12 Apr 2008
0 CommentsEarly Adopters versus Business Models: Shooting Yourself in the Foot?
In an attempt to de-mystify seeming abstract business theory, from time to time, we will discuss “real world” examples of business models in action.
Both theory and practice underscore the importance of keeping early adopters engaged with a new product or service, a key enabler for creating a hit in the mainstream market. Of course, such trend setters love to play and revel in all things new. More importantly, they are also disproportionately connectors and influence makers, who can make or break eventual success in any marketplace. The new science of social networks merely provides proof of our intuitive sense that these people are the number one key to success in new markets.
To provide some historical context, a lack of serious engagement with application developers (a very specialized form of early adopter), penalized early Apple Macintosh market share, a failing which took nearly 20 years to put right! Thus, do people running both startups and major corporations, having learned this lesson, live and breathe attention to early adopter crowd?
Hardly. Below are two glaring examples, sadly (or perhaps tellingly), both involve the same major Canadian wireless carrier. Both involve a very simple lapse in appreciating of long term impact of short term decisions. Can you provide additional examples?
Electronic Bill Presentment and Payment: In the late 1990’s, Electronic Bill Presentment and Payment (EBPP), in which consumer bills that had been printed and mailed via the postal service, are instead processed automatically as a web service, was an exciting emerging market. I can remember the palpable frustration of Ray Simonson when I told him of my early adopter experiences EBPP. Ray, currently CEO of Software Innovation (Coreworx) and my partner at Verdexus , was co-founder and CEO of Bluegill Technologies (now Checkfree Software), which was the run away success and market leader in EBPP.
What was my involvement in this? Around 1998, I jumped at the option of “on-line” billing for my Rogers Wireless service (using a different platform than Bluegill by the way). As a committed early adopter, of course I signed up. Imagine my dismay when, at tax time, I found that the system had stored only the previous 6 months of bills! Because I no longer received paper bills in the mail, and this being early April, I had to scramble to find 9 of the preceding 12 months of billings to complete my return. And, this one year requirement doesn’t even take into account the tax authority’s rule of 7 years of record retention.
Did this early service meet my basic needs? No, it fell short, and spectacularly so. But, even worse, until very recently that negative early experience put a “chill” on my migration away from any form of paper bills, although I did pay online through my bank. Once burned, twice shy.
Wireless Data Pricing: Many people have commented on the issue of high data rates, and even higher charges for data roaming on wireless networks. The problem is endemic in the US and even more spectacularly in Canada, and is arguably a product of a flawed regulatory framework and inadequate competition.
The roots of this problem have been discussed many times, including in this blog and by Alec Saunders. For example, Toronto entrepreneur and futurist, Thomas Purves, in his analytical (if not constructively inflammatory) posting “Canada Worse than 3rd World Countries When it Comes to Mobile Data Access” shows just how egregious data rates really are(see graph). My personal initiation into this problem occurred in 2006 when my normally $300/month Rogers bill came in about $1000 higher than I expected! The cause – the overage was split pretty equally between going over the meagre 25 MB of data (for which I already pay $60/month) and data roaming outside Canada. At the time, both were billed at a charge rate of $0.05/K or an unbelievable $50/MB! And, at least on my Blackberry or Nokia N80 there is absolutely no mechanism to monitor or meter consumption. Therefore, unlike voice with its call timers, there is no effective way to predict and high charges simply show up as unwelcome surprises on the next monthly bill.
Of course, who is going to argue with a company (again Rogers Wireless) exploiting its natural monopoly profits? This problem is more than my personal griping, or that of any individual business. The strategic significance is that if Canada (and to a less extent the US) continues to keep these barriers to adoption of wireless data applications, the innovation and economic benefits will migrate elsewhere. It’s very hard for Canadian mobile startups to compete globally with such a flawed home market. And, for Rogers, my strong belief is that any short term gain will be far outweighed by the loss of signficant data revenues as they become the driver of future wireless business models.
Two very sad stories indeed. I’d love to hear your take on this early adopter issue. Do you have stories of your own? Do you have a different take? Feel free to comment.
21 May 2008
0 CommentsIndigestion from “Half Baked” Mobile Web Browsing
Blackberry Pearl – Convergence of Network and Information
Yesterday, Chris Sacca (ex Googler extraordinaire, investor in the likes of Twitter and recent Tech Leadership Conference Keynote speaker) shot a provocative salvo across the bow of the Twittosphere. Many times Twitter is a true belwether, capturing the pulse of market dynamics. And, although saying this might not go down well in Waterloo, it struck a chord with me. Here’s Chris’s shot of wisdom:
In the mobile universe, aren’t we forever doomed to suffer a hopelessly limited and painful browsing experience? And, why is mobile browsing that important anyway?Whizzy gizmos like the accelerometer aside, the key breakthrough of last year’s Apple iPhone launch was to deliver mobile browsing that is every bit as rich as the equivalent desktop experience. The entire universe of websites accessible to the desktop user simply works in the iPhone browser. This is equally true on 2G EDGE networks, and doesn’t depend on the forthcoming release the iPhone 2 with its higher speed 3G HSDPA capabilities.In short, Apple has moved the bar a quantum leap higher for the entire mobile market. Constrast that with the Blackberry (Pearl or Curve) which so frustrates Chris Sacca. Many sites that work on my notebook give errors, render poorly on the Blackberry screen or use features which simply aren’t supported. On top of that, the browsing and rendering is unbelievably s-l-o-w. Nokia on the Symbian S60 phones, like the N95, is way ahead of Blackberry, but still needs to retool to catch Apple’s strong lead.But, most of all, this is so important because mobile browsing is becoming the only application mechanism that matters for mobile. The myriad hassles of operator locking and closed platforms has effectively rendered the market for downloaded mobile applications stillborn. 2008 is the year in which it has become crystal clear to all of us in the mobile space, that the application platform of choice is, in fact, the browser.The test of Blackberry’s ability to reassert some market leadership will be the new Blackberry Bold which is expected later in 2008. Most people in the know are keenly awaiting to see if it’s browsing experience can rise the the iPhone challenge, or will it merely close some of the gap with Nokia which is itself still an also ran? For me, this may well be the most important strategic market inflection point for Blackberrry over the next year or so. Thus, it would be great if someone in the RIM-plex would care to comment?