Xioami

Start with the needs of the end user, and work back from there…

ianwaring Amazon, Future Trends, Internet, Management, Mobiles, Politicians, Samsung, Software, Xioami Leave a comment

Great Customer Service

A bit of a random day. I learnt something about the scale of construction taking place in China; not just the factoid that they’re building 70 airports at the moment, but a much more stunning one. That, in the last 3 years, the Chinese have used more cement than the USA did in the 100 years between 1900 and 2000. The very time when all the Interstate and Road networks were built, in addition to construction in virtually every major city.

5 of the top 10 mobile phone vendors are Chinese (it’s not just an Apple vs Samsung battle now), and one appears to be breaking from the pack in emerging markets – Xiaomi (pronounced show – as in shower – and me). Their business model is to offer Apple-class high end phones at around cost, target them at 18-30 year “fans” in direct sales (normally flash sales after a several 100,000 unit production run), and to make money from ROM customisations and add-on cloud services. I’ve started hearing discussions with Silicon Valley based market watchers who are starting to cite Xiaomi’s presence in their analyses, not least as in China, they are taking market share from Samsung – the first alternative Android vendor to consistently do so. I know their handsets, and their new tablet, do look very nice and very cost effective.

That apart, I have tonight read a fantastic blog post from Neelie Kroes, Vice President of the European Commission and responsible for the Digital Agenda for Europe – talking specifically about Uber and this weeks strikes by Taxi drivers in major cities across Europe. Well worth a read in full here.

Summarised:

  • Let me respond to the news of widespread strikes and numerous attempts to limit or ban taxi app services across Europe. The debate about taxi apps is really a debate about the wider sharing economy.
  • It is right that we feel sympathy for people who face big changes in their lives.
  • Whether it is about cabs, accommodation, music, flights, the news or whatever.  The fact is that digital technology is changing many aspects of our lives. We cannot address these challenges by ignoring them, by going on strike, or by trying to ban these innovations out of existence
  • a strike won’t work: rather than “downing tools” what we need is a real dialogue
  • We also need services that are designed around consumers.
  • People in the sharing economy like drivers, accommodation hosts, equipment owners and artisans – these people all need to pay their taxes and play by the rules.  And it’s the job of national and local authorities to make sure that happens.
  • But the rest of us cannot hide in a cave. 
  • Taxis can take advantage of these new innovations in ways consumers like – they can arrive more quickly, they could serve big events better, there could be more of them, their working hours could be more flexible and suited to driver needs – and apps can help achieve that.
  • More generally, the job of the law is not to lie to you and tell you that everything will always be comfortable or that tomorrow will be the same as today.  It won’t. Not only that, it will be worse for you and your children if we pretend we don’t have to change. If we don’t think together about how to benefit from these changes and these new technologies, we will all suffer.
  • If I have learnt anything from the recent European elections it is that we get nowhere in Europe by running away from hard truths. It’s time to face facts:  digital innovations like taxi apps are here to stay. We need to work with them not against them.

It is absolutely refreshing to have elected representatives working for us all and who “get it”. Focus on consumers, being respectful of those afflicted by changes, but driving for the collective common good that Digital innovations provide to society. Kudos to Neelie Kroes; a focus on users, not entrenched producers – a stance i’ve only really heard with absolute clarity before from Jeff Bezos, CEO of Amazon. It does really work.

 

Further Insights – Apple/Beats and the Anaemic Twitter

ianwaring Apple, Software, Twitter, VCs, Xioami Leave a comment

Jimmy Iovine Interiew - AllThingsD

A bit of a slow day today – i’m doing my Amazon Web Services Accreditations and it appears to be a slow news day at the same time.

There was neat video cited by Benedict Evans Weekly Email where Jimmy Iovine, one of the two co-founders of Beats, was interviewed at a recent AllThingsDigital conference. Full 41 minute video here. Having listened to it yesterday, I think i’ve changed my mind – and that Beats is probably not the wholesale Xioami-type younger persons brand for Apple. Instead, it sounds like the real benefit is a redesign of Apple’s relatively unsuccessful “iTunes Match” and a re-implementation of the “iTunes Genius” recommendation engine. The Beats folks are curating their own “what track should we play next” capability with over 100 professional record industry mix specialists, and then trying to bolt on some behaviours that a machine-generated recommendation engine can follow.

On a completely different tack, I think Twitter’s lack of user growth is certainly below what most commentators appear to thing as possible (with a base of 200 million Monthly Active Users – compared to Facebooks 1.2 Billion equivalent). That said, there was a comment I saw berating people for being so hard on them.

The central argument is that only 60 million of the 200 million logged in Monthly Active Users post any tweets at all. There was a three year old comment from VC Fred Wilson (full text here) I saw that suggested this was actually a terrific achievement, and that most media production has far less user content shared. Fred (who was an early stage investor in the company) said:

Let’s remember one of the cardinal rules of social media. Out of 100 people, 1% will create the content, 10% will curate the content, and the other 90% will simply consume it. That plays out on this blog, that plays out in Twitter, and that plays out in most of the services we are invested in.

Twitter has 400mm active users a month, 100mm of them are engaged enough to log in, but only 60mm tweet. For years people have made it out like this is a bad thing. It’s not a bad thing. It is an amazing thing. Let people use the service the way they want and you’ll get more users. Logged out users are users just like logged in users. We should focus more on them, build services for them, and treat them like users, not second class citizens.

That said,  a few people are starting to complain about Marc Andreessen’s bombs of successive numbered tweets – the very thing i’ve said (with supporting dialogue from other participants) were really gold. The main complaint given (full article here) was the way they mess up the twitter streams of people who aren’t as fascinated as I am by the content of the discussion to-and-fro’s. I just wish there was a way to bottle these things – and i’m sure they will in time. Whether it’s in Twitter or with a different service. But that’s for another day.

In the meantime, back to my AWS certifications.

Apple buying Beats; one idea everyone appears to be missing

ianwaring Android, Apple, Future Trends, Xioami Leave a comment

Beats by Dre Logo

There’s been a lot of commentary on blogs and podcasts following the apparent strong rumour that Apple are paying over $3 Billion to buy the Beats by Dr Dre headphone business and associated music streaming service. Most of it very bemused as to why Apple would want to do this. Thinking about it, I have my own theory, though i’d be first to admit I may be way out.

In trying to deduce a theory, a few characteristics of the position Apple find themselves in today:

  • Worldwide, they have circa 70% of all handset makers profits.
  • In every market they enter, they displace the previous market leading high end Android competitors, and relentlessly ratchet up their market share (currently 20% in most established geographies)
  • They are parked in the premium, highest price volume segment everywhere they serve
  • In developing markets, a lot of their initial adoption comes from users buying previous model second hand or refurbished handsets.
  • The latest 5c model was parked a bit too close to the 5S, making it a decoy price in both contract and prepay markets. Colour did not lead an appeal to a younger demographic as was originally expected.
  • Carriers (with the exception of Japan) tend to sell a handset on a cost recovery basis, either upfront (for PAYG) or as part of a 2 year term (Contract)
  • Users change their handsets about once every two years
  • There is a burgeoning market for the collection, disposal and/or resale of old iPhones
  • Historically, the strongest competitor has been Samsung. However, upstarts like Xioami are taking share from Samsung in China, and showing signs of doing that elsewhere as they sell into more territories. Xioami’s target demographic is 20-30 year old, first time purchasers since leaving the parental nest; high quality product, thin margins, but supplemented by useful, high quality and paid online services
  • Smartphone growth has started to stall, where the growing segments are either at the bottom (feature phone replacement or first step onto the ladder) or in the midrange (circa $300)

So, if I was Apple, what would I do in order to preserve the current high end volumes and profit margins, but dip down into growth segments? I think my strategy would be:

  1. In the car markets of the USA, Toyota sell Lexus at the premium end of the market, and Scion to the young, first time buyer demographics. Mindful there is also Honda/Acura and Nissan/Infiniti with similar volume/premium brands. Beats becomes Apple’s brand for the Xioami (20-30 year old) demographic; past that, many will hop onto the Apple brand as they age (or become wealthier).
  2. Apple formalise the bundling of a replacement handset and associated online services into a perpetual $15-ish scale monthly subscription. New replacement requires return of old handset, which Apple can continue to use in emergent markets; by doing so, they garner more wallet share. Telco services become relatively unbundled commodities.

I think that would give them high growth, more people in their 100’s of millions entering the Apple ecosystem, and without affecting the current iPhone business dynamics at all.

So, what do you think? It’ll be interesting to see how this pans out in the coming months.