business advice | Paul Wallbank - Communications Professional

Alibaba and the rise of chinese companies

The rise of Alibaba shows Chinese companies are now major global players.

Chinese e-commerce company Alibaba floated on the New York Stock Exchange and immediately rang up a 38% gain that values the company at $238 billion, behind only Microsoft, Apple and Google in tech stock valuations.

One of the major shareholders in Alibaba is Yahoo! who posted a 2.7% drop in value despite picking up a $5 billion windfall from the Chinese companies float.

For Alibaba’s founder Jack Ma, this float and the stock market’s reaction is a vindication of his business and of China’s place in the modern global economy, something we discussed with early Alibaba employee Porter Erisman last year.

Alibaba also shows that Chinese companies are now credible international businesses and companies like Haier, Lenovo and Hauwei need to be taken seriously as competitors and suppliers.

While Jack Ma and Alibaba celebrate, Marissa Mayer and Yahoo!’s management team are going to have to give some careful thought about how to use that extra five billion dollars. Time and investor patience is dwindling away for the once powerful internet giant.

It may be too soon to draw Alibaba’s success and the fall of Yahoo! as being the parallel of the rise of the Chinese economy and the decline of the US, but yesterday does give a strong signal about how the global economy is changing.

Image source: alibabagroup.com

Time to strike deals

It’s time to strike deals as banks and other big businesses start to feel the effects of global competition

It didn’t take long for the competition in the payments market to heat up after the announcement of Apple Pay last week as PayPal launched a campaign asking if you’d trust your financials to a business who can’t protect your selfies.

While PayPal pokes fun at Apple, there are more serious competitive pressures developing as the companies start negotiating with credit card providers and banks to reduce their rates. This is something that will be an immediate benefit for businesses of all sizes who are prepared to renegotiate their contracts.

Most businesses, big and small, are poor at monitoring what they pay for a service; while they’ll shop around and negotiate when they’re looking for provider, they’ll let often these contracts go for years without reviewing them – something that utilities like banks, telcos and power companies take advantage of.

I was reminded of this earlier this week at a lunch with some senior Qantas accountants who were quite open about how every supplier’s contract was constantly reviewed and discounts were aggressively pursued. It’s a tough life for the airline’s subcontractors.

Times are tough for Qantas though, having sustained a 2.8 billion Aussie dollar loss last year along with constant declines in market share and stock prices. So it’s not surprising they have an aggressive cost cutting strategy in place.

Many other industries are now looking at the same problem as the global economy is now in a phase of at best anemic growth for the foreseeable future, which makes it essential for all businesses to start reviewing their costs.

With the banking sector now being disrupted by companies like PayPal and Apple, it might be time for all businesses to ask some hard questions of their banks and payment providers. The time is right to strike a deal.

Activating main street

PayPal lays out its vision of the future of retail

The future of retail is being fought out on three fronts believes eBay’s Michael Camplin — global, local, mobile and data.

At eBay’s Commerce Innovation Showcase at its San Jose head office Champlin shows visiting partners, media and government officials part of the payments giant’s vision for that future.

“It’s about connecting buyers and sellers across the globe,” says Champlin. “Local is important for us because even with the growth of the online ecommerce revolution that we’re in the middle of right now we still see 75% of commerce happens within fifty miles of the customer and 90% of that happens in bricks-and-mortar stores.”

“So to be able to connect buyers and sellers in those local stores is a major push we have at eBay.”

The first presentation in the tour demonstrates a day in the life of an eBay customer from the bedroom of a fictional customer, Reese McLaren, a funky young guy shopping for new equipment ahead of a camping trip. Champlin illustrates how Reese can order, pay and collect through a store’s integrated online service from his home.

On the other side of the transactions, store employees use the PayPal apps like Red Lazer and Braintree to complete the order. A key part of that is using beacon technologies to log a customer into the store to alert staff that a customer has arrived to collect an order.

At the next stage of the tour, we visit some demonstration stores; first we start with the Burger Bistro where eBay’s Eric Armstrong shows how restaurant’s point of sale system is integrated with PayPal services, showing waitstaff who is logged in through the company’s app.

Integrating PayPal’s services into the establishment’s point of sale system means customers can order through the PayPal Wallet service and waitstaff know if a customer has paid through the app.

The app also speeds up settling customers’ bills as diners can pay the check through their phone and not bother with using cash or swiping credit cards.

One key point with PayPal Wallet is that users can enter any payment form that suits them and choose whichever option suits them at the time including direct bank transfers and credit cards.

Another area that PayPal are pushing out are coupon offers. At present the company is subsidising them as they test how the services work. The objective is to offer a digital equivalent of everything people currently have in their wallets.

For staff, eBay are offering the ability to bring your own device for point of sale systems with cloud base apps turning staffs’ tablets and smartphones into POS terminals.

Tying into the Point of Sale capability is the PayPal Now service that allows establishments to swipe credit cards directly into the app through a dongle that reads the chip or stripe. Despite the rise of online payment services, swiping credit cards is still the main way US customers pay their bills.

Despite the continued popularity of credit cards, eBay are hoping to move customers over to the online services through ease of service; the one stop authentication service means customers are logged into the payment platform as soon as they check into a location.

One area PayPal sees great opportunity in stadiums and major events where attendees automatically check in and can then access food and souvenir stands without having to re-authenticate or authorise each purchase they make.

A key part of eBay’s retail strategy is the use of beacons to monitor customers entering establishments. The one illustrated is the PayPal beacon that was a limited release earlier this year. The device doesn’t have its own battery, instead relying on a USB socket for power.

Two weeks after this tour Apple launched its Pay service with its range of integrated APIs to offer many of things shown in this showcase. eBay and its Braintree subsidiary was conspicuously missing from the listed partners.

For PayPal and eBay the field has suddenly become more competitive, this is a sector that is now at the forefront of the battle between today’s internet empires.

Tipping and mobile payments

During the recent switch over to chip and pin payments, many in the restaurant industry feared that tips would fall and waitstaff would lose jobs, the reality is somewhat different claims PayPal.

This post is the second in a series of four sponsored stories brought to you by Nuffnang.

During the recent switch over to chip and pin payments, many in the restaurant industry feared that tips would fall and waitstaff would lose jobs, the reality is somewhat different claims PayPal.

Last week I had the opportunity to tour the PayPal Innovation Centre in San Jose where they showed off the work they are doing in the retail and hospitality industries to change payment systems.

One of the products they showed was their Pay At Table app that integrates into a café or restaurant’s point of sale system and allows customers to pay their bills immediately.

The immediate reaction to this has been resistance from restaurant managers who were worried customers to skip without paying. For waitstaff, the worry was they could be replaced by an app.

It turns out the technology has had a different effect, the productivity of floor staff in the establishments where the app has been trialled has improved substantially.

“In a typical café it takes around ten minutes to get the check,” says the lead demonstrator of the Innovation Center, Michael Chaplin. “We find that freeing waitstaff up to help customers and letting them pay their bills faster means everybody is happier.”

With that ten minute per table improvement, management have found customers’ satisfaction has improved and the waitstaff have seen tips improve – partly because diners are happy and also because the tipping is integrated into the payment, calculating an appropriate gratuity is always a hassle in the United States.

That ease of payment from mobile phone and table apps is rolling across industries, it’s not just limited to the hospitality sector. Increasingly these technologies are being used by tradespeople, retailers and across the service industries

Increased productivity is more than just saving money and reducing staff numbers, it’s about giving the customer a more seamless and easy experience.

All business need to think carefully about how they can use technology to improve their service and increase revenues.

Rise and fall

We live in rapidly changing times. Incumbents and market leaders shouldn’t assume their positions are safe.

Twenty years ago UK supermarket chain Tesco was an also ran.

A decade ago it was the market leader.

Today Tesco is in trouble again as low cost European competitors like Aldi and Lidl have chipped away the British majors’ market share.

A few weeks later, Tesco shares plummeted on revelations the company’s profit guidance had been overtstated by 250 million pounds with the company’s chief executive Dave Lewis announcing several executives have been stood down as auditors investigate the descrepencies.

Tesco is a very good example of how quickly how competitors can come from behind in today’s marketplaces; first Tesco itself during its 1990s rise and then its crash in recent years.

We live in rapidly changing times. Incumbents and market leaders shouldn’t assume their positions are safe.

A land of grace and favors

The quiet abandonment of Google Authorship once again shows why businesses and creative workers shouldn’t trust online services to reward their work.

Yesterday the Search Engine Land website broke the news that Google Authorship is dead.

The quiet abandonment of Google Authorship once again shows why businesses and creative workers shouldn’t trust online services to reward their work.

Google Authorship was a subset of the company’s Google Plus service that let writers and journalist claim their work.

For authors Google Authorship was a useful tool in the battle against the verminous ‘content scrapers’ whose business lies in stealing other peoples’work. It was also a good way of building an online portfolio.

Google benefited from a huge improvement in the quality of its data as its algorithms authorship made it easier for the algorithm to identify original sources.

Using Google’s Authorship tool wasn’t easy, like many of the company’s services it was cumbersome to setup, opaque and subject to arbitrary rules.

Many journalists, bloggers and writers went through the process however as they saw the benefits and trusted Google to maintain the service.

Trusting Google to maintain any service is risky with the company’s well deserved reputation of axing services the moment management’s attention turns to the next shiny thing.

Which is exactly what’s happened to those who’ve invested their time in Google Authorship and they join the disillusioned masses who’ve been burned by the company previously with services like Google Wave.

The lessons from Google’s dropping of Authorship shouldn’t be lost on those working hard to build Google Plus profiles.

Right now, despite the propaganda for those with a lot invested in the service, Google Plus is not travelling well and it’s in a dangerous zone within the company with the departure of its internal management champion Vic Gundotra earlier this year.

The risk of investing too much time on Google Plus is clear, however it would be unfair to single Google out as being alone in presenting this risk.

Every social media service and publishing platform carries the same risk.

Those spending hours creating Facebook communities or carefully crafting LinkedIn or Medium posts need to remember they are only their by the grace and favor of the service.

Nothing replaces your own website as an online property. Your mission is to drive as much traffic to it as possible. Social media platforms can help you do this, but they are not your friends or business partners.

Don’t forget this.

Don’t be at the wrong end of the long tail

The state of the apps market shows how the long tail theory doesn’t work for businesses in digital markets

One of the most important characteristics of the technology industry is you have to be first or second in your market to guarantee profitability.

As more of the world become digitized this is becoming true in other sectors, as Tomi Ahonen’s survey of the app industry shows. This also demolishes the long tail theory of online economics.

The long tail idea was put out by writer Chris Anderson during the first dot com boom.

Anderson’s view was the long tail of older material would be a useful income source for creatives and businesses. For many, small payments on a ‘long tail’ of older work would add up to reasonable revenues.

I’ve always skeptical of that view as the internet tends reward the ‘one percenters’ — a tiny number with the most traffic or revenue make the money while the bulk of players fight over the few crumbs that drop from the table.

A sheer disaster industry

A good example of how digital markets favour a tiny group of leaders is in Tomi Ahonen’s survey of the 2014 mobile apps market that shows the vast majority of developers struggle for pennies.

Ahonen pulls no punches, describing the apps industry as a “sheer disaster industry with only one sector making money” and goes on to describe just how dire the predicament is for most developers.

The first point is where the money is being made; the first answer is by Google and Apple who skim five billion of the industry’s $21 billion in revenues. Just that stat alone shows where the real money is in the sector.

Of the remaining $15 billion the top 1.3% of the industry — around 27,000 developers — take $11 billion, or 73% of the revenue and leave four billion to be shared among the other 98%.

Slaves and huddled masses

At the other end of the scale those who Ahonen calls the ‘slaves’ and the ‘huddled masses’ there’s only 400 million dollars to be shared around two million developers. Implying 87% of the industry barely make a few hundred dollars a year.

On Ahonene’s figures two out of five developer make nothing.

HUDDLED MASSES IN APPS ECONOMY 2013
Revenues left . . . . . . . . . . 0 million dollars
Bottom 39% developers . . 819,000 developers
Bottom 39% earn . . . . . . . 0 million dollars
Bottom 39% earn . . . . . . . 0% of all revenues
Bottom 39% earn . . . . . . . 0% of developer revenues
Average per dev . . . . . . . . 0 dollars
In above numbers:
Beggars failed to earn . . . . 400,000
Hobbyists don’t care . . . . . 250,000
Branded utility app devs . . 170,000
Source: TomiAhonen Consulting analysis on Vision Mobile survey Aug 2014

The Apps industry is a stark indicator of just how brutal the economics of digital distribution are. The long tail is real, it’s just that it describes a massive imbalance in income within markets.

For all of us trying to make a dollar in the digital world, we need to find the niche where we fit into the profitable part of the curve.

Being on the wrong end of the long tail is a recipe for poverty.

Frenemies in the age of tectonic shifts

In an age where business is changing dramatically it’s worth keeping your rivals close.

“Apple lives in an ecosystem,” Steve Jobs told the 1997 MacWorld conference. “It helps other partners and it needs the help of other partners.”

A few minutes later Jobs unveiled Apple’s deal with Microsoft, much to the disgust of many of the company’s true believers in the audience – something not helped by Bill Gates appearing on video midway through the presentation.

“We have to let go of the idea that for Apple to win, Microsoft has to lose;” said Jobs after the booing died down.

I was reminded of Jobs’ and Gates’ deal when talking to Pat Gelsinger, the CEO of virtualisation software company VM Ware at their annual VM World conference in San Francisco this week.

Gelsinger was discussing the myriad deals VM Ware has made with companies that are their superficially their rivals as markets radically change. The company has even gone as far to embrace the open source Open Stack that was originally set up as competition to VM Ware’s proprietary technology.

“The idea of frenemies – or co-competition – isn’t new to the IT industry.” Said Gelsinger, “as we are in this period that we’ve called the tectonic shifts that are underway.”

“All of us need to be somewhat careful about who’s our friends and who’s our enemies as we go through that period and be as nice as we can to everybody because who’s our friends and who’s our enemies in six months or twelve months could change a whole lot.”

That lesson has been harsh in the IT industry as various unstoppable businesses have found the market has shifted rapidly against them. A process that’s accelerating as cloud computing changes the software industry.

“I always quip that ten years ago or fifteen years ago Sun would have been buying Oracle. Those shifts can occur quite rapidly,” Gelsinger says.

VM Ware itself is on the brunt of one of those shifts as its core business of creating virtual services in company’s data centres is being disrupted by cloud computing companies like Amazon, Google and – ironically – Microsoft.

Adapting to that changing market is the key task for Gelsinger and VM Ware’s management team, “our philosophy has been about doing the right thing that technology enables us to do.” Gesliner states, “do the right things for our customers and enable the ecosystem to join us on the journey.”

For companies like VM Ware and Microsoft no-one predicted that one of their biggest threats would come from an online book retailer, yet Amazon Web Services has upended the entire software industry.

The challenges for VM Ware today or Apple nearly two decades ago are being repeated in many other industries as competitors appear from unexpected directions, which is why it’s important not to ignore and sometimes co-operate with your competitors.

We shouldn’t also ignore the other main reason why companies like Apple, Microsoft and, possibly, VM Ware have survived massive market shifts over time – a deep and loyal customer base.

Understanding and responding to your customers’ needs is possibly the greatest management skill needed in every business today. Are you listening to what your market is telling you?

Paul travelled to VM World in San Francisco as a guest of VM Ware

Picture of Steve Jobs and Bill Gates via Joi Ito on Flickr

Blurring the boundaries between home and office

The workplace is changing as mobile internet becomes an expected part of society.

“My ambition is to only spend four or five hours in the office,” said Vodafone Australia CEO Iñaki Berroeta when asked at a lunch in Sydney today about how he would like to structure his working day.

For many Australians, this is becoming the reality of work as increasingly their job is following them home and into their social lives according to Microsoft’s Life On Demand white paper released this week.

The blurring of the lines between home and work is no surprise to small business owners, senior executives or those establishing a startup, however according to Microsoft this is becoming normal for the majority of workers.

In their paper, Microsoft found 30% of Australian workers are checking work emails on devices at home before they leave for work and 23% are doing work activities while they are socialising with their friends.

Overall, more than a quarter of Australians work from anywhere which has more than doubled in the last five years.

This is largely due to the rise of tablet computers and accessible wireless broadband. A direct consequence of this is nearly half of commuters work or study while on public transport.

Being able to work on the train, bus or tram is changing the usage of public transport with many commuters preferring to use the usually slower option (at least in Australia) over driving as it’s seen as more productive time. This is a cultural change that governments have been slow to understand.

Equally slow have been many businesses in understanding they have to deploy the tools that allow workers to be efficient while out of the office, this is the whole point of cloud services.

The workplace is changing as mobile internet becomes an expected part of society. How is your businesses catering to both your staff and customers’ needs in the age of the smartphone and tablet computer?

It’s time to educate our politicians

Last week showed the technological ignorance of Australian politicians. It’s time voters and business demanded better.

In mid 2003 I put an employment ad online for two computer technicians. I was expecting a healthy response as it was the depths of the computer industry’s depression following the tech wreck two years earlier.

A healthy response is what I got. Two thousand job applications came in; it took me a week to wade through them.

I was reminded of that story with the Federal government’s recent thought bubble requiring those on unemployment benefits to apply for forty jobs a months.

Like most of the business community I was appalled at the thought of being buried under hundreds of pointless job applications that served nothing but to fulfil a Liberal Party staffer’s ideological fantasies.

Within a week an Adelaide grandfather had come up with the idea of a jobseeker app that would automate the task which shows just how far out of touch both sides of politics have become with the modern world, particularly the digital economy.

The Australian political classes’ lack of understanding of technology has been on painful display over the last week with the Federal government’s fumbling over proposed data retention laws; one gets the impression George Brandis needs other people to use the toaster for him, let alone be trusted to use a computer without assistance.

This incomprehension of what’s driving the modern economy among our political leaders is no longer a joke – when the Prime Minister himself proudly states ‘I am not a geek’, it’s clear this nation is being led away from having any serious role in the 21st Century.

In fairness, this is not the fault of any single party or individual; it’s the result of Australians – particularly Australian businesses – voting like sheep for the blue team or the red team at every election.

As a consequence, Australian politics is now dominated by comfortable, arrogant and somewhat dim careerists who have little in skills beyond being able to float to the top of the shallow, fetid sewers that are the party political machines.

This is our fault and it is where Treasurer Joe Hockey is right in bemoaning how business won’t stand up and strongly lead the nation’s reform agenda.

Unfortunately for Joe, a true reform agenda is about making the nation more competitive in an era where the world’s economy is radically changing. The old ‘ship out resources and watch your property go up in price’ model that has sustained the Aussie economy is not a recipe for long term success.

If Australia is going to compete in the Twenty-First Century then we are going to have to invest in modern training, education and capital equipment while putting in the tax and social security systems that reward genuine entrepreneurs and job creators over property speculators and corporate ticket clippers.

Right now Joe, and his friends in both the Liberal and Labor parties, are doing exactly the opposite.

Joe’s right. We need to voice our concerns loudly. We also need to demand our politicians at least take the time to understand the basics of the technologies that are radically changing today’s world.

Next time you see a politician, of either colour, try to get five minutes of their time to explain how technology is changing your business. Hopefully it might make them pause before the next thought bubble.

Standing up to the giants – why the big software companies don’t always win

The survival of QNX illustrates how big companies don’t always prevail on the internet

In the latest Networked Globe post I have an interview with QNX founder Dan Dodge on how BlackBerry wants to be at the heart of the Internet of Things.

One of the things Dodge discusses is how twenty years ago Microsoft told QNX they would be driven out of business by the software giant’s Windows CE operating system.

As it turned out Microsoft failed dismally.

QNX’s survival in face of a big competitor is similar to Google’s failed attempts to enter various industries. Everyone assumes Google will succeed against the smaller players because they are rich and smart.

Often however the rich player doesn’t win because the smaller incumbent is savvy, focused and knows their market well.

Sometimes bigger is not always better in the software industry.

Everyone is a critic on the internet

Business owners need to stop being so defensive about what their customers say on social media

“Everyone’s a critic” is the old saying. Today this is truer than ever as anyone can post a review online.

One of the notable things about business in the internet age is how sensitive people are to criticism.

A good example of this is a story going around the web this week of a Dallas chef, John Tesar, who had a magnificent breakdown over a review of his restaurant in the local newspaper.

This set off a chain of claims and counterclaims including some truly bizarre pieces on various blogs about ‘chefs winning the war against critics.’

Probably the strangest thing with this whole debacle is the review by Leslie Brenner in the Dallas Morning News is actually quite constructive and certainly no AA Gill style demolition of the establishment.

This silly little spat illustrates how business people, not just temperamental chefs, have glass jaws. Another story going around the web this week is of Union Street Guest House in Hudson, New York, that fines guests for bad reviews

Tesar’s response is pretty typical of many business owners – attack the critic instead of addressing the problems. Given Tesar threw the Twenty Rules of Social Media – which apply to businesses as much as social media – out the window, he was lucky not to find his reaction backfiring horribly on him.

What business owners have to understand is that you will get criticism, unfortunately most of it you will never know about as unhappy customers tell their friends and relatives.

If you get the opportunity to hear that criticism, then you have the opportunity to fix the problem.

This is something business owners need to understand about review sites and social media; it’s an opportunity to get some honest feedback about how things are going.

So start listening to what your customers are saying online and stop being so defensive.