Give the man music

This blog has been silent of late due to my travels to, first, a conference in Rome, and then, a couple of weeks of R&R around Puglia.  As such, my ponderings have been banking up while I waited for decent internet access.

All this travel and stays in hotels of various quality and other accommodation has got me thinking about lost competitive opportunities for hoteliers.  The one that is really starting to aggravate is the failure to provide facilities for listening to music.

In a world were huge numbers of travellers are carrying Apple music players of various descriptions, I am stunned that it has not become de rigeur to provide an iPod dock in hotel rooms.  I would love the chance to move beyond headphones or the tinny speaker on my iPhone.

The cost to a hotelier would be low (decent units go for less than $100), and the payoff in terms of satisfaction would be high.  As travellers become more and more linked, and more vocal, through feedback sites such as Tripadvisor, hotels should be looking for simple but effective ways to make the stay more enjoyable and to differentiate themselves from others.  This would be one of them.

I can only recall one hotel that I’ve stayed in which provided a dock. It rocked and was well-named!

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Time for Apple to flex its muscles?

There’s more to a firm or product’s success than merely the action of the firm in question.

Apple have a struck rich seam of gold with the iPhone.  I recently joined said user cult, and in the Australian domestic setting, was wowed by its interface, the integration of voice and data services (plus all the apps, music and general funkiness elements).

But, here I am in Thailand and I don’t dare utilise the data roaming facilities (beyond typically unsuccessful searches for free wi-fi).  I am simply unwilling to incur the astronomical prices being quoted by my Aussie telecoms provider (something like $20 a mb!), nor am I enamoured with the call costs ($1 for 30 secs).

So I am back using a 1st generation Nokia with a local SIM card and a ridiculously cheap prepaid topup.  I also carry what is now effectively a very pricey iPhone touch in case someone calls from down under.

It is alarming how easily the utility of a nifty product can fall away.

It is criminal how the various national (and international) telecoms players interact to generate such enormous rents from international travellers.  There were similar problems in the voice domain a decade ago, but someone clearly broke the cartel.

The challenge is there for Apple given their headline device is so data hungry. It is scaring off corporate clients. There is a lot of noise around the internet from dissatisfied customers slugged with outrageous bills.

Apple has rewritten the handset provider-telecoms bargaining relationship, earning a considerably higher percentage of call revenues than their competitors.  Will they flex their muscles on the global roaming front and thus maintain their unofficial role as the purported patron saints of consumers everywhere?

More on forward integration into online retailing

Yesterday’s post about Billabong’s forward integration into online retailing ended with a query about whether other such firms have pursued this strategy (and whether it has been a success).

Coincidently I have since stumbled upon this story reporting recent moves by various Italian fashion houses such as Armani, Roberto Cavelli, Valentino and Ferragamo, to build their presence online (link c/o State of Lux). This quote sounds pretty familiar:

“The cost of making a Web Site is not that big. That’s encouraging fashion houses,” said Stefano Sassi, chief executive officer of Milan-based Valentino, which opened its Web shop six months ago. “There’s a very interesting margin on e-commerce.”

It would seem these firms would face a similar issue with channel conflict (with potentially even more conflicts with respect to price parity maintenance).

Armani has also taken on the m-commerce challenge with an i-Phone application. Is this sort of customer engagement better suited to luxury goods?

Visualising an iLifeycle

The take-up speed of new technology or products is an important issue for any firm involved in innovation-driven industries.

We typically argue in the early stage of industry or product life cycles firms will battle it out to produce the dominant technology, and the winner(s) will then ride the growth wave as consumers rush in and profits soar. Finding data on such processes it not always easy.

The two slides discussed in this Techcrunch blog post looking at the uptake and impact of Apple’s iPhone and iTouch are illuminating.

The first shows the speed at which various comparable technologies were taken up in their respective markets (in (admittedly crude) terms of number of products shipped):

Source: Morgan Stanley Internet analyst Mary Meeker vis Techcrunch

What is apparent is the huge appetite for Apple’s new offerings relative to (i) its big competitor in the smartphone domain (Blackberry) and (ii) their precursors in the i-world, the iPod. No wonder Apple is more profitable than ever. Of course, you could also argue that Apple is leveraging off the harder fought gains of these precedents in terms of building consumer interest and confidence with such products… but that IS what the life-cycle idea argues too.

A neat little aside to this discussion is seeing what impact such huge market growth has on suppliers/complements. This slide looks at the upswing in mobile data traffic on the major telecoms network in the US:

Source: Morgan Stanley Internet analyst Mary Meeker vis Techcrunch

Now that’s a nice trickle-down effect!

Beware of extrapolation

Good strategic decisions rely on good data, or at least logical data. I can’t help but think the extrapolation in this article is misguided and overstated:

…a survey by apps company AppsFire has found the average owner spends $US80 on apps for their iPhones.

Multiply this by the 45 million owners across the globe (and adjust for the 7% of users who prefer to only use free apps) and the market is worth a whopping US$3.3 billion, the company says.

The scope for multiplicative errors here is enormous. If the average spend is even 20% less (and I suspect is substantially less than that), and the percentage of users who prefer to only use free apps is 10% (again, I suspect it is much more), this market would only worth $2.6 billion.

The datasource here is very weak (1200 users) and sample representativeness highly dubious.

Firms should avoid such overt optimism wherever possible. A good strategy considers the worse possible (yet reasonable) external environment, as well as the best.