Finally, Nokia and Elop story reached logical end

Two and half years ago, when Stephen Elop was brought in to lead Nokia, many asked the question openly if Elop was the trojan horse for Microsoft. Though Elop publicly denied that charge at that time, Nokia's journey for last two and half years with him at the helm, has however reached the conclusion that many feared with announcement that Microsoft is buying Nokia mobile business at $7.2 billion and Stephen Elop returning to Microsoft. With Steve Ballmer's announcement of retirement, people are making simple arithmetic with Stephen Elop. We, humans, are good in drawing sweeping conclusion based on only 2-3 data points and this is also no exception to that rule. Truth, as often is found to lie somewhere in between.
The legacy of Elop in Nokia is hardly anything to be jealous about. Since he came on board, Nokia's valuation came down by 85%, the market space where Nokia was world leader, saw Nokia receding ground to Samsung and other OEMs. The smartphone space which was the key element driving Nokia to cannibalize Symbiosis and embrace Windows OS, decidedly went with Apple's iOS and Google's Android. Now did anyone know for sure that these were going to happen when Elop came on board?
Social psychologists use the term Fundamental Attribution Error to our natural bias to attribute personal disposition instead of situational artifacts as a cause of certain eventuality. We feel higher satisfaction if we can find someone to hold responsible for an event that we do not like. So we feel doubly eager to attribute Nokia's ill-fate to Elop. Psychologists also tell us that that bias changes when one is involved and is answerable for the course of event. In the scenario where the person is involved, it is often observed that he/she attributes the cause of events to the situational changes instead of his/her own decisions. That means, Stephen Elop will attribute the cause of the present state of Nokia to the changing situations!
Rational minds would ask, "Was the decision taken only by Elop? Would Nokia board agree to allow Elop to take the decision if they knew they had better alternatives [other than going windows way] two and half years back?"
 Given that the board members had access to all the information that Elop had, it is reasonable to assume that each member individually vetted all the different options in their personal capacity before agreeing to Elop's solution. What Elop most likely have done at that time is that he influenced these members in evaluating the potentials and risks that each option provided. He might have been successful in creating fear for future failure in sticking to existing course. He might have projected the value of Windows and Microsoft alliance much higher than it actually was. But ownership of the course steering lies with all the executive members of Nokia board.
Once the decision was taken, it was clear which path Nokia is heading. Mounting accumulated losses, market pressure, competition from Apple, Samsung and other Android-based smartphone OEMs took Nokia further away from its root and towards further grip of Microsoft.
But did Elop think that bringing Nokia mobile to Microsoft could make him a strong candidate for Ballmer's successor? Even if he did, how much could he bet that course of events will take the shape the way it happened when he took the plunge 2.5 years back? Nobody realistically could be sure. At most, he could do is play his cards the way he played and hope things will eventually take him to the coveted post that he might have been eying for.
Now how does this change for Microsoft? Would this bring the hardware success that eluded Microsoft and Ballmer all along? Well, fact is Nokia Lumia series with windows 8 has become a success. It is capturing market quite fast, providing a credible alternative to Android based smartphones, even at lower cost point. Merger in fact positions Lumia at stronger ground with control on both smartphone hardware and OS. It will give Lumia leverage to bring price of smartphone further down and present a credible competition to Android-based low cost phones in all emerging markets where the real smartphone battle has to be fought and won.
It will also help Microsoft to boost its advertising business where the battle with Google is being fought, by making advertisement more personalized for the users by integrating smartphone's on-device data with skydrive [Microsoft Cloud] and Outlook [Microsoft email]. But for this to work, Microsoft's existing strong culture of internal competition [and therefore wastage of creative bandwidth in political rivalry] must change and find a way to work like collaborative set of engineering/business functions. Lumia hardware engineering must be allowed to function independently of Windows software division for them to build on each other's strength. But if this strategy succeeds, Microsoft will have evolved itself for the new generation of users and move to a new position of strength.
So, good luck to Mr. Elop and RIP Nokia mobile [that's a bit hurtful for someone who always used Nokia handsets]!
The next news to watch is who is going to buy Blackberry/RIM!

New Frontier of Marketing: Leveraging your emotional vulnerability

For last two years, I have been writing about this in this blog in different posts. The web has changed the world permanently and irrevocably. A large chunk of world population literally live inside the web. New generations will never know what it used to mean to live in analogue not-always-connected world. Thanks to myriad digital contraptions that you carry all the time, your location trail is available to anyone who is interested. New tools are continuously being developed that enhance the depth and breadth of the information trail that you leave behind in the web. But you already know that! You buy more powerful, more sophisticated smartphones, tablets which provide you faster apps to post your photos and videos, chat with your friends, 'like' posts and comment on the posts in real time while on move. They make your web-presence lot more richer, more lively. You want people to know and feel the length and breadth of your persona. At both conscious and unconscious level, web is your new sense organ, it breaks the local limits of your sense experiences and makes you expressions available across the web for others to notice.. Noticed, they definitely are but probably not the way you thought. We all like to believe that each of us has his/her own unique persona with his/her own evolved way that arms him/her to deal with reality in a manner that is different from other. So, even though we know that advertisers and product marketeers are targeting us to sell their stuff, we think that we know how to manage them, how not to let them intrude into our emotional space, how not to let them influence our decision making..But do we?
  There are experiments made and being made that try to find out how far your emotional irrationality is unpredictable. And do not be alarmed. Most of the researches overwhelmingly conclude that your emotions are predictable, however irrational they are! You panic when situations are presented that unsettle you, like everyone does; You feel vulnerable when you face unfavourable situations, like others do irrespective of where you live or which language you speak. You react, when you feel violated, belittled, like others do. You believe however ludicrous the content appears to be, when the same content is fed continuously to you through all your trusted information channels.
Now to be able to reliably guess your emotional state, one needs histories of situations and your reactions to them. I am sure you would agree that those who you consider closest to you, are closest because you think they understand you i.e. they know your emotional topography; what you like, what your soft spots are, how you react in a given scenario. And they sure do, otherwise, why would you confide them in?  Why would you reach out to them when you are disturbed, when you feel emotionally vulnerable? And they know you because you have let them know the trail of emotions and situation that you have gone through. In the new scheme of things, more you lose physical human touch, more you lay bare your emotions in the social portals, in your chats. And with the power, sophistication and reach of the analytics engines that present marketing world has at its disposal, those emotional signatures of yours are computable and usable in real time. After a heated argument with your spouse, when you are feeling particularly low and probably are looking for bear to cool you off, you are likely to welcome a pop-up ad that tells you about a new waterhole at just 1 km distance. Or if a sudden change of events at the stock market has made you feel particularly shaken financially, and you have a payment date nearby, how would you react to a call from bank offering some mortgage offer specifically customized for you? These, you probably would think benign. But how would you react when you learn that your kids are also being subjected to this type of massive, focused advertising manipulations? And they will not be limited only to product marketing, these tools can and will be used for mass opinion engineering. The Extreme the views are, the more pitched and intense would be the manipulation. Who draws the ethical boundary? Who monitors whether that boundary is being respected?
        Welcome to the world of new age marketing manipulation! You just cannot run away from this new reality of personalized advertizing and campaigning. Typically, a country would have legal framework to protect its citizen from this type of manipulative assaults but in this case, technology developed faster than the laws governing the advertising Industry. Which means you have no laws to protect yourself or your kids from advertisers to use your online /on-device data in order to present you their product/solution when you cannot refuse. There is no law to stop the advertisers/online campaigners use your personal data to get the result that they want. I saw a recent study report, by M. Ryan Calo from Washington University, that highlights the incompleteness/inadequacies of existing consumer protection laws.
He observes, "Today’s firms fastidiously study consumers and, increasingly, personalize every aspect of their experience. They can also reach consumers anytime and anywhere, rather than waiting for the consumer to approach the marketplace. These and related trends mean that firms can not only take advantage of a general understanding of cognitive limitations, but can uncover and even trigger consumer frailty at an individual level.
A new theory of digital market manipulation reveals the limits of consumer protection law and exposes concrete economic and privacy harms that regulators will be hard-pressed to ignore."
I definitely would urge everyone to read his report which is available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2309703. But more importantly, we should actively participate in public discussions so that fast erosion of private space be arrested now with strengthened legal definition of digital market/campaign manipulation.

Microsoft's online adv business after its first quarterly loss and aQuantive writeoff

We are continuing with your fictitious Microsoft interview in this post too. You were little lost in your thought when the interviewer came back with another person. Customary to strange interviewing process, the interviewer stepped out of the room 30 minutes ago, requesting you to wait for a while. 
The interviewer simply introduces his companion as a colleague who works in Microsoft’s online advertising vertical. For our convenience, let’s call this colleague of the interviewer, interceptor. The interceptor thanks the interviewer, greets you nicely at which point you notice that the interviewer gets up and takes leave from both of you. As the interviewer walks out of the room, the interceptor tells you that he would like this to be free-format discussion rather than a strict question-answer session. This is a new tack and it could mean that he will judge you based on how forthcoming you are in picking up the leads and how resourceful you are in fleshing up the conversation.
So, you start neutrally, “I read that Microsoft wrote off aQuantive and took a hit of $6.2 billion in its quarterly result. But you guys must be seeing this for some time?”
His eyes flickered, “Yes, you could say that.” He seemed to weigh his words before going any further. You decide to use silence as your tactical tool. Finally he spoke, “Online Advertising itself is a very new area and is going though continuous changes both from providers and advertisers’ point of view. Market saw explosive growth of online advertising spots in last two years, far exceeding the demand. In the hindsight, Microsoft may have put a little too high price for aQuantive.”

This is as far as it could get, you realise. You decide not to press further.  The interceptor goes back to more familiar line and asks you to talk about your experience, your achievements, and your failures. These are fillers and you know that all you need is repeat your well-rehearsed pitch, not too aggressive, neither too submissive, not too short, neither too elaborate, leaving pointers that lead to known territory, your space of comfort. You know that he will play with them for next 30 minutes. The important thing here is to maintain the flow but to not make any obvious mistakes. Eventually he will move to the ‘challenge’ phase. He will use chosen few questions as deal-breaker, assuming you have managed to maintain his interest till that point.

“What in your view is situation with online advertising space?” he changes the line and gives you a large canvas.
“Online advertising is the future, no doubt, but it is highly likely that advertising itself will see a large transformation before we reach there.” His eyes tell you that you have grabbed his attention. Now you need to carefully steer it.
Basic purpose of advertising, to start with, is to reach out to its potential buyers. It starts with a process of building general awareness of the product, its functionality, its value both at functional and emotional plane. In a world that is information-deprived, such as in the post internet-era, advertising was essentially broadcast. Print media or TV/entertainment media were the avenues to reach its audience and the advertisement content producer’s sole aim was to create content that sticks in viewer’s mind the longest. Building a brand is all about creating lasting impression in customer’s mind, creating emotional connectivity with customer’s thought process.

In the internet-era, information access has been practically ‘on demand’. It is buyers’ media now.  While TV and print media advertising continues and will continue to remain broadcast in nature, internet advertising must be focused on customer’s need and reaching to customer when his need arises. If broadcast advertising is more ‘push’ type, internet advertising is more a ‘pull’ type. Depending on the type of information that a person is searching/reading in the internet, the advertising agent has to pick and display the ad. If the agent provides too many irrelevant display ad, the viewer/user may block the content. So the role of the advertising agent is much more delicate, much more crucial here. With doubleclick, if Google has showed how to appropriate the value of display ads, it is also largely using its strength and dominance of its search engine. Microsoft with aQuantive and Bing although tried to emulate the model, fact that Bing commands a lot smaller share went against the model. Of course, with meteoric rise of Facebook, like the interceptor said, supply of advertising spots exceeded the demand by a large magnitude, bringing down the tariff of internet display ad overall.

Note : The average cost to reach 1,000 people with an online display ad fell to about $11.50 at the end of 2011 from $13.35 in late 2009, according to SQAD Inc, which tracks negotiated ad deals – source: Reuters

“Interesting! So how would you correct the course for Microsoft, if you are allowed to? What changes will you bring in?”

This unmistakably is the challenge question. Shying away is not only inappropriate, it will weaken your position. You must take this square on and try to be crisp while you are on it.

“I would start with basics. Microsoft is what it is because of Windows. I will start there. Windows is not only an operating system, it is a complete platform with whole lot of computing resources and with lot of crucial user-specific private data. Transferring the data outside user’s device would be tantamount to violating user’s privacy, so I will incorporate a sophisticated analytical engine inside Windows. It will continuously scan the information content being read/browsed and create a some sort of a live ‘top of mind’ list. When the customer invokes Explorer, I will provide a space which user can disable or resize or run in the background, if he likes to, but like news feed, this space will show display ads or links to the company that is absolutely relevant to his ‘top-of-mind-list’. More it is contextual, the better. Once this done properly same scheme can be used for Windows Phone too. Fact is with Phone the potential is lot higher. The phone soon is becoming the electronic gadget that will treble as communication device, entertainment device, gaming device as well as mobile commercial device and if I have a sophisticated platform like Windows, I will take full advantage of it by incorporating an analytics engine that maintains a live four dimensional profile of the user, the four dimensions being location, time, finance and emotional/behavioural state. With voice-assistance, I suspect that this, if it is done properly, it will be immensely useful to the customer too. Look at how popular Siri is for iPhone/iPad users and this will be lot more smarter that Siri! For amnesiacs, it will take the role of careful companion.

We will feed this engine with all the relevant advertising content which will be entirely contextual where high premium will be attached to relevance and physical/temporal proximity. That would not only create the channel that Microsoft is looking for, it will also be welcomed by its customers.

However, with the knowledge that Microsoft always works on competing strategies, I suspect that Microsoft’s post-aQuantive engineering team already is working on this line for it is the only way to deliver the promises of internet-based advertising which essentially pulls the right ad at right time to the right person, as many say!”

You did not notice when the interviewer came back but you seem to notice their momentary eye-contact as you were coming back from the whiteboard. You know that you have been fairly logical and accurate but were you a bit too assertive?

The interceptor tells you that he thoroughly enjoyed the discussion and gives you his card, when you realize your second interviewer is a Vice President in Microsoft.

What value would FaceBook have if it was based in India?

Apparently my last post did not bring enough contentment to me, hence another post on a similar note. While Facebook IPO [future], LinkedIn and Twitter valuation clearly established the potential of the Identity-realty, the question whether that valuation transcends the boundary is not answered. To make it simpler, let's just consider this question: Would FaceBook be valued equally had it been based in India or China? The question is not as frivolous as it may sound to some. If you look at the user base of Facebook, India provides second largest user-base with 43 million users just after its home turf i.e. USA with 155.5 million users [source: http://www.socialbakers.com/facebook-statistics/]. Moreover while the user-base in USA contracted over last few months, Indian user-base continues to grow. In fact Facebook clearly states in its SEC filing that India is going to be the biggest driver for their growth in next few years. 1.2+ billion population with only 15% penetration, how can anyone ignore the potential!
Similar statistics can be found with Twitter and LinkedIn too, but that is beside the point. Fact is today's valuation of Facebook is done in USA by the USA analysts using the benchmark that is largely driven by USA economic parameters. The fact that Facebook has users across 200 countries, the fact that 3/4th users are from outside the USA, makes it a truly international entity. Even to think of it, a social platform that assimilates so many different cultures and languages, nation boundaries with its local laws under a single computing infrastructure is by itself an enormous feat, only to be matched with that of its mother invention i.e. internet. But I think what makes the difference here is that Facebook has created multiple revenue channels, that it has generated a $1 billion cash reserve before it goes for IPO, that its revenue has grown spectacularly since last year, that it is seen as the second best platform for online advertising after Google, that the online advertising market is seen as an area with immense potential, that it has created a platform that most big companies and even Govt. agencies find difficult to stay away from and more importantly that it has invested heavily in building massive analytics engine that can analyze and provide online reports to suit the customer's need in almost real time. An advertiser can monitor effectiveness and progress of any single advertising campaign that it has launched and get cues on how to make it more PERSONALIZED ..yes PERSONALIZED for every individual user.
As many observed already, the biggest promise of online advertising is its ability to enable the advertisers to reach a customer when he needs the product/service most. Facebook not only understood that, they committed themselves to create the massive engine that sifts through all the online updates in real time and make accurate prediction about user's i.e. customer's behaviour.
This, however is the need for advanced users, those who use smartphones or at the least internet. In India TV Ads still form the biggest share of advertising expense and total annual budget for online advertising is hardly more than few hundred of millions of dollars, which mostly, again, come from American companies.
Does that mean that India does not have any hope for internet-based online service delivery? Actually not that bad if you look at the following two recent reports from IndiaDigitalReview portal. The first one says, "according to India e-Marketing Outlook 2012, conducted by Octane.in, Social Media and Email Marketing will emerge as the top two online marketing initiatives that will see an increase in marketing investments in 2012, as compared to 2011."
Next one tells us that Flipkart, an Indian equivalent of Amazon online shop has raised $150 million of series D funding which pulls the capital infusion value to $850 million. That is a huge number considering that Flipkart sells products to mostly English-speaking internet-savvy customers and its market is entirely limited to Indian subcontinent [where Amazon does not sell] and many of the science and technology books [Books constitutes large chunk of Flipkart's retail portfolio] are to be exported from either USA or UK. One must not forget that its annual revenue this year reached Rs 50 crores. In fact that figure pushed Amazon to launch its India-equivalent service with junglee.com.
   That takes us to the question we started with. What would be the valuation of Facebook if it was based in India? If one could, and there is a biiiiig IF, build Facebook [with the totallity of what it has today] from India, I think, learning from Flipkart experience, it would have reached at least one tenth of its present valuation if not more. And that is not too low considering India's GDP is just little more than a trillion dollar and that more than half of its population is still outside any advertising net.