Archive for April, 2005
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As I already wrote about technical aspects of The Next Generation Mobile Phones, recently, however I had some follow-up thoughts within a broader context on this topic.
This summer, a new service will begin in Spain, and later spread to other European countries, to make mobile payments easier. Called Simpay, it is jointly owned by some of Europe’s largest mobile operators. Simpay is designed to function as a non-profit organisation with a common brand. The idea is that eventually all of Europe’s 70m mobile users will be able to click on a “buy with Simpay” logo whenever they use their mobiles to surf the web. Any purchases will then be charged to their mobile bill. If Simpay is anywhere near as successful as PayPal, eBay’s online payments system, it might give the banks a jolt: PayPal now has more than 60m account-holders worldwide.
As mobile phones are increasingly used for shopping, their appeal as a medium for reaching consumers at the point of purchase will grow. Along with services such as global positioning systems, which some handsets already provide, and software that can monitor online behaviour, a handset could offer all kinds of novel things - even telling you where to find that item you are searching for in the supermarket, and that it is on special offer.
“Anything that is screen-based will be able to be used as an ad-serving mechanism,” says Andy Jung, director of advertising and media for Kellogg’s. Other marketeers agree. The mobile phone is a very personal device: a faithful companion that nearly always stays with its owner.
Furthermore, the mobile phone is itself a powerful brand builder, as Samsung’s success has shown. From near-bankruptcy after the 1997 Asian financial crisis, Samsung is now neck-and-neck with America’s Motorola as the second-biggest maker of handsets after Nokia. In terms of market capitalisation, the South Korean company is worth a lot more than Sony, which has long been the king of consumer electronics. Samsung was seen as a producer at the low end of the price spectrum and had a poor reputation for quality, especially in South Korea itself. Yet by concentrating on making handsets that worked better than its rivals’, at first in its home market and then for export, it improved its image. Good-quality handsets got people to look at Samsung’s other products, such as digital cameras and flat-screen televisions.
Sphere: Related ContentTo conclude, the mobile phone will become an even more powerful marketing medium, says Vodafone’s Mr Wheldon. “But it is one where we proceed with gigantic caution.” People may use their mobile services differently in different countries, but consumers everywhere have one thing in common: they never seem to have enough time. If too many ads are pushed on to the screens of handsets, users could become dissatisfied with their service provider and get very annoyed with the advertisers, as they already do about “pop-up” ads on the internet. Whichever way mobile phone marketing evolves, Mr Wheldon says it must be “hugely respectful” of users and their time. Another victory, then, for consumer power.
In 1960, South Korea had only one telephone for every 300 people - barely one tenth of the world average at the time. Today, more than 90% of households have a fixed-line phone, three times the world average.
Moreover, three-quarters of the population carry mobile phones, which mean that pretty well everyone has one, apart from tiny tots and a few elderly people. With government encouragement and the benefit of a densely populated, mainly urban environment, South Korea has been relatively easy to wire up. The country boasts one of the highest internet-penetration rates in the world, with more than 31m of the 48m population now having access to the web, most of them via high-speed services. Apartment blocks display government notices by the front door certifying the speed of their internet connection.
Those connections are about to get even faster. In January, the government licensed the country’s three main telecoms firms, SK Telecom, KT and Hanaro, to offer a new high-speed wireless internet service called WiBro. From next year, this will allow mobile users to surf the internet at much higher speeds than they do now, as well as more reliably. Somewhat alarmingly, the Ministry of Information and Communication (MIC) says it will work even in a car travelling at 60km an hour.
For the country’s consumer-electronics makers, this vibrant home market is an invaluable development laboratory. Samsung Electronics, South Korea’s biggest consumer-electronics company, has already produced a mobile phone especially for watching high-quality video. Its rival, LG Electronics, has even unveiled one with a built-in personal video recorder, which automatically switches to “record” if the user needs to take a call. Lots of other new gadgets are coming, including phones that can read the radio-frequency identification tags that will eventually replace the barcodes attached to goods. These phones, says the MIC, could be used to check the expiry date of fresh produce, say, or pick up a signal from a poster advertising a new movie, which would then prompt you to download a preview.
Furthermore, walk into the experimental coffee bar at the Ministry of MIC’s offices in Seoul, and the screen of a handset lights up with the menu. You can order two cappuccinos, pay electronically and receive a receipt, all on the handset. Mobile phones are already configured for some basic ecommerce activities such as downloading music, and in Asia a few can already be used to make some purchases in shops. “There is a future, not too far away, when the only thing you will need to leave home with is your mobile phone, because it will be your wallet and your key and all the things it already is,” says David Wheldon, global director of marketing and brand communications for Britain’s Vodafone, the world’s biggest mobile operator.
Sphere: Related ContentThere seems little doubt that South Koreans will flock to use many of these services: the MIC expects the number of WiBro subscribers to rise to over 9m within six years. But the way the locals use these new technologies may not translate perfectly to other countries. Watching video on your mobile phone already looks like a winner in Japan, because many Japanese face long commutes on public transport. But if you are stuck in a traffic jam on Interstate 405 on your way to work in Los Angeles, you might do better to tune your phone to pick up high-quality satellite radio instead.
South Korea is one of the most wired countries in the world. That is why Meg Whitman, the chief executive of eBay, the biggest online auctioneer, sees the country as a “window into the possibilities” of what might happen when high-speed broadband services are widely adopted in other places too.
Saturday morning in Myeong-dong, and the huge shopping district in the centre of Seoul, South Korea’s capital, prepares for a long day and night. As the hawkers move in with their barrows, a man selling fried squid sets up his stall next to a woman displaying shawls with Louis Vuitton logos. Real or fake, just about every fashion brand in the world can be bought here, if not from the hawkers, then certainly from the hundreds of stores, shopping malls or the massive Lotte department store. A solitary preacher stands outside a Starbucks singing hymns, as if to steer the swelling crowds away from the path of Mammon. Eventually he packs up and leaves, drowned out by the music blasting from the sound systems of trendy boutiques. This is consumerism at its most strident. So where is the internet?
It is all around. Start with shops, many of which display signs showing their website address. Then watch the shoppers, especially the younger ones. They have acquired new skills: walking through a crowd while studying the screen on their mobile phone, or examining a rail of clothes while using their thumb to text a friend. Some will also be checking their bank accounts, getting sports news, keeping track of an online computer game, or downloading a new ring tone or avatar-a cartoon-like character that will appear as their digital representative on mobile phone screens and in online games. Plenty will also be listening to music downloaded from the internet.
They are what marketing people call generation Y, a group born between 1980 and 1994. They have already turned some clothing, drinks and electronics brands into winners and losers. They have grown up with more choice than any other generation. They are busy and know how to shop around, both online and offline.
More than any other group, the 18- to 34- year-olds access the internet from places other than home, school or work, especially if they are using a mobile phone. They seem to want to be connected wherever they go. They also see the internet as one of their most important sources of information and entertainment.
So the group to watch closely is the younger generation. Young people are the most avid users of the internet because they have grown up with its benefits. For this age group, the internet will remain the most dominant medium in their lives, as it will be for the following generation - who even at primary school are using the web to do their homework.
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America is the world’ s biggest market for cars and General Motors (GM) is the world’s biggest car manufacturer. In a few years, Toyota’s relentless growth is likely to render this statement only half true.
After several recent pieces of bad news and a share price languishing at a ten-year low, GM has revealed how it intends to keep itself at the top, at least for the moment. On Monday April 4th, Rick Wagoner, the firm’s chairman and chief executive, said that he would assume direct responsibility for GM’s North American operations in an attempt to reverse the company’s decline. But it is unlikely that GM and Detroit’s two other car making giants, Ford and Chrysler (the Detroit-based arm of DaimlerChrysler), will be able to keep Toyota and the rest of Japan’s high-revving carmakers at bay for long.
Is there anything US car suppliers haven’t tried to counteract the enormous purchasing power of the handful of car manufacturer that make up their customer base? As the suppliers’s profit margins have been squeezed again and again, they have responded with an array of strategic initiatives, including diversifying their customer base, going global, positioning themselves further upstream in the value chain, and actively helping to design components in hopes of capturing more value than they could by simply bending metal. In the 1990s, the industry also went through an M&A wave that many hoped would deliver the heft needed to push back against the car manufacturers.
Currently, facts speak for themselves, dwindling market share in the face of fierce competition from Japan has forced General Motors to shake up its management. Ford faces similar problems. DaimlerChrysler’s American arm is taking advantage of their misfortune but may be held back by problems at the group’s European operations. Detroit has bounced back before. Can it do so again?
The winning car suppliers of the future won’t try to fight size with size to gain an advantage against their big customers’s purchasing power. Only a restructuring that focuses on excellent processes as well as excellent products will provide the precision-targeted leverage suppliers need to fight back effectively and to preserve the long-term health of their industry.
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Its direct-sales strategy has been a winner so far. However, in today’s global market, that approach may need some adjusting.
For years, that direct, low-cost sales model worked perfectly. It allowed Dell to make high margins while selling computer gear for less than its rivals. As a result, it now holds a leading 17.9% share of the world PC market and has grown much faster than competitors Hewlett-Packard and IBM. But lately, this same sales approach might be hampering Dell’s growth.
Increasingly, industry analysts believe it’s time for Dell to tweak its sales model. After all, times have changed. And to keep growing Dell may need to change, too, and not just in appearance - last summer Kevin Rollins took the CEO reins from Michael Dell.
More on this topic check this webpage.
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Collaborative filtering software is changing the way people choose music, books and other things, by helping them find things they like, but did not know about.
Each year, thousands of films are released and tens of thousands of books published. A big city has thousands of restaurants. How does one deal with such abundance? Reading reviews of films, books and restaurants can provide a guide, but there are more reviews than one has the time to read, and you cannot be sure that the reviewer’s taste matches your own. Word-of-mouth recommendations can help in that regard; friends, after all, are often friends because they share similar tastes.
Collaborative filtering starts off by collecting data on individuals’ preferences. This can be an explicit process, by which a user ranks a book (or CD, or restaurant) on a numerical scale, typically on a scale of one to five. It can also be an implicit process - a purchase, for instance, is a clear indication that an individual is interested in the item in question. But implicit measures can also be more subtle; for instance, the amount of time spent viewing a web page, or even just the “clickstream” - the sequence of links clicked on by a person browsing on the web. These different methods can then either be aggregated into a single score, or stored separately to allow more detailed analysis. And sometimes, consumers will be asked to score the same item in different ways - for instance, what one thought of the food at a restaurant, and what one thought of the service.
The benefit of item-item filtering is that this elaborate similarity calculation need only be done infrequently. Then, when a user ranks a new item - by purchasing it, ranking it, visiting its web page, or whatever - the system can simply call up a pre-calculated list of items that are also likely to appeal to that user. This is what allows Amazon to handle over 30m customers and give instant recommendations, even as the list of items that have been ranked by a customer hanges, since merely calling up the web page for a particular book counts as a ranking. All the calculations are done by Amazon’s powerful server, which creates a list of recommended items and seamlessly stitches that list into the next page sent to the user’s web browser, neatly excluding items they have already purchased.
The value of collaborative filtering has, in any case, already been established. It helps people find things they might otherwise miss, and helps online retailers increase sales through cross-selling. Where the user of a search engine is on a solitary quest, the user of a collaborative - filtering system is part of a crowd. Search, and you search alone; ramble from one recommendation to another, and you may feel a curious kinship with the like-minded individuals whose opinions influence your own - and who are, in turn, influenced by your opinions.
The China Economic Quarterly (CEQ) is an independent newsletter devoted to analysis of the Chinese economy and business environment since 1997.
It draws on the 25 years of combined experience of its editors, veteran financial journalists Joe Studwell (author of The China Dream) and Arthur Kroeber, and also publishes articles by leading China-focused economists and journalists. Visit the CEQ online at http://www.theceq.com/
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2004 Executive Compensation
The spectacle of once-respected corporate titans doing perp walks - Martha Stewart, Bernard J. Ebbers, Richard M. Scrushy, the list seems endless - has pretty well tarnished the title of chief executive. But it has done little, it seems, to scratch the gilt from the corner office.
In fact, the boss enjoyed a hefty raise last year. The chief executives at 179 large companies that had filed proxies by last Tuesday - and had not changed leaders since last year - were paid about $9.84 million, on average, up 12 percent from 2003, according to Pearl Meyer & Partners, the compensation consultants.
To measure executive compensation, Sunday Business studied 200 large public companies that had filed proxies by Tuesday for last year. Pearl Meyer & Partners, the compensation practice of Clark Consulting, compiled and analyzed the data from corporate filings. The tables appear here and here. For the Hauls of Fame click here.
Well, I thought there was code “Tabaksblad” and a restructuring of Corporate Governance at conglomarates.
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