I’ve long argued that what NZ lacked wasn’t fast broadband to the home, farm or small town. If those communities want it, let them pay for it themselves (perhaps through a locally subsidised utility since it isn’t economic outside the CBDs and central suburbs of NZ’s significant cities). What we do need as a nation is superfast, attractively-priced telecommunications pipes between our major centres and the rest of the world.
It’s that need Pacific Fibre plans to address. At this stage, all they really have is an idea and an intention, so activity is focused on planning, partnering and funding:
The group is looking to secure funding and build a 5.12 Terabits/sec capacity fibre cable to be ready in 2013 connecting Australia, New Zealand and the USA – the initial proposal is a cable which will deliver five times the capacity of the existing Southern Cross system.
I’m told by chums in the broadband business that Southern Cross has plenty of capacity available now and in future, through relatively straightforward upgrades, but maximises its profits through high pricing, which discourages heavy broadband users such as film or online services being based in NZ. Pacific Fibre may simply be a PR pressure play against a de facto monopoly, but so far it looks real enough. I do hope that a viable alternative can get traction. Competition is always better than an unregulated monopoly - not just for price but also for quality, service and, when things go badly wrong, for back-up.
So, Rod & Co., I’m keen. Call me.
Disclosure: My family trust has been a long-time shareholder in Telecom, part-owner of Southern Cross. However, the trust’s investment manager has sold out now.
Update: Lance Wiggs has posted some technical details on the PF website.
Click Suite is looking for a senior .Net developer to take a leading role in an online marketplace project. Very exciting. Pass it on if you know someone very good.
You’ve got just two weeks left to enter the 2010 New Zealand Hi-Tech Awards. Even if you’re not an entrant, reward and encourage your team by booking a table at the Awards Dinner - it’s a great party (in Auckland this year on 7 May).
Once again, I’m a judge; it’s always inspiring to read the entries and interview the finalists. This year’s categories are:
PricewaterhouseCoopers Hi-Tech Company of the Year
NZX Emerging Hi-Tech Company of the Year
HiFx Innovative Service Product of the Year
Duncan Cotterill Innovative Software Product of the Year
Dell Innovative Hardware Product of the Year
International Business Wales Hi-Tech Exporter of the Year
Paul Quickenden sent me a link to a fascinating analysis of Google’s “cheaper than free” strategy, sharing its advertising revenue with companies (including telcos) building products using Google’s various tools and services. (This approach may also resolve the content vs search revenue debate, as well). In effect, through Google search, maps, the Android phone system and Chrome operating systems, not to mention the growing richness of Google’s mail, calendar, office applications. Google sites, etc., etc., etc., why would anyone build their products and services using Microsoft et al, for which they have to pay?
Naysayers of these assertions will likely have the same retort – quality is key. They will argue that Google’s turn-by-turn apps are inferior to their well honed market leading products. With regard to Android, Google will lack the user interface or embedded software expertise necessary and will deliver a subpar product. Plus, because the Android OS will be so splintered, QA testing will be difficult and incompatibility issues will abound. In the short run, these issues will exist.
Despite these challenges, it would be a dangerous strategy for any of the many threatened players in these markets to hang on to this “quality” rationalization for very long. First, Google’s products will get better over time. The sheer volume of the Android phones in the market will give them new data feeds to complement their own mapping effort. Also, they can create UGC hooks for users to embellish their own maps (like in Google Earth), offering themselves further differentiation. With regard to Android, version 3 will be better than version 2 will be better than version 1. Microsoft knows this game well.
Another perhaps even more important factor is that when a product is completely free, consumer expectations are low and consumer patience is high. Customers seem to really like free as a price point. I suspect they will love “less than free.”
I suggest you read the whole article before bursting into comment mode. This isn’t so much about the changes for the end-user. This is more about the impact on makers and purveyors of products and services, and the platforms upon which those products and services are built. Google’s growing dominance will make Microsoft’s near-monopoly look trivial. I can hear the anti-trust lawyers sharpening their knives already.
PS. MS still has very powerful offerings in other areas (eg. .Net), not to mention huge familiarity and comfort within its installed customer base, so don’t write it off yet.
Disclosure: My family trust owns Google and Microsoft shares.
I was an early investor in Surveylab, which makes the ikeGPS range of professional hand-held data-capture devices. Their point of difference is that they capture the image and location of an object from a distance, unlike most GPS devices which only tell you where you are. Applications are manifold, in network industries like electricity and telecommunications, in environmental agencies like the US Parks Services, and in military applications such as UN post-war reconstruction. Sales are primarily B2B, either direct or via their major distribution partner in the US. Founder Leon Toorenburg is looking for someone to take on the global marketing role, with a particular emphasis on internet-enabled sales. The business is VC-funded, with another funding round being completed as I write. So if you or someone you know is interested in the job, take at look at the ad on Seek or TradeMe.
Mainstream telecommunications companies needs brands that relate to people as individuals; literally, everyone is a potential customer in their own right, even when they’re acting on behalf of their employer. New Zealand’s largest telco recently changed its very corporate look to this sketched asterisk logo and colour palette. I like it; it’s simple, light and human. Corporate rebadging always attracts critics complaining of waste, insincerity, “a child could have done better”, and so on. Rebadging is also a heaven-sent opportunity for those who hate a particular organisation (or large corporations in general) to replay all their historical grievances. Sometimes they’re justified, sometimes they’re not. However, I’m not commenting today on Telecom in general. I just think their rebadging is a good decision, and I look forward to seeing if and how they apply this lighter personality throughout their business.
I was at a breakfast function this morning to witness the induction into the NZ Hi-Tech Industry Hall of Fame (aka. The Flying Kiwis) of two of this country’s leading technology entrepreneurs - Rod Drury (whom I first knew 20 years ago as a junior consultant who could build clever spreadsheets) and Selwyn Pellett, (whom I first met 12 years ago when he sold us some components). Both thoroughly deserve their admission to the Hall of Fame. There’ll no doubt be plenty elsewhere on their careers, but it was interesting to hear them talk about dark moments. Rod was fortunate in not having any serious business disasters, but acknowledged the terrible loneliness of being away from home for long periods, staying in yet another hotel. Anyone who thinks business travel is glamorous clearly doesn’t do it much! Selwyn talked about launching his company on the London AIM share-market when there was an unexpected last-minute problem; the gap between what the new investors would pay and what the existing shareholders would accept had suddenly widened to what seemed like an unbridgeable gulf. It looked like the listing would be cancelled and with it all the plans which depended on the new capital. Fortunately a deal was done and the listing went ahead, albeit a day late.
I remember a particularly dark moment at Deltec. The global market for cellular network antennas had virtually dried up very suddenly. I’m talking about a 90% drop in the space of a month. Fortunately we’d built up a cash reserve and rode it out for a while, but after the 3rd straight month of no orders, we held a secret board meeting off-site in a private room at the Wellington Club. We’d asked the receivership partners at PwC to come in later and advise us on the actions we were taking as directors, since we didn’t want to be personally sued for trading while insolvent. After an hour of doom, gloom and tough decision-making, one of the independent directors suddenly said “**** this! It’s my 60th birthday today and we’re going to celebrate!“ He ordered champagne for us, served just as the the PwC receivership guys walked in. The look on their faces was priceless; a brilliantly funny moment in an otherwise awful day. On the positive side, PwC told us we were doing all the right things, and we survived the downturn, which was (inevitably) followed by a boom.
You rarely hear about the dark moments, but for most entrepreneurs and business owners, dark moments come along more often than most other people realise.
Know anyone who wants to play a big role in a new web business in Wellington, NZ? Get them to look at this. Some people I know are planning to build an international business-to-business on-line marketplace for clients and providers of a specialist business service. I’ve had a look at what they’re planning and it’s very promising; probably the best web business idea I’ve seen recently (locally). The market is truly international in scale and scope. However, while these guys really know their services market, they freely admit they know little about building and operating an on-line marketplace. They’re looking for 3 key people to join them in the start-up team:
The CEO: someone who knows how to build a web business, build and lead the team and operational processes, drive the strategy and international marketing push. Excellent English language written and spoken communication skills. Proficiency in another major European or Asian language would be useful, but not essential.
Head of development: Leadership experience in Agile web-business application development. Knowledge of on-line payments, cloud-based infrastructure, etc.. Good understanding of customer-centred product management and design.
The business could also use the occasional services of someone who understands (at a business level) cross-border payments; maybe consult, maybe part-time, maybe advisory board.
So if you, or someone you know, want to put yourself on the line with all the challenges and potential rewards of a start-up business, please email me with a short pitch on what you have to offer. Those wanting a big salary, fancy offices, hordes of staff, regular hours and business class travel should not apply!
PS: Thanks in advance for any links from bloggers and twitterers.
Postscript: My graphic seems to have caught people’s attention. In technology businesses, I often joke that the best way to get the sales team’s focus onto a product is to not release it for ages, and then immediately withdraw it!
Further to my last post on the limitations on what governments can do to promote economic development, for those that want to read some arguments from “the other side”, there’s a major debate going on at the Harvard Business Review Voices blog, following an HBR article “Restoring American Competitiveness,” by Gary P. Pisano and Willy C. Shih, who argue that outsourcing has undermined that country’s high tech sector. Here’s a list of posts to date:
“There is a tendency to write-off the UK software industry because most of the familiar software companies are in the US. That would be a big mistake… organic and inorganic growth has resulted in the top 50 UK headquartered software companies growing c20% in the last year. Perhaps even more surprising, to an ever sceptical British audience, is the c70% of revenues that the UK software industry earns abroad. Indeed, the UK is not that far off earning as much from overseas markets as we buy in. Currently £4.6b plays £5.6b with the gap narrowing each year.”
“The problem for the UK software industry has never been the quality of its people or its innovation,” TechMarketView chairman Richard Holway said, instead blaming other factors holding the UK industry back:
Lack of available financial backing: In comparison to the US, it is much more difficult for UK software developers to gain access to venture capital funding.
Lack of marketing expertise: Many of the UK’s best developers simply fail in explaining how great their product is to investors and to the market.
Local not Global: Many of the UK’s software companies focus mainly (if not solely) on products geared to the UK market.
Lack of ambition: Many UK software companies are run as ‘lifestyle’ businesses. Very few UK software entrepreneurs seem prepared to risk the Merc for the seemingly scant possibility to become a global player.
Lack of management skills: Growing from a small enterprise to medium-sized is hard enough - but not a fraction as hard as that required to grow to be large. Few founders are up to running large, global organisations; even fewer are prepared to step aside!
Easily pleased: UK software companies have a long history of being other nations’ ‘acquisition fodder’. Founders seem to want to ‘take the money and run’ rather than take the risk of growing to something larger.
New Zealand (and Australian) industry observers will find the list very familiar, except perhaps for one thing. When you’ve only got 4 million people in your home market, international ambitions are needed pretty much from the beginning, adding the complexities, risks and costs of heading overseas while still very small, unsophisticated, and fragile. Given that struggle, it’s no wonder that many are satisfied once they’ve got “the boat, the bach, and the beamer.”
Guns don’t kill people; the people who fire them do. The same is true for Microsoft’s ubiquitous presentation software. PowerPoint is actually a very good tool; but lethal in the hands of bad presenters. PowerPoint didn’t make them bad presenters. They’d have found another weapon to kill their audience. Do you remember those 35mm slide carousels, the flight bags full of overhead slides, and the stacks of flip-charts. I remember a university lecturer we called “Scribbler”; in a one hour lecture, he’d get through a roll of acetate on his overhead projector, writing constantly, reading out what he was writing, eyes glued to the foil and never once engaging with his audience.
The BBC has noted that PowerPoint is 25 years old. PowerPoint doesn’t deserve the opprobrium it receives. It has deserved its 25 years of successful sales.
Poor presenters? Just take them outside and shoot them.
Technology trends researcher Gartner has published its 2009 Hype Cycle Report. This attempts to place technology developments onto what it calls the “Hype Cycle”, a wavelike progression over expectations over time:
Technology trigger
Peak of inflated expectations
Trough of disillusionment
Slope of enlightenment
Plateau of productivity
Here are some of Gartner’s views on four “hot” technologies at the “peak of inflated expectations”
Cloud Computing. … The levels of hype around cloud computing in the IT industry are deafening, with every vendor expounding its cloud strategy and variations, such as private cloud computing and hybrid approaches, compounding the hype.
E-Book Readers. … the devices still suffer from proprietary file formats and digital rights management technologies, which along with price, are limiting their adoption and will drive them into the Trough of Disillusionment.
Social Software Suites. … Within businesses, there is strong and rapidly growing evidence of experimentation and early production deployments… Disillusionment is … based on the realization that … much work must be done to build an effective social software deployment.
Microblogging. … Twitter … exploded in popularity … inevitable disillusionment around “channel pollution” is beginning. As microblogging becomes a standard feature …, it is earning its place alongside other channels (for example, e-mail, blogging and wikis), enabling new kinds of fast, witty, easy-to-assimilate exchanges.
Meanwhile, RFID (wireless product tagging) is at the bottom of the “trough of disillusionment”, and mobile payments technology is just emerging from it to begin climbing the “slope of enlightenment”.
Tom Forenski at ZDNet writes that “the internet devalues everything it touches“. He uses online business applications, outsourced call centres, and online shopping as examples of how costs have come down for vendors and their customers. To label that as “devaluation” is a strange way of describing what has happened. While in one economic meaning he may be right, ie. the unit price has come down, the value of a good or service to a customer (ie. its utility or benefits) doesn’t decrease when it is delivered via the internet. On the contrary, its value may well have increased, through greater convenience, speed, and so on. Or it may have become more affordable and accessible to new customers. Likewise for a supplier. I’ve never met someone in business who thought that increasing efficiency, effectiveness, customer utility or market reach for lower cost doesn’t enhance or at least maintain shareholder value. While unit revenue may come down, competitiveness may have been enhanced.
Lean manufacturing created much greater value for customers and shareholders (or at least those whose companies who adopted it). The lean business processes made possible by the internet do the same.
I was sorry to hear that listed NZ technology business Provenco Cadmus has called in the receivers. On a positive note, the receivers think that the underlying operating businesses (none of which are in receivership) can keep going under new or restructured ownership.
By sheer chance, after Peter Maire sold Navman and we’d sold Deltec, he and I found ourselves both at the same time getting excited about the payments industry. My move was to support the creation of Fronde Anywhere (mobile banking, ID authentication and payments). Peter had a much bigger game to play, building stakes in two major NZ payment hardware businesses and promoting their consolidation to create a globally competitive firm. Timing was an issue - the merger took far too long to win approval, and then the global banking system went into meltdown. Peter’s naturally disappointed about how it’s all turned out; presumably his 6% stake is not worth much now. But life goes on.
“I’ll be helping out the receiver any way I can. It’s still a good business, and I expect there will be a lot of interested parties. Then I’ll be moving on. There’s never a shortage of things to turn my time to.”
That’s the thing. As Fred Astaire and Ginger Rogers sang, “Pick yourself up, dust yourself off, start all over again“.
I was pleasantly surprised when I tried Microsoft’s Bing internet search engine. It did a far better job of finding information on products and suppliers than Google; I usually got what I wanted on the first page at the first attempt, without complex search criteria. At last Google may have a serious contender - not for general search, but for advertising dollars. If Bing delivers more actual buyers than Google, a large part of that vast advertising revenue will shift to the more effective channel. Eyeballs don’t count. Sales do.
Now comes news that Microsoft has done a deal with Yahoo, effectively taking over Yahoo’s search business, gaining access to Yahoo’s sales force and user base. That will really speed up Bing’s market penetration - reaching many more advertisers and potential buyers much faster than MS could achieve on its own. I’m impressed. (Update: Most commentators are bemused or negative. I’m sticking to my view that MS has pulled off a smart move here).
Of course, Google won’t stand idly by and let that happen without a fight.
And I couldn’t resist the urge to make a lame reference to Bing Crosby.
Disclosure: My family trust has investments in Microsoft and Google.
Why do business buyers keep confusing cheapness with value? Time and again I’ve seen the best vendors lose on price because the buyer could “get it much cheaper elsewhere”. The classic example is professional services charged by the hour. Any good manager of people knows that you pay your better staff more because they are more than worth it to you. For example, a good IT designer/developer will work out many times cheaper in the long run. They understand the business need quicker, design quicker, design better, write code quicker, write better code with faster performance and fewer bugs, and their software is cheaper to maintain. That can equate to a 10-30 fold lifetime cost difference - the saving more than outweighing any hourly rate difference. And that’s before you factor in the risk of non-delivery - much lower with better suppliers.
But many business buyers persist in penny-wise, pound-foolish buying practices. I have interests in several firms who sell products and services to other businesses, and my attitude is clear. I put a lot of emphasis on getting the price/value/cost proposition right, but if I can’t persuade you of the value for our prices, I’ll walk away before discounting. I’m not in business to subsidise anyone else’s business.
I have also big interests these days as a board member. I often see proposals brought to me for approval by a buyer proudly telling me that they’ve got the lowest input costs. All too often, I send them away to redo the basis of purchase and decision. Get me the best price and the best people to deliver the outcome, not just the lowest cost of the inputs. If it has to be input-based, hire the best you can (while avoiding bloated suppliers and being sensible on price). It may cost more theoretically on paper, but I’ve rarely seen it cost more in actuality. On the contrary, the lowest input cost approach usually blows out on time, cost, reliability and efficacy.
Managers and buying teams - take note. Top management and boards much prefer certainty and effectiveness over cheapness.
Over at The Technium, Kevin Kelly asks “Was Moore’s Law Inevitable?” You’ll recall that Moore’s Law predicts a doubling of transistor numbers in an integrated circuit chip every two years, and it has held astonishing true for nearly 50 years. Fulfilling this “law” has been a key driver in the astonishing growth of computer power accompanied by falls in the cost of that power. Kelly explores whether Moore’s Law simply sets a target which engineers strive to achieve (2 years does match neatly with typical product development cycles), or if there is some other deeper factor, and extrapolates this to a variety of technologies.
I was struck by Kelly’s observation that most current new technologies have gained momentum from smallness:
The first thing to notice is that all these examples demonstrate the effects of scaling down, or working with the small. In this microcosmic realm energy is not very important. We don’t see exponential improvement in efforts to scale up, to keep getting bigger, skyscrapers and space stations. Airplanes aren’t getting bigger, flying faster, and more fuel efficient at an exponential rate. Gordon Moore jokes that if the technology of air travel experienced the same kind of progress as Intel chips, a modern day commercial aircraft would cost $500, circle the earth in 20 minutes, and only use five gallons of fuel for the trip. However, the plane would only be the size of a shoebox! We don’t see a Moore’s Law-type of progress at work while scaling up because energy needs scale up just as fast, and energy is a major limited constraint, unlike information. So our entire new economy is built around technologies that scale down well — photons, electrons, bits, pixels, frequencies, and genes. As these inventions miniaturize, they reach closer to bare atoms, raw bits, and the essence of matter and information. And so the fixed and inevitable path of their progress derives from this elemental essence.
At antenna manufacturer Deltec, we were frequently asked why our unit costs didn’t fall as fast as the electronic subsystems in mobile communications infrastructure. While we did achieve cost savings from smarter design, leaner manufacturing and experience/scale effects, the laws of physics imposed limits on what could be achieved in a shaped piece of metal whose minimum size was determined by the frequency/wavelength and performance requirements of the network design and cellsite coverage. Smallness only came from shorter wavelengths/higher frequencies or lower range/coverage (increasing the number of cellsites).
Kelly also unearthed this old chart from the US Air Force. Impulse power, Mr Sulu! You’re due about now.
