why? Because the floor mats were disabling drivers to hit brakes or accelerate the cars automatically. There are problems with gas pedals. Imagine sitting in a car that you cant control. Imagine trying to stop the car when you see pedestrians, but instead the car starts racing. All these decades, Toyota, an otherwise smart company because of its focus on innovation and hybrid technologies, was praised high for its ability to advance production processes through just in time (JIT) manufacturing and constant improvement yada yada yada. JIT practice is not a panacea, while it can save inventory costs, it puts a strain on human beings to do things in the last minute, it clogs traffic and finally it responds weakly to variance in demand. I see a link between these methods like JIT and other fancy Japanese words to the recent recalls. Management consultants would like you to believe otherwise, because they sell crappy ideas with fancy words and make fancy bucks doing so. In its quest to increase market share, Toyota might have sent an unfinished product to the market without proper testing. Is this the constant improvement they were doing for last two decades? Most of the major Toyota brands like Prius and others were recalled. Even Lexus, which prides itself in its quality has recalls. Please remember the ads of Lexus extolling its virtues and how cool you are as a person just because you drive a Lexus. Well, if you stay alive driving one that is. And this week Chrysler announced that it is recalling nearly 600,000 Jeep Wranglers and Chrysler/Dodge because of a possible brake fluid leak from front inner fender liners causing friction and a possible loss of brakes not to mention the fire hazard the wiring can cause. We were not safe crossing the road but now we are not safe inside the cars.
Johnson & Johnson, loved by many B school professors who constantly give the cliched example of Tylenol recall in the 70s, recalled Children's Tylenol and Other Children's Medicines in the last few weeks. batches of regular and extra-strength Tylenol, children's Tylenol, eight-hour Tylenol, Tylenol arthritis, Tylenol PM, children's Motrin, Motrin IB, Benadryl Rolaids, Simply Sleep, and St. Joseph's aspirin have been recalled. If you ate them, J&J is sorry about it. Sorry, we had some bacteria in our manufacturing plants and this bacteria (which is resistant to anti-biotic by the way) seeped into the tablets your kids take. I ask, why is there not a revolution already in the streets demanding the heads of people responsible for these things? Is it just enough to start a boycott J&J or Toyota page on FaceBook? Does J&J know about something called testing? According to FDA, problems with these drugs surfaced as early as 2008, but no one bothered to follow up. What kind of manufacturing standards do these companies use? Is it just enough to put anything out, as soon as can? It does not even matter if the consumer dies using the product? Companies don't care about this, because Wall St., does not care. All investors care is about the return on their investment, it does not matter if their kids are taking contaminated medicines of a company in which their parents are investors. Who cares if a few children get sick or even die when the company has been consistently giving returns and meeting quarterly expectations? We were not safe using these drugs in the first place, because they cure the symptoms not the disease. Now, we have to think ten times before we load our kids with Motrin and Tylenol and who knows, maybe J&J will come up with another medicine to cure those who are affected by the contaminated Tylenol. Now, that would be a great business idea, which would make those investors drop their pants and dance.
HP, another paragon of virtues as extolled by gurus, recalled thousands of laptop batteries last week cause they were a fire hazard. Simply put, you or I could be blown to bits by just using a laptop. Why do we need weapons of mass destruction, if we have batteries like that? Why not install them batteries into laptops and gift them to our enemies? Now, since I bought a HP laptop in 2007 (recall period, August of 2007 and July of 2008), my heart skipped a beat and I hastily checked my battery serial number. No, its not in the recall. But yes, the battery overheats like crazy causing either my clunky Windows OS to shutdown, or drive the fan nuts or barbecue my thighs or all. CPSC, the primary safety watchdog for technology in the United States, can be contacted if consumers have problems but what about those laptops that were sent to places like India where finding someone who cares is as hard as finding a snowball in hell? It does not matter right, because HP already booked those laptops into their sales figures, which is reflected in its share price and investors already made their returns. Why care if a few people's lives are jeopardized because their laptops have suddenly turned to landmines. We are not safe by using our "productivity" enhancing gadgets.
We might have to strip ourselves naked and go live in the jungle. Might could be right there but at least there is honesty in such a killing. The above named corporations should be ashamed of themselves for the fact that they will go to any length in their naked pursuit of profit. Investors could care less if these companies make lethal products that masquerade as kids toys or cars or laptops. I don't believe that only a few people who are exposed to these products and endanger their lives will pay the price along with their families and friends. I believe that we are all doomed as long as we think and act like sheep (read consumers). Nobody will question these companies because they are too big. A few heads could fall, business will be back to normal but processes will not change. Investors will only clamor for quarterly performance. Soul searching will not happen and our cars, glasses, laptops, burgers, medicines, and lives will keep getting contaminated until the last day. We will all eventually meet our maker, and hey, I have my defects but I don't want to be recalled just yet. But I'm sick and tired about these companies and their cadmium-tainted souls.
Saturday, May 22, 2010
The Gulf of Tragedy
The eleventh largest body of water, the Gulf of Mexico is being raped as I type. The sense of helplessness that I can do nothing about it is frustrating me as it is to many fellow kindred souls. Starting on the 20th of April, which is about a month back, 200,000 US gallons (or about 800,000 liters) of oil is gushing into the water system, EVERYDAY. Eleven workers are dead, 17 are injured and it must be costing BP, the principal developer of the project, millions of dollars in restoration. But will BP pay the real cost of this disaster or just an "economic" cost?
BP will only pay a minuscule percentage of its profits in "cleaning" this gush but we will all pay the real costs. Our future generations and all those unborn children and animals, birds, fishes, plants will pay the social, environmental costs of a spill that will soon be forgotten in the daily din of human existence. From my limited understanding of the situation, a hydraulic system leak caused the explosion, which is causing the gush of oil into the water. Petroleum companies usually use highly toxic chemicals to break up this oil, causing more problems than solutions. They will also try and salvage as much as they can from the oil, but this amount is negligible. The oil will not dissolve into the water system, neither will it sink. It will NOT go back to Earth, as easily as it came out. The molecules will stick together and ugly goblets of oil will spread across the water, some landing on beaches where children play and others entangling flora and fauna into a death grip. At the risk of being romantic, I ask, who will stand up for these animals? Since we live an anthropocentric and egocentric lives as humans, and behave as the World (and all its resources) belong to us (and not the other way, that we belong to this universe), we only think in terms of what we monetarily lose. Economists and accountants will only calculate the dollars lost in the spill and the non-renewable resource wasted. A small blip on the GDP of some country and who cares if a few ecosystems are destroyed! The animals and plants do not have representatives to argue their case. Who cares if the oil will change the sex of the fish in the next few generations, its never captured in the economic calculus.
At this point, its time to ask a few basic questions. Why wasnt more precaution taken in this deep-sea drilling? In a report filed with the US Interior Department in 2009, BP quoted that an event like this happening is unlikely and if it did, it could be contained. Now, reports are indicating that it might take a few more months until the gush is contained. Was BP not prepared adequately for such an eventuality? Was BP not focussed as much on disaster management as it is on drilling more and more oil from pristine and interior regions? A more important question to ask at this juncture would be why did BP or other oil companies have to go to the deep sea for oil? Or an even more important question to ask would be why do we depend more and more on oil to provide us with warmth, cooking, goods and transportation?
A few hundred years back people burned candles and Whale fat for light and wood for cooking while using horses for transport. Then, post industrial revolution in Europe and various technological breakthroughs in the US (Oil Creek Pennsylvania in 1859, where oil was first discovered and drilled), slowly led to an addiction to oil, which we can find in almost every aspect of our daily life. Its cheap even at about $3 a gallon because the social cost of drilling oil (which is non-renewable and would take millions of years for Earth to make it for us again using our own dead bodies) is not paid by us. If as a civilization we could put man on the moon and do all these incredible things that we do today, which were inconceivable just a few years back, why the hell cant we stop our addiction to oil? We can blame Ronald Reagan who reduced the fuel efficiency standards set by Jimmy Carter, we can blame the Big Three car makers of the US to lobby the congress/senate and reduce public transportation so people can buy more cars, we can blame the OPEC which cunningly adjusts its production as to stimulate demand (through the weapon of price), we can blame perverted business decisions that put short-term growth ahead of longer-term sustainability of this planet but ultimately we have to blame ourselves. If all of us take an oath to push hybrid technologies and divorce the inefficient internal combustion engine from gas (which wastes >90% of a gallon as heat and exhaust), if all of us start carrying bags to buy groceries instead of using cheap plastic (made from oil) bags, if all of start taking this planet and its natural resources as seriously as we take the next winner of American Idol, we will not have to go deeper and deeper into pristine ecosystems and natural habitats for oil and we will surely think twice before we drill a hole into our mother Earth and suck her blood like an avaricious leech with a ravenous greed. As demand comes so will supply be generated. Kill the demand and the supply will fall (and so with it a few totalitarian regimes).
As I was thinking of the Gulf of Mexico tragedy in the last few days, a strange thought stuck in my head. If there was a fire in our house, we would go to any length to stop it. If we there was a torrential rain and the water came gushing into our basement, we would stop watching TV and rescue our precious furniture. But if something like an oil spill occurs somewhere in the Gulf of Mexico, a majority of us do not even react or think deeper as to how it could affect us or how they can contribute in lessening such damage. Its because a majority of us do not "own" anything in the Gulf of Mexico. What if you had a financial stake in this disaster and you were rewarded if this tragedy is addressed immediately? Will that call you to action? It will. Sadly, all our motives, ambitions and even social relationships revolve around the dollar (or some other currency). Wake up and smell the mint, everyday, until we die. Our perception is that whatever happens to Earth and its natural systems, is meaningless to us because it does not "affect" us nor we will incur any damage as a result of it. Likewise, if the Earth is doing well, it doesn't matter to us, because we are not "rewarded". But the butterfly effect of this tragedy will have a damaging repercussion on all of us, our children and their children. These are the events that will change the course of history and create a new dimension to the path of humanity, a dark dimension. And if we chose to do nothing about these things and alter our lifestyles so as to make some contribution to the world we live in, we will all pay a price. Life on Earth is a cobweb, its interrelated and interdependent. If the planet is healthy, we will be healthy. But the pathetic rules we created for our selves in the last hundred or so years where we wallow in our little selfish shells, dancing in the human carnival wearing different masks leads to an apathy that covers our conscience like an oil slick that covers the soft fur of a sea creature. Its up to us to decide how each of us will react to this, if we will let this be a wake-up call. But such foolish, corny hope took a hit when I read a BP senior executive saying that "I'm optimistic, I'm very optimistic that the Gulf will fully recover". Optimistic? Fully recover? Is this hope or dope speaking?
This is the real tragedy of the commons. Welcome to the suck!
BP will only pay a minuscule percentage of its profits in "cleaning" this gush but we will all pay the real costs. Our future generations and all those unborn children and animals, birds, fishes, plants will pay the social, environmental costs of a spill that will soon be forgotten in the daily din of human existence. From my limited understanding of the situation, a hydraulic system leak caused the explosion, which is causing the gush of oil into the water. Petroleum companies usually use highly toxic chemicals to break up this oil, causing more problems than solutions. They will also try and salvage as much as they can from the oil, but this amount is negligible. The oil will not dissolve into the water system, neither will it sink. It will NOT go back to Earth, as easily as it came out. The molecules will stick together and ugly goblets of oil will spread across the water, some landing on beaches where children play and others entangling flora and fauna into a death grip. At the risk of being romantic, I ask, who will stand up for these animals? Since we live an anthropocentric and egocentric lives as humans, and behave as the World (and all its resources) belong to us (and not the other way, that we belong to this universe), we only think in terms of what we monetarily lose. Economists and accountants will only calculate the dollars lost in the spill and the non-renewable resource wasted. A small blip on the GDP of some country and who cares if a few ecosystems are destroyed! The animals and plants do not have representatives to argue their case. Who cares if the oil will change the sex of the fish in the next few generations, its never captured in the economic calculus.
At this point, its time to ask a few basic questions. Why wasnt more precaution taken in this deep-sea drilling? In a report filed with the US Interior Department in 2009, BP quoted that an event like this happening is unlikely and if it did, it could be contained. Now, reports are indicating that it might take a few more months until the gush is contained. Was BP not prepared adequately for such an eventuality? Was BP not focussed as much on disaster management as it is on drilling more and more oil from pristine and interior regions? A more important question to ask at this juncture would be why did BP or other oil companies have to go to the deep sea for oil? Or an even more important question to ask would be why do we depend more and more on oil to provide us with warmth, cooking, goods and transportation?
A few hundred years back people burned candles and Whale fat for light and wood for cooking while using horses for transport. Then, post industrial revolution in Europe and various technological breakthroughs in the US (Oil Creek Pennsylvania in 1859, where oil was first discovered and drilled), slowly led to an addiction to oil, which we can find in almost every aspect of our daily life. Its cheap even at about $3 a gallon because the social cost of drilling oil (which is non-renewable and would take millions of years for Earth to make it for us again using our own dead bodies) is not paid by us. If as a civilization we could put man on the moon and do all these incredible things that we do today, which were inconceivable just a few years back, why the hell cant we stop our addiction to oil? We can blame Ronald Reagan who reduced the fuel efficiency standards set by Jimmy Carter, we can blame the Big Three car makers of the US to lobby the congress/senate and reduce public transportation so people can buy more cars, we can blame the OPEC which cunningly adjusts its production as to stimulate demand (through the weapon of price), we can blame perverted business decisions that put short-term growth ahead of longer-term sustainability of this planet but ultimately we have to blame ourselves. If all of us take an oath to push hybrid technologies and divorce the inefficient internal combustion engine from gas (which wastes >90% of a gallon as heat and exhaust), if all of us start carrying bags to buy groceries instead of using cheap plastic (made from oil) bags, if all of start taking this planet and its natural resources as seriously as we take the next winner of American Idol, we will not have to go deeper and deeper into pristine ecosystems and natural habitats for oil and we will surely think twice before we drill a hole into our mother Earth and suck her blood like an avaricious leech with a ravenous greed. As demand comes so will supply be generated. Kill the demand and the supply will fall (and so with it a few totalitarian regimes).
As I was thinking of the Gulf of Mexico tragedy in the last few days, a strange thought stuck in my head. If there was a fire in our house, we would go to any length to stop it. If we there was a torrential rain and the water came gushing into our basement, we would stop watching TV and rescue our precious furniture. But if something like an oil spill occurs somewhere in the Gulf of Mexico, a majority of us do not even react or think deeper as to how it could affect us or how they can contribute in lessening such damage. Its because a majority of us do not "own" anything in the Gulf of Mexico. What if you had a financial stake in this disaster and you were rewarded if this tragedy is addressed immediately? Will that call you to action? It will. Sadly, all our motives, ambitions and even social relationships revolve around the dollar (or some other currency). Wake up and smell the mint, everyday, until we die. Our perception is that whatever happens to Earth and its natural systems, is meaningless to us because it does not "affect" us nor we will incur any damage as a result of it. Likewise, if the Earth is doing well, it doesn't matter to us, because we are not "rewarded". But the butterfly effect of this tragedy will have a damaging repercussion on all of us, our children and their children. These are the events that will change the course of history and create a new dimension to the path of humanity, a dark dimension. And if we chose to do nothing about these things and alter our lifestyles so as to make some contribution to the world we live in, we will all pay a price. Life on Earth is a cobweb, its interrelated and interdependent. If the planet is healthy, we will be healthy. But the pathetic rules we created for our selves in the last hundred or so years where we wallow in our little selfish shells, dancing in the human carnival wearing different masks leads to an apathy that covers our conscience like an oil slick that covers the soft fur of a sea creature. Its up to us to decide how each of us will react to this, if we will let this be a wake-up call. But such foolish, corny hope took a hit when I read a BP senior executive saying that "I'm optimistic, I'm very optimistic that the Gulf will fully recover". Optimistic? Fully recover? Is this hope or dope speaking?
This is the real tragedy of the commons. Welcome to the suck!
Thursday, April 29, 2010
HP's Palm Reading...
Its 2010 and HP acquires Palm. Unless you were sitting in a well for the last one year, its impossible not to see the direction computing industry is taking now. HP, which pretty much nailed Dell in the last few years is getting aggressive about the much hyped smartphones market. As we shift from laptops to smartphones, there are just a few companies that are going to take advantage of this shift, with Apple, RIM and Google being at the top. Not one to be left behind, HP wants a share of this market. With more than 200 million smartphones being forecasted for shipping in 2010, it a market hard to ignore. And HP has $12 billion cash and spending about 10% of it on Palm, isn't too bad right? Wrong.
Palm makes phones that run Palm OS, WebOS and Windows Mobile. I remember Palm very fondly from my salad days at the start of this decade. My colleagues boasted the Palm Pilots in their cool leather pouches and I was pretty envious of its sex appeal, then. But the cooler guys amongst us, wore the even sexier Treo, made by Handspring and later acquired by Palm. At around the same time, the dorks used to carry iPaqs, made by Compaq (acquired by HP, our protagonist in this story). iPaqs were pioneers, in the sense that they were some of the first smart devices (no phone though). But after HP's acquisition, iPaq instead of being promoted as a telecom smart device (What RIM did to those berries) was left to its own fate (Back then, HP had its own management problems, remember the board troubles with Carly Fiorina?) and as a result died a premature death. Also, iPaq's ran on Windows O/S and hence they were very lethargic (Guess Windows could use some Coffee). At this time, Apple and RIM were pushing the envelop. So cut to late 2006, RIM, which successfully married telecom and computing into its berries became a leader and in 2007, when iPhone was launched, for the first time people started having orgasms at phones. My question is, what was Palm doing these 4-6 years? It was launching product after product that failed to capture either the market or the consumer's imagination. So it started developing its own O/S, the Web O/S. Not to be left behind in smartphones, HP looks around and find the also-ran Palm and pays a whopping $1.2 billion of it, reflecting about 25% premium over Palm's stock price in April 2010. For what? I will tell you for what. For a few products that HP thinks can take on RIMs, Apples and hot new Androids of the world. But this observer feels that history will repeat. Because:
- Palm is an also-ran in the emerging smartphones market much behind RIM, Apple, Microsoft and now, Android. It has no momentum in sales, no single product that the consumer will salivate after, and its market share is reducing as I type (mostly at the expense of Google's Droid).
- The key word in smartphones is community. Apple has one, Google has one, RIM has one and Palm comes with a negligible community (around 2000 or so developers). The maximum impact a smartphone will have is not on the user but through the developer. With so many apps being created everyday for Apple, Droid and RIM, there are not many out there doing the same for Palm. So, HP does not even get a large installed base of developers.
- As the netbooks market is going to take off, and with the impact of the iPad, HP will want to focus more on this market than on the smartphone market. It will be confused to focus on both these market what with the O/S decisions (Palm comes with Web O/S, but HP is a big supported of Windows Mobile, and I bet you cant have these two coexisting in peace, what will developers focus on?), hardware design decisions, app decisions to be made on a daily basis.
- Finally, lets remember iPaq for a moment. I wonder if Palm would take a similar fate or baffle us all by making HP a leader in the smartphone market, which I doubt.
I am sure HP has its reasons but are they worth $1.2 billion for a company that the world has mostly forgotten?
Palm makes phones that run Palm OS, WebOS and Windows Mobile. I remember Palm very fondly from my salad days at the start of this decade. My colleagues boasted the Palm Pilots in their cool leather pouches and I was pretty envious of its sex appeal, then. But the cooler guys amongst us, wore the even sexier Treo, made by Handspring and later acquired by Palm. At around the same time, the dorks used to carry iPaqs, made by Compaq (acquired by HP, our protagonist in this story). iPaqs were pioneers, in the sense that they were some of the first smart devices (no phone though). But after HP's acquisition, iPaq instead of being promoted as a telecom smart device (What RIM did to those berries) was left to its own fate (Back then, HP had its own management problems, remember the board troubles with Carly Fiorina?) and as a result died a premature death. Also, iPaq's ran on Windows O/S and hence they were very lethargic (Guess Windows could use some Coffee). At this time, Apple and RIM were pushing the envelop. So cut to late 2006, RIM, which successfully married telecom and computing into its berries became a leader and in 2007, when iPhone was launched, for the first time people started having orgasms at phones. My question is, what was Palm doing these 4-6 years? It was launching product after product that failed to capture either the market or the consumer's imagination. So it started developing its own O/S, the Web O/S. Not to be left behind in smartphones, HP looks around and find the also-ran Palm and pays a whopping $1.2 billion of it, reflecting about 25% premium over Palm's stock price in April 2010. For what? I will tell you for what. For a few products that HP thinks can take on RIMs, Apples and hot new Androids of the world. But this observer feels that history will repeat. Because:
- Palm is an also-ran in the emerging smartphones market much behind RIM, Apple, Microsoft and now, Android. It has no momentum in sales, no single product that the consumer will salivate after, and its market share is reducing as I type (mostly at the expense of Google's Droid).
- The key word in smartphones is community. Apple has one, Google has one, RIM has one and Palm comes with a negligible community (around 2000 or so developers). The maximum impact a smartphone will have is not on the user but through the developer. With so many apps being created everyday for Apple, Droid and RIM, there are not many out there doing the same for Palm. So, HP does not even get a large installed base of developers.
- As the netbooks market is going to take off, and with the impact of the iPad, HP will want to focus more on this market than on the smartphone market. It will be confused to focus on both these market what with the O/S decisions (Palm comes with Web O/S, but HP is a big supported of Windows Mobile, and I bet you cant have these two coexisting in peace, what will developers focus on?), hardware design decisions, app decisions to be made on a daily basis.
- Finally, lets remember iPaq for a moment. I wonder if Palm would take a similar fate or baffle us all by making HP a leader in the smartphone market, which I doubt.
I am sure HP has its reasons but are they worth $1.2 billion for a company that the world has mostly forgotten?
Flash in the pan?
Jobs rips Flash apart here, interesting comments:
http://www.apple.com/hotnews/thoughts-on-flash/
http://www.apple.com/hotnews/thoughts-on-flash/
Friday, January 29, 2010
AmazonFlix?
Heard on the tech street that Amazon is looking to gobble up Netflix. I love both the companies and use them pretty avidly. Almost daily in fact. Problem is how well can Amazon take Netflix to the next level? Few hunches:
1. Netflix is unchallenged. It single-handedly killed the Blockbuster dinosaur with innovative technology and superbly easy to use web interface. Amazon is a major retailer for DVDs and BlueRays so on the surface this is a marriage made in heaven. Marry the content of Amazon to the neat distribution of Netflix. With the streaming vidoes taking off, this is only gonna go to the next level. Neat!
2. Amazon owns IMDB, the most popular site for anything related to movies. This can be and will be well leverage by Amazon in tying up with user-ratings and related stuff for Netflix, which already developed/is developing complex matrices for understanding user patters in movie tastes and preferences. IMDB rocks, I personally go there almost daily and this should help both the parties integrate better.
3. With Comcast and ATT trying to stream movies along with gaming devices like Wii and PlayStation joining in, there is a war out there to get movies to users. This reaching out effort will be good for users, as prices get low and choices improve. I guess it wont be long before Kindle starts streaming movies and here Netflix technology will help Amazon get an edge over the iPad, if at all. This is a really interesting space to watch. Media distribution over Internet almost killer Warner with its incompatible marriage to AOL but newer channels will emerge. Set-top boxes, gaming devices, iPads will all be eager to stream movies as they become distribution channels. The key is to ink smart deals with the studios who might not be over-cautious in releasing their content. Warner already has a wait-list on Netflix for its new DVDs so sales can be as much front-loaded as possible thus shifting rentals to the backburner. Naturally, studios would want to sell DVDs than rent since margins will be greater.
I think Amazon and Netflix make a good pair. Lets see what happens!
1. Netflix is unchallenged. It single-handedly killed the Blockbuster dinosaur with innovative technology and superbly easy to use web interface. Amazon is a major retailer for DVDs and BlueRays so on the surface this is a marriage made in heaven. Marry the content of Amazon to the neat distribution of Netflix. With the streaming vidoes taking off, this is only gonna go to the next level. Neat!
2. Amazon owns IMDB, the most popular site for anything related to movies. This can be and will be well leverage by Amazon in tying up with user-ratings and related stuff for Netflix, which already developed/is developing complex matrices for understanding user patters in movie tastes and preferences. IMDB rocks, I personally go there almost daily and this should help both the parties integrate better.
3. With Comcast and ATT trying to stream movies along with gaming devices like Wii and PlayStation joining in, there is a war out there to get movies to users. This reaching out effort will be good for users, as prices get low and choices improve. I guess it wont be long before Kindle starts streaming movies and here Netflix technology will help Amazon get an edge over the iPad, if at all. This is a really interesting space to watch. Media distribution over Internet almost killer Warner with its incompatible marriage to AOL but newer channels will emerge. Set-top boxes, gaming devices, iPads will all be eager to stream movies as they become distribution channels. The key is to ink smart deals with the studios who might not be over-cautious in releasing their content. Warner already has a wait-list on Netflix for its new DVDs so sales can be as much front-loaded as possible thus shifting rentals to the backburner. Naturally, studios would want to sell DVDs than rent since margins will be greater.
I think Amazon and Netflix make a good pair. Lets see what happens!
Thursday, January 28, 2010
iPad - A Quick Review
With the fervent will of a reformed smoker, I watched in awe the live blogging of Apple's iPad launch today in San Francisco. As a preamble, I have been waiting for this day with a great anticipation of waiting for my favorite rock band's new album. It was worth the wait, as its a good album :)
The Internet has been burning with rumors, heard-on-the-street gossip and smack talk about the iPad (iSlate, iTablet, iWhatever) since more than a few weeks, with the madness reaching a crescendo today. There are reviews and 'expert' opinions for you to read just by typing A into Google (well not exactly but try App..).
Here is a quick review from an avid iPhone, iPod user and a serious Apple fan. Cutting to the chase:
1. The iPad is the most important product from Apple not after 1984 as reported but after 2007, i.e., after the iPhone. Its hype definitely should not take anything away from this cool device. Its a perfect piece for the net-savvy, Facebook generation looking for one gadget to aggregate Internet, Mail and Media. I dont believe the argument that there is no market or there is a small market for the iPad. People actually thought there was no market for music players back in 2000 and then we got hit with iPods. Well, thats an other story. Tablets are going to be big with every major tech company trying to do something concrete in this area. Even a retailer like Amazon has Kindle, which kind of competes with tablets. Intel has Moorestown and Moblin OS just for Tablets and so on.
2. I do have a few nitpicks. My three major complaints about the iPad are a) It doesn't have a camera and that hurts. Its an easy thing to do Steve, you have it in the iPhone (and even iPods though its for video), so why miss it on this? I would have loved to webcam with the iPad in my lap but I will have to wait for that. b) Its storage demands more. I mean, I understand this is not a storage device but a streaming device. But come on, media files (HD videos and all those books and songs), eat up space like a hungry wolf. 16GB can just store a few HD movies along with pix and songs, that just does not cut it. The iPad should have started at 128GB and upwards. c) Flash stupid! I mean, whats the whole deal with not playing Flash? We are not asking for Silverlight, just good old Flash from good old Adobe.
3. The pricing is not surprising. I never for a second believed the 'expert' analysts predicting that iPad was gonna be about $1000. Are you kidding me? Why the hell would Apple price iPad at $1000 and have a Mac Book at $1200? I thought it was going to have a simple pricing structure of around $700 and I was about right. I did this by taking the simple average of iPhone (about $200 with contract) and basic Mac Book (about $1200). But Apple came up with the somewhat complex matrix of two basic models -- one with WiFi 802.11n connectivity only, the other with both WiFi and 3G. The 3G models are $130 more than non-3G models, prices vary depending on memory.
Tablets have been around for a while and the last time there was so much hype on a tablet, they were commandments written on it. But seriously, remember iPaq? Even the name is eerily strange with the i in front but whatever happened to it when Compaq was gobbled by HP. There are many more tablets in the last few years but none that can offer the functionality of iPad. At least for now.
Here are some of the cool things to be done on the iPad:
- iBooks: What iTunes did to music, hopefully this will do to publishing. Read and buy books on the go. Kindle is cool, I checked it out but who wants so many devices? I cant watch videos or email on Kindle and I am not going to buy 100 devices for 100 things. Like in 2000, when you had laptops, Blackberries for email (berries could not talk then), mobiles, pagers, PDA like Palm and Trio. Hell, Dockers even made pants with 8 pockets for all these devices. Nobody bought these devices after the tech crash and last I heard, Dockers discontinued these pants.
- iWorks: Adds cool business functionality to the iPad. iWork is a neat way to create documents, spreadsheets, and presentations and its friends with MS Office.
- We have the good old iTunes, and App Store of course.
Well, 2 months to go for delivery and I am still saving up for my iPad. Lets see how many iPads will be sold in 2010. But today sir, was a good day to be alive.
Saturday, January 9, 2010
Friday, January 8, 2010
Will Google Be The Next MS?
I hope we will not hate Google as we do Microsoft (not all, maybe most) now in 2010. But in 2020, chances are the World is going to be so much more connected and Google will play such a huge role in it that it might just become another behemoth creating unintended consequences of dislike.
Take the mobile market now for instance. Only the uninformed would think that the underpinnings of this market are established and that PC will remain what it is today. Just as computing shifted from mainframes to mini to PC to laptops, its gonna shift to mobiles. MS was smart enough to milk the PC OS for decades before paradigms started shifting against it. Windows Mobile is a clunky and idiotic OS masquerading as a 'smart' mobile OS. It was made for a different paradigm and its dead or going to die soon. Google is exactly in the place MS was in late 70 and it knows that. Enter Chrome OS for PC and Android for mobile. A one-two punch to take on both the markets and converge it later as the dust settles. Meanwhile, hardware on mobiles will be commoditized just like PC hardware was in the 80s and 90s. So who makes the hardware of your phone will be irrelevant as long as it runs a hybrid version of Chrome and Android. I dont care if its HP or Dell or Lenovo or Acer as long as the network dictates to me that I buy Windows and I get a nice PC for cheap. I am not loyal to either Dell or HP, sorry. Likewise, future will not care if Nokia or Samsung or someone else makes your hardware but Google wants the winning OS to be Android. But there is a gap. Not all phones are made the same, and that gap is between regular phones (Nokia, Samsung, Sony Ericsson etc) and smart phones (Blackberry, iPhone, Droid etc). Here, the ace in the hole is not Web OS or RIM (although Blackberry is still the numero uno smartphone to beat), its a no-brainer folks, they taught us this in kindergarden, A for Apple.
Apple made its own hardware and OS in the 80s and into 90s and just managed to survive the PC onslaught. It stood alone with its loyal fanbase and the headwind called iTunes changed the course of that company. Just so, in 2010 and beyond, if iPhone can expand its niche to a large enough marketshare, i.e., network, (which it is) its going to be THE company to beat Google (Wonder how many such strategy meetings on the future of mobile computing Eric Schidmt was part of when at Apple board, phew). So Apple is the thorn in the flesh for Google not MS, too bad tech blogs dont even talk much about MS these days not even after the successful W7. I wish Apple made a search engine, it would probably look and work so cool that we might even stop interacting with other humans (thank God, Steve Jobs never thought of a search engine :)
So imagine a website, when you enter with the intention of buying a nice smartphone. You pick what display size you want, the hard disk capacity, memory, and other guts, choose a carrier (hopefully ATT, TMobile, Sprint and Verizon will agree to be on the same page), and finally pick the software that runs these parts together. Google hopes its gonna be Android and it might just be. Commodity hardware, Common software, ring a bell?
But the trump card for now is with Apple, iTunes and App Store. The integration of iTunes/App Store with iPhone is the challenge to beat for Google. But watch how the bargaining power of Google is increasing. Personally, I am writing this free blog provided by Google and if I need to search any damn thing/info on the net, I verb where you all verb. I am thinking of consolidating all my mails into Gmail soon etc etc. Its easy to watch 2010 is when the World is gonna take steps to move to Google Apps. MS Exchange Server makes way to Gmail and its pack of apps. Chrome will be the browser to deliver these apps and Android the OS to run them all, nice picture. So from neat little apps to OS and all the search in between, monopolized in the hands of an erstwhile start-up we all grew up loving and using.
But it scares me that in the next 10 years, if I do update this blog, I dont want to look back and see the graves of future Netscapes, and other innovators with a cold knife in their backs. Ultimately, for innovation to succeed, there should be no such back-biting evil. And Google, did I hear you say "Do Know Evil"? Lets hope the company and its triumvirate leadership is listening.
PS: 2010 will also be the year when I move from Windows OS to Apple tablet, long time coming, i-whatever!
Take the mobile market now for instance. Only the uninformed would think that the underpinnings of this market are established and that PC will remain what it is today. Just as computing shifted from mainframes to mini to PC to laptops, its gonna shift to mobiles. MS was smart enough to milk the PC OS for decades before paradigms started shifting against it. Windows Mobile is a clunky and idiotic OS masquerading as a 'smart' mobile OS. It was made for a different paradigm and its dead or going to die soon. Google is exactly in the place MS was in late 70 and it knows that. Enter Chrome OS for PC and Android for mobile. A one-two punch to take on both the markets and converge it later as the dust settles. Meanwhile, hardware on mobiles will be commoditized just like PC hardware was in the 80s and 90s. So who makes the hardware of your phone will be irrelevant as long as it runs a hybrid version of Chrome and Android. I dont care if its HP or Dell or Lenovo or Acer as long as the network dictates to me that I buy Windows and I get a nice PC for cheap. I am not loyal to either Dell or HP, sorry. Likewise, future will not care if Nokia or Samsung or someone else makes your hardware but Google wants the winning OS to be Android. But there is a gap. Not all phones are made the same, and that gap is between regular phones (Nokia, Samsung, Sony Ericsson etc) and smart phones (Blackberry, iPhone, Droid etc). Here, the ace in the hole is not Web OS or RIM (although Blackberry is still the numero uno smartphone to beat), its a no-brainer folks, they taught us this in kindergarden, A for Apple.
Apple made its own hardware and OS in the 80s and into 90s and just managed to survive the PC onslaught. It stood alone with its loyal fanbase and the headwind called iTunes changed the course of that company. Just so, in 2010 and beyond, if iPhone can expand its niche to a large enough marketshare, i.e., network, (which it is) its going to be THE company to beat Google (Wonder how many such strategy meetings on the future of mobile computing Eric Schidmt was part of when at Apple board, phew). So Apple is the thorn in the flesh for Google not MS, too bad tech blogs dont even talk much about MS these days not even after the successful W7. I wish Apple made a search engine, it would probably look and work so cool that we might even stop interacting with other humans (thank God, Steve Jobs never thought of a search engine :)
So imagine a website, when you enter with the intention of buying a nice smartphone. You pick what display size you want, the hard disk capacity, memory, and other guts, choose a carrier (hopefully ATT, TMobile, Sprint and Verizon will agree to be on the same page), and finally pick the software that runs these parts together. Google hopes its gonna be Android and it might just be. Commodity hardware, Common software, ring a bell?
But the trump card for now is with Apple, iTunes and App Store. The integration of iTunes/App Store with iPhone is the challenge to beat for Google. But watch how the bargaining power of Google is increasing. Personally, I am writing this free blog provided by Google and if I need to search any damn thing/info on the net, I verb where you all verb. I am thinking of consolidating all my mails into Gmail soon etc etc. Its easy to watch 2010 is when the World is gonna take steps to move to Google Apps. MS Exchange Server makes way to Gmail and its pack of apps. Chrome will be the browser to deliver these apps and Android the OS to run them all, nice picture. So from neat little apps to OS and all the search in between, monopolized in the hands of an erstwhile start-up we all grew up loving and using.
But it scares me that in the next 10 years, if I do update this blog, I dont want to look back and see the graves of future Netscapes, and other innovators with a cold knife in their backs. Ultimately, for innovation to succeed, there should be no such back-biting evil. And Google, did I hear you say "Do Know Evil"? Lets hope the company and its triumvirate leadership is listening.
PS: 2010 will also be the year when I move from Windows OS to Apple tablet, long time coming, i-whatever!
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