Poohwinn | Technology . Design . Creativity . Web2.0

Saturday, January 24, 2009

Encouraging SaaS takeup


The economic crisis that we are facing today may well benefit the SaaS market. Companies are now more conscious and careful about cashflow and will be less willing to invest high capital expenditure on software licences. Besides, one striking benefit of SaaS is the scalability and low risk of technology obsolescence since the risk is shifted to the provider. But, to all the SaaS providers out there, you gotta really understand that SMBs are usually less tech-savvy and have little IT resources at their disposal. In fact, many of the smaller SMBs are still relying on paper and pencil or basic excel spreadsheet to do their invoices and timesheet. To increase the adoption rate, SaaS providers should offer free training for first time users regardless how idiot-proof you think your application is and always offer free trial with no obligation. In addition, customer testimonials are always good to have. You can also see how to influence the government policies or work with business associations to provide some incentives to encourage the SMBs to adopt SaaS.

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Thursday, January 22, 2009

Why Apple iPhone Succeeds and Other Fail


Today Nokia announced that its profit for the fourth-quarter has declined by a whopping 69% and sales declined by 19%. Every $1 drop in revenue translates to 3.6x drop in profit. That's very very steep decline. It's a double whammy for Nokia. It lost market share at the lucrative high end and sales did not fly during the holiday season in the growth markets such as China. Nokia has also invested alot of money into the Come with Music initative. The price differential for a phone that has Come with Music and one that doesn't can be as much as $100 or more. I think in the hard times like today, it's going to be a uphill battle to squeeze that incremental revenue from consumer. Again, not surprisingly, about 1,000 job cuts were annouced. Just a week ago Motorola announced 4,000 layoffs and it would only roll out 12 phone models in a year. For smartphones, it will only produce for Android platform and the first Android handset is slated for Q2 2009 in the US.
The big software giant microsoft is not spared either. Its earning fell in second quarter on the back of weaker sales, resulting in earnings of 47 cents a share against analysts' estimate of 49 cents a share. 1,400 people were let go immediately and upto 5,000 in total are expected to be laid off.
 
Well not all is bad news. Apple had reported stellar quarterly revenue and earnings in Apple History. Its ipod sales set new record. This is a very good set of results considering that Apple had to amortise the revenue and costs over the economic lives for iPhone and Apple TV. To quote Steven Jobs, "Even in these economically challenging times, we are incredibly pleased to report our best quarterly revenue and earnings in Apple history—surpassing $10 billion in quarterly revenue for the first time ever."
 
Eversince Apple opened up its iPhone Appstore, Google Android, Blackberry and now Palm have jumped onto the bandwagon. I'm less optimitic about the takeoff for Blackberry Application Centre since most Blackberry users are enterprise users and generally companies have strict policies on what applications can be downloaded onto company handsets. Besides, Blackberry users will not be the right target segment for games and entertainment which are the ones that have the most downloads on Apple Appstore. Google Android is seen as the alternative to iPhone. The difference is that there is only one iPhone maker and that's Apple. Whereas we can expect more Android handsets by various handset makers in the future.
 
I think Nokia is making a strategic mistake to pump millions of dollars into its music store. No doubt that it's more and more common for people to play music on their cellphones but will people want to pay over $100 for a subscription per year to download unlimited number of songs (with DRM) at this economy? Wired.com recently wrote an article on the 5 ways the cellphones will change how you listen to music (http://blog.wired.com/business/2009/01/six-ways-cellph.html) and I think Nokia should reconsider their business model.
 
In the past, Microsoft and Blackberry dominated the smartphone segment. Nokia had some success with its E series too but all of these players were only focused on the exchange email synchronisation. What Apple succeeds and Nokia or Motorola fail is to revolutionalise the way people use the phone. The ability for each iPhone user to do "customisation" on his phone by installing apps that he finds useful is a very sticky proposition. Besides, the affordability of the apps only serves to reinforce the value proposition. This is also why Apple delivered an outstanding set of results where others fail. Let's see whether Palm manage to revive its fortune with Palm Pre.

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Saturday, January 17, 2009

The Mobile War


Recent Palm Pre launch has created quite a stir. I was once a Palm fan. At that time you could only synchronise your emails by putting the Palm onto the cradle and connecting it to your notebook (oh my, I still remember that I used a Tohsiba Protege then). Then as smartphones took the scene by storm, Palm faded. Sad, but the reality was that the once-upon-a-time innovative company could not stay ahead of the curve. Symbian-based Mobile phones (mainly Nokia), Windows Mobile phones, Blackberry took the lion share of the smartphone devices market until...we all know, Apple iPhone came along.

Apple iPhone didn't immediately target the enterprise users when it was first launched. It targeted the lifestyle users who didn't really care about having their corporate emails on iPhone. That was a smart move. The addressable market for lifestyle users was much bigger and competition was less stiff. If Apple were to target enterprise users from day one, it would be attracting too much attention from Microsoft and Blackberry. It is a much wiser market entry strategy to build up a bigger base of customers by addressing the lifestyle user and leveraging on Apple's strengths in user interface and integrated entertainiment apps and its already big base of iPod fans. With the launch of iPhone 3G, Apple upped the ante with the launch of appstore. It's nothing revolutionary. Yes, you can already buy symbian or windows mobile applications today. But have you wondered why it never really took off in a big way? It never quite reached the tipping point that iPhone created. I'm not sure if the fact that iPhone 2G was jailbroken to allow the installation of third party apps through the Installer (for those who jailbreak your iPhone, you should be quite familiar) had accelerated Apple's plans to launch the appstore but I would say that the strategy of allowing third party to develop apps is definitely one big factor to increase the stickiness. It is definitely a plus point that most of these apps are priced at very affordable prices - at price point that most consumers won't mind paying to try out. Prices can be low because of the the large base of iPhone users worldwide. The phone has evolved to become a very personalised piece of device that is more than just making phone calls or texting someone. With mobile broadband through WiFi or HSPA, I can now run web-based applications with just thin clients on my phone. I can access my computer easily to retrieve files when I'm away from my computer.

So, the trend for mobile is clearly on the apps side. Nokia has its Ovi. Blackberry has its Application Storefront. Google has its Android Appstore. Now Palm is launching an appstore for its Palm Pre. The fight will be on the installed base. The more apps a user installs on his phone, the less likely he's going to switch out to another phone device, especially if there are one or two killer apps that the user must have. The market is now beginning to heat up. Today, most apps are non-enteprise. I can see that as companies become more receptive to cloud computing and web-based applications, mobile enterprise apps will be the next wave. As aptly put across by Gartner, "SaaS adoption is being driven by businesses' pursuit of cost savings and quicker implementations, as well as wider availability of high-speed Internet connections....initial concerns regarding the SaaS applications' security and reliability have faded somewhat as the model has matured"

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Sunday, January 4, 2009

Book Summary: The Mckinsey Engagement


It has been a week since my last post. I am savouring the last day of my long break before I report back to work tomorrow. In the past one week, I had the opportunity to catch up with my reading.

If you are interesting in management consulting, you may be interested the book titled "The McKinsey Engagement: A Powerful Toolkit For More Efficient and Effective Team Problem Solving" by Paul N. Friga (http://snipurl.com/9ftfd)

The author uses TEAM FOCUS as the acronyms for the framework discussed in this book. While the contents make sense and will be usefule as reference for team problem solving, I am not sure if this is THE Mckinsey engagement approach. It seems rather generic. I should caveat to say that the author did point out that this book is not endorsed by Mckinsey.

In a nutshell, TEAM FOCUS refers to the following:

T: TALK
E: EVALUATE
A: Assist
M: Motivate

F: Frame
O: Organize
C: Collect
U: Understand
S: Synthesize

I will elaborate a little more on what the author means by each of these acronyms.

Talk (T): communicate constantly, listen attentively and separate issues from people
Evaluate (E): discuss group dynamics, set expectations and monitor results, develop and re-evaluate a personal plan
Assist (A): leverage expertise, keep teammates accountable, provide timely feedback
Motivate (M): identify unique motivators, positively reinformce teammates, celebrate achievements

Frame (F): idenfity the key issues, put into profitability issue tree, business issues, information tree, decision tree, articulate the hypothesis
Organize (O): develop process map, content map, story line
Collect (C)- collect ghost charts, interview guide, interview summary, secondary sources
Understand (U): undestand implications summary , insight -titled chart
Synthesize (S): obtain inputs from various stakeholders and ensure buy in from client and provide a final report

If you read enough of books on Mckinsey, you will remember that a key principle that all consultants must internalise is the MECE (mutually exclusive collectively exhaustive) framework. MECE means that when you break down an issue, you must consider be able to group the various underlying factors into distinct buckets. There must be no overlap of ideas across groupings and all the possible factors must be accounted for in one of the groupings.

If you are more into logic and thinking process, I would recommend you to read the book titled "The Pyramid Principles" by Babara Minto (http://snipurl.com/9fteb). If you read Japanese, you may wish to read the book "ビジネスカの磨き方" and "実戦!問題解決法" by Kenichi Ohmae. I have read almost all the books by Kenichi Ohmae. I first read his book "The Mind of the Strategist" more than 10 years ago. My key takeaway from his recent books is that what's important is the ability to harness your logic thinking skills for problem solving and develop your own thinking style.

Happy New Year!!!

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