Bill Gates suggests that there is a degree of convergence between the functionality of Longhorn, Microsoft’s 2006 Window’s operating system, and Tiger, Apple’s new operating system released this week. In particular, Gates emphasizes similarity in usability, search facilities, and ease of switching between applications such as chatting, gaming, and Internet.
While it is debatable whether Windows will ever be as easy to use as Apple’s operating systems, there is nothing to prevent Microsoft incrementally improving the usability of Windows until it approaches that of Apple. But that would not be a good idea for either company.
The reason is that the only way to outsell a competitor with a product similar to your own is to promote better, distribute better, or price lower. Unfortunately, all these options have the effect of reducing profits for both parties. The winner is therefore typically the company with the greatest capital reserves. That would be Microsoft.
A better way for Apple to compete is to aim for product divergence or differentiation from Windows. That would allow it to compete on four instead of only three dimensions: features, price, distribution and promotion. In order to maximize its own profits, Microsoft should of course do the same and differentiate itself as much as it can from Apple.
The question is therefore how these companies might differentiate from each other. One important difference, for example, is that Apple provides both the hardware and operating system for its systems unlike Microsoft which provides only the software. Apple could therefore introduce innovations that rely on the tight integration between its hardware and software. For example, its PCs could become music centers - extensions of iTunes if you will. Microsoft would not easily be able to imitate this.
Similarly, Microsoft is differentiating itself by integrating its Xbox games unit more tightly with Windows – something Apple would find difficult to copy.
All in all, there are many ways for these companies to differentiate. I do not understand why Gates speaks so highly of convergence.
Source: http://maxblumberg.typepad.com/dailymusings/apple_strategy/index.html
Sunday, November 25, 2007
iTunes: Rental Challenges from Yahoo and Real?
When Napster to Go was launched, we predicted that “younger” music listeners (say those under the age of 25) would prefer these rental download models to outright purchase models like iTunes.
Yahoo and Real clearly agree and have launched Yahoo Music Unlimited and Rhapsody, both music-for-rent models.
This begs a number of questions. First, will Google launch a music service? I doubt it because unlike Yahoo or MSN, everything that Google does is based around a search niche. For example, Google does not offer video downloads, but it does offer video search. It will probably introduce a music search facility in the foreseeable future which crosses all music platforms.
A second point is that I believe that these rental models will cause significant changes to the music industry. iTunes, Rhapsody, YMU, Napster and co are online distributors for record labels such as Universal, Sony BMG, EMI, and Warner Music. With the exception of Sony, few of these labels distribute any products other than their own for fear of promoting competitor’s brands. This is short-sighted; there is no need for any label to lose out on the sale of its competitors' music.
What these labels should consider is adopting a customer-centric approach by selling music buyers whatever they want to hear whether it is from their own label or not. In other words, they should get into the distribution game and treat it as a separate business from music/content production. This will better serve both their profits and their markets.
If a record label chooses this route – as Sony has – it has begun a process of vertical integration, from the production of the content through to its retail distribution.
I predict that we will see more vertical integration and a resulting contraction of music industry big names. A forthcoming article will explore possible roles for independent labels
Source: http://maxblumberg.typepad.com/dailymusings/2005/05/itunes_rental_c.html
Yahoo and Real clearly agree and have launched Yahoo Music Unlimited and Rhapsody, both music-for-rent models.
This begs a number of questions. First, will Google launch a music service? I doubt it because unlike Yahoo or MSN, everything that Google does is based around a search niche. For example, Google does not offer video downloads, but it does offer video search. It will probably introduce a music search facility in the foreseeable future which crosses all music platforms.
A second point is that I believe that these rental models will cause significant changes to the music industry. iTunes, Rhapsody, YMU, Napster and co are online distributors for record labels such as Universal, Sony BMG, EMI, and Warner Music. With the exception of Sony, few of these labels distribute any products other than their own for fear of promoting competitor’s brands. This is short-sighted; there is no need for any label to lose out on the sale of its competitors' music.
What these labels should consider is adopting a customer-centric approach by selling music buyers whatever they want to hear whether it is from their own label or not. In other words, they should get into the distribution game and treat it as a separate business from music/content production. This will better serve both their profits and their markets.
If a record label chooses this route – as Sony has – it has begun a process of vertical integration, from the production of the content through to its retail distribution.
I predict that we will see more vertical integration and a resulting contraction of music industry big names. A forthcoming article will explore possible roles for independent labels
Source: http://maxblumberg.typepad.com/dailymusings/2005/05/itunes_rental_c.html
T-Mobile responds to Vodafone iPhone injunction: $1,500 unlocked iPhones
T- Mobile just issued a press release in response to Vodafone's efforts to unravel the iPhone exclusive offering in Germany. In the statement, T-Mobile claims that they will appeal the ruling (they have two weeks to do so) and will continue selling the iPhone unabated. T-Mobile defends the locking strategy as good for consumers who receive preferential data rates and access to T-Mobile hotspots as a result. In addition, T-Mobile says that it will likely claim damages against Vodafone for the mess they're causing. Perhaps T-Mob hasn't noticed all the free press they (and Apple) are receiving?
Update: Reuters confirms that T-Mobile will sell the iPhone in Germany unlocked -- that will be the first unlocked iPhone officially available. The catch: it's €999! That's $1,478 at the current exchange rate for a phone which cost €399 (with contract) just a few minutes ago. Hackers and unlockers, your services are still required.
Source: http://www.engadget.com/2007/11/21/t-mobile-responds-to-vodafone-iphone-injunction/
Update: Reuters confirms that T-Mobile will sell the iPhone in Germany unlocked -- that will be the first unlocked iPhone officially available. The catch: it's €999! That's $1,478 at the current exchange rate for a phone which cost €399 (with contract) just a few minutes ago. Hackers and unlockers, your services are still required.
Source: http://www.engadget.com/2007/11/21/t-mobile-responds-to-vodafone-iphone-injunction/
Vodafone strategy change may be near
Executive changes at Vodafone Group PLC, including the announcement on Sunday of the resignation of Christopher Gent, life president of Vodafone, indicate a battle over the future direction of the company, analysts say.
"It's about an impending strategy shift, which the old guard may find difficult to accept," said James Enck, European telecommunications analyst at Daiwa Securities SMBC Europe Ltd.
On Monday, Vodafone Chairman Ian MacLaurin issued a statement saying that he and the board are fully supportive of Arun Sarin, Vodafone's chief executive officer. He said his comment was in response to recent press reports that have described a supposed rift between Sarin and some board members, led by MacLaurin and representing Vodafone's historic mission as originally outlined by Gent.
Gent is widely credited with turning Vodafone into an international operator with a mobile-only strategy. But recently, an increasing number of operators around the globe are looking to deliver multiple services and also to combine those services for customers. "No one can afford to be a one-dimensional, one-technology company anymore," Enck said.
An examination of Vodafone's holdings hint at a potential impending change in strategy that could include a fixed-line business, he said. For instance, historically when Vodafone has made an acquisition that includes a fixed-line operation, it sells the fixed-line business, he said. However, with its acquisition of Mannesmann in 2000, Vodafone acquired Arcor AG & Co. KG, a wireline operator, and has yet to sell off that business.
In Germany, Vodafone competes with T-Mobile Deutschland GmbH, whose parent company has a fixed-line business. O2 (Germany) GMBH & Co. OHG, another mobile operator in Germany, was recently acquired by Telefonica SA, which has a DSL (Digital Subscriber Line) offering in Germany. Over the weekend, Enck heard rumors of a potential tie-up between E-Plus, another German mobile operator, and QSC AG, a DSL provider in Germany. Vodafone can better compete with those operators in Germany if it retains Arcor, Enck said.
Vodafone lacks a wireline operation in its other large European markets, including the U.K., Italy and Spain. But the company could be in the process of freeing up cash to make purchases of wireline businesses in those regions, Enck said. Earlier this month Vodafone announced that it is in discussions to sell its unit in Japan. Rumors have also surfaced recently about Vodafone possibly selling its stake in Verizon Wireless Inc.
Vodafone has not yet responded to a request for comment on the executive changes and a potential shift in strategy.
In addition to Gent's resignation, Vodafone announced last Wednesday that long-time Vodafone executive and Chief Marketing Officer Peter Bamford would resign on April 1.
Source :http://www.infoworld.com/article/06/03/13/76375_HNvodafonechange_1.html
Vodafone's expansion strategy makes it a good bet
It was only a few years ago that Vodafone was a mobile evangelist, intent on selling off its German fixed-line business as it did not fit the bill. By the end of 2005, it was talking about the potential of broadband and convergence, but adopted a softly-softly approach to broadband, based around signing joint venture deals with the likes of BT to keep hold of customers who wanted to source high-speed internet and mobile from the same provider.
Fast-forward to today and Vodafone is a fully fledged consolidator in the broadband sector after splashing out £537m on Tele2's Spanish and Italian fixed-line businesses. Vodafone has picked up nearly 650,000 broadband customers in two high-growth markets, yet it has also gained 2.4 million fixed-line voice customers.
It is a sign of the times that the only concern analysts have is the price, not exposure to fixed-line voice. Although it has only gained a market share of 4 per cent in the two broadband markets, Vodafone has paid a 30 per cent premium to the value of the assets under Tele2's ownership. But the company was accused of overpaying for assets in Turkey and India over the past two years, and it has quickly turned that sentiment on its head.
Under Arun Sarin's leadership Vodafone has become synonymous with investment in high-growth emerging markets. Yet its strategy in mature markets to cut costs and drive growth from new services such broadband is just as important. The Tele2 deal reflects that focus and strengthens the company's hand in two key European markets without materially affecting its financial performance. Despite various threats to the company's progress over the coming years, notably price deflation and regulation, the shares look a good bet to keep progressing toward the 200p level.
Source: http://news.independent.co.uk/business/comment/article3041116.ece
Fast-forward to today and Vodafone is a fully fledged consolidator in the broadband sector after splashing out £537m on Tele2's Spanish and Italian fixed-line businesses. Vodafone has picked up nearly 650,000 broadband customers in two high-growth markets, yet it has also gained 2.4 million fixed-line voice customers.
It is a sign of the times that the only concern analysts have is the price, not exposure to fixed-line voice. Although it has only gained a market share of 4 per cent in the two broadband markets, Vodafone has paid a 30 per cent premium to the value of the assets under Tele2's ownership. But the company was accused of overpaying for assets in Turkey and India over the past two years, and it has quickly turned that sentiment on its head.
Under Arun Sarin's leadership Vodafone has become synonymous with investment in high-growth emerging markets. Yet its strategy in mature markets to cut costs and drive growth from new services such broadband is just as important. The Tele2 deal reflects that focus and strengthens the company's hand in two key European markets without materially affecting its financial performance. Despite various threats to the company's progress over the coming years, notably price deflation and regulation, the shares look a good bet to keep progressing toward the 200p level.
Source: http://news.independent.co.uk/business/comment/article3041116.ece
Vodafone outlines emerging-markets strategy
Vodafone Group Plc has taken time to outline its strategy in the Eastern Europe, Middle East, Africa, Asia Pacific, and Affiliates region to analysts and investors.
Vodafone is the world's largest mobile operator in terms of sales. Over the past decade it has adopted a global approach, and acquired stakes and operations in many countries. However, since the departure of Sir Christopher Gent in 2003, the group has moved from an "empire-building" approach and instead opted to offload assets in mature markets such as Japan, Sweden, and Belgium where it could not establish a dominant position.
The biggest challenge now facing Vodafone under chief executive Arun Sarin is ensuring growth. Vodafone's core markets in western Europe are heavily saturated and offer very limited growth potential, so over the past 12 months, Sarin has turned to developing markets such as India, South Africa, and Turkey to drive growth.
Vodafone's $4.55bn purchase in Turkey last December of Telsim Mobil Telekomunikasyon AS was controversial. Many thought it had overpaid when it won an auction for Telsim Mobil Telekomunikasyon AS that was broadcast live on Turkish television. Telsim had been in receivership since February 2004 when state authorities seized 219 companies that belonged to its owner, the Uzan family, whose business empire collapsed in 2003 after a fraud scandal.
However, Vodafone has now told investors that it hopes to turn around its Turkish mobile business quicker than previously forecast, and it reiterated an interest in increasing its presence in China and India.
Telsim is solidly in second position in Turkey, with a 24% market share behind market leader Turkcell's 60%. Sarin said on Wednesday that Vodafone is happy with its market position there but expects margins to fall in the second half of the year because of higher costs and seasonally lower call volumes. Sarin also revealed that the capital expenditure on Telsim is expected to be around 433m pounds ($853m), compared with the 611m pounds ($1.2bn) it had previously forecast
Vodafone reiterated its expectations of compound average annual revenue growth of 20% for Vodafone Turkey for the next five years, but is now targeting EBITDA margin percentage in the medium term to be in the high-twenties compared with mid-twenties previously.
Vodafone shares fell 1.27% to 136.5 pence ($2.68) on the London Stock Exchange during afternoon trading.
Meanwhile, in separate news, Motorola Inc announced that it has won a major contract to upgrade, extend and manage Vodafone's nationwide GSM network in Turkey. It is an eight-year contract that means that Motorola will modernize and upgrade Vodafone's radio access network to increase coverage and capacity. In addition, Motorola will assume responsibility for operational management of the network. It will also ensure the 3G readiness of key sites. No financial terms of the deal were disclosed.
The deal shows that Motorola harbors no ill feeling towards Telsim. Prior to its acquisition by Vodafone, Telsim had been found guilty of cheating Motorola out of $2bn in loans. Telsim had borrowed nearly $2bn from Motorola in order to finance the building of a Motorola-constructed mobile phone system in Turkey. Telsim also owed Nokia approximately $900m. Following Vodafone's purchase, both since settled their lawsuits against the Turkish operator.
Source: http://www.cbronline.com/article_news.asp?guid=7793D322-1BE1-45E7-BC74-4E03A700B579
Vodafone is the world's largest mobile operator in terms of sales. Over the past decade it has adopted a global approach, and acquired stakes and operations in many countries. However, since the departure of Sir Christopher Gent in 2003, the group has moved from an "empire-building" approach and instead opted to offload assets in mature markets such as Japan, Sweden, and Belgium where it could not establish a dominant position.
The biggest challenge now facing Vodafone under chief executive Arun Sarin is ensuring growth. Vodafone's core markets in western Europe are heavily saturated and offer very limited growth potential, so over the past 12 months, Sarin has turned to developing markets such as India, South Africa, and Turkey to drive growth.
Vodafone's $4.55bn purchase in Turkey last December of Telsim Mobil Telekomunikasyon AS was controversial. Many thought it had overpaid when it won an auction for Telsim Mobil Telekomunikasyon AS that was broadcast live on Turkish television. Telsim had been in receivership since February 2004 when state authorities seized 219 companies that belonged to its owner, the Uzan family, whose business empire collapsed in 2003 after a fraud scandal.
However, Vodafone has now told investors that it hopes to turn around its Turkish mobile business quicker than previously forecast, and it reiterated an interest in increasing its presence in China and India.
Telsim is solidly in second position in Turkey, with a 24% market share behind market leader Turkcell's 60%. Sarin said on Wednesday that Vodafone is happy with its market position there but expects margins to fall in the second half of the year because of higher costs and seasonally lower call volumes. Sarin also revealed that the capital expenditure on Telsim is expected to be around 433m pounds ($853m), compared with the 611m pounds ($1.2bn) it had previously forecast
Vodafone reiterated its expectations of compound average annual revenue growth of 20% for Vodafone Turkey for the next five years, but is now targeting EBITDA margin percentage in the medium term to be in the high-twenties compared with mid-twenties previously.
Vodafone shares fell 1.27% to 136.5 pence ($2.68) on the London Stock Exchange during afternoon trading.
Meanwhile, in separate news, Motorola Inc announced that it has won a major contract to upgrade, extend and manage Vodafone's nationwide GSM network in Turkey. It is an eight-year contract that means that Motorola will modernize and upgrade Vodafone's radio access network to increase coverage and capacity. In addition, Motorola will assume responsibility for operational management of the network. It will also ensure the 3G readiness of key sites. No financial terms of the deal were disclosed.
The deal shows that Motorola harbors no ill feeling towards Telsim. Prior to its acquisition by Vodafone, Telsim had been found guilty of cheating Motorola out of $2bn in loans. Telsim had borrowed nearly $2bn from Motorola in order to finance the building of a Motorola-constructed mobile phone system in Turkey. Telsim also owed Nokia approximately $900m. Following Vodafone's purchase, both since settled their lawsuits against the Turkish operator.
Source: http://www.cbronline.com/article_news.asp?guid=7793D322-1BE1-45E7-BC74-4E03A700B579
Nortel Tries Again To Turn Corner from Accounting Saga ( Flash Back for Year 2004)
Nortel said it was in the process of trying to recoup about $10 million worth of performance bonuses from those fired. Although Nortel has not detailed the exact nature of the accounting issues, speculation is that 2002 results were artificially lowered and 2003 results falsely pumped up to help executives achieve bonuses for returning the company to profitability.
Battered Nortel said it would lay off 3,500 workers and fire seven executives as part of its latest attempt to move beyond an epic accounting scandal and regain its market prominence.
The layoffs , part of a US$400 million restructuring aimed at cutting costs to be more competitive, represent about 10 percent of the worldwide workforce of the Canadian company. The cuts will leave Nortel with about 30,000 workers, far below its peak size of nearly 100,000 workers in 2000.
In addition to the cuts, which Nortel said would come across its businesses and be focused in North America, the company also announced it had fired for cause seven more executives. Those firings come on top of the earlier sackings in April of the CEO, CFO and controller in charge of the company during the disputed earnings period in 2001.
Under Scrutiny
Nortel said it was in the process of trying to recoup about $10 million worth of performance bonuses from those fired. Although Nortel has not detailed the exact nature of the accounting issues, speculation is that 2002 results were artificially lowered and 2003 results falsely pumped up to help executives achieve bonuses for returning the company to profitability.
CEO Bill Owens emphasized that Nortel was still not in a position to provide solid financial data or comparisons, because all of its recent results remain under scrutiny. Regulators in both the U.S. and Canada are investigating and private shareholder lawsuits have been filed as well.
"We're well on our way to putting our financial issues behind us," Owens said in a conference call.
Shares of Nortel were up about 3 percent in Friday trading to $3.85.
Long Process
Turning Nortel around is proving no small or short-term feat.
In June, the company announced it would sell most of its manufacturing operations to Flextronics, which will make Nortel's hardware on an outsourcing basis. That deal is expected to help bring more than $700 million into Nortel's coffers in coming years and will result in Nortel shedding more than 2,000 workers.
Gartner (NYSE: IT) analyst Mark Fabbi said Nortel has been careful to act quickly to take the necessary steps to address the earlier problems, but probably still has a rattled employee base and some spooked customers.
"The shakeups have been a distraction, but the message that the tough decisions will be made is one that everyone needs to hear," Fabbi told the E- Commerce Times.
Although Nortel has appeared to maintain some of its key market share in the wireless infrastructure space in particular, he added, customers are more likely to postpone purchases until Nortel can prove it's turned the corner, which might in turn hamper efforts to right the shop.
Cutting Carefully
Nortel said the cuts would come mainly from management, and while they'll leave the company with less than a third of its onetime employee base, analysts said the company could still be a market force in its slimmed-down form.
"Cuts of that magnitude can leave a company reeling, because the employees left behind feel a bit shell shocked," Challenger, Gray & Christmas CEO John A. Challenger told the E-Commerce Times. "The impetus is on the leadership to convey that the company is going to emerge from this stronger than before. They have to watch employee reaction very closely."
One reason for the cuts is Nortel's desire to be profitable consistently going forward, something that investors in the space are demanding, especially since competitors, many of whom were equally battered by the tech downturn, have managed to do so.
Lucent (NYSE: LU) Technologies recently posted its fourth straight quarter of profit, and Cisco Systems (Nasdaq: CSCO) and Juniper Networks (Nasdaq: JNPR) have managed to turn the corner on better sales of enterprise and telecom equipment.
Source: http://www.ecommercetimes.com/story/35986.html
Battered Nortel said it would lay off 3,500 workers and fire seven executives as part of its latest attempt to move beyond an epic accounting scandal and regain its market prominence.
The layoffs , part of a US$400 million restructuring aimed at cutting costs to be more competitive, represent about 10 percent of the worldwide workforce of the Canadian company. The cuts will leave Nortel with about 30,000 workers, far below its peak size of nearly 100,000 workers in 2000.
In addition to the cuts, which Nortel said would come across its businesses and be focused in North America, the company also announced it had fired for cause seven more executives. Those firings come on top of the earlier sackings in April of the CEO, CFO and controller in charge of the company during the disputed earnings period in 2001.
Under Scrutiny
Nortel said it was in the process of trying to recoup about $10 million worth of performance bonuses from those fired. Although Nortel has not detailed the exact nature of the accounting issues, speculation is that 2002 results were artificially lowered and 2003 results falsely pumped up to help executives achieve bonuses for returning the company to profitability.
CEO Bill Owens emphasized that Nortel was still not in a position to provide solid financial data or comparisons, because all of its recent results remain under scrutiny. Regulators in both the U.S. and Canada are investigating and private shareholder lawsuits have been filed as well.
"We're well on our way to putting our financial issues behind us," Owens said in a conference call.
Shares of Nortel were up about 3 percent in Friday trading to $3.85.
Long Process
Turning Nortel around is proving no small or short-term feat.
In June, the company announced it would sell most of its manufacturing operations to Flextronics, which will make Nortel's hardware on an outsourcing basis. That deal is expected to help bring more than $700 million into Nortel's coffers in coming years and will result in Nortel shedding more than 2,000 workers.
Gartner (NYSE: IT) analyst Mark Fabbi said Nortel has been careful to act quickly to take the necessary steps to address the earlier problems, but probably still has a rattled employee base and some spooked customers.
"The shakeups have been a distraction, but the message that the tough decisions will be made is one that everyone needs to hear," Fabbi told the E- Commerce Times.
Although Nortel has appeared to maintain some of its key market share in the wireless infrastructure space in particular, he added, customers are more likely to postpone purchases until Nortel can prove it's turned the corner, which might in turn hamper efforts to right the shop.
Cutting Carefully
Nortel said the cuts would come mainly from management, and while they'll leave the company with less than a third of its onetime employee base, analysts said the company could still be a market force in its slimmed-down form.
"Cuts of that magnitude can leave a company reeling, because the employees left behind feel a bit shell shocked," Challenger, Gray & Christmas CEO John A. Challenger told the E-Commerce Times. "The impetus is on the leadership to convey that the company is going to emerge from this stronger than before. They have to watch employee reaction very closely."
One reason for the cuts is Nortel's desire to be profitable consistently going forward, something that investors in the space are demanding, especially since competitors, many of whom were equally battered by the tech downturn, have managed to do so.
Lucent (NYSE: LU) Technologies recently posted its fourth straight quarter of profit, and Cisco Systems (Nasdaq: CSCO) and Juniper Networks (Nasdaq: JNPR) have managed to turn the corner on better sales of enterprise and telecom equipment.
Source: http://www.ecommercetimes.com/story/35986.html
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