Customer Value

Nicholas Carr writes:

A recent paper by three business-school professors – Sunil Gupta, Carl Mela, and Jose Vidal-Sanz – offers a new approach for estimating the value of nonpaying, or, as the professors term them, “free,” customers. The authors created a mathematical model of a hypothetical firm, with a business similar to Monster’s, and used it to calculate how much every new buyer joining the company site is worth and how that value changes over time.

Some of the results were fascinating. The professors found, for instance, that the value of each nonpaying customer (buyer) was actually slightly higher than the value of each paying customer (seller) – even though there were far more buyers than sellers in the company’s marketplace.

Verizon’s Network Bet

WSJ writes:

Three years after rolling out one of the industry’s costliest initiatives — a super-fast, $18 billion fiber-optic network — the company must now prove that its pricey gamble can pay off in the form of consumer demand.

Verizon executives see the new network, called FiOS, as a chance to reposition the telecom giant into more of an Internet-based company — one that can supply a raft of digital services under one roof. The plan is to offer a host of new services to run on FiOS, some of which are still in the development stages. The company is targeting everything from online games and local news shows to movie downloads and music-mixing sites. With FiOS’s ability to carry huge amounts of data at warp speed, Verizon is betting that the network will be a magnet for subscribers and advertisers alike.

Google and Old Media

Knowledge@Wharton writes:

“It’s difficult for Google,” says Wharton marketing professor Patricia Williams. Traditional media companies “have models that have evolved to be inefficient.” For example, a single snippet of video content — such as a commercial — most likely has multiple parties looking for compensation. An actor in a television commercial may get paid every time it runs, and the ad agency could also be remunerated based on the number of times the commercial is aired. What happens if that same commercial is uploaded and played on YouTube? Williams says the challenge for Google is finding a way to compensate all the various players in the traditional media food chain.

Wharton marketing professor Peter Fader attributes Google’s YouTube troubles to missed opportunities. Last fall, Google announced the $1.65 billion acquisition of YouTube and a series of business development deals with content providers like CBS. However, according to Fader, Google has failed to do much with the partnerships since. “I think Google was handed a golden opportunity with YouTube,” he notes. Indeed, “content providers and Google seemed to get along” in the beginning. “It’s hard to say why they can’t get along now.”

Incubation

Sramana Mitra writes:

The entrepreneur is the real soul of a venture.

We already have the VCs in India in droves. All I am suggesting now, is to layer in the Dave Chens with experience in different domains, around the Sramana Mitras who perhaps have the Niagran passion, the Himalayan ambition, but are simply not ready yet.

Get them ready in this round, and they will become Serial Entrepreneurs, doing venture after venture after venture.

Nokia’s Ad Service

Ajit Jaokar writes about the service:

The Nokia ad service provides a very interesting alternative to third parties because it is an Off portal initiative across all Nokia handsets globally.

This truly changes the game from an advertiser perspective because:

a) They deal with one entity(Nokia)

b) They potentially access ALL Nokia devices ACROSS operators globally

c) They can target the customer base because the Web/Mobile gateways are run by Nokia (off portal)

From a third party advertiser perspective, working with a company like Nokia would be far more preferable than working with the many Operators globally and not getting anywhere.

TECH TALK: Envisioning Tomorrows World: SMEs

For small- and medium-sized enterprises (SMEs), the coming world of teleputers, Ubinet and M-Web can help in making computing technology a utility that can help automate their businesses much faster. Today, SMEs in emerging markets have a low adoption of computers. As a result, many of their business processes are still manual and paper-oriented. This needs to change. It is not just about buying more computers. Rather, it is using computing as a utility to ensure that information is digitised at the source, and business processes and workflows become electronic.

A number of innovations taken together can make this happen. Teleputers connected to docking stations each with a keyboard, monitor and mouse can provide the big input-output capability that information workers need. The M-Web can be home to software-as-a-service applications much like what Salesforce.com is offering but at a magnitude lower price point. When an information worker is away from the desk, the teleputer doubles as a mobile phone making possible access to the required information via the Ubinet. Open-source software can be aggregated together to put together a range of industry-specific applications on the server-side. A monthly pricing model can make it affordable for businesses to make it available to every person in the organisation.

Another platform which could be useful for SMEs is an SME Trade Information Marketplace (STIM) which can help SMEs generate new business opportunities. Think of STIM as a yellow pages on steroids built around the publish-subscribe model. SMEs can post what they want to buy and sell. A matching engine can then provide them with alerts as the new updates come in. This can help enlarge the leads that SMEs need to grow their business.

Endnote

Many of the ideas discussed here are likely to come to fruition within the next couple of years. Indian entrepreneurs have a great opportunity to build out businesses in these blue oceans leveraging the technological innovations that are occurring. Investors need to think of putting an ecosystem of companies together to build out this digital infrastructure. Indian companies have the advantage of a large domestic market which they can target first and then expand to other emerging markets. What is needed is a mix of vision and will to make tomorrows world a reality.

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