As I write this post, I am aware of a considerable hype and excitement that has been created by Sony Experia C660 Yuga Smartphone- 5” Full HD display, Glass Back, Android 4.1.2, Samsung Exynos 5 Quad Core processor, 3GB RAM, 128GB Storage, 16MP Camera and more. Sure that’s excitement- its closer to a laptop than a smartphone and sure that’s big- But I am really not sure –if that enough to get Sony back in the game. Here’s why-
Back in 2005-08, Sony (Then erstwhile Sony Ericsson) was big in devices- the 4th or the 5th in terms of device volumes and revenues, 2nd or 3rd on Profits and an enviable leadership in ASP. As if that wasn’t good enough Sony had a real plan to leverage its other sub brands – Walkman, Cybershot, Handycam, Playstation, Bravia, Sony Pictures, VAIO and Sony Music. Sony thus had enviable stakes in Music, Video, Imaging, Gaming, Computing, Content (both movies and Music) and LCD screens. In 2007, that kind of a portfolio was something that even a Apple couldnot think of for itself. Sony needed Brand extension of its venerable consumer brands into mobility and many believed that Sony had the secret sauce … except that the secret sauce did not happen. In 2009, Sony launched its last big sub brand- Xperia which would stand for its line of smartphones and one hoped that Xperia would marry the Sony heritage of consumer durable brands – 3 years on, the promise is un-fulfilled and Sony is fast fading into “has been” territory in smartphones.
Where did Sony Loose it? Like Nokia, it misread the writing on the wall as a war of features. It did not recognize the importance of putting all this together on a platform and innovate on the platform – something that Apple and Google pioneered with their App stores. Instead it played the marksmanship on device features bettering one sec with another and still with other. The most appalling realization is that Sony hasn’t still done anything to leverage these sub-brands to build a proposition in Mobility even now. That’s where Sony Experia C660 Yuga Smartphone comes in. All hardware, device and specs – no real platform innovation.
Sony has to get its content platform strategy in place – to really cause a dent in the device space. However, I don’t see a platform play happening at Sony which is a little sad given that there is very little profit pool left to maneuver only on the basis of devices. Neither has Sony been able to leverage its sub brands positively to create compelling propositions.
The EBook reader space is fading out rather precipitously.The rapid growth—followed by the immediate collapse—of the ebook market is virtually unheard of, even in the notoriously short life cycle of products inhabiting the volatile consumer electronics space.
In 2011, dedicated ebook readers saw shipments of 23.2 million units which dropped a whopping 36% to 14.9 million units in 2012, as reported by iHS iSuppli. Furthermore, the numbers are forecasted to drop by 27% in 2013, to 10.9 million units.By 2016, this number would have dropped to 7.1 million units less than 1/3rd of the 2011 volumes.
While these are just estimates, the trend is clear: dedicated ebook readers are going to die a quick death. After all, with tablets being able to do more than these one-trick ponies, it’s completely expected.
Yet, Amazon mopped up record number of EBook sales, in CyberMonday 2012.This is a counter-trend given the damning numbers reported by iHS iSuppli. Sure – the pricing starting from $69 for Kindle is a coup. But Amazon is able to deliver such numbers only basis the pricing subsidy enabled by the sales of Ebooks – Pure eco-system play. Thus what looks to me as happening in the next year or two is that Amazon will monopolize the EBook numbers which will be an extremely large bargain power for Amazon versus publishers. Amazon looks to be uniquely capable of becoming the “lord & master” of the book-publication industry – both in digitized and paper format.
If the early results are any indication, Adobe, has become a model for companies coping with tech’s changing landscape. But the Business transition is easier said – Adobe will have to navigate the rise of cloud, Mobility, social media and highly targeted online advertising. It also pits Adobe against some very well entrenched competition – Microsoft and Apple in productivity programs, IBM and Google in digital marketing.
Adobe’s move into digital marketing- which has its roots in the acquisition of Omniture, a web analytics company in 2009 is an equally adroit move. The second leg of Adobe’s strategy re-orientation includes data driven marketing – real-time bidding on Google search ads, targeting display ads using Facebook profiles, analyzing which Tweets or blog posts drive traffic, testing different site designs to see which generate sales. To make those features possible, Adobe has spent $800 million in the last 3 years on acquisitions since Omniture: Day Software for website-content management, Demdex for ad targeting, Efficient Frontier for search and social media ad exchanges, and Auditude for inserting ads inside streaming videos. According to Gartner, marketing budgets will grow 9% this year, compared with 4.7% for IT. Adobe wants to benefit from that growth by selling marketing services and software simultaneously. Thus, Adobe tools once relied on just for creating a website, have become much more useful as a digital marketing suite.
Still, Adobe’s marketing push means going up against deep-pocketed companies like IBM, Microsoft, Oracle, and Google — all of which are more experienced in the enterprise software market. The next year or so will be critical for Adobe as it changes tracks and dons a new gear. It is a risk but then its vastly better than waiting for the emminent death of Adobe Flash.Adobe’s post-Flash strategy was announced in November 2011, alongside the restructuring that made digital marketing and Creative Cloud the company’s top priorities Adobe saw the writing on the wall and conciously anchored itself on the Creative Cloud and Digital Marketing as the next streams of business. Now we await the new Adobe!
In the age of Cloud,Mobility,Social Media and altering business models,Companies that simply try to preserve the status quo will fail – Inspired
Adobe is the midst of transition would inspire many a case studies. A company that epitomized Shrink Wrapped High Quality Software is working on complete re-doing of its business and revenue models with an eye on the future. Historically, Adobe has been a productivity suite company with its software being centred around enterprises, film-makers, webmasters and content creators and it has done well till recent times. Not wishing to be caught on the wrong foot holding on to status quo, Adobe has readied and implemented a radical change in its business model- It has embraced the cloud based distribution and digital marketing and is phasing out the CD based version of “pay beforehand $1400-$2400” software distribution to Software in the cloud, monthly subscription service. This sachet service works three ways – It steadies revenue per month, it reduces piracy (Adobe was losing a reported $1bn to piracy of its software) and it also increases penetration (The move to subscriptions is a clever and thoughtful way to lower the price point). This model works on a $20-$50 subscription model – and this would bring 325K subs by end of 2012 as per Adobe. Lready Adobe has a million free memberships on its Cloud.The current onboarding rate is 11K per week. Overall average revenue per user is 20% higher compared with the old product. That number will rise even further, the company says, because it is much more likely to sell support services, website hosting, or server management to cloud customers. Already Adobe is augmenting its cloud product by addition of features and functionalities such as Creative Cloud for teams, making it easy (collaborate effort); Adobe Muse (For creation of Mobile websites); Creative Cloud Connection for desktop synching and collaborative sharing;Creative Cloud Training; and demonstrating the unlimited access to the Digital Publishing technology used by major publishers to create interactive content for the smartphones and tablets.
Sure this audacious moved spooked the stock which lost steam in 2011 but it is back in action and has traced a healthy recovery. The stock is way behind its historic highs of $47.9- however at $35.5 it is trading 47% above its 2011 trough of $24.17. Even while the stock is underperforming as per analyst’s expectations- the 3Q, 2012 profits have reversed a trend of 3 quarters of dipping profits. In the most recent quarter, profit increased by 3.2% year-over-year. Looking back further, profit dropped 2.4% in the second quarter, 21.1% in the first quarter and 35.4% in the fourth quarter of the last fiscal year. The turnaround seems to be working for Adobe and we would get to know more about this in time. As for the shift from boxed software to subscriptions: It is far from over. In fact, it is the company’s greatest source of uncertainty.
As per the latest reports from IDC, Global market for Connected and Smart devices grew 27.1% YoY in Q3,2012 to 303.6 million units, valued at $140.4 billion. Shipments will continue to reach record levels in Q4 2012, rising 19.2 per cent from the 3Q, 2012 figure and 26.5 per cent above 3Q, 2011. IDC expects sales of 362 million units with a market value of $169.2 billion in the final quarter, with tablet sales up 55.8 per cent and smartphones up 39.5 per cent, while PCs are expected to show small declines. Samsung maintained the top position with a 21.8 per cent market share while Apple help 15.1 per cent based on unit shipments. But Apple led all vendors in value with $34.1 billion in quarterly sales and an average selling price of $744 across all device categories. The difference in the ASPs (average selling prices) Of Samsung and Apple, is a telling sign of different market approaches. The fact that Apple’s ASP is $310 higher than Samsung’s with just over 20 million fewer shipments in the quarter speaks volumes about the premium product line that Apple sells. Having said that, there is also a risk that Apple could get relegated to a minority market, just the way Windows95 out-marked Apple OS in the mid 90s.
In terms of shipments, Lenovo ranked third with seven percent of the market, followed by Hewlett-Packard (4.6 percent), and Sony (3.6 percent). IDC expects the worldwide smart connected device market will hit 2.1 billion units in 2016 with a market value of $796.7 billion worldwide. In 2011, PCs accounted for 39.1 per cent of this market but by 2016 it is expected to drop to 19.9 per cent. Smartphones will be the top product category with share growing from 53.1 percent in 2011 to 66.7 per cent in 2016 and tablets will grow from 7.7 per cent in 2011 to 13.4 per cent in 2016. The advent of cloud-based services is enabling people to seamlessly move from device to device, which encourages the purchase and usage of different devices for different situations.
The shift in demand from the more expensive PC category to more reasonably priced smartphones and tablets will drive the collective market ASP from $534 in 2011 to $378 in 2016. While, IDC hasn’t provided a breakdown by operating system, Android with its mass-market devices with prices trending towards $100 or less will continue to take a majority share in smart devices.
Over the last few months now, Apple has been behaving like the big daddy – reminiscent of Microsoft in the 2000-10 decade. Firstly, there is the push into patent led legal processes with Samsung; then the whole act of reducing supplies of the Samsung chips and then there is the whole maps fiasco for which Tim Cook has also had to apologize in public. Apple’s push to pack all of its eco-system in its walled garden is becoming a bad press issue. The latest being the Map application errors which has led Australian Police to issue a warning on use of the Apple Maps application in North West Australia categorizing the app as “Potentially Life Threatening”. The latest map glitch puts motorists 70 kms off from where they are supposed to be.
Again then – the question that arises- Post the Jobs era, Is Apple lapsing into the ordinary?