Category Archives: Disruption

Is this the End of the Smartphone Era?

When Nicholas Carlson wrote that the end of the smartphone era is coming, he overstated the comment I made to his post the day before. He had asked his readers whether Sailfish OS was the next big platform. I answered:

DOA. I bet the next big platform won’t look like a phone.

That sparked Nicholas’ imagination and the next day he came with his post: The end of the smartphone era is coming.

Is this the end of the Smartphone era?

Of course not. The point is not that the smartphone era is close to its end. The point is that to disrupt a market taken by iOS and Android, you’d better come with something radically different. Else you have no chance. If you are able to wow consumers into a new platform, it won’t be a phone.

The next platform will not look like a phone.

Google knows it and that’s why they lead the pack to explore what the next step will be. Google Glass is the most visible example. Watches and other wearable computer gadgets will surely spark your imagination. You could argue those things are not new, but hey the Tablet was not a new concept and it was not a reality until Apple made it happen. Glass today is not compelling enough, but if they fix a few things, I would bet it will. Maybe that’s why Microsoft reportedly issued a patent application for a similar concept.

The platform that ends the smartphone era is still unknown. For sure, it’s more likely to look like Glass that than a phone.

If you were wondering to wait until next Xmas to renew your smartphone, no need to.

How different you have to be to beat iOS and Android?

Samsung Note was a perfect example of how to make something different from the iPhone riding on the wave that people talk less and less and write, read, listen, watch or take pictures much more.

Amazon was disruptive in the business model. They sell the Kindle Fire at a loss, because they are in the content distribution business.

But Windows Phone and Blackberry. Sorry guys, so far you are just changing colors, and have no chance unless you come with something that breaks the rules again. Maybe RIM could keep exploring keyboard and variants: Many of us still complain about typing on an iPhone compared to how good it was to type on a Blackberry.

Any other new platform like Meego/Sailfish cannot just bet on being more open than Android. Android is open enough. But hey it is good for us consumers that someone keeps Google honest in not being evil.

How did disruption look in the past?

During years, Nokia kept doing telephones with a dial pad, despite you make most calls from your address books, and despite the huge growth of texting. RIM, Microsoft PDA-phones had already moved a step forward, though it was Apple who reinvented the phone.

The iPhone was a totally disrupting concept with a ‘wowing’ UI and a breakthrough decent mobile internet experience, that had nothing to do with horrendous WAP or Brew.

In short: The end of the smartphone era is not coming (soon)

You are happy with your iPhone or your Galaxy, and just wonder whether this is the end of the smartphone era. It is not.

 

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How does Disruption look like in Print Media

Not because you already anticipated it, it’s less of a dramatic picture. The chart from Statista shows the result of how technology reinvents industries.

In 2004, Google’s $3Bn business seemed nothing compared to a $70Bn industry. Only eight years later, Google is bigger than the entire Print Media business in US.

A single company — let’s call it the disruptor— is worth more than the entire industry it disrupts, in less than a decade!

Though it is the company that gets more attacks from the newspaper and magazine industry, Google was not the only one driving the change.

  • Some years ago when you wanted to sell a car or a house, there was one obvious place to advertise: Newspapers. Nowadays you would only think of eBay, Craigslist or Carlist.
  • Bloggers were the first to grab readers from traditional media, though Google Adsense dollars helped here.
  • Then came the big social media boom with Facebook and Twitter attracting eyeballs from other media.
  • And finally, also contributing to the decline in offline revenue, Print Media has gone online, though they have not been too enthusiastic about exchanging “paper ads dollars by online cents.”

Print and online magazine advertising spending in the U.S. from 2010 to 2016
You will find more statistics at Statista

After disruption, is the resulting market smaller or bigger?
U.S. Print Media went from a $72bn peak in 2006 to $42bn in 2011. Where has all that money gone? Online, right?

According to GroupM, online ad revenue in US in 2011 was $34.5Bn (*). You make the numbers and that means that the size of Print Media + Online combined add to $76Bn. Around same market size as in 2006.

Roughly, you could conclude the combined market of “disrupted + disrupting” has not de-materialized the industry.

Jobs: A collateral damage of disruption?
The most visible effect in jobs is the change in skills and preparation. New jobs online require more preparation than those in the old industry. And for sure they need different skills.

Disruption due to new technologies often creates inflation in preparation. The lowest rank worker in the new industry will require far more preparation than in the previous one. E.g. Less skilled jobs like printing operation or distribution are replaced by technology. If you are a junior journalist you are now in the lower ranks, in the sense that the jobs less skilled than yours are all replaced by technology. You need much more preparation to be a journalist than to be a guy in the distribution chain.

On the other hand, a system like Adsense enables a bigger crowd to benefit from advertising. Now if you are a junior journalist you can join the Long Tail of  bloggers and be self-employed. Online ads, combined with indie publishing, are the foundation of the Digital Renaissance we live in.

How does print media respond to that?
Sadly enough, we have the example of France, where print media lobbies politicians to tax the innovator, in order to protect the status quo and delay the inevitable. As RIAA already demonstrated in the music industry, trying to stop change with lawsuits is not the best way to deal with disruption.

* Google makes 95% of revenues from Ads and U.S. represents 46% of their worldwide business. As Google reportedly has 44% market share in U.S. online ads, numbers are consistent.
Global online advertisement spending in 2011
You will find more statistics at Statista

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Connecting the dots: Why the iPod changed the world?

Via Business Insider.

“You can’t connect the dots looking forward; you can only connect them looking backwards.”
                   Steve Jobs, Stanford Commencement Address, 2005

In 2006 it was clear that mobile phones and MP3 players would converge. Nokia, the smartphone leader at the time, already incorporated mp3 players in their phones. In Japan, KDDI had the most advanced mobile music service in the world, selling millions of songs per month downloaded from mobile phones.

For Apple, the iPod was at risk. At that time the iPod had become the product that had turned around Apple. iPods were more than 50% of Apple’s revenues in 2006 — see chart. Nokia was set to go for the iPod. Apple had to defend. The iPhone development was a matter of survival. Eat or be eaten.

Before the iPhone was unveiled in 2007, anyone would have bet that handset makers (and telcos) were in better place to win the race for the converged phone/MP3 player.
Few would have bet that a company with no experience in mobile would succeed to put a solid product in place so quick. In the early 2000s all main handset makers came from telecom vendors: Nokia, Ericsson, Siemens, Alcatel, Motorola, NEC coped the top of the charts. Even Sony had to join forces with Ericsson to play in the field. Microsoft venture into smartphones had given expensive and unstable smartphones after many years of experience with PDAs.

Then the genius of Steve Jobs made it. Leveraging on Apple’s core competency in making computers, they made a leapfrog. With no legacy to respect, unlike Nokia.

Today the iPhone is more than 50% of Apple’s revenue. It was the stepping stone without which the iPad had not had the form and success it had in changing personal computing forever.

The iPod today is less that 5% of Apple’s revenues. It went from 50% in 2006 to less than 5% in 2012. Had Apple failed to win the battle for the convergent phone/Mp3 player, Apple would have not even survived with a leading product such as the iPod.

It’s the perfect model for a market dominant player to lead disruption. It was the leader in the MP3 segment who drove its cannibalization and won. Cannibalize to survive. Easier said than done.

Connecting the dots
If Jobs wouldn’t have bet on the iPod—which at the time was not an obvious product for a computer maker—, Apple would not have been in such a good position to enter mobile and reinvent it. And without the iPhone experience, the iPad wouldn’t have been the hit that has changed personal computing. In hindsight, without the iPod, the tablet might have not existed as we know it.

 

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Will Google Glasses Cross the Chasm?

Less than one day since Google released their Project Glass video, everyone is talking about it. The objective is met. People talk about augmented reality, immersive apps, wearable computing… People even make fun videos of it.

Since Google wants to start a conversation, here are my views:

Why not a Shades form-factor?. No matter how many photos of pretty models you show, even early adopters will hesitate to go out with that thing on their faces without disguise. One of the glasses killer apps is to ‘secretly’ remind you the name of the person you just bumped into — but it has to be ‘secret’, you need the privacy of sunglasses! By the way,  you would mostly wear them while walking in the street, just as you do with shades.

Spoken commands are a show-stopper. How many people do you see in the street talking to Siri? I can imagine people having a chat with Siri in the car, far less while walking. You need Thought and Eye control to go mainstream. Didn’t IBM say we are not that far from that?

– Only measured by the interest raised, Google, please pursue by all means! You will get there!! And you will get people to finally upload to G+!! (just kidding)

Once more, Google, you have captured our imagination, just as you did with your self-driving car. Awesome! Thanks for inspiring us into the future.

 

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Disruption: Technology or Business Model? Definitively, not Laws

Kindle books have now overtaken paperback books as the most popular format on Amazon.com, according to the quarterly results just released.

  • For every 100 paperback sold, Amazon sold 115 Kindle books
  • For every 100 hardcover sold, Amazon sold 300 Kindle books
  • The Kindle store has over 810,000 ebooks
  • 670,000 ebooks are priced at $9.99 or less

In just 3 years, Amazon has taken the eBook from nothing to mainstream. Amazon has managed to take the book transition to digital without suffering the pain the music labels went through with mp3. How did they do it? First, with a great device, the iPod of the ebooks. Second, no fear to cannibalize their own business. Third, force publishers to accept the $9.99 price policy. Same recipe as the iTunes “take it or leave it” $0.99 a song.

Amazon and Apple set the example of companies taking advantage of technology to drive new business models that are changing industries. The Netflix $7.99 a month all-you-can-stream is another bold proposition for consumers, that is shaking the Pay-TV industry.

The right offer for digital content at the right price is not only changing industries in US. It is also driving piracy down. Meantime countries like France, UK and Spain struggle with nonsense laws that not only are useless against piracy, but that are also stopping the development of a legal digital content market.

Legislators in Europe should stop making laws to preserve the status quo. Else US companies will have total domination of digital media by the time old Europe reacts.

 

 

Mark Zuckerberg: Social is THE Feature

Mark Zuckerberg, CEO of Facebook, predicts that “social” will rethink industries such as TV, news, music and film.

The clip is a bit long.This is my summary of his key points:

Facebook started their photo product after big names like Flickr were established. Facebook first photo-sharing service was very simple and lacked features like high resolution or sorting, that were available elsewhere. However, you upload a photo and all your friends get it. That is powerful and engaging.

Facebook realized that “the social feature was most important that all the other features put together.” […] “Social rethinks the whole space.”

That is why Facebook makes the platform open for others to build on. Zynga, Playfish and Playdom are examples of gaming companies built entirely on Facebook. Surprisingly, Zynga’s market value is larger than EA’s!

In Zuckerberg’s words, “gaming is just the first vertical to tip” as it happened in many platforms before. Game apps on iPhone and iPads are the most popular. Even for the early PC, one of the things that got PCs to homes were games.

What are the next verticals to come? TV, music, news, movies. Zuckerberg predicts “In 5 years some of these verticals will be completely rethought and their business rebuilt.”

Zuckerberg did not mention Telecom, but hasn’t Facebook already changed the way we communicate? Will “social” transform telecoms even further?

Video found via the Silicon Alley insider.
It is a one hour clip. See minute 16:50 for the topic in this post.

[Chart] Drop in Pay TV: recession or cord-cutters?

chart-of-the-day-us-multichannel-subscriber-trends-2009-2010

It is the first time ever that Pay TV loses subscribers quarter on a quarter, as the Business Insider chart shows.

A previous post on “spotting disruption before it happens” shows the 3 phases that can be spotted before a disruption actually occurs, exemplified with the postal service.

A lot have been said about how Internet TV offers like Hulu can lure people to cut the cord and drop their Pay-TV subscriptions. Still data so far only showed that Pay-TV rather than declining was actually growing. Up to Q2 2010. For the first time ever, Pay-TV loses subscribers. Does it resemble the 3-phase pattern of the postal service fall?

Is the drop just due to the recession? or are the cord-cutters finally here?