Archive for the ‘business’ Category
There are events and then there are not-so-ordinary events that give us hints, even in their disassociation, about the direction that technological (or any other type, for that matter) developments will head.
In the past week we have seen three such events – Microsoft’s formal overture towards Yahoo!, Facebook’s less-than-stellar numbers and Twitter’s ongoing saga in trying to keep a web-scale messaging framework up and running – that give us tasty hints as to where we may be headed.
The simpler, shorter version of the Microsoft – Yahoo! story is that companies that do business in the old school way – a manner similar to a behemoth, clumsy and ugly in gait – are history on the internet. Lock-in of the user and his/her data to platforms or products is a strategy that is history. It is only a stellar product that will keep companies alive in the future. And neither Microsoft, nor Yahoo! have built and in-house hit web-scale product in recent times.
The feeling that keeps coming back to my mind is that Microsoft and Yahoo! will be one of those weddings that look perfect as a mental image (for the shareholders and business wonks), but in practice it ends up being an absolute nightmare. There is a staggering amount of redundancy (for every Yahoo! product you can think of, there is almost a competing one with MSN/Live.com) and the integration will also be rotten in terms of platforms and cultures.
Even if you set apart the strong stench of desperation in the move, the fact remains that these are two companies that are struggling to catch the imagination of the younger and upcoming generation. By the time the dust settles on this one, much confusion would have ensued, which would tick off the loyal users who make up a vast majority of the numbers that make the deal look exciting.
That said, it is indeed a sad development to see an internet icon like Yahoo! being in the position that it finds itself in now. And in that state of distress lies a story for everyone who makes a living off the internet – don’t take anything for granted. Earlier, a company’s lifecycle – from inception to success to the demise – used to take decades, now the same is being compressed into ten years.
It is a theme that I will never tire of telling everyone I know: being nimble is a priceless asset in doing business now – nurture it, grow it and covet it with as much care as you covet your bottom line.
Just a quick note before the day starts in full flow choc-a-bloc with meetings. For all those really loud people who have dismissed outsourcing and given it so much grief, go and take a look at IBM’s Q4 2007 earnings call. A lot of IBMers in the US are getting to keep their jobs because of their company’s strong performance have to thank outsourcing for it. Services, which is mostly driven by outsourcing has been their rock star performer:
Looking at our results by segment, Services continued the momentum we’ve seen over the year. Global Technology Services revenue was up 16%, profit up 26%. Global Business Services revenue was up 17%, profit up 9%. And we signed $15.4 billion of new business, and importantly short term signings were up 8%.
They have also benefited from having a truly global operation, which enables them to focus on emerging markets, that drew in a 3rd of their revenue for the quarter. You can expect a similar set of results from Google (growth, but at a much slower rate) and from other geographically diverse companies who can limit their exposure to the carnage that we will see this year in the US market. Google itself crossed the crucial landmark a while ago, when, in Q1 2007, their international revenues pretty much hit 50% of their total revenue.
Once again, companies that will take a huge hit are ones like Apple, who depend extensively on retail spending in the US markets, which is why they have been gradually moving into other segments (iPhone) for which you can look at recurring revenues per customer than a one time engagement. 2008 will be critical for Apple and if they have to escape the carnage, they have no choice but to forge ahead with the launch of the iPhone in other markets.
Then again, the iPhone is vastly overpriced for a market like India, even if you were to assume something like INR 16,000 as the price point. If they need a winner, they’ll need something in the sub-INR 10,000 price range to set the market alight and I don’t see something like that coming from Apple.
On an unrelated parting note, I think I’ve linked to David Manners’ blog on the semiconductor trade, but it is an absolutely lovely blog to read even if you are not a semiconductor wonk. Highly suggested.
Automattic, the company that created the WordPress.com blogging platform and oversees the WordPress.org open source project, has rejected a $200 million acquisition offer, says multiple sources. — Techcrunch
I’d said a while ago that even the $300 million figure quoted by Rafat earlier was not the right valuation for the company. Automattic does not only create software that helps people — and now a fair number of publications — publish content, they also organise it in a consistent manner using global tags and categories. They are, in fact, a content management, content delivery and allied services company, very much unlike what the world thinks of them as: a blog software company.
If they stick it out in the long run by themselves (no reason why they should not do it, since they have not taken on board any major funding in a while now, which is a good indication that the company is doing well in terms of cash flow/reserves), they would be worth a whole lot more.
Update: More evidence to back it up that WordPress is much more than a blog software company. How long it will be before they get an actual editor to run that page and push out more organised content?
We really have to come up with better ways of measuring subscriptions and usage. After the entire ruckus by Naukri and Timesjobs about who is the big daddy as far as job sites go, it is now Reliance’s turn to go overboard with usage numbers. According to a release (reproduced almost in toto by Alootechie), Zapak Digital Entertainment has signed up more than 1 lakh users on a single day for their new email service Zapakmail.
If you go by IAMAI’s *cough* numbers, the average ‘active’ users in March 2007 was estimated at 28 million and the way ‘active’ has been defined is thus: “someone who has used the internet at least one in the last 30 days.” Even by that number, and after taking extreme liberties in considering it to be true and extrapolating it further, we have roughly 903,225 users for the March 07 number, on a daily basis in India. If you go by Zapak’s numbers (1,15,263 in a single day), it would mean that 1 out of 9 users who logged on to the net in India that day signed up for an email account at Zapak. How likely is that? You can judge that for yourself since there’s no way we are going to get the real numbers out of Reliance.
In any case, as it was earlier with the Sunsilk Gang of Girls concept, sign ups are not a good enough measure of stickiness and active users. You might have a million signed up users who never log in and the reason why we can’t ever agree on which site is better is because everyone has different definition of an active user. And this is a problem that the industry has to address at some point because even with the presence of an external auditor, metrics like pageviews, user sessions are far from being above board and bereft of inflation.
p.s: Sanjeev, please get your blog hosted on Naukri than on Blogger, or at least get a better template than the boring default blogger template. It would not take more than half a day for the chaps at your labs to get this done.