Banking's Long Tail

Chris Skinner has a great post on the long tail of banking.

There is no question that as the barriers to distribution disappear (the penetration of mobile devices/infrastructure in emerging markets a key driver here) money will begin to operate a lot more like software. The destabilizing effects of this on "business as usual" banking will be profound (just ask people in the music business).

Banks are fortunate that they can reference the lessons learned by other industries as they formulate their strategy for dealing with this seismic change. In order to capitalize on the opportunity presented by the "long tail" in banking, banks will need to think differently about the markets that they serve and the companies with which they compete.

The pressure being placed on interchange fees today will be compounded as technology companies look to disintermediate the banks. Had Google bought PayPal rather than eBay, the payments market would look quite different today. As it stands, Google is making inroads with Google Checkout, Amazon is looking to expand its patented 1-Click technology and Microsoft has made no secret of its intention to get involved with payments. Apple's development push will no doubt result in a bevvy of smartphone-based payments applications...and the list goes on.

These technology-driven solutions will have certain advantages, and yet, the banks themselves have a major head start. The key will be to build systems flexible enough to meet the demands of a fragmented market. What has passed for product innovation in the payments space will simply not be enough.


Posted by Michael Megalli on July 1, 2008 in Financial services, Technology | Permalink | Comments (0) | TrackBack


Consumer Tech in Egypt | Retail

Most of the discussion that I read here in the US about technology developments in emerging markets focus on product and price. OLPC is the classic example in this regard...a product that designed to be inexpensive and simple enough that every child in the world ultimately has access to one. Microsoft's Windows Starter Edition fits the mold, as do Nokia's efforts to create products targeted to these markets.

However, before one can talk about product or price, the question of distribution needs to be addressed ("placement" if we are sticking with the Ps, although that word has always felt inadequate).

In markets like Egypt, the lack of quality retailers has long been a barrier to the growth of consumer technology spend. While the well-traveled buyer could pickup their gadgets on a trip overseas, everyone else was stuck paying too high a price for outmoded and poorly supported products. This is changing, and the emerging retail landscape is a great predictor of the ways in which consumer tech is moving.

The leaders in Egypt are the mobile carriers themselves. Companies like Mobinil have made serious investments in the customer experience of their retail locations. The staff is extremely well-informed, the stores are beautiful and the service level is best-in-class. When you walk in the store a host helps to direct you to the right area or person. The products are clearly displayed and the signage around their features is clear and extremely helpful. I would put the retail experience of the Mobinil and Vodaphone stores up there with a AT&T or Verizon store here in New York. The pictures I've posted will help to visualize some of this.

New-comer Etisalat has looked to jumpstart its market entry through a deal with Egypt Post.

However while those in the market for a mobile phone have a number of good options, anyone looking for computer hardware, software or accessories, including digital cameras, will need to work a bit harder.

The main retailers are small "mom & pops" with very little selection. These can be found throughout Cairo, and particularly in a couple of large flea-market-like malls with aggregations of small stores and stalls.

The major retail trend, which mirrors the rise of suburban developments outside of Cairo, are the huge malls on the outskirts of the city. These massive retail centers, offer everything imaginable, including large selections of consumer technology and electronics. Interestingly the largest of these is the local branch of the Virgin Megastore.

(NB: I have focused on what I was able to observe with physical retailers. I am less sure about direct retailers such as Dell and Apple. Dell does have a Middle East ecommerce site, but I cant say much about it.)

In order for people to spend money, they need access to reputable merchants whom they trust to provide quality, up-to-date products at reasonable prices. From what I saw during this last trip, the mobile carriers are the ones to beat in Egypt.

Posted by Michael Megalli on June 5, 2008 in Technology, Telecom | Permalink | Comments (1) | TrackBack


Who Keeps the Motorola Brand?

Big news day for Motorola with the announcement by CEO Greg Brown that they would be splitting off the company's mobile handset business. As we have covered before, this news the latest in a series of shake-ups, mix-ups and screw-ups that have dropped the tech giant to a shaky 3rd in the market for cellular handsets.

Brand issues often arise in M&A situations where the merged entity has to weigh the market equities and decide whether to keep one of the pre-existing brands or create a new one. This process is often fraught with emotion as loyalists on both sides make claims as to their brand's predominance.

Motorola's breakup brings the company face-to-face with a corollary challenge: which of the two emerging companies gets the Motorola brand and how is the other company branded? In the early part of the decade, Accenture and BearingPoint brands were born out of similar splits. Freescale Semiconductor was created in 2004 after the spin off of Motorola's semiconductor business.

It seems fairly clear that the handset business needs the brand more than does the  set-top box/modems side of the house. At the same time, neither side can afford to lose any advantages.

As it splits, Motorola will need to think creatively about how it maximizes the brand assets it has. One possibility would be to use the "Moto" brand -- a cornerstone of the handset advertising campaign and a recognizable brand in its own right -- as the new handset brand. This raises questions about global applicability of the Moto brand, and yet desperate times call for desperate measures.

Of course these are also emotional times at Motorola. Senior management is going to have to keep a cool head and get some good counsel.

Posted by Michael Megalli on March 26, 2008 in Branding, Technology, Telecom | Permalink | Comments (1) | TrackBack


Tracking Brand HTC

As close-readers of this blog will remember, at the end of last year we picked HTC to be Brand of the Year 2008.

In the spirit following up that bet, a couple of interesting developments this week:

New website: HTC has revamped its website which was definitely overdue for a change. The new site does a much better showing off the company's fantastic product line (although it could use some more QA). I have been a member of the "eClub" for a while but its not particularly active. Perhaps this web relaunch will re-engerize their efforts to engage customers directly.

New press coverage
: Laptop Magazine has a new interview with CEO Peter Chou which is not quite as detailed as the one he did with Engadget in December, but does have some new info. Particularly interesting is HTC's focus on interface innovations and (selective) commitment to its original ODM business as with the highly-anticipated Sony Ericsson’s XPERIA line.

Product branding: This week, HTC (or, more accurately, "someone close to the situation") announced that the Android "Google phone" that HTC is working on will be called "Dream". Interesting to see that the company is putting much more effort into its product naming strategy, at least for high profile products. Traditionally HTC's product naming has been more about non-committal non sequiturs which its channel partners were left to rename (Kaiser becomes Tilt, Excalibur becomes Dash, etc). Seems like HTC stepping to the challenge of getting its product marketing in order.  

Posted by Michael Megalli on March 21, 2008 in Branding, Technology | Permalink | Comments (0) | TrackBack


Intel Outside

Atom_rgb_78_com_trans Intel is the kind of client that branding consultants dream of. In addition to being the world's largest manufacturer of semiconductors, Intel has also run one of the most successful ingredient branding campaigns in history. Beginning in 1991, Intel successfully stemmed the tides of commoditization with a simple sticker that assured consumers that the computer they were buying was powered by the latest and greatest technology. Over the years, the campaign has changed to reflect Intel's enormously complex product portfolio, but the basic parameters of the campaign (backed up with some serious co-op marketing dollars) have kept would-be competitors like AMD at bay.

Today's announcement that Intel would be introducing Atom, a new brand for its line of low-power processors is the next evolution in this ingredient brand strategy.

This new generation of extremely small, energy efficient processors are the core of Intel's bid to power smaller devices such as mobile phones, ultra mobile PCs and low cost laptops (Intel calls them Mobile Internet Devices). Intel has struggled to find its place in the market for mobile phones, the hope now is that Atom will allow them to do so.

As a name Atom is so good that it's a miracle it made it through Intel's trademark attorneys. It elegantly conveys the key benefits of the product line in a simple and appealing word (and only 4 letters!).

And yet while the technology is revolutionary, the marketing strategy looks like more of the same. Great brands are defined by the flexibility with which they evolve to meet the challenges of new market realities. Intel on the other hand seems stymied by the success of a strategy that it has employed for 17 years.

The market for mobile phones and ultra portables is much different than the market for PCs in which Intel's brand strategy worked so well. Is there room for another ingredient brand in this muddled, fast-changing and poorly understood marketplace? Is there room for an ingredient brand on the slim and forever slimming form-factors of cellular phones? Will the Intel brand hold the same degree of influence with consumers in emerging markets; for whom mobile devices will be their first and primary computing experience? Finally how should the Intel brand--and its ingredient brands--adapt to the realities of a world where computing power is less relevant than connectivity?

No one can know the answers to all of these questions, but slapping another "inside" brand on this new generation of devices will almost certainly fall short of the mark.

Posted by Michael Megalli on March 3, 2008 in Branding, Technology | Permalink | Comments (0) | TrackBack


Let's Get Social

BusinessWeek recently ran an interesting article by authors Spender E. Ante and Catherine Holahan called "Generation MySpace is Getting Fed Up," which deals with the tenuous relationship between social networks and advertising. It focuses primarily on the uncertain nature of advertising in this environment and how advertising might affect (read: annoy) users. It's useful reading generally, but one thing in particular caught my attention. "The Myspace Generation," it reads, "may be getting annoyed with the ads and bored with profile pages."

This brings together two things I think are important to understand regarding social media. 1) Serving traditional online ads won't ever be very effective, and 2) the social network that brings utility to the social media sphere will win out.

Let's start with point 2 just to be contrarian. There's no question that social networks like MySpace and Facebook are initially a kick and kind of addicting. But the novelty wears thin quickly. How many vampire attacks can you send before you begin to question the nature of the vampire attack? The poking and gifting fast becomes a nuisance and masks the real value a social network can provide.

A social network like Facebook can serve as the ideal hub for communications and content - more fun than a Yahoo! homepage and more personally relevant than a Google search. The combination of having, in one place, all of your preferred content and quick access to what you're friends are reading and watching, where their eating and what products they're into, is a truly killer app. 

But for the benefit to be realized, the network needs to actually offer the capability to draw the necessary content and applications to create this personal hub. Currently, the social networks have little utilitarian content of this kind and what little there is tends to be incredibly hard to find. There need to be more applications like the ones created by NetFlix and GoodReads and the incredible new city guide UpNext (currently in beta). Have a friend whose tastes you share in movies, take a look at their queue. A friend who is particularly well-read, have a look at reviews of the books they've read. How about your friend who is really in the know. Check out what they think about a recent visit they had at one of Manhattan's hot spots. One can imagine a social network ultimately being a true content hub where friends can share immediately a television program they saw that might appeal to a friend of theirs, a news item directly related to their line of work, or their wedding gift registry. These are the kinds of useful tools that need to become more prevalent on social networks to combat the boredom that eventually comes from one to many "superpokes." And right now they're precious few.

Which brings us to point 1. Companies have to stop focusing on figuring out how to deliver ads to consumers on social networks and begin to actually use the medium to their advantage. An ad will always be passive and, as BusinessWeek notes, sometimes intrusive. Instead "advertisers" should be developing actual applications, as well, ones that are useful to consumers and can take advantage of the inherent viral nature of social networks.

Companies can learn from the likes of NetFlix. The app is, in effect, an ad as well as an extension of their service. But a straight promotion can be transformed in the social sphere, as well.

Why wouldn't a credit card company like MasterCard investigate creating promotional applications in Facebook? Something that extends their SoundStage promotion into the social media habitat, for example. Or take it a step further and allow social networkers to create and share their own "Priceless" campaigns.

Dominos is asking customers to create their own pizza recipes. Why not make this an OpenSocial application that can be used on any of a number of social networks? And why not let them order it right from their profile page?

These are just a couple of examples. Are these ads? Yes, in a sense. But they are neither passive or intrusive. They're instead interactive and self-selective. The promotion is essentially endorsed by whomever passes it along. A music lover might be drawn to the SoundStage promotion app and compelled to share it with a fellow music lover. You can imagine millions of people sharing the Dominos app and concocting the most preposterous (delicious?) recipes. But every person that downloads the app at the encouragement of a friend is a person exposed to the brand.

These sorts of promotions are everywhere but in the past getting them in front of people took major capital investment in advertising or hope that people would stumble upon them. Now the mechanism is there and companies are remiss if they don't take advantage of it.

Posted by Todd Merriman on February 13, 2008 in Branding, Discipline of marketing, Technology | Permalink | Comments (1) | TrackBack


A Case in Point

Another example of Apple's disruptive marketing. The company's online store has gone down and intrepid bloggers are on the case. Apple's fanboy minions are rallying, effectively launching whatever new product has coming... for free.

Update: It's back up. And? How about a 16GB iPhone and a 32GB iPod Touch?

Posted by Todd Merriman on February 5, 2008 in Cult brands, Discipline of marketing, New product launches, Technology | Permalink | Comments (0) | TrackBack


Dead Brand Walking

Palm_pilot Last weekend I was walking through Washington's Union Station when I saw the Palm Store and decided to pop in for a visit. It's hard today to remember just how innovative Palm was during its mid-90s heyday. Also difficult to reconcile the tepid offering on display at the Palm Store with the, revolutionary spirit of the original Palm Pilots. Just after Apple failed with its Newton handhelds, Palm brought a device to market that was simple to use, elegantly designed and, most import of all, unlike anything else.

These days, Palm can't get a break. Earlier this year it squashed its Foleo product before ever bringing it to market. The stock price has fallen by 2/3 since that announcement. On Friday, the company announced that it would miss earnings expectations because of certification delays with a new product (likely the "yawn-worthy" Treo 755p for Verizon Wireless). As is the way with these things, even the good news is bad news; Palm's budget-minded Centro has been selling well, but its slimmer margins have further hurt the financial picture.

Trying to think about what I would do with Palm is a challenging thought experiment. The company is surrounded by a mean gang of competitors, both for business customers and consumers. It's clear that in order to survive, Palm needs to make some quick decisions on what its going to be...the company no longer has the luxury or the scope to be a broad-ranging player.

Centro's positioning as an entry-level smartphone is not a bad one considering the space. However, it will need to do more than simply be a Junior Treo if it is to compete with the Sidekicks, Helio Oceans and next gen iPhones.

One difficult decision (that should have been made two years ago) is the OS. Consumers are not willing to make handset decisions and operating system decisions separately, nor should they be. Job one: figure out which operating system to go with (Win Mobile, Palm Garnet or Linux) and stick with that decision.

All hope is not lost. The Palm brand still has some gasps of life in it and in today's short-memory marketplace, product innovations trump all else. The company's record of waffling and making really stupid decisions doesn't give a lot of hope, but perhaps the smart folks at Elevation Partners can bring in some tough love. Palm needs it. 

Posted by Michael Megalli on December 10, 2007 in Brand volatility, Digital lifestyle, Technology | Permalink | Comments (0) | TrackBack


Heads up

FYI - my previous post, Mutual of Omaha's Wild Media, was picked up as commentary on Online Media Daily (Media Post Publication - free registration required).

Posted by Todd Merriman on December 3, 2007 in News, Technology | Permalink | Comments (0) | TrackBack


Mutual of Omaha's Wild Media

In my post yesterday, I mentioned that the writers' strike would give corporations an opportunity to explore alternative advertising approaches. A friend of mine responded to my post wondering if we were going to see a return to "the days of 'Mutual of Omaha's Wild Kingdom'?" Certainly looks that will be one of the models. This article from The Hollywood Reporter article mentions Johnson & Johnson funding an after-school type program for its Accuvue brand. I think you'll see a lot of brands funding entertainment content that is directly targeted to their core audience.

Ultimately, from an entertainment perspective, you can envision a world in which all content is available on-demand (you know, like it is on the Internet), supported by a brief advertisement like this (or something similar). I would hope this has all of the interested parties - the networks, movie studios, and cable providers, to name a few - shaking in their boots and looking for a way to participate in the obvious future, rather than impersonating an ostrich and sticking their head in the ground like the music moguls.

Isn't it inevitable that the television simply becomes akin to an all-you-can eat buffet, pulling content from a million sources, rather than a pre-set menu prepared by the mediocre chefs at NBC Universal, Viacom, and Disney and delivered to your table by those ill-tempered waiters at Time Warner, Cox and Comcast?

Suggests some interesting questions:

How long before cable companies become nothing more than ISPs?
If they can't charge exorbitant fees for access to their slate of channels and to use their inadequate set-top boxes, they become little more than an ISPs with a good set of pipes. Which brings up a corollary question: How long before those pipes become totally unnecessary?

Do the studios have any value beyond the intellectual property they already have?
If the control of content is wrested from the studios, what value do they provide? They've got some big studios they could rent out. And, presumably, a lot of cameras and lighting and what-not. But with production increasingly happening on location and the cost of technical production going down, that's not much value. What they do have is all the stuff they created in the past. In the case of Disney, they have power of their characters, their back catalog, their brands and their creative departments. They've basically got Mickey Mouse, The Little Mermaid, ESPN and Pixar. A lot, to be sure, but it certainly isn't the impenetrable wall they have today.

What happens when that wall comes down?
You can certainly see how some of those media properties become less valuable in the future. What happens when the NFL doesn't need to deal with the cable companies or distribute their product through Disney's ABC Sports and ESPN anymore and simply can instead offer their games (all of them) on a pay-per-view, on-demand basis? Could this be what the NFL is thinking with its much maligned NFL Network? Remember: the NFL didn't get to be the juggernaut it is by playing softball and being stupid. Don't you think the NFL (in this case, the content creator) would jettison these partners immediately if they could charge a small fee to customers to watch the games or keep all of the ad revenue for themselves (or both)?

Play that scenario out with any piece of content. Was that James Dolan that just fainted?

Granted the NFL is the NFL. But what happens when a venture capitalist and a small production group get together and create the next Heroes? Do you think they'll be running to sign a distribution deal with NBC or trusting that the inherently viral nature of the Internet will take care of that pesky issue for them?

Will all of this make search and social networking even more important in the future?
If the TV becomes an empty vessel for endless content, the viewer has to find what they want, right? Google made finding content easy. Apple made finding and acquiring music easy and legal. Facebook and myspace have made internet communications more personal and fun. Won't some combination of this become the new interface for that empty vessel formerly known as the television set?

So much for TV Guide.

UPDATE: Is TiVo making a move?


Posted by Todd Merriman on November 28, 2007 in Customer experience, Digital lifestyle, Marketing communications, News, Technology | Permalink | Comments (1) | TrackBack