記得在UC Berkeley 一個課程進修時，Professor Ho給我們在價格戰上上了一個課，在價格戰線上，貨品價物長遠只有向下，沒有向上。這給我一個當頭棒喝，避免價格戰，是教授的忠告。
可惜，中國市場就是一個殺戮戰場，不論你是B2C、B2B、傳統企業，或者電子商務，價格血戰連場，那陣血腥味，中人欲嘔。
無怪的，在一項最新調查顯示，中國2010年度單是網絡市場交易總額就已經突破了一千億元人民幣。要搶奪市場，傳統智慧就是打價格戰，以本傷人，看誰人能最後站在戰場上不倒下來。有誰會細想，留下殘障的身體仍有力持久下去嗎？
最新有一個報導各映這個事實：
針對低價競爭的情況，某國內資深電商從業者感慨到，“不僅電子商務領域是這樣，其他領域也一樣，如中國手機，一通價格血戰下來，不管是戰鬥機還是轟炸機，都失去了應得的先機。還有大家熟悉的三鹿奶粉，一度因價格便宜受到消費者歡迎，最後吃出了三聚氰胺，大家又開始花10倍價錢去買國外的進口奶粉。這些鮮活的例子告訴我們，一味的價格戰只能遭到市場的質疑，最終使企業走向黑洞。”某國外專家在一次論壇中則講到：“目前中國企業中有很多都在採用價格戰來增強用戶的粘稠度，尤其是電子商務企業，競爭的方式過於單一，僅停留在價格戰的階段，而忽視了貨品品質、物流、服務在提升競爭力方面的重要作用。”
誠然，價格是最即時見成效的武器，就像核彈一樣，推倒整個市場。問題在於能持久嗎？
其實，貨品最終的決戰在於自己的質素和服務，這才是商界正道。可惜「葵花寶典」就在眼前，又有那個能抵擋魔力，不揮劍自宮，以捷徑稱霸江湖呢？
Tuesday, July 6, 2010
Facebook遊戲注定失敗?! 遊戲商要小心自己的投資
朋友S寄來Facebook(FB)遊戲，希望取一點意見。多年來，朋友S專注國內遊戲市場，由C++開始，澳門起飛時，曾經在賭博遊戲上下過功夫，但經過多年，始終未能闖開新世界。FB可會是新希望？嗯，我的看法是危機四伏…
遠的不看，先看最新消息。Yahoo將於今天與虛擬遊戲商Offerpal宣布合作，作為Yahoo向遊戲業進軍的重要一步。早在今年五月，FB與FarmVille的開發商Zynga鬧翻後，Yahoo立即拉攏FarmVille加盟Yahoo Game，Yahoo的意圖已經後明顯，希望糾正過去的錯誤。不過，目前Yahoo要對FB造成威脅，尚有一段距離。
FB以火燒的速度，成為網上遊戲業的巨擘，這是不爭的事實。問題在於FB對於遊戲業的投入度，一直盛傳FB的CEO Mark Zuckerberg對遊戲業務不感興趣，讓遊戲業務不獲重視，這是對遊戲商一大重擊。
業界普遍認為，FB作為社交網的龍頭，正重蹈Yahoo Game當年的錯誤，沒把遊戲業務當作一回事，結果被Real Networks和BigFish等坐大。Hi5 總裁Alex St.John直言，FB的失敗是無可避免的。據網流監察機構comScore的統計，Zynga去年的流量已經超越了Yahoo Game。
問題真正在於FB的遊戲業務，是否有前景，因為公司不專注在這業務上，只在發展FB平台為一個多用途的社交網。
當然，我不排除很多同業心感酸溜溜，乘機踏FB幾腳。有人話，FB遊戲勢將宣布全面失敗。我就覺得太誇張，忽略FB對網民心理上engagement的元素。FB遊戲有多差勁，也不致於如Yahoo Game咁，只餘下公公婆婆在玩。
遠的不看，先看最新消息。Yahoo將於今天與虛擬遊戲商Offerpal宣布合作，作為Yahoo向遊戲業進軍的重要一步。早在今年五月，FB與FarmVille的開發商Zynga鬧翻後，Yahoo立即拉攏FarmVille加盟Yahoo Game，Yahoo的意圖已經後明顯，希望糾正過去的錯誤。不過，目前Yahoo要對FB造成威脅，尚有一段距離。
FB以火燒的速度，成為網上遊戲業的巨擘，這是不爭的事實。問題在於FB對於遊戲業的投入度，一直盛傳FB的CEO Mark Zuckerberg對遊戲業務不感興趣，讓遊戲業務不獲重視，這是對遊戲商一大重擊。
業界普遍認為，FB作為社交網的龍頭，正重蹈Yahoo Game當年的錯誤，沒把遊戲業務當作一回事，結果被Real Networks和BigFish等坐大。Hi5 總裁Alex St.John直言，FB的失敗是無可避免的。據網流監察機構comScore的統計，Zynga去年的流量已經超越了Yahoo Game。
問題真正在於FB的遊戲業務，是否有前景，因為公司不專注在這業務上，只在發展FB平台為一個多用途的社交網。
當然，我不排除很多同業心感酸溜溜，乘機踏FB幾腳。有人話，FB遊戲勢將宣布全面失敗。我就覺得太誇張，忽略FB對網民心理上engagement的元素。FB遊戲有多差勁，也不致於如Yahoo Game咁，只餘下公公婆婆在玩。
Friday, July 2, 2010
No software giants should make handset other than Apple?! What a suggestion!
A friend from Google showed me his Nexus One (almost a year old). His mobile's Android OS version is still 2.0. Asking why he didn't upgrade his OS to the latest, I got a wierd answer that he didn't get time to read all the email from Google. There are too many initiatives in his company. Ha ha ...
Perhaps, Nexus One may be the last Google branded mobile. It is true. Google is not a good handset maker according to my friend. In the deal with HTC in Nexus One, what Google is pursuing is a perfect mobile. You may check it out from Nexus One. It gets a perfect shell which HTC said they would not produce any products in that manner. It is too expensive.
Recently, I read an article which is close to what I am thinking of.
Why software giants—except Apple—should not be making handsets
While both Microsoft and Google excel in their own spheres, the one thing they should steer clear from are screws and screens.
Sales of Apple’s iPad and iPhone 4 have been robust as expected, but Google’s Nexus One failed to meet expectations and Microsoft is raising the white flag on its teen-targeted Kin less than two months after its heavily marketed launch. Perhaps the lesson is stick to your knitting, and in the case of Google and Microsoft, it may behoove them to promote their respective operating systems—and continue to grow their mobile search and mobile advertising revenues—rather than try to be handset manufacturers.
“Certainly one issue Apple doesn’t face that Google and Microsoft do face is that Apple is not looking to license its operating system, so there is no conflict between its needs and licensees’ needs, while both Google and Microsoft do have that conflict,” said Ross Rubin, director of industry analysis at the NPD Group, Port Washington, NY.
“Both decided to stay out of the way to a certain extent—Google decided to pursue direct distribution and avoided carrier deals, and the Nexus One sales suffered due to not having access to those strong sales channels,” he said. “The Kin had a specific target user, teens and twenty-somethings, as opposed to Windows Phone 7 devices, which should have a broader target and access to an app store.
“Microsoft and Google had some mixed motivation in terms of not wanting to compete directly with licensees of the operating systems that they promote.”
The iPhone outshines Nexus One, Kin
While its Android operating system is an undisputed success, direct sales of Google’s Nexus One have not met expectations—a sign that round one of the handset distribution battle has gone to the carriers.
With both Sprint and Verizon Wireless refusing to offer the Nexus One at a subsidized price, Google has had to rely on its direct-to-consumer ecommerce portal—selling the smartphone at $529 a pop—and on distribution through T-Mobile USA, the No. 4 carrier nationwide. That strategy has not enabled the Nexus One to live up to the hype (see story).
Nexus One sales are said to be poor.
Reports indicate that Google sold roughly 135,000 Nexus One phones in their first 74 days on the market. In comparison, Motorola sold 1.05 million Droids in the same timeframe.
Kin sales have not met expectations either.
The Yankee Group estimated that Kin sales were above 1,000 units but did not surpass 10,000 units over the two-month period since its launch. Other sources speculate that sales could have been as low as 500.
In comparison, Apple sold 1.7 million iPhone 4 units within three days of the device's launch. Since this number included pre-orders, sales have slowed down since then.
On the other hand, sales of the iPad are accelerating and have now hit the 2-million mark. It took Apple more than 28 days to sell its first million, but only 22 days to go from 2-3 million.
Different core competencies
One of the truisms of marketing is that you get your best business from existing customers, that is, from repeat business. The 80-20 rule states that 80 percent of your business comes from 20 percent of your customers.
Apple’s ability to create buzz around product launches and the magnetic hold that it has over its customer base are currently unrivaled.
“Apple has been successful thanks to an intuitive user interface, smart marketing and to some extent a strong brand halo effect,” said Dmitriy Molchanov, analyst at Yankee Group, Boston. “Apple's specialty is in building reliable, stable and intuitive user-interfaces.
“Google specializes in cloud-based services,” he said. “It wants to get consumers more familiar with interacting with the cloud.
“With the Kin, and now Windows Mobile 7, Microsoft seems to be building a mobile offering that focuses on social networks and quick, easy interactions with friends.”
With Google’s acquisition of AdMob and Apple’s acquisition of Quattro Wireless and the launch of the iAd network, all three companies are going head to head in the mobile advertising space.
While Google is still the leader in search, Microsoft is showing progress with its Bing search engine, both online and mobile, including a deal with Verizon Wireless. Mobile search is one area where Apple does not have a presence.
Each company has its own core competencies, and there is a fine line between branching out and spreading one’s self too thin.
Google and Microsoft have plenty going for them. In the face of Apple dominating smartphone manufacturing, and now tablet manufacturing, maybe Google and Microsoft should say, “So what?” and continue with their bread-and-butter businesses.
“Apple’s strengths are the vertical integration of hardware software and services, clearly very strong design capabilities, its franchise in digital music and it has perhaps the strongest brand of the three companies,” Mr. Rubin said. “It also has a direct retail channel, so customers can get hands-on and look at how the phone fits into the rest of the Apple ecosystem.
“Microsoft has strong ties with third-party developers—it is sort of in the middle between Apple and Google in terms of the openness of its platform and the extent to which it will allow customization,” he said. “It also has the strongest ties of the three to game developer community.”
In addition, Microsoft has a strong suite of Web services—Windows Live, the Zune music service, Bing and Xbox Live—as does Google.
“Google is the most open of the three, and it has a huge advantage in that it gives away the OS for free,” Mr. Rubin said. “It also has an aggressive release schedule, with two to three major releases per year.
“Its suite of Web services has a somewhat different focus than Microsoft,” he said. “Google is also allowing carriers and OEMs a good degree of leeway in terms of customization, creating a good amount differentiation in the marketplace.”
Not-so-secret strategy
While sales of the Nexus One have been nothing to write home about, there is evidence that it has furthered Google’s agenda anyway.
“Google may have been more successful than critics think,” Mr. Molchanov said. “The majority of Google's revenues come from Google ads, and Google benefits whenever it can get more consumers online.
“It designs products like Android and Chrome OS to get consumers online and to give them the fastest browsing speeds possible while they're there,” he said. “Google's goal with the Nexus One was less about selling devices, and more about getting consumers familiar with mobile browsing and with the Android OS.”
To some extent, Google has been successful executing that strategy.
Android now has 5 percent worldwide market share, which means sales of roughly 14 million units, according to Yankee Group.
To put that number in perspective, iPhone has roughly 15 percent worldwide market share.
“Android's success is far more important to Google than the success of the Nexus One,” Mr. Molchanov said. “A few months ago, Google told Verizon shoppers to buy the HTC Incredible, an Android phone, instead of a Nexus One.
“In Microsoft's case, the Kin's failure should have been foreseen,” he said. “The Kin phone was a by-product of their purchase of Danger, which manufactured T-Mobile's successful Sidekick phones.
“Forcing the Sidekick phone to run a version of Windows CE, pricing the phone like a smartphone and giving it a data plan despite its lack of apps and games was 'akin' to shooting it in the foot.”
Handset or hand-wriging?
So will Google and Microsoft give it another go as an original equipment manufacturer? Will there be a Nexus Two? Will Microsoft to rebound with handsets based on its soon-to-launch Windows Phone 7 OS?
“Google is a software company, not a hardware company,” Mr. Molchanov said. “For that reason, I think Google's future in mobile rests largely on the success of Android.
“Microsoft has invested a substantial sum in Windows Mobile 7 and early looks at Mobile World Congress do look impressive,” he said. “However, at this point, Microsoft is playing catch-up and the advanced OS is several development cycles behind its competitors.
“The launch later this year does look to be a make-or-break moment for Microsoft in the mobile phone space.”
There has been some speculation that Microsoft might come out with a slate tablet based on its new OS.
That might be a better play, because in the smartphone market, it must contend with not just the iPhone and Android devices, but also Research In Motion’s BlackBerry.
“Microsoft now has to compete with two companies that have perfectly wonderful products and operating systems that seem to meet everyone’s needs and even seem to be sufficiently able to address the corporate market,” said Oren Michaels, cofounder/CEO of Mashery, San Francisco. “And there’s a third competitor—RIM.
“Microsoft has typically provided its PC OS to corporate customers and Apple has not, and RIM has typically provided its mobile OS to corporate customers and Apple has not, but Apple is making inroads [into the enterprise market],” he said. “I don’t see Microsoft having an easy time beating Apple or Andorid with the cool factor, so really the company that Microsoft will have to be competing with is RIM.
“At this point RIM owns mobile exchange, so can Microsoft take back control of their own email product? It got supplanted on mobile by RIM.”
Perhaps, Nexus One may be the last Google branded mobile. It is true. Google is not a good handset maker according to my friend. In the deal with HTC in Nexus One, what Google is pursuing is a perfect mobile. You may check it out from Nexus One. It gets a perfect shell which HTC said they would not produce any products in that manner. It is too expensive.
Recently, I read an article which is close to what I am thinking of.
Why software giants—except Apple—should not be making handsets
While both Microsoft and Google excel in their own spheres, the one thing they should steer clear from are screws and screens.
Sales of Apple’s iPad and iPhone 4 have been robust as expected, but Google’s Nexus One failed to meet expectations and Microsoft is raising the white flag on its teen-targeted Kin less than two months after its heavily marketed launch. Perhaps the lesson is stick to your knitting, and in the case of Google and Microsoft, it may behoove them to promote their respective operating systems—and continue to grow their mobile search and mobile advertising revenues—rather than try to be handset manufacturers.
“Certainly one issue Apple doesn’t face that Google and Microsoft do face is that Apple is not looking to license its operating system, so there is no conflict between its needs and licensees’ needs, while both Google and Microsoft do have that conflict,” said Ross Rubin, director of industry analysis at the NPD Group, Port Washington, NY.
“Both decided to stay out of the way to a certain extent—Google decided to pursue direct distribution and avoided carrier deals, and the Nexus One sales suffered due to not having access to those strong sales channels,” he said. “The Kin had a specific target user, teens and twenty-somethings, as opposed to Windows Phone 7 devices, which should have a broader target and access to an app store.
“Microsoft and Google had some mixed motivation in terms of not wanting to compete directly with licensees of the operating systems that they promote.”
The iPhone outshines Nexus One, Kin
While its Android operating system is an undisputed success, direct sales of Google’s Nexus One have not met expectations—a sign that round one of the handset distribution battle has gone to the carriers.
With both Sprint and Verizon Wireless refusing to offer the Nexus One at a subsidized price, Google has had to rely on its direct-to-consumer ecommerce portal—selling the smartphone at $529 a pop—and on distribution through T-Mobile USA, the No. 4 carrier nationwide. That strategy has not enabled the Nexus One to live up to the hype (see story).
Nexus One sales are said to be poor.
Reports indicate that Google sold roughly 135,000 Nexus One phones in their first 74 days on the market. In comparison, Motorola sold 1.05 million Droids in the same timeframe.
Kin sales have not met expectations either.
The Yankee Group estimated that Kin sales were above 1,000 units but did not surpass 10,000 units over the two-month period since its launch. Other sources speculate that sales could have been as low as 500.
In comparison, Apple sold 1.7 million iPhone 4 units within three days of the device's launch. Since this number included pre-orders, sales have slowed down since then.
On the other hand, sales of the iPad are accelerating and have now hit the 2-million mark. It took Apple more than 28 days to sell its first million, but only 22 days to go from 2-3 million.
Different core competencies
One of the truisms of marketing is that you get your best business from existing customers, that is, from repeat business. The 80-20 rule states that 80 percent of your business comes from 20 percent of your customers.
Apple’s ability to create buzz around product launches and the magnetic hold that it has over its customer base are currently unrivaled.
“Apple has been successful thanks to an intuitive user interface, smart marketing and to some extent a strong brand halo effect,” said Dmitriy Molchanov, analyst at Yankee Group, Boston. “Apple's specialty is in building reliable, stable and intuitive user-interfaces.
“Google specializes in cloud-based services,” he said. “It wants to get consumers more familiar with interacting with the cloud.
“With the Kin, and now Windows Mobile 7, Microsoft seems to be building a mobile offering that focuses on social networks and quick, easy interactions with friends.”
With Google’s acquisition of AdMob and Apple’s acquisition of Quattro Wireless and the launch of the iAd network, all three companies are going head to head in the mobile advertising space.
While Google is still the leader in search, Microsoft is showing progress with its Bing search engine, both online and mobile, including a deal with Verizon Wireless. Mobile search is one area where Apple does not have a presence.
Each company has its own core competencies, and there is a fine line between branching out and spreading one’s self too thin.
Google and Microsoft have plenty going for them. In the face of Apple dominating smartphone manufacturing, and now tablet manufacturing, maybe Google and Microsoft should say, “So what?” and continue with their bread-and-butter businesses.
“Apple’s strengths are the vertical integration of hardware software and services, clearly very strong design capabilities, its franchise in digital music and it has perhaps the strongest brand of the three companies,” Mr. Rubin said. “It also has a direct retail channel, so customers can get hands-on and look at how the phone fits into the rest of the Apple ecosystem.
“Microsoft has strong ties with third-party developers—it is sort of in the middle between Apple and Google in terms of the openness of its platform and the extent to which it will allow customization,” he said. “It also has the strongest ties of the three to game developer community.”
In addition, Microsoft has a strong suite of Web services—Windows Live, the Zune music service, Bing and Xbox Live—as does Google.
“Google is the most open of the three, and it has a huge advantage in that it gives away the OS for free,” Mr. Rubin said. “It also has an aggressive release schedule, with two to three major releases per year.
“Its suite of Web services has a somewhat different focus than Microsoft,” he said. “Google is also allowing carriers and OEMs a good degree of leeway in terms of customization, creating a good amount differentiation in the marketplace.”
Not-so-secret strategy
While sales of the Nexus One have been nothing to write home about, there is evidence that it has furthered Google’s agenda anyway.
“Google may have been more successful than critics think,” Mr. Molchanov said. “The majority of Google's revenues come from Google ads, and Google benefits whenever it can get more consumers online.
“It designs products like Android and Chrome OS to get consumers online and to give them the fastest browsing speeds possible while they're there,” he said. “Google's goal with the Nexus One was less about selling devices, and more about getting consumers familiar with mobile browsing and with the Android OS.”
To some extent, Google has been successful executing that strategy.
Android now has 5 percent worldwide market share, which means sales of roughly 14 million units, according to Yankee Group.
To put that number in perspective, iPhone has roughly 15 percent worldwide market share.
“Android's success is far more important to Google than the success of the Nexus One,” Mr. Molchanov said. “A few months ago, Google told Verizon shoppers to buy the HTC Incredible, an Android phone, instead of a Nexus One.
“In Microsoft's case, the Kin's failure should have been foreseen,” he said. “The Kin phone was a by-product of their purchase of Danger, which manufactured T-Mobile's successful Sidekick phones.
“Forcing the Sidekick phone to run a version of Windows CE, pricing the phone like a smartphone and giving it a data plan despite its lack of apps and games was 'akin' to shooting it in the foot.”
Handset or hand-wriging?
So will Google and Microsoft give it another go as an original equipment manufacturer? Will there be a Nexus Two? Will Microsoft to rebound with handsets based on its soon-to-launch Windows Phone 7 OS?
“Google is a software company, not a hardware company,” Mr. Molchanov said. “For that reason, I think Google's future in mobile rests largely on the success of Android.
“Microsoft has invested a substantial sum in Windows Mobile 7 and early looks at Mobile World Congress do look impressive,” he said. “However, at this point, Microsoft is playing catch-up and the advanced OS is several development cycles behind its competitors.
“The launch later this year does look to be a make-or-break moment for Microsoft in the mobile phone space.”
There has been some speculation that Microsoft might come out with a slate tablet based on its new OS.
That might be a better play, because in the smartphone market, it must contend with not just the iPhone and Android devices, but also Research In Motion’s BlackBerry.
“Microsoft now has to compete with two companies that have perfectly wonderful products and operating systems that seem to meet everyone’s needs and even seem to be sufficiently able to address the corporate market,” said Oren Michaels, cofounder/CEO of Mashery, San Francisco. “And there’s a third competitor—RIM.
“Microsoft has typically provided its PC OS to corporate customers and Apple has not, and RIM has typically provided its mobile OS to corporate customers and Apple has not, but Apple is making inroads [into the enterprise market],” he said. “I don’t see Microsoft having an easy time beating Apple or Andorid with the cool factor, so really the company that Microsoft will have to be competing with is RIM.
“At this point RIM owns mobile exchange, so can Microsoft take back control of their own email product? It got supplanted on mobile by RIM.”
Thursday, July 1, 2010
SMS is still the best way to go!
You may think it is really funny to discuss about SMS in this Apps world.
No kidding. The two-way communication may help you. Don't miss it.
Another good article to share.
SMS opens a two-way dialogue between marketer and consumer: 360i
Text messaging is by far the most popular mobile activity after talking, and it is one of the most proven mobile marketing channels, according to digital marketing agency 360i.
SMS is the most universal, given that it is available on just about every mobile phone, from lower-end feature phones to the priciest smartphones. ComScore reports 65 percent of mobile subscribers send text messages, compared to about 30 percent using the browser and downloading applications.
“SMS is incredible in the sense that two-thirds of mobile users are using it,” said David Berkowitz, senior director of emerging media and innovation at 360i, New York. “It is so simple in format but the things you can do with it are amazing.
Text messaging is by far the most popular mobile activity after talking, and it is one of the most proven mobile marketing channels, according to digital marketing agency 360i.
SMS is the most universal, given that it is available on just about every mobile phone, from lower-end feature phones to the priciest smartphones. ComScore reports 65 percent of mobile subscribers send text messages, compared to about 30 percent using the browser and downloading applications.
“SMS is incredible in the sense that two-thirds of mobile users are using it,” said David Berkowitz, senior director of emerging media and innovation at 360i, New York. “It is so simple in format but the things you can do with it are amazing.
find a job for you
“It is the most integrated marketing channel because you can tie it to anything you are doing both online and offline,” he said.
Teenagers are especially drawn to SMS. Pew Internet & American Life Project reports that American teens 12-17 contact peers daily via texting (54 percent) more than any other communication channel, including calling on mobile phones (38 percent), talking face to face (33 percent), instant messaging (24 percent) and email (11 percent).
But SMS’ reach is by no means limited to just American teens. An April 2010 study by Merkle found that 63 percent of U.S. adults 30-39 text, as do 49 percent of adults 40-49.
According to 360i, there are several ways to engage in SMS marketing - branded short codes, shared short codes and in-SMS advertising.
Consumers can send a text message to either a shared or branded short code to get updates or engage with the marketer.
With either form of short code use, the biggest advantage is the integration potential.
SMS callouts can appear in out-of-home marketing, point-of-sale locations, TV, radio, print, online display, email and social marketing.
Marketers can also advertise on SMS ad networks by appending a brief message to content that consumers subscribe to, such as sports alerts from, say, NBC.
The ads can be used for a range of purposes, from building up the marketer’s own SMS opt-in list to driving traffic or engagement to the brand’s mobile Web site or application.
“SMS has the reach and if a marketer wants to do an ad campaign advertising can reach a lot of consumers via mobile and very quickly,” Mr. Berkowitz said.
“Building an opt-in list is key because it becomes a deeper discussion and can make it work for them on a long-term basis.
“Part of the power of SMS is getting consumers to opt-in to have an ongoing message,” he said. That’s where SMS takes a different turn.”
Marketers can use SMS to text content, such as product information, informative tips, polls or trivia questions to their opt-in list.
SMS communications can include links to mobile Web sites, maps for store locators and click-to-call links that lead consumers to retail stores or call centers.
A text message can also connect a consumer to a brand’s multimedia, such as images, videos or ringtones.
As of lately, many retailers – such as Walmart – have been using SMS to push coupons, driving consumers in-store for purchasing.
“SMS resembles email in terms of the potential for a two-way dialogue, providing for a deeper experience,” Mr. Berkowitz said.
No kidding. The two-way communication may help you. Don't miss it.
Another good article to share.
SMS opens a two-way dialogue between marketer and consumer: 360i
Text messaging is by far the most popular mobile activity after talking, and it is one of the most proven mobile marketing channels, according to digital marketing agency 360i.
SMS is the most universal, given that it is available on just about every mobile phone, from lower-end feature phones to the priciest smartphones. ComScore reports 65 percent of mobile subscribers send text messages, compared to about 30 percent using the browser and downloading applications.
“SMS is incredible in the sense that two-thirds of mobile users are using it,” said David Berkowitz, senior director of emerging media and innovation at 360i, New York. “It is so simple in format but the things you can do with it are amazing.
Text messaging is by far the most popular mobile activity after talking, and it is one of the most proven mobile marketing channels, according to digital marketing agency 360i.
SMS is the most universal, given that it is available on just about every mobile phone, from lower-end feature phones to the priciest smartphones. ComScore reports 65 percent of mobile subscribers send text messages, compared to about 30 percent using the browser and downloading applications.
“SMS is incredible in the sense that two-thirds of mobile users are using it,” said David Berkowitz, senior director of emerging media and innovation at 360i, New York. “It is so simple in format but the things you can do with it are amazing.
find a job for you
“It is the most integrated marketing channel because you can tie it to anything you are doing both online and offline,” he said.
Teenagers are especially drawn to SMS. Pew Internet & American Life Project reports that American teens 12-17 contact peers daily via texting (54 percent) more than any other communication channel, including calling on mobile phones (38 percent), talking face to face (33 percent), instant messaging (24 percent) and email (11 percent).
But SMS’ reach is by no means limited to just American teens. An April 2010 study by Merkle found that 63 percent of U.S. adults 30-39 text, as do 49 percent of adults 40-49.
According to 360i, there are several ways to engage in SMS marketing - branded short codes, shared short codes and in-SMS advertising.
Consumers can send a text message to either a shared or branded short code to get updates or engage with the marketer.
With either form of short code use, the biggest advantage is the integration potential.
SMS callouts can appear in out-of-home marketing, point-of-sale locations, TV, radio, print, online display, email and social marketing.
Marketers can also advertise on SMS ad networks by appending a brief message to content that consumers subscribe to, such as sports alerts from, say, NBC.
The ads can be used for a range of purposes, from building up the marketer’s own SMS opt-in list to driving traffic or engagement to the brand’s mobile Web site or application.
“SMS has the reach and if a marketer wants to do an ad campaign advertising can reach a lot of consumers via mobile and very quickly,” Mr. Berkowitz said.
“Building an opt-in list is key because it becomes a deeper discussion and can make it work for them on a long-term basis.
“Part of the power of SMS is getting consumers to opt-in to have an ongoing message,” he said. That’s where SMS takes a different turn.”
Marketers can use SMS to text content, such as product information, informative tips, polls or trivia questions to their opt-in list.
SMS communications can include links to mobile Web sites, maps for store locators and click-to-call links that lead consumers to retail stores or call centers.
A text message can also connect a consumer to a brand’s multimedia, such as images, videos or ringtones.
As of lately, many retailers – such as Walmart – have been using SMS to push coupons, driving consumers in-store for purchasing.
“SMS resembles email in terms of the potential for a two-way dialogue, providing for a deeper experience,” Mr. Berkowitz said.
Wednesday, June 30, 2010
Good article to share: The five types of successful acquisitions
I love this article merely because it really inspires intuitive thinking.
There is no magic formula to make acquisitions successful. Like any other business process, they are not inherently good or bad, just as marketing and R&D aren’t. Each deal must have its own strategic logic. In our experience, acquirers in the most successful deals have specific, well-articulated value creation ideas going in. For less successful deals, the strategic rationales—such as pursuing international scale, filling portfolio gaps, or building a third leg of the portfolio—tend to be vague.
Empirical analysis of specific acquisition strategies offers limited insight, largely because of the wide variety of types and sizes of acquisitions and the lack of an objective way to classify them by strategy. What’s more, the stated strategy may not even be the real one: companies typically talk up all kinds of strategic benefits from acquisitions that are really entirely about cost cutting. In the absence of empirical research, our suggestions for strategies that create value reflect our acquisitions work with companies.
In our experience, the strategic rationale for an acquisition that creates value typically conforms to at least one of the following five archetypes: improving the performance of the target company, removing excess capacity from an industry, creating market access for products, acquiring skills or technologies more quickly or at lower cost than they could be built in-house, and picking winners early and helping them develop their businesses. If an acquisition does not fit one or more of these archetypes, it’s unlikely to create value. Executives, of course, often justify acquisitions by choosing from a much broader menu of strategies, including roll-ups, consolidating to improve competitive behavior, transformational mergers, and buying cheap. While these strategies can create value, we find that they seldom do. Value-minded executives should view them with a gimlet eye.
Five archetypes
An acquisition’s strategic rationale should be a specific articulation of one of these archetypes, not a vague concept like growth or strategic positioning, which may be important but must be translated into something more tangible. Furthermore, even if your acquisition is based on one of the archetypes below, it won’t create value if you overpay.
Improve the target company’s performance
Improving the performance of the target company is one of the most common value-creating acquisition strategies. Put simply, you buy a company and radically reduce costs to improve margins and cash flows. In some cases, the acquirer may also take steps to accelerate revenue growth.
Pursuing this strategy is what the best private-equity firms do. Among successful private-equity acquisitions in which a target company was bought, improved, and sold, with no additional acquisitions along the way, operating-profit margins increased by an average of about 2.5 percentage points more than those at peer companies during the same period.1 This means that many of the transactions increased operating-profit margins even more.
Keep in mind that it is easier to improve the performance of a company with low margins and low returns on invested capital (ROIC) than that of a high-margin, high-ROIC company. Consider a target company with a 6 percent operating-profit margin. Reducing costs by three percentage points, to 91 percent of revenues, from 94 percent, increases the margin to 9 percent and could lead to a 50 percent increase in the company’s value. In contrast, if the operating-profit margin of a company is 30 percent, increasing its value by 50 percent requires increasing the margin to 45 percent. Costs would need to decline from 70 percent of revenues to 55 percent, a 21 percent reduction in the cost base. That might not be reasonable to expect.
Consolidate to remove excess capacity from industry
As industries mature, they typically develop excess capacity. In chemicals, for example, companies are constantly looking for ways to get more production out of their plants, while new competitors continue to enter the industry. For example, Saudi Basic Industries Corporation (SABIC), which began production in the mid-1980s, grew from 6.3 million metric tons of value-added commodities—such as chemicals, polymers, and fertilizers—in 1985 to 56 million tons in 2008. Now one of the world’s largest petrochemicals concerns, SABIC expects continued growth, estimating its annual production to reach 135 million tons by 2020.
The combination of higher production from existing capacity and new capacity from recent entrants often generates more supply than demand. It is in no individual competitor’s interest to shut a plant, however. Companies often find it easier to shut plants across the larger combined entity resulting from an acquisition than to shut their least productive plants without one and end up with a smaller company.
Reducing excess in an industry can also extend to less tangible forms of capacity. Consolidation in the pharmaceutical industry, for example, has significantly reduced the capacity of the sales force as the product portfolios of merged companies change and they rethink how to interact with doctors. Pharmaceutical companies have also significantly reduced their R&D capacity as they found more productive ways to conduct research and pruned their portfolios of development projects.
While there is substantial value to be created from removing excess capacity, as in most M&A activity the bulk of the value often accrues to the seller’s shareholders, not the buyer’s.
Accelerate market access for the target’s (or buyer’s) products
Often, relatively small companies with innovative products have difficulty reaching the entire potential market for their products. Small pharmaceutical companies, for example, typically lack the large sales forces required to cultivate relationships with the many doctors they need to promote their products. Bigger pharmaceutical companies sometimes purchase these smaller companies and use their own large-scale sales forces to accelerate the sales of the smaller companies’ products.
IBM, for instance, has pursued this strategy in its software business. From 2002 to 2009, it acquired 70 companies for about $14 billion. By pushing their products through a global sales force, IBM estimates it increased their revenues by almost 50 percent in the first two years after each acquisition and an average of more than 10 percent in the next three years.2
In some cases, the target can also help accelerate the acquirer’s revenue growth. In Procter & Gamble’s acquisition of Gillette, the combined company benefited because P&G had stronger sales in some emerging markets, Gillette in others. Working together, they introduced their products into new markets much more quickly.
Get skills or technologies faster or at lower cost than they can be built
Cisco Systems has used acquisitions to close gaps in its technologies, allowing it to assemble a broad line of networking products and to grow very quickly from a company with a single product line into the key player in Internet equipment. From 1993 to 2001, Cisco acquired 71 companies, at an average price of approximately $350 million. Cisco’s sales increased from $650 million in 1993 to $22 billion in 2001, with nearly 40 percent of its 2001 revenue coming directly from these acquisitions. By 2009, Cisco had more than $36 billion in revenues and a market cap of approximately $150 billion.
Pick winners early and help them develop their businesses
The final winning strategy involves making acquisitions early in the life cycle of a new industry or product line, long before most others recognize that it will grow significantly. Johnson & Johnson pursued this strategy in its early acquisitions of medical-device businesses. When J&J bought device manufacturer Cordis, in 1996, Cordis had $500 million in revenues. By 2007, its revenues had increased to $3.8 billion, reflecting a 20 percent annual growth rate. J&J purchased orthopedic-device manufacturer DePuy in 1998, when DePuy had $900 million in revenues. By 2007, they had grown to $4.6 billion, also at an annual growth rate of 20 percent.
This acquisition strategy requires a disciplined approach by management in three dimensions. First, you must be willing to make investments early, long before your competitors and the market see the industry’s or company’s potential. Second, you need to make multiple bets and to expect that some will fail. Third, you need the skills and patience to nurture the acquired businesses.
Harder strategies
Beyond the five main acquisition strategies we’ve explored, a handful of others can create value, though in our experience they do so relatively rarely.
Roll-up strategy
Roll-up strategies consolidate highly fragmented markets where the current competitors are too small to achieve scale economies. Beginning in the 1960s, Service Corporation International, for instance, grew from a single funeral home in Houston to more than 1,400 funeral homes and cemeteries in 2008. Similarly, Clear Channel Communications rolled up the US market for radio stations, eventually owning more than 900.
This strategy works when businesses as a group can realize substantial cost savings or achieve higher revenues than individual businesses can. Service Corporation’s funeral homes in a given city can share vehicles, purchasing, and back-office operations, for example. They can also coordinate advertising across a city to reduce costs and raise revenues.
Size per se is not what creates a successful roll-up; what matters is the right kind of size. For Service Corporation, multiple locations in individual cities have been more important than many branches spread over many cities, because the cost savings (such as sharing vehicles) can be realized only if the branches are near one another. Roll-up strategies are hard to disguise, so they invite copycats. As others tried to imitate Service Corporation’s strategy, prices for some funeral homes were eventually bid up to levels that made additional acquisitions uneconomic.
Consolidate to improve competitive behavior
Many executives in highly competitive industries hope consolidation will lead competitors to focus less on price competition, thereby improving the ROIC of the industry. The evidence shows, however, that unless it consolidates to just three or four companies and can keep out new entrants, pricing behavior doesn’t change: smaller businesses or new entrants often have an incentive to gain share through lower prices. So in an industry with, say, ten companies, lots of deals must be done before the basis of competition changes.
Enter into a transformational merger
A commonly mentioned reason for an acquisition or merger is the desire to transform one or both companies. Transformational mergers are rare, however, because the circumstances have to be just right, and the management team needs to execute the strategy well.
Transformational mergers can best be described by example. One of the world’s leading pharmaceutical companies, Switzerland’s Novartis, was formed in 1996 by the $30 billion merger of Ciba-Geigy and Sandoz. But this merger was much more than a simple combination of businesses: under the leadership of the new CEO, Daniel Vasella, Ciba-Geigy and Sandoz were transformed into an entirely new company. Using the merger as a catalyst for change, Vasella and his management team not only captured $1.4 billion in cost synergies but also redefined the company’s mission, strategy, portfolio, and organization, as well as all key processes, from research to sales. In every area, there was no automatic choice for either the Ciba or the Sandoz way of doing things; instead, the organization made a systematic effort to find the best way.
Novartis shifted its strategic focus to innovation in its life sciences business (pharmaceuticals, nutrition, and products for agriculture) and spun off the $7 billion Ciba Specialty Chemicals business in 1997. Organizational changes included structuring R&D worldwide by therapeutic rather than geographic area, enabling Novartis to build a world-leading oncology franchise.
Across all departments and management layers, Novartis created a strong performance-oriented culture supported by shifting from a seniority- to a performance-based compensation system for managers.
Buy cheap
The final way to create value from an acquisition is to buy cheap—in other words, at a price below a company’s intrinsic value. In our experience, however, such opportunities are rare and relatively small. Nonetheless, though market values revert to intrinsic values over longer periods, there can be brief moments when the two fall out of alignment. Markets, for example, sometimes overreact to negative news, such as a criminal investigation of an executive or the failure of a single product in a portfolio with many strong ones.
Such moments are less rare in cyclical industries, where assets are often undervalued at the bottom of a cycle. Comparing actual market valuations with intrinsic values based on a “perfect foresight” model, we found that companies in cyclical industries could more than double their shareholder returns (relative to actual returns) if they acquired assets at the bottom of a cycle and sold at the top.3
While markets do throw up occasional opportunities for companies to buy targets at levels below their intrinsic value, we haven’t seen many cases. To gain control of a target, acquirers must pay its shareholders a premium over the current market value. Although premiums can vary widely, the average ones for corporate control have been fairly stable: almost 30 percent of the preannouncement price of the target’s equity. For targets pursued by multiple acquirers, the premium rises dramatically, creating the so-called winner’s curse. If several companies evaluate a given target and all identify roughly the same potential synergies, the pursuer that overestimates them most will offer the highest price. Since it is based on an overestimation of the value to be created, the winner pays too much—and is ultimately a loser.4
Since market values can sometimes deviate from intrinsic ones, management must also beware the possibility that markets may be overvaluing a potential acquisition. Consider the stock market bubble during the late 1990s. Companies that merged with or acquired technology, media, or telecommunications businesses saw their share prices plummet when the market reverted to earlier levels. The possibility that a company might pay too much when the market is inflated deserves serious consideration, because M&A activity seems to rise following periods of strong market performance. If (and when) prices are artificially high, large improvements are necessary to justify an acquisition, even when the target can be purchased at no premium to market value. Premiums for private deals tend to be smaller, although comprehensive evidence is difficult to collect because publicly available data are scarce. Private acquisitions often stem from the seller’s desire to get out rather than the buyer’s desire for a purchase.
There is no magic formula to make acquisitions successful. Like any other business process, they are not inherently good or bad, just as marketing and R&D aren’t. Each deal must have its own strategic logic. In our experience, acquirers in the most successful deals have specific, well-articulated value creation ideas going in. For less successful deals, the strategic rationales—such as pursuing international scale, filling portfolio gaps, or building a third leg of the portfolio—tend to be vague.
Empirical analysis of specific acquisition strategies offers limited insight, largely because of the wide variety of types and sizes of acquisitions and the lack of an objective way to classify them by strategy. What’s more, the stated strategy may not even be the real one: companies typically talk up all kinds of strategic benefits from acquisitions that are really entirely about cost cutting. In the absence of empirical research, our suggestions for strategies that create value reflect our acquisitions work with companies.
In our experience, the strategic rationale for an acquisition that creates value typically conforms to at least one of the following five archetypes: improving the performance of the target company, removing excess capacity from an industry, creating market access for products, acquiring skills or technologies more quickly or at lower cost than they could be built in-house, and picking winners early and helping them develop their businesses. If an acquisition does not fit one or more of these archetypes, it’s unlikely to create value. Executives, of course, often justify acquisitions by choosing from a much broader menu of strategies, including roll-ups, consolidating to improve competitive behavior, transformational mergers, and buying cheap. While these strategies can create value, we find that they seldom do. Value-minded executives should view them with a gimlet eye.
Five archetypes
An acquisition’s strategic rationale should be a specific articulation of one of these archetypes, not a vague concept like growth or strategic positioning, which may be important but must be translated into something more tangible. Furthermore, even if your acquisition is based on one of the archetypes below, it won’t create value if you overpay.
Improve the target company’s performance
Improving the performance of the target company is one of the most common value-creating acquisition strategies. Put simply, you buy a company and radically reduce costs to improve margins and cash flows. In some cases, the acquirer may also take steps to accelerate revenue growth.
Pursuing this strategy is what the best private-equity firms do. Among successful private-equity acquisitions in which a target company was bought, improved, and sold, with no additional acquisitions along the way, operating-profit margins increased by an average of about 2.5 percentage points more than those at peer companies during the same period.1 This means that many of the transactions increased operating-profit margins even more.
Keep in mind that it is easier to improve the performance of a company with low margins and low returns on invested capital (ROIC) than that of a high-margin, high-ROIC company. Consider a target company with a 6 percent operating-profit margin. Reducing costs by three percentage points, to 91 percent of revenues, from 94 percent, increases the margin to 9 percent and could lead to a 50 percent increase in the company’s value. In contrast, if the operating-profit margin of a company is 30 percent, increasing its value by 50 percent requires increasing the margin to 45 percent. Costs would need to decline from 70 percent of revenues to 55 percent, a 21 percent reduction in the cost base. That might not be reasonable to expect.
Consolidate to remove excess capacity from industry
As industries mature, they typically develop excess capacity. In chemicals, for example, companies are constantly looking for ways to get more production out of their plants, while new competitors continue to enter the industry. For example, Saudi Basic Industries Corporation (SABIC), which began production in the mid-1980s, grew from 6.3 million metric tons of value-added commodities—such as chemicals, polymers, and fertilizers—in 1985 to 56 million tons in 2008. Now one of the world’s largest petrochemicals concerns, SABIC expects continued growth, estimating its annual production to reach 135 million tons by 2020.
The combination of higher production from existing capacity and new capacity from recent entrants often generates more supply than demand. It is in no individual competitor’s interest to shut a plant, however. Companies often find it easier to shut plants across the larger combined entity resulting from an acquisition than to shut their least productive plants without one and end up with a smaller company.
Reducing excess in an industry can also extend to less tangible forms of capacity. Consolidation in the pharmaceutical industry, for example, has significantly reduced the capacity of the sales force as the product portfolios of merged companies change and they rethink how to interact with doctors. Pharmaceutical companies have also significantly reduced their R&D capacity as they found more productive ways to conduct research and pruned their portfolios of development projects.
While there is substantial value to be created from removing excess capacity, as in most M&A activity the bulk of the value often accrues to the seller’s shareholders, not the buyer’s.
Accelerate market access for the target’s (or buyer’s) products
Often, relatively small companies with innovative products have difficulty reaching the entire potential market for their products. Small pharmaceutical companies, for example, typically lack the large sales forces required to cultivate relationships with the many doctors they need to promote their products. Bigger pharmaceutical companies sometimes purchase these smaller companies and use their own large-scale sales forces to accelerate the sales of the smaller companies’ products.
IBM, for instance, has pursued this strategy in its software business. From 2002 to 2009, it acquired 70 companies for about $14 billion. By pushing their products through a global sales force, IBM estimates it increased their revenues by almost 50 percent in the first two years after each acquisition and an average of more than 10 percent in the next three years.2
In some cases, the target can also help accelerate the acquirer’s revenue growth. In Procter & Gamble’s acquisition of Gillette, the combined company benefited because P&G had stronger sales in some emerging markets, Gillette in others. Working together, they introduced their products into new markets much more quickly.
Get skills or technologies faster or at lower cost than they can be built
Cisco Systems has used acquisitions to close gaps in its technologies, allowing it to assemble a broad line of networking products and to grow very quickly from a company with a single product line into the key player in Internet equipment. From 1993 to 2001, Cisco acquired 71 companies, at an average price of approximately $350 million. Cisco’s sales increased from $650 million in 1993 to $22 billion in 2001, with nearly 40 percent of its 2001 revenue coming directly from these acquisitions. By 2009, Cisco had more than $36 billion in revenues and a market cap of approximately $150 billion.
Pick winners early and help them develop their businesses
The final winning strategy involves making acquisitions early in the life cycle of a new industry or product line, long before most others recognize that it will grow significantly. Johnson & Johnson pursued this strategy in its early acquisitions of medical-device businesses. When J&J bought device manufacturer Cordis, in 1996, Cordis had $500 million in revenues. By 2007, its revenues had increased to $3.8 billion, reflecting a 20 percent annual growth rate. J&J purchased orthopedic-device manufacturer DePuy in 1998, when DePuy had $900 million in revenues. By 2007, they had grown to $4.6 billion, also at an annual growth rate of 20 percent.
This acquisition strategy requires a disciplined approach by management in three dimensions. First, you must be willing to make investments early, long before your competitors and the market see the industry’s or company’s potential. Second, you need to make multiple bets and to expect that some will fail. Third, you need the skills and patience to nurture the acquired businesses.
Harder strategies
Beyond the five main acquisition strategies we’ve explored, a handful of others can create value, though in our experience they do so relatively rarely.
Roll-up strategy
Roll-up strategies consolidate highly fragmented markets where the current competitors are too small to achieve scale economies. Beginning in the 1960s, Service Corporation International, for instance, grew from a single funeral home in Houston to more than 1,400 funeral homes and cemeteries in 2008. Similarly, Clear Channel Communications rolled up the US market for radio stations, eventually owning more than 900.
This strategy works when businesses as a group can realize substantial cost savings or achieve higher revenues than individual businesses can. Service Corporation’s funeral homes in a given city can share vehicles, purchasing, and back-office operations, for example. They can also coordinate advertising across a city to reduce costs and raise revenues.
Size per se is not what creates a successful roll-up; what matters is the right kind of size. For Service Corporation, multiple locations in individual cities have been more important than many branches spread over many cities, because the cost savings (such as sharing vehicles) can be realized only if the branches are near one another. Roll-up strategies are hard to disguise, so they invite copycats. As others tried to imitate Service Corporation’s strategy, prices for some funeral homes were eventually bid up to levels that made additional acquisitions uneconomic.
Consolidate to improve competitive behavior
Many executives in highly competitive industries hope consolidation will lead competitors to focus less on price competition, thereby improving the ROIC of the industry. The evidence shows, however, that unless it consolidates to just three or four companies and can keep out new entrants, pricing behavior doesn’t change: smaller businesses or new entrants often have an incentive to gain share through lower prices. So in an industry with, say, ten companies, lots of deals must be done before the basis of competition changes.
Enter into a transformational merger
A commonly mentioned reason for an acquisition or merger is the desire to transform one or both companies. Transformational mergers are rare, however, because the circumstances have to be just right, and the management team needs to execute the strategy well.
Transformational mergers can best be described by example. One of the world’s leading pharmaceutical companies, Switzerland’s Novartis, was formed in 1996 by the $30 billion merger of Ciba-Geigy and Sandoz. But this merger was much more than a simple combination of businesses: under the leadership of the new CEO, Daniel Vasella, Ciba-Geigy and Sandoz were transformed into an entirely new company. Using the merger as a catalyst for change, Vasella and his management team not only captured $1.4 billion in cost synergies but also redefined the company’s mission, strategy, portfolio, and organization, as well as all key processes, from research to sales. In every area, there was no automatic choice for either the Ciba or the Sandoz way of doing things; instead, the organization made a systematic effort to find the best way.
Novartis shifted its strategic focus to innovation in its life sciences business (pharmaceuticals, nutrition, and products for agriculture) and spun off the $7 billion Ciba Specialty Chemicals business in 1997. Organizational changes included structuring R&D worldwide by therapeutic rather than geographic area, enabling Novartis to build a world-leading oncology franchise.
Across all departments and management layers, Novartis created a strong performance-oriented culture supported by shifting from a seniority- to a performance-based compensation system for managers.
Buy cheap
The final way to create value from an acquisition is to buy cheap—in other words, at a price below a company’s intrinsic value. In our experience, however, such opportunities are rare and relatively small. Nonetheless, though market values revert to intrinsic values over longer periods, there can be brief moments when the two fall out of alignment. Markets, for example, sometimes overreact to negative news, such as a criminal investigation of an executive or the failure of a single product in a portfolio with many strong ones.
Such moments are less rare in cyclical industries, where assets are often undervalued at the bottom of a cycle. Comparing actual market valuations with intrinsic values based on a “perfect foresight” model, we found that companies in cyclical industries could more than double their shareholder returns (relative to actual returns) if they acquired assets at the bottom of a cycle and sold at the top.3
While markets do throw up occasional opportunities for companies to buy targets at levels below their intrinsic value, we haven’t seen many cases. To gain control of a target, acquirers must pay its shareholders a premium over the current market value. Although premiums can vary widely, the average ones for corporate control have been fairly stable: almost 30 percent of the preannouncement price of the target’s equity. For targets pursued by multiple acquirers, the premium rises dramatically, creating the so-called winner’s curse. If several companies evaluate a given target and all identify roughly the same potential synergies, the pursuer that overestimates them most will offer the highest price. Since it is based on an overestimation of the value to be created, the winner pays too much—and is ultimately a loser.4
Since market values can sometimes deviate from intrinsic ones, management must also beware the possibility that markets may be overvaluing a potential acquisition. Consider the stock market bubble during the late 1990s. Companies that merged with or acquired technology, media, or telecommunications businesses saw their share prices plummet when the market reverted to earlier levels. The possibility that a company might pay too much when the market is inflated deserves serious consideration, because M&A activity seems to rise following periods of strong market performance. If (and when) prices are artificially high, large improvements are necessary to justify an acquisition, even when the target can be purchased at no premium to market value. Premiums for private deals tend to be smaller, although comprehensive evidence is difficult to collect because publicly available data are scarce. Private acquisitions often stem from the seller’s desire to get out rather than the buyer’s desire for a purchase.
Tuesday, June 29, 2010
iPhone 4 change the way of mobile commerce?!
Undeniably, iPhone changes the world. It heals the hearts of computer idiot. No kidding. It is really the value proposition of iPhone.
What brings along iPhone is a change of mobile usage habit and eventually an evolution of mobile commerce. What should we keep in mind? An article leads us the way.
Why iPhone 4 will change mobile commerce as we know it
Industry experts said that the new iPhone 4 is going to change the face of mobile commerce, and both brands and retailers need to adjust their strategies accordingly.
The technology behind the new device is based on the same operating system powering Apple’s iPad tablet, which has already reinvented the mobile commerce experience. With mobile commerce sales reaching $1.2 billion in 2009 and projected to almost double to $2.2 billion this year, retailers need to take advantage of the new iPhone and make their mobile experiences more gripping.
“There are two things that the iPhone 4 is going to do,” said Scott Dunlap, CEO of NearbyNow, Mountain View, CA. “First, this is an HD phone. The clarity of the screen, plus the ability to take high-resolution pictures and HD video, is going to raise the bar on the mobile visual experience.
“I think it is finally at a point that even the Rolexes and Tom Fords of the world will be pleased with how the quality of their products will be represented,” he said. “Second, the iAd network that comes with iOS 4 is about to change everything we know about mobile advertising, and in turn, mobile commerce.
“The ads themselves are as powerful as apps, and can be mini-networked games, video channels and location-based trivia contests. You could even make a purchase directly from an ad. It's the first mobile ad network to have both reach and rich ad units. Mobile banner ads will instantly become archaic, and all of us will have to rethink mobile engagement.”
HD display
Apple’s new Retina display is the highest resolution display ever built into a phone, resulting in super-crisp text, image and video.
In addition, iPhone 4 features a 5-megapixel camera with LED flash, HD video recording, Apple’s A4 processor, a 3-axis gyro and up to 40 percent longer talk time — in a beautiful all-new design of glass and stainless steel that is the thinnest smartphone in the world.
IPhone 4 comes with iOS 4, the newest version of what is undoubtedly world’s most advanced mobile operating system, which includes more than 100 new features and 1500 new APIs for developers.
Creating buzz
As we all know, Apple is a master at creating buzz around its new devices.
Walking by SoHo’s Apple store on June 24 was absolutely impossible. There was a huge mob of people waiting to get in to pick up their phones.
Apple reports that it received 600,000 pre-orders for the device on just the first day alone. That is 10-times more than it did on the first day the iPhone 3GS became available for pre-order.
The slogan that Apple is using for the iPhone 4 is, “This changes everything. Again.” Most industry executives agree, especially in the case of mobile commerce.
“It’s not only the device that will alter mobile commerce, it is the underlying iAd platform which allows for in-app purchasing,” said Neil Strother, Kirkland, WA-based practice director at ABI Research. “Assuming this process is as seamless as promised, and consumers can easily make purchases within apps, then this could be an important step forward for mcommerce.
“Given Apple’s ability to deliver a high-quality user experience and attention to detail, it’s a good bet this will work well,” he said. “It’s important to remember too that this purchase capability will extend to other devices running iOS 4, such as iPads and iPod touch devices.
“So, mcommerce should not only get a boost from users of the latest iPhone version, but also from users of these other devices as well.”
iPhone-driven improvements
Marci Troutman, founder/CEO of Siteminis, Atlanta, said that three quick iPhone-driven commerce improvements will be:
1. Better quality social media interactivity, which will improve ad marketing revenue
2. More sophisticated OS and screen resolution, which will improve the gaming and entertainment experiences, leading to more revenue through download and content purchases
3. More APIs and developer tools, which will improve quality and the number of new applications available for downloads creating revenue through the download and use of iAds through the applications
“Longer term impacts are OS speed, ability to multi-task, battery life improvement, camera quality and higher screen resolution will lead to faster emergence and adoption of technologies such as augmented reality, bar code scanning and near field communications - which all create revenue streams,” Ms. Troutman said.
“Of course, the caveat is that this is all for just iPhone users,” she said.
Apple’s iPhone OS 4’s new multitasking feature offers users a new way to quickly move between applications. It provides developers seven new services to easily add multitasking features to their applications as well.
New services include background audio, so applications such as Pandora can play music in the background.
Additionally, the VoIP service lets applications receive a VoIP call even when the iPhone is asleep or the user is running other applications.
Not everyone's impressed
Gary Schwartz, founder/CEO of Impact Mobile, New York, feels that Apple is too focused on applications and that mobile commerce growth is going to depend on more than just apps.
“The iOS 4 continues to focus on app domination,” Mr. Schwartz said. “IOS 4 offers app productivity features such as app multitasking, which allows for services to run in the background while the shopper navigate secondary apps. No surprise Apple’s focus is still on 200,000-plus apps which are, in great part, Apple’s marketing communications strategy.
“Other players in-market are focusing on the super-app, the mobile browser, which, with HTML5 allows for rich app-like functionality,” he said. “Steve Jobs talks about apps and the HTML5 browser as two separate platforms – Apple continues to focus all of its energy on apps and in-app iAds.
“Commerce enhancements such as iOS 4’s peer-to-peer app gifting is a self-serving feature. Ultimately, Apple will have to let go of this smorgasbord approach to the phone-top and focus on centralized browser functionality for mcommerce.”
Mr. Schwartz said that shoppers need a one-stop impulse click.
“The shopper needs integrated SMS activation and retention hooks,” he said. “Focusing on the browser with integrating location APIs and rich media caching will enable the browser to behave more like a downloaded app and drive more commerce adoption long-term.
“HTML5 will ultimately be the demise of the app as a mainstream commerce medium. Apple knows this and is reticent to push in-browser functionality which would cannibalize its app-dom.”
Not everyone agrees.
Bringin' sexy back
Just as brands and marketers flocked to the App Store for the iPhone and its successor, the iPhone 3GS, the same will hold true for the new iPhone 4.
Let’s face it. There is something sexy about an iPhone application. And as the iPhone gets smarter, the whole application concept becomes ever-more appealing.
Retailers and brands recognize this, as already mobile commerce giant eBay has revamped its iPhone application for the new iPhone 4.
With a new look and feel, the eBay application is even more compelling.
“Apple's first iPhone was revolutionary to the smartphone market, and as it continues to release more sophisticated and user-friendly devices, mobile commerce will become more and more a part of consumers' every day routines,” said Nick Taylor, president of Usablenet, New York.
From a retail perspective, the iPhone 4 is a new opportunity to increase sales.
The phone will fuel smartphone adoption, which will drive mobile commerce activity.
“The new iPhone 4 provides more fuel for consumer smartphone adoption, at a time when distribution rate growth is already more than impressive,” said Kevin Ranford, director of Web marketing at 1800Flowers, Carle Place, NY.
“The iPhone 4's functionality specifically favorable to mcommerce is the multi-tasking functionality so that shoppers can make a purchase while still engaged with another app, and the sharp Retina display making merchandise images pop,” he said.
What brings along iPhone is a change of mobile usage habit and eventually an evolution of mobile commerce. What should we keep in mind? An article leads us the way.
Why iPhone 4 will change mobile commerce as we know it
Industry experts said that the new iPhone 4 is going to change the face of mobile commerce, and both brands and retailers need to adjust their strategies accordingly.
The technology behind the new device is based on the same operating system powering Apple’s iPad tablet, which has already reinvented the mobile commerce experience. With mobile commerce sales reaching $1.2 billion in 2009 and projected to almost double to $2.2 billion this year, retailers need to take advantage of the new iPhone and make their mobile experiences more gripping.
“There are two things that the iPhone 4 is going to do,” said Scott Dunlap, CEO of NearbyNow, Mountain View, CA. “First, this is an HD phone. The clarity of the screen, plus the ability to take high-resolution pictures and HD video, is going to raise the bar on the mobile visual experience.
“I think it is finally at a point that even the Rolexes and Tom Fords of the world will be pleased with how the quality of their products will be represented,” he said. “Second, the iAd network that comes with iOS 4 is about to change everything we know about mobile advertising, and in turn, mobile commerce.
“The ads themselves are as powerful as apps, and can be mini-networked games, video channels and location-based trivia contests. You could even make a purchase directly from an ad. It's the first mobile ad network to have both reach and rich ad units. Mobile banner ads will instantly become archaic, and all of us will have to rethink mobile engagement.”
HD display
Apple’s new Retina display is the highest resolution display ever built into a phone, resulting in super-crisp text, image and video.
In addition, iPhone 4 features a 5-megapixel camera with LED flash, HD video recording, Apple’s A4 processor, a 3-axis gyro and up to 40 percent longer talk time — in a beautiful all-new design of glass and stainless steel that is the thinnest smartphone in the world.
IPhone 4 comes with iOS 4, the newest version of what is undoubtedly world’s most advanced mobile operating system, which includes more than 100 new features and 1500 new APIs for developers.
Creating buzz
As we all know, Apple is a master at creating buzz around its new devices.
Walking by SoHo’s Apple store on June 24 was absolutely impossible. There was a huge mob of people waiting to get in to pick up their phones.
Apple reports that it received 600,000 pre-orders for the device on just the first day alone. That is 10-times more than it did on the first day the iPhone 3GS became available for pre-order.
The slogan that Apple is using for the iPhone 4 is, “This changes everything. Again.” Most industry executives agree, especially in the case of mobile commerce.
“It’s not only the device that will alter mobile commerce, it is the underlying iAd platform which allows for in-app purchasing,” said Neil Strother, Kirkland, WA-based practice director at ABI Research. “Assuming this process is as seamless as promised, and consumers can easily make purchases within apps, then this could be an important step forward for mcommerce.
“Given Apple’s ability to deliver a high-quality user experience and attention to detail, it’s a good bet this will work well,” he said. “It’s important to remember too that this purchase capability will extend to other devices running iOS 4, such as iPads and iPod touch devices.
“So, mcommerce should not only get a boost from users of the latest iPhone version, but also from users of these other devices as well.”
iPhone-driven improvements
Marci Troutman, founder/CEO of Siteminis, Atlanta, said that three quick iPhone-driven commerce improvements will be:
1. Better quality social media interactivity, which will improve ad marketing revenue
2. More sophisticated OS and screen resolution, which will improve the gaming and entertainment experiences, leading to more revenue through download and content purchases
3. More APIs and developer tools, which will improve quality and the number of new applications available for downloads creating revenue through the download and use of iAds through the applications
“Longer term impacts are OS speed, ability to multi-task, battery life improvement, camera quality and higher screen resolution will lead to faster emergence and adoption of technologies such as augmented reality, bar code scanning and near field communications - which all create revenue streams,” Ms. Troutman said.
“Of course, the caveat is that this is all for just iPhone users,” she said.
Apple’s iPhone OS 4’s new multitasking feature offers users a new way to quickly move between applications. It provides developers seven new services to easily add multitasking features to their applications as well.
New services include background audio, so applications such as Pandora can play music in the background.
Additionally, the VoIP service lets applications receive a VoIP call even when the iPhone is asleep or the user is running other applications.
Not everyone's impressed
Gary Schwartz, founder/CEO of Impact Mobile, New York, feels that Apple is too focused on applications and that mobile commerce growth is going to depend on more than just apps.
“The iOS 4 continues to focus on app domination,” Mr. Schwartz said. “IOS 4 offers app productivity features such as app multitasking, which allows for services to run in the background while the shopper navigate secondary apps. No surprise Apple’s focus is still on 200,000-plus apps which are, in great part, Apple’s marketing communications strategy.
“Other players in-market are focusing on the super-app, the mobile browser, which, with HTML5 allows for rich app-like functionality,” he said. “Steve Jobs talks about apps and the HTML5 browser as two separate platforms – Apple continues to focus all of its energy on apps and in-app iAds.
“Commerce enhancements such as iOS 4’s peer-to-peer app gifting is a self-serving feature. Ultimately, Apple will have to let go of this smorgasbord approach to the phone-top and focus on centralized browser functionality for mcommerce.”
Mr. Schwartz said that shoppers need a one-stop impulse click.
“The shopper needs integrated SMS activation and retention hooks,” he said. “Focusing on the browser with integrating location APIs and rich media caching will enable the browser to behave more like a downloaded app and drive more commerce adoption long-term.
“HTML5 will ultimately be the demise of the app as a mainstream commerce medium. Apple knows this and is reticent to push in-browser functionality which would cannibalize its app-dom.”
Not everyone agrees.
Bringin' sexy back
Just as brands and marketers flocked to the App Store for the iPhone and its successor, the iPhone 3GS, the same will hold true for the new iPhone 4.
Let’s face it. There is something sexy about an iPhone application. And as the iPhone gets smarter, the whole application concept becomes ever-more appealing.
Retailers and brands recognize this, as already mobile commerce giant eBay has revamped its iPhone application for the new iPhone 4.
With a new look and feel, the eBay application is even more compelling.
“Apple's first iPhone was revolutionary to the smartphone market, and as it continues to release more sophisticated and user-friendly devices, mobile commerce will become more and more a part of consumers' every day routines,” said Nick Taylor, president of Usablenet, New York.
From a retail perspective, the iPhone 4 is a new opportunity to increase sales.
The phone will fuel smartphone adoption, which will drive mobile commerce activity.
“The new iPhone 4 provides more fuel for consumer smartphone adoption, at a time when distribution rate growth is already more than impressive,” said Kevin Ranford, director of Web marketing at 1800Flowers, Carle Place, NY.
“The iPhone 4's functionality specifically favorable to mcommerce is the multi-tasking functionality so that shoppers can make a purchase while still engaged with another app, and the sharp Retina display making merchandise images pop,” he said.
Sunday, June 20, 2010
收購合併好事嗎?
早前，為一間國際級機構香港及大中華區寫稿，跟多位香港區的高級見面詳談，由榮譽主席到分區經理皆有心人，希望可以保著公司的核心價值，不要被收購後遭受淹沒。各人說話裡，總帶點苦澀味，怕往後日子不好過。
說真的，我身同感受。因為我曾經在香港電訊工作，經歷香港歷史上最失敗的收購合併事件，最終成為電訊盈科人，受盡人家白眼。公司進入毫無管治的年代，自己以「落荒而逃」的敗局終結。
M&A，在我的經驗上，只有失敗的味道！史上，亦有很多很多M&A失敗的個案，為何還要做呢？
理論上，M&A有五大訴求：
1. improving the performance of the target company; 提高目標公司的效能
2. removing excess capacity from an industry; 從一個產業去除多餘的容量
3. creating market access for products; 為產品打開市場
4. acquiring skills or technologies more quickly or at lower cost than they could be built in-house; 更快速地或以較內部低的成本掌握技能或技術
5. picking winners early and helping them develop their businesses; 預早挑選優勝者和幫助他們發展業務
原來，回望前塵，當年電訊盈科的收購合併，並未符合任何一個法則，難怪全都失敗。
說真的，我身同感受。因為我曾經在香港電訊工作，經歷香港歷史上最失敗的收購合併事件，最終成為電訊盈科人，受盡人家白眼。公司進入毫無管治的年代，自己以「落荒而逃」的敗局終結。
M&A，在我的經驗上，只有失敗的味道！史上，亦有很多很多M&A失敗的個案，為何還要做呢？
理論上，M&A有五大訴求：
1. improving the performance of the target company; 提高目標公司的效能
2. removing excess capacity from an industry; 從一個產業去除多餘的容量
3. creating market access for products; 為產品打開市場
4. acquiring skills or technologies more quickly or at lower cost than they could be built in-house; 更快速地或以較內部低的成本掌握技能或技術
5. picking winners early and helping them develop their businesses; 預早挑選優勝者和幫助他們發展業務
原來，回望前塵，當年電訊盈科的收購合併，並未符合任何一個法則，難怪全都失敗。
Subscribe to:
Posts (Atom)