Tuesday, January 18, 2011

What is Competition or what may be competition?

Who sells the largest number of cameras in India?
Your guess is likely to be Sony, Canon or Nikon. Answer is none of the above. The winner is Nokia whose main line of business in India is not cameras but cell phones. Reason being cameras bundled with cell phones are outselling stand alone cameras. Now, what prevents the cell phone from replacing the camera outright? Nothing at all. One can only hope the Sony’s and Canons are taking note.

Try this. Who is the biggest in music business in India? You think it is HMV Sa-Re-Ga-Ma? Sorry. The answer is Airtel. By selling caller tunes (that play for 30 seconds) Airtel makes more than what music companies make by selling music albums (that run for hours). Incidentally Airtel is not in music business. It is the mobile service provider with the largest subscriber base in India. That sort of competitor is difficult to detect, even more difficult to beat (by the time you have identified him he has already gone past you). But if you imagine that Nokia and Bharti (Airtel’s parent) are breathing easy you can’t be farther from truth.

Nokia confessed that they all but missed the Smartphone bus. They admit that Apple’s I phone and Google’s Android can make life difficult in future. But you never thought Google was a mobile company, did you? If these illustrations mean anything, there is a bigger game unfolding. It is not so much about mobile or music or camera or emails?

The “Mahabharat” (the great Indian epic battle) is about “what is tomorrow’s personal digital device”? Will it be a souped up mobile or a palmtop with a telephone? All these are little wars that add up to that big battle. Hiding behind all these wars is a gem of a question – “who is my competitor?”

Once in a while, to intrigue my students I toss a question at them. It says “What Apple did to Sony, Sony did to Kodak, explain?” The smart ones get the answer almost immediately. Sony defined its market as audio (music from the walkman). They never expected an IT company like Apple to encroach into their audio domain. Come to think of it, is it really surprising? Apple as a computer maker has both audio and video capabilities. So what made Sony think he won’t compete on pure audio? “Elementary Watson”. So also Kodak defined its business as film cameras, Sony defines its businesses as “digital.”

In digital camera the two markets perfectly meshed. Kodak was torn between going digital and sacrificing money on camera film or staying with films and getting left behind in digital technology. Left undecided it lost in both. It had to. It did not ask the question “who is my competitor for tomorrow?” The same was true for IBM whose mainframe revenue prevented it from seeing the PC. The same was true of Bill Gates who declared “internet is a fad!” and then turned around to bundle the browser with windows to bury Netscape. The point is not who is today’s competitor. Today’s competitor is obvious. Tomorrow’s is not.

In 2008, who was the toughest competitor to British Airways in India? Singapore airlines? Better still, Indian airlines? Maybe, but there are better answers. There are competitors that can hurt all these airlines and others not mentioned. The answer is videoconferencing and telepresence services of HP and Cisco. Travel dropped due to recession. Senior IT executives in India and abroad were compelled by their head quarters to use videoconferencing to shrink travel budget. So much so, that the mad scramble for American visas from Indian techies was nowhere in sight in 2008. (India has a quota of something like 65,000 visas to the U.S. They were going a-begging. Blame it on recession!). So far so good. But to think that the airlines will be back in business post recession is something I would not bet on. In short term yes. In long term a resounding no. Remember, if there is one place where Newton’s law of gravity is applicable besides physics it is in electronic hardware. Between 1977 and 1991 the prices of the now dead VCR (parent of Blue-Ray disc player) crashed to one-third of its original level in India. PC’s price dropped from hundreds of thousands of rupees to tens of thousands. If this trend repeats then telepresence prices will also crash. Imagine the fate of airlines then. As it is not many are making money. Then it will surely be RIP!

India has two passions. Films and cricket. The two markets were distinctly different. So were the icons. The cricket gods were Sachin and Sehwag. The filmi gods were the Khans (Aamir Khan, Shah Rukh Khan and the other Khans who followed suit). That was, when cricket was fundamentally test cricket or at best 50 over cricket. Then came IPL and the two markets collapsed into one. IPL brought cricket down to 20 over’s. Suddenly an IPL match was reduced to the length of a 3 hour movie. Cricket became film’s competitor. On the eve of IPL matches movie halls ran empty. Desperate multiplex owners requisitioned the rights for screening IPL matches at movie halls to hang on to the audience. If IPL were to become the mainstay of cricket, as it is likely to be, films have to sequence their releases so as not clash with IPL matches. As far as the audience is concerned both are what in India are called 3 hour “tamasha” (entertainment). Cricket season might push films out of the market.

Look at the products that vanished from India in the last 20 years. When did you last see a black and white movie? When did you last use a fountain pen? When did you last type on a typewriter? The answer for all the above is “I don’t remember!” For some time there was a mild substitute for the typewriter called electronic typewriter that had limited memory. Then came the computer and mowed them all. Today most technologically challenged guys like me use the computer as an upgraded typewriter. Typewriters per se are nowhere to be seen.

One last illustration. 20 years back what were Indians using to wake them up in the morning? The answer is “alarm clock.” The alarm clock was a monster made of mechanical springs. It had to be physically keyed every day to keep it running. It made so much noise by way of alarm, that it woke you up and the rest of the colony. Then came quartz clocks which were sleeker. They were much more gentle though still quaintly called “alarms.” What do we use today for waking up in the morning? Cell phone! An entire industry of clocks disappeared without warning thanks to cell phones. Big watch companies like Titan were the losers. You never know in which bush your competitor is hiding!

On a lighter vein, who are the competitors for authors? Joke spewing machines? (Steve Wozniak, the co-founder of Apple, himself a Pole, tagged a Polish joke telling machine to a telephone much to the mirth of Silicon Valley). Or will the competition be story telling robots? Future is scary! The boss of an IT company once said something interesting about the animal called competition. He said “Have breakfast …or…. be breakfast”! That sums it up rather neatly.

The moral of the story is be nimble on the head, on action and on the feet.

If not this then something else..but anticipate developments in the near term. There is a reason why Apple that was languishing at less then $10/share for 8-10 years suddenly took off - Steve Jobs. Honestly I hate apple products, except for their PC/Lappy. But I admire the vision, a stupid phone which does nothing right still hold millions in its grasp - courtesy Steve Jobs vision.

Very few people are like this - visionaries..
Look at MSN, well they introduced windows (copied it), but look whats happened after that.. they thought garnering 95% of market share was good enough. what they forgot was this number was for 1st world.. The future is BRIC, Far east and Latin america. Here people are not going to buy official copies of MSN - pirating and now the cheaper Linux option. So MSN didnt anticipate this and kept assuming W hemisphere is enough to drive its growth. Germany in all public office/uni is pushing for Linux. UK in Univs, lots of companies are moving towards linux based systems..

Kodak was a classic example!! and its true of Japanese culture too.. They are slow moving behemoths.. Sony, Toyota, Panasonic, Nissan etc etc..

Probably, That is one reason why Sony would be under immense pressure because of a simple fact that they did not anticipate Samsung create a ripple in people's imagination. Nokia again clearly saying they missed the bus they have to kick their back side for all the crap they have been loading into their new phones just to stay alive. Apple thought Nokia was the competition then again, by the time Motorola realized it was all over Razr came in - the only saving grace. Little did they think that a smaller or lets say an inconsequential firm - HTC would be snitching in with some of the awesomest ideas. Today they are a kick away from iPhone and which is why Apple would be under immense immense pressure to relase the products this April. Trust me, if Apple is not going to come with better versions on their iPhone or iPad - they are in some serious trouble in the market - now that Jobs is going on leave for a while again. The charisma the guy had is unparalleled

Rightly so most organizations get into the slack mode - IBM did. It was about to be made a Chinese melon, then the sensibilities prevailed and it started dismembering and started working on how to return the stock market investor that extra more for what he invested in. Fantastic thought process when diversification was getting to be the mantra in the world. IBM started dismembering. Everything out of the window, if the investor is investing on me because I am good in producing this, I will make money and return the money back. It worked like a charm and today IBM in the 100 years of existence, a 99.7 billion dollar revenue, a 18 billion dollar bottom line. FANTASTIC stuff. What IBM does, is what is followed by the rest of the world. Now where was this idea - who was the competition?

It is also about being ready to think on the run, work with many things and yet not miss on the objective. I kind of like the fact that Microsoft is challenged more, said more they were the elephants around pretty much entering the heart and soul of everyone. Then what happened? They took it easy with UNIX, tried to kill Linux Today we have a zillion OS's and the funny thing is IBM also started selling multiple OS's in their mainframe. Competition is such a funny funny word. If something is a blessing in the 21st century is the fact that the offshoring/nearshoring. Totally changing the playground big, just then people realize what is their worth for what it is in true sense.

So bottom line - keep improving - the day it is about being happy doing the same thing again and again because there is no pressure, no need to learn - stop think again - think Phillipines, think Argentina. Think competition. Think life.

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