Friday, October 18, 2013

Disruptive Technologies: Mobiles Vs The Rest

Now, I just wrote about how mobiles could kill the watch brands. With Samsung Galaxy Gear, the battle for the wrist is official. If Apple gets in, it will be more interesting. If this was not enough, Adidas has launched a smart watch while Nike already has one.

Now the other day, I was watching TV and saw Priyanka Chopra, the former Miss World, movie star and a favorite for brands in India, promoting two different brands with conflicting interests. In one ad, she is promoting Nikon. In the other, she speaks of Nokia as a listening brand and how the camera in Lumia allows one to take pictures in the low light.

Strange isn't it? Or at least that is what I thought. I posted my opinion about this conflict on my Facebook status. Interestingly, few friends felt that Priyanka was not professional. But that was not the point. She is quite fine in pocketing the money offered by the brands. It should have been the brands' responsibility to ensure that there are no conflict of interest.

Conflict of interest?

On the Facebook status, some felt that there was no conflict of interest. They said one was a mobile phone that has a good camera and the other was a camera brand. Why am I seeing a conflict? Because I saw a sign of disruption. How? First Canon, then Olympus and Fuji exited the low-end camera business.

So, Nokia Lumia 1020 will come with a 41 mega pixel camera. How long before the mobile industry brings cameras that are more sophisticated and capable? Now that is disruption for you. Like classic example of computers replacing typewriters. Emails and electronic transfers have hit the humble neighborhood post office. Telegraph is already history.

As I had said, if Gear and similar devices make watches irrelevant, then there is every possibility that Cameras will also be eaten by mobiles. Going by the looks of it, in future, any device that doesn't multitask is likely to face a death. So, TV can no more be TV, it has to be smart. Gaming Console is not just gaming console, they have to help us watch movies, organize our pictures and listen to music. Watch is not a time observing device, it has to help us read messages, take calls, shoot pictures. Or as Nike and Adidas want it, be our health monitoring device.

While it seems easier for technology companies to diversify, would it be possible for traditional one-category brands to diversify into the technology sphere and stay relevant. Say, would Swatch and Titan start making watches that can be a smartphone? They currently rule the wrists but will it be easier to transform themselves into a technology brands? Will Canon start making phones with much better camera than Samsung or Nokia?

Let me take the risk of predicting the future, here. I think it will be the technology brands that will win the battle. Why? It is the world of Digital Natives who are exposed to technology brands from very early on. Once they grow and find their beloved brands offer more, they are more likely to continue patronizing them. On the other hand, Watch or Cameras come later. Think about it. Children start taking pictures using mobiles and pads much before they are handed over a camera.

The era of technology brands is ushering in, I suppose. Time for other brands to watch out and take steps to evolve and protect their territories.

Oh, by the way, did you read about Google's self-driving cars

Tuesday, October 15, 2013

Samsung Gear: Doomsday for Watch Brands?

Now I know how the Samsung Gear works.

Internet and Computing technology have brought many disruptive changes and transformed the way we live. Older technologies for which Digital Immigrants have nostalgic feelings are unknown to Digital Natives. Existing technologies are made obsolete while the new ones itself become irrelevant in a short period. So when Gear was launched, I wondered if we will witness any disruption?

Will Swatch, Rado, Rolex, Seiko, Citizen, Titan et al become obsolete? Or like how mobile phones have pushed Canon to exit the low end camera business, will watch brands be relevant only for a niche segment? Or will  it be the Gear and its likes become niche?

1. Watch is not a time machine: One thing that goes for the watch brand is that the device is not a functional piece that adorns our wrists. It is a symbol of status. Will mobile brands be able to crack that grip?

2. We have but one wrist: I know we have two wrists but watch goes to only one wrist. If the Gear and Watch have to co-exist, will we start wearing a device in each of our wrists? Will watch lose the race to Gear or will it maintain the hold on its citadel?

3. Gear is no replacement for a phone: If you have seen the video, you must have figured that the Gear doesn't do away with the actual phone. You still need the Note. If I can say, Gear is an extension of phone. Of course, Gear can exist on its own but it will be limited. So you will need to have two devices. I am already thinking of cost.

4. What does Gear offer?: Does Gear have anything substantial to offer? Does it solve any problem for us? Or does it make life easier for us? I believe that the Gear is largely for the Gatekeepers. Will it cross over to the main market, I am not sure.

But if the Gear does win the battle for our wrists, God save the Watch brands!

Imagine after 20 years, when the then Digital Natives look at a piece of today's watch in a museum, they will chuckle and wonder how the Digital Immigrants (that is today's Digital Natives) ever lived without a Gear! Will this happen? Only time will tell. 

Saturday, October 12, 2013

Micromax, the true Indian branding success

I usually don’t read Annual Reports that are mailed systematically by the Company Secretaries of the organizations whose shares I have bought. More so if it is AGM address.

But for a change when the AGM address of ITC Chairman YC Deveshwar landed into my inbox recently, I felt like reading it. Maybe because the ITC shares have given me good returns and also the fact that ITC is a great case study of how the group has reinvented itself from being a predominantly Tobacco major into a well-diversified conglomerate. It is also probably the best example for a professionally managed business amidst the predominantly family owned businesses in India.

Mr. Deveshwar's address is very interesting and informative. I specifically like the part on THE INDIAN GLOBAL MARKET: DOMINANCE OF FOREIGN BRANDS. He quotes The ET Intelligence Group report - "...royalty payments by Indian arms of top MNCs have trebled over the past 5 years. The report points out that in FY12, 306 listed companies paid royalty and technical fees aggregating almost Rs 35,000 crores.” Further, a similar analysis by Business Standard of 75 BSE500 companies reveals that these firms paid out royalty equivalent to 32% of their net profits in FY12. This sudden surge he notes is after the removal of ceiling on royalty payments in 2009.

He also quotes media reports that this spurt in payments did not reflect any noteworthy value-addition from technology transfer by the foreign entities. These media articles also expressed concern at the adverse impact of this huge outflow on minority shareholders and on the exchequer.

Look around, one can easily find this dominance in our lives. Almost all the products that Indians consume are foreign brands. But then as Mr. Deveshwar says there are not many Indian success stories. He has listed few in that address. 

What probably he missed is Micromax! The great Indian mobile brand. A brand that has managed to make a mark for itself in a space that is dominated by the Korean Chaebol. 

And I must say in its fight Micromax had to face not only the competition but also the Indian mindset! 

Indian mindset: I am not sure what it is because of but Indians probably don't trust Indian brands. Maybe Indian brands actually do not deliver or as it is said we have a colonial mindset. For us, anything foreign is superior. Couple of years back when Apple was yet to revolutionize the smartphone market, it was the world of feature phones. When I bought one of those feature phones, a colleague exclaimed - Micromax! Yes, it was that degrading tone. Things have changed since then and Micromax seems to be fast catching up with Samsung. But has our mindset changed, I can’t be too sure.

Yes, it's a Me Too: Yes, but in many ways Samsung, LG or any brand is also a Me Too. The advantage of Android ecosystem is so, it provides opportunities for many. Everyone assembles!  

Branding, the game changer: In addition to lacking the drive to innovate, the Indian brands are also not very successful in branding. Thankfully, Micromax has been very savvy. In addition, Micromax products are attractively priced. 

Just like Galaxy, Optimus and Lumia, Micromax has managed to draw its own Canvas. 

The good news is that Micromax is not alone. Recently when I was planning to buy a phone and sought advice from some of my friends. They not only suggested Micromax but also spoke very highly of Karbonn and Xolo. Heartening! Couple years back, many Indians would not have considered them a great choice. 

As a person who has used Micromax product, I urge my fellow brethren to take pride in our local Indian brand. Not just because they are Indian but because these products 

  1. Look as great as any other
  2. Perform as great if not greater than others 
  3. Come at price points which are very attractive 
Unless you want to sponsor the royalty payments that Mr. Deveshwar's address talks about. 

But why only mobile phones, I think there are great Indian brands in almost all the categories. Take Dabur Red for example. Why not Bovonto or Kalimark! And why not Poomer

Go Indian!