Communities Dominate Brands

When your past comes back to haunt you.. Tom Hume blogs about second subscriptions

Tom Hume of Future Platforms is another of our friends and has been a long term fellow traveller on this path to the future of technology, telecoms, mobile and communities. Tom wrote a blog a few days ago about second subscriptions, and had a funny line in it:

About 5 years ago I saw a talk from Tomi Ahonen where he discussed multiple SIM ownership in Finland and mentioned the number of devices he carried with him personally. "Yeah yeah" I thought, filing him mentally under "crazy Finn" and getting back to business. But he was, of course, completely right and it's happened, hasn't it?

Tom then goes on to explain how he already has now joined this group and carries around him several SIM cards in his phone, the wireless modem to his laptop, etc.

First, thanks Tom, I really do appreciate it, that you blogged about it so honestly, that yes, once you thought an idea of mine was typical "Silly Tomi" kind of thinking, and that now you've noticed it has come true.

I wish all my forecasts would have turned out that way (like anyone making predictions, I've got my fair share of them massively wrong, such as recently the one about MMS picture messaging for example, I often am asked to explain what went wrong with that forecast, ha-ha).

But on the really big picture things - that mobile phone subscriptions would exceed human populations (in over 50 countries already); that SMS text messaging is addictive; that yes, we will carry multiple subscriptions (and often multiple phones), I'm quite happy with my record, more right than wrong, and for any forecaster, that is about the best you can hope for. And thank you Tom for putting it so nicely, that even the "Crazy Finn" thinking might turn out right in the end, ha-ha..

I took a quick look through my second book, M-Profits (as it was one I wrote by myself, I'd have nobody to share the blame with for any wrong forecasts) and thought I should really make a review of the major predictions and forecasts, and report on how the forecast turned out. This could be a fun - and perhaps also painful (ha-ha) blog.. ..Stay tuned.

3rd Annual Future TV show 2008

I am off to speak at the above event - if anyone reads our blog and is in Monaco too - please come and say hello and we can have a conversation.

I was asked to speak at this event after helping to arrange a summit of Nordic commercial broadcasters looking into the future of audio-visual content.

My task to answer the question - What is the new business model for advertising in TV? The answer - How long have you got!

Great new book: Mobile Advertising by Sharma, Herzog and Melfi

I've just finished reading a brand new book by our friend Chetan Sharma, co-authored with Joe Herzog and Victor Melfi. Its entitled Mobile Advertising: Supercharge your brand in the exploding wireless market. (and I'd stay away from those explosive wireless devices, they can be pretty nasty, eh, ha-ha). Seriously, this is a great 404 page hardcover book just published by John Wiley & Sons.

Regular readers of ours will recognize Chetan Sharma's name from his excellent analysis of the American mobile telecoms market and other stats and analysis of the mobile telecoms industry. Several of our friends have also been involved in helping with the research for the book, including Russell Buckley of Admob, Peter Miles of SubTV and Tony Fish of AMF Ventures. In fact the acknowledgements section of the book is almost a list of the who's who of this space, ha-ha.. And yes, Alan and I are quoted several times in the book as well.

So the authors have been on very solid ground in preparing the book. What I really liked about it, was that it was both very up-to-date (they include Blyk for example in the book) as wide-reaching. They discuss very expertly the markets as diverse as those in Finland and Sweden, to China and India, to the USA, to the UK, as well as those in Japan and South Korea. I personally like to think that I know this area of mobile advertising and marketing very well, yet this book kept on adding to my knowledge and giving plenty for me to think about. Naturally I won't agree with quite all of it, but very seriously, these guys know what they're writing about, and they do a terriffic job at describing the full range of issues that are involved. Not sugar-coating it, but honestly, from the good to the bad, and putting the mobile media into context by comparing it to the older six mass media and showing how mobile is now a new media with abilities that are unique to it.

The book also has a good collection of case studies (16 cases including Admob, Enpocket, NTT DoCoMo and Vodafone), and also a good representative set of expert commentaries in their own words, from several industry leaders (13, including Nokia, Yahoo, Microsoft, MTV, Disney and Ogilvy).

I was very impressed with the level of realism in the book, both in terms of the "positive realism" of what is already commercially available for example in Japan and South Korea, but also in the "negative realism" of how incredibly complex the mobile advertising proposition is still today, just about everywhere. Here is a short excerpt of the book and how the authors describe it (from pages 155-156):

"(A mobile campaign) ...quickly gets complicated. Mobile ad reach is either reated or crippled in the ensuing steps of campaign management. Targeting the details of handset models or user interface (UI)types, UI modalities, and user profile selections is hard, but getting campaigns targeted to the next level of application, channel or silo can be difficult. Text messaging targeting is easy and serves as the lowest common denominator. Multimedia messaging (MMS) and Wireless Application Protocol (WAP) are not that easy. Idle screen adn applications, such as Global Positioning System (GPS) navigation or games, are orders of magnitude harder and their reach in campaigns is limited. Although some advertising and content standardization is in place, much more is needed. The complexities of these silos are simply too visible for advertisers. As a result, campaign complexity is too difficult to quickly scale, and reacing across innumerable silos is too hard and time consuming." 

And so forth.. The book is both very practical and realistic. I can warmly recommend Mobile Advertising to anyone who is interested in mobile advertising and would want to learn more about it.

The advertising arms race in social networks

The Stampede For Social Network Dollars Intensifies writes Diane Mermigas

The race to monetize and leverage the power of social networks is turning into a stampede, as evidenced by Microsoft’s recently renewed efforts to acquire Facebook in the wake of its failed bid for Yahoo.Many of the biggest and most intriguing niche social networks are in play as a result of the Microsoft-Yahoo merger battle, which is fundamentally about potentially lucrative but unrealized advertising and e-commerce gains. Both companies have limited exposure to social networking–the most prominent being Microsoft’s 1.6% stake in Facebook, for which it paid $240 million.

And

The mighty Google has brought a new sense of urgency to the social-network mining game by leveraging the iGoogle home page into a convenient aggregation of user-selected links to social sites and friends’ personal pages.

Think about this 25% of all media will be created by us in 2012. So will we have consumer created advertising too?

Consumer-created advertising will have all the appeal of anything crafted by the agencies, and will be ‘co-opted’ by the brands themselves.

Mermigas has a point of view on this

The lessons learned about how to make online social networks more constructive and profitable will have far-reaching ramifications for all digital media’s community-driven business–from the players of “Grand Auto Theft IV” to the kids and families of Walt Disney to the Dow Jones business constituency. Eventually, the economics of most Web sites will be secured by social networking and community elements. If the business minds don’t crack the monetization codes, chances are that tech-empowered consumers will.

Ning, a do-it-yourself social network company already valued at $500 million, has aided the development of more than 100,000 social network sites. That’s the beauty of the digital interactive age: The answers lie within

So what does that mean for traditional media? and this debate hardly touches mobile yet and we did ask whether traditional TV advertising was moving the deck chairs on the Titanic and we did post about the data flow wars because when we leave digital footprints in the digital age, we can recount the audience, we can develop universal profiles and certain companies will transform advertising effectiveness by harnessing a refining digital shadows and that data flows that will reach 988 billion gb's by 2010 from 161 gb's in 2006. Social networks play a key role in this development and this is a battle between the experts and the amateurs?

Americans waking up to mobile data: already average 2 SMS sent per day

I picked this up from a posting at the Silicon Investor discussion board by "Slacker 711" (sorry, Slacker, I would have wanted to post a comment for you there as well, but as the site requires registration, was just too much a hassle for a one-time comment; I enjoyed your discussion there).

Anyway, onto the latest US numbers on SMS. Slacker 711 points out that a new Gartner study says Americans are picking up the SMS text messaging habit. This is good news (and it was about time, I've ranted and raved about SMS to North American audiences since 2000 ha-ha, so now I can finally say "I told you so" ha-ha).

The Garner study is summarized at considerable degree at their website. It reports that for 2007, Gartner estimates 189 billion mobile messages sent by US mobile phone subscribers. Gartner says this includes mobile email (ie Blackberry etc) and mobile IM Instant Messaging, but according to Gartner "but it's very small compared with the uptake of SMS"  So we can safely assume the vast majority of the 189 B messages are SMS text messages in America. This is a healthy level, it averages to about 2 SMS per subsriber per day. That is what Britain did in 2005 and Ireland for example was at 3 SMS per day already in 2004, so the US still lags Europeans, but they are starting to catch up. This is good.

Gartner attributes the rapid adoption of SMS by Americans to the big free buckets of SMS. Obviously still today, that is only arriving to about the world average of 2 SMS per day (Informa said 2.6 SMS per day; this Garner study said 2.1), and the UK today is at 6 SMS per day, Singapore at 12, Philippines at 15 SMS sent per subscriber per day.

But this is very good news for the mobile industry in America. Now Americans are starting to fall in love with SMS. They will learn like the more advanced markets, that SMS is a more appealing service than voice calls, and eventually will come to the same conclusion (as for example the Irish and British did already a year or two ago) that the primary service on a cellphone is no longer voice, it is SMS texting.

The Americans are still years behind the leading countries of the mobile world in the 20 areas, as I explained last week in my extensive review of this topic on the Motorola CEO search blog and its related comparison of US mobile/wireless telecoms market to the rest of the world. But on this one aspect - SMS usage - definitely this is good news. Now Americans can start to discover Reachability, and become addicted to the cellphone, and then - it becomes possible to offer them far more advanced services as wel. A good trend. Thank you Slacker 711 for mentioning the Gartner study.

PS - Slacker 711 - the one comment I would have liked to add to your posting, was that Americans actually have the highest monthly fees for their mobile phone services (and that buys them the worst phones on the worst networks in the world). Only the Japanese pay similar rates and have magnificent phones and perfect networks in exchange. The average US consumer pays 50 dollars per month. The average European pays barely half that on far superior networks. So your thought that American cellphone prices are somehow cheap - sorry, think again. Here in Hong Kong for example we get local cellphone rates from any network to any network at one quarter of one US cent per minute (ie 0.0025 dollars, 0.25 cents, four minutes for one US cent). In Finland you can get a monthly contract for a dollar a month. And so forth..  That idea that Americans have lowest cost mobile telecoms is a total myth, it is only "true" on one measure, totally fake accounting. Look at the monthly spend, America is consistently most expensive.. Sorry about that. It only serves to support my main theme, that American wireless telecoms needs to evolve still much more..

How to buy your competitor in the Connected Age: Case Sprint vs T-Mobile

Well, this is an interesting development in the new Connected Age. How to buy your rival who is twice your size? Wait for them to stumble in understanding digital communities, then when their stock price tumbles to half what it was, buy them.. Like we say here with Alan, you gotta understand digital communities to survive. That is what we wrote in the book, and it might well be that the biggest case study of the new era is being created right now, in that very style.

This is now a possibility in America, with T-Mobile (the fourth and clearly smallest of the big 4 remaining nation-wide US mobile operators) and its 29 million subscribers, now looking hungrily at Sprint Nextel which is almost twice its size at 54 million subscribers and the third largest mobile operator in the USA. Combining the two would create America's biggest operator - and judging by the general satisfaction level and above-industry-average growth rates of T-Mobile, vs Sprint Nextel's disasterous year the past 12 months (following their idiotic "Sprint 1,000" marketing fiasco that resulted in the CEO, Chief Marketing Officer and Chief Financial Officer being fired) - you could bet your farm that the new company would be named simply T-Mobile.. Oh, the Sprint Nextel stock price is well under half from its peak, that is why this is suddenly financially feasible. And T-Mobile's parent, Deutsche Telecom is a wealthy German operator, with lots of Euros in its cash reserves, which buy lots of dollars these days..

And then there is the issue of GSM vs CDMA. T-Mobile network is on the GSM standard. Sprint before the Nextel merger was on CDMA and Nextel was on iDEN - all three are incompatible. Sprint Nextel has been migrating customers to CDMA. But the global standard is now GSM, and CDMA is the losing proposition on the technology front, with more than a dozen mobile operators/carriers around the world migrating customers from CDMA to the GSM (and/or WCDMA/UMTS and/or HSDPA) evolution path. This is also being seriously considered at Verizon - in fact they have pondered it for years already, and many suggest it will happen (migration from CDMA to the GSM evolution path at Verizon). AT&T with its iPhone is already on the GSM standard. So what do you think T-Mobile would do?

This would be a quick way to become the biggest carrier/operator in America. T-Mobile would inherit a deeply unsatisfied customer base, but if they played their cards right - this is such a wounded animal, that almost any changes by T-Mobile would be seen as improvements. Lets see how this pans out. I would not be surprised..

Why is managing contacts and friends such a pain, or is it just me

I'm doing a day of catch-up work on email, blogs and also Linked In, Facebook and of course Forum Oxford.

And those darn invitations at Linked In (and even worse, Facebook) are such a PAIN to manage. (I don't mean that you should not connect with me, I do believe in, and want to support these virtual contacts, BUT) I don't want to accept every random connection-hog invitation by someone with 500+ links on Linked In, who sends me a standard invitation and clearly isn't even working in my industry. (Oh, anyone who links in with me and says they read the blog, is an automatic acceptance - of course, ha-ah)

But equally, there are the random contacts from someone who attended one of my workshops, who perhaps does not speak English very well, and is very shy about contacting me, and has perhaps 15 links and kind of is a newcomer to Linked In. Every time I have to click on the invitation, read the invite, then click on the person's page to see who they are and what their company does (and how many links they have, I am very skeptical of all contacts who have 500 or more links)... Oh, and Facebook is even worse. Once I leave the contact invitations page - there is no link back to it (that I've found). So its a hideous hassle to do serious consideration of Facebook link contacts.

Is this just me or is this way too much of a hassle to handle new invitations properly. Maybe I'm getting too old for this industry ha-ha..

Hollywood goes gaming

'Gaming is now a bigger industry than cinema' said Bobbie Johnson

And now we find one of Hollywoods finest Steven Speilberg creating a game for the Wii

On May 6 Steven Spielberg will release his first collaboration with game publisher Electronic Arts a clever, innovative Wii game called Boom Blox.

Boom Blox does what so many Wii titles wish they could, by splitting the difference between casual players and lifelong gamers. You can pass the Wiimote to your grandma or a 5-year-old and they'll have a ball with its clever mix of brainy puzzles and satisfying explosions. But hard-core players like me will find a surprising amount of depth to the gameplay and a satisfying, addictive challenge

.

we asked is Gaming the New Marketing?

Perhaps Guitar Hero fits into this camp too? I love the line unleash your inner Rock Legend.

On the Wiki page

The Guitar Hero series has made a significant cultural impact, becoming a "cultural phenomenon." The series' titles became very popular party games, which led to their being played in a variety of locales. Several bars in the United States are offering "Guitar Hero nights" as an alternative to karaoke; one New York City bar experienced triple the business on such nights

And then we have the intense interest around Grand Theft Auto 4

During Microsoft's 2006 E3 press conference on 9 May 2006, it was announced that Rockstar Games will offer exclusive episodic content via Xbox Live for the Xbox 360 version of the game. Peter Moore, the then head of Microsoft's Interactive Entertainment Business division announced that Rockstar Games is working on two GTA IV downloadable packs exclusively for the Xbox 360, which will be released after the full game.

Henry Jenkins on Why Grand Theft Auto Should Be Taught in Schools?

David Cushman has great White Paper on role of Communities for Business Organization

Our very good friend David Cushman of Bauer (who bought up his employer Emap) is a prolific blogger in the digitally converging media space at Faster Future, one of our fave blogsites to read regularly. He wrote a White Paper recently about the role of digital communities to corporate enterprises, not as customers, but as forms of organizational structure. The theme is rather obvious from the title of the document "Communities of Purpose are the Business Units of the 21st Century". Its very good, and available for free of course. Here is a bit of a sampler. David writes:

"Example after example is showing the world is moving toward it – we want to join in the production process, we want to customise, we want to shape and select. The creation generation insists on it. In this world our global focus group can now disintermediate the companies they were once feeding back to. Now they can become the producer, their own board of directors. Now consider how companies function. If they could connect their own dots perhaps they’d start the process of catching up with the reorganisation of the disaggregated skill sets that is already happening on a global scale through blogs and social networks.

Timescale: Short to mid-term requirement for change in companies, mid-longterm change in how we will organise ourselves."

Very good stuff as always from David. You can read the full White Paper here (or download it) at Scribd.

Of TMT industries: America is IT centric; Asia is Entertainment centric; Europe is Telecoms Centric

I was thinking about that blog last week about the Moto-CEO, and the 20 changes that the blog outlined where each of the given changes in mobile telecoms was first observed and when that change arrived to American shores. My mind was still tossing those issues around this weekend and I decided to do a kind of follow up.. Not about Moto or about mobile, but more about that big picture convergence story, telecoms, IT and media (TMT, Telecoms, Media and Tech, as some call it).

Regular readers of our blog know that the our book Communities Dominate Brands discussed the digital convergence of media, telecoms and IT to a good degree, and in my latest book Digital Korea, I've already outlined the next stages of digital convergence, beyond these three industries, to add banking and advertising (and more bizarre industries such as robotics, telematics and virtual worlds).

But that looks into the future. Over the weekend my mind was pre-occupied with some thoughts about where we stand today. So I took a look at the Fortune Global 500 edition from last August, and wanted to see if my gut feeling was on the right track. Its quite fascinating what I found.

Lets look at today, the giant corporations of today. They of course reflect sound management decisions and bold strategies for the past decade or more, the successful business enterprise execution of the "right" strategies to become one of the 500 biggest businesses of today. The Global 500 companies listed by Fortune acount for a combined 20.9 Trillion dollars (20,900 Billion) of revenues or about 51% of the world's total GDP. These are the 500 companies that pretty much define the world economy.

I did a quick analysis adding up the Telecoms sector (Telecommunications and Networking Equpment) and the Tech or IT sector (Computers, Computer Services, Semiconductors, and Wholesale Computers); and the Media sector (Electronics and Entertainment). I did some quick tabulations and analysis and my gut feelings were quite clearly validated.

I then did a more thorough comparison for our purposes. I considered each company that Fortune had listed, and in a few cases re-allocated them - Cisco, for example, can well be counted in Networking (as Fortune does), but when I want to delineate between telecoms and IT, Cisco does not fit that well into telecoms, they belong more in the tech sector (computer and internet networking, rather than telecoms networking). And I also allocated a quick-and-dirty attribution of one third of total revenues of selected major players form one industry to another - such as Motorola being yes majority in Telecoms (where Fortune lists them), but they also are a major supplier of seminconductors; Samsung is yes an electronics company, but the world's second largest handset maker is obviously also in telecoms. And many companies in random other industries do have a significant telecoms presence, such as Hutchison Whampoa out of Hong Kong (listed for its main business under Specialized Retail) which owns one of the world's largest groups of mobile telecoms providers under the "Three" brand in a dozen countries from the UK to Australia, or SK out of South Korea (listed under Petroleum) which owns South Korea's largest mobile operator SK Telecom, etc. I went through the 500 companies, made the detail adjustments and then tabulated my findings.

Entertainment is an Asia-dominated Industry

Lets start the media and home entertainment part. (Electronics and Entertainment). Fortune listed 22 companies in this space. After my adjustments, I had 25 companies with whole, majority, or significant minority of revenues from this sector. The 25 companies had total (adjusted) revenues of 868 Billion dollars. A big industry sector yes, ruled by home electronics giants like Sony, Matsushita (ie Panasonic) and Samsung. The interesting part is that of the 8 countries represented, 55% of the total Fortune Global 500 company revenues were earned by companies based in Asia. The USA is far smaller in total revenues of the giant media and entertainment companies, with 37%; and Europe is a tiny player whose couple of Fortune Global 500 companies in this sector accounted only for 7% of the revenues. Yes, the home electronics and media industry is governed by the Asians. And perhaps a good metaphor for this sector is the plasma screen TV - perhaps a Toshiba or LG.

IT is an US-dominated Industry

So then the technology sector (Computers, Computer Services, Semiconductors and Wholesalers of Computers). Of the three, like in real life, also among the biggest global companies making the Global Fortune 500, this is the smallest sector, worth "only" 690 Billion dollars. The sector included 21 companies after my adjustments. This sector is in the hands of companies based in only 5 countries. And North America, USA and Canada, accounted for 73% of the earnings of the Global Fortune 500 in technology/IT. Europeans have no representatives here. Asians account for the remaining 27%. A good metaphor for the IT industry is a laptop computer, by Apple or Dell.

Telecoms is a Europe-dominated Industry

So then telecoms (Networking Equipment and Telecommunications). This is the biggest sector of the three TNT sectors, worth 1.2 Trillion dollars (1,200 Billion). The Fortune Global 500 mimics the real world again as telecoms is the biggest of the three even in the global economy. So where are they? I had 33 companies from 17 different countries, and nearly half, 45% from Europe. Asians account for 30% and USA and Canada 20% of the earnings of the Global Fortune 500 telecoms sector companies. (The last 5% are in other countries.). Note that where the IT industry is very compressed, in 5 countries in total, only in North America and Asia, and three fourths in North America, now in telecoms there are companies all over the place. This is a difficult industry to track if you have to follow companies from Australia to Italy to Mexico to China. And yes, telecoms is led by the Europeans, and the metaphor here is a mobile phone by Nokia.

We can also look at the regional emphasis-points for the three regions. Considering the above, this is quite predictable and consistent

Europe is telecoms-obsessed.

In Europe the TNT sector has the smallest overall size at only 589 Billion, and 88% of that is telecoms. The only small additional industry is media of the remaining 12%. Europe has no tech/IT companies in the Global Fortune 500. So Europeans seem to think only in telecoms terms. And that the Nokia phones have added many more entertainment features rather than copying PDA functions suggests this telecoms-to-media focus. The same is true of the various initiatives of the European mobile operators moving into the media space, such as France Telcom/Orange investing in movies.

Asia is home electronics focused

The Asians are more balanced. The TMT sector is almost twice that of Europe, at 1.05 Trillion (1,053 Billion) dollars. It is led by home electronics and entertainment at 46%, followed by telecoms 37% and IT/tech last at 17%. Asians think entertainment and home gadgets first but understand telecoms well, computers less well. So LG the electronics giant launching as a telecoms operator in South Korea is perfect illustration of this spread of interest. Sony relaunching its Walkman and Cybershot onto high end smartphones, is another indication of this interest expanding from entertainment to telecoms.

America is tech focused.

The North Americans are also similarly balanced to the Asians and the three-industry TMT sector in North America is almost identical size to Asia at 1.07 Trillion (1,072 Billion) dollars. North America is led by the IT/tech industry accounting for 47%, followed by media/electronics at 30% and having telecoms last at 23%. The Americans clearly think IT first, and media second - ie Apple going iPod and iTunes makes perfect sense in this context, before thinking of the iPhone. Same for Microsoft going for the gaming market with the Xbox.

Now, for anyone looking to find numbers on the related industries, please remember, that the numbers in this blog posting are severely less than the global numbers, because these are only the totals of adding up the related Fortune Global 500 company revenues which only reflect half of the world GDP. The real industry global numbers probably twice these reported.

But global media, telecoms and IT numbers broken down by sector and region, for current global data, are hard to come by from any one (free) source, so this look into the Global Fortune 500 is a reasonable proxy for a comprehensive global comparison between the three industries, and certainly about where their leading companies are based.

So, I think it does well validate the "prejudices" that we find when consulting or giving seminars to audiences in Asia, Europe and North America. I had definitely noticed the difference in dealing with executives from North America vs those from Europe, on say the PDA functionalities in thinking about smartphones etc. But I hadn't picked up on the "Asian dimension" until now, as I am reminded vividly that often here in Asia the executives will use the Sony PSP (PlayStation Portable) as a typical gadget of reference, the pocket media device. Yes, interesting how our regional focus areas will influence how we think and see the world outside.

So - a final point contrasting the three. The tech/IT industry is the smallest of the three, and growing at sluggish rates. The media and electronics business is very much a hits and misses industry, quite volatile, and growing only at about the average for the world economy. But the telecoms industry - is the biggest of the three, and growing the fastest. Which one did you want to focus on? Of telecoms, the losing proposition is the fixed landline telecoms business, and all the growth, revenues, customers, traffic and profits, are on the mobile telecoms side. Its a very challenging business, but if you get it right, the rewards can be enormous. This is the business to be in..