Paul Wallbank – Brilliant Communications

Category: Innovation

  • Uber’s New Year’s test

    Uber’s New Year’s test

    Update: It appears Uber passed the New Year’s Eve test without problems. There were almost no complaints at all.

    New Years Eve 2011 was a tough night for customers of the Uber hire car booking service in New York City when fares surged as partygoers headed home.

    This year, Uber hopes to overcome problems by making sure customers are aware with big warnings of prices and even a sobriety test so users can confirm they know what they are doing when they agree to catch a cab.

    Uber’s dynamic pricing matches supply with demand, which means a more reliable service but also opens the company to allegations of price gouging during busy periods.

    Those allegations are exactly what happened in New York last year and in 2012 Uber’s risks of bad publicity are far higher as the service is now international with operations in cities like London, Paris and Sydney.

    Sydney will be the first city to encounter the effects of surge pricing and big risks lie in the Harbour City as Sydneysiders are used to fixed cab fares and enjoy a good whinge when things don’t work in their favour.

    Over a million people are expected on the shores of Sydney Harbour to watch the New Year’s Eve fireworks which means cabs and hire cars are at a premium.

    If Sydney has the triple fares expected in New York then Uber’s fare from Circular Quay to Bondi Beach will be around $150. This compares to the standard cab fare of around $30.

    Those markups will be exploited by the incumbent taxi companies and booking networks. We can expect a wave of stories over the next few days from tame journalists regurgitating the incumbents’ media releases.

    How Uber’s Australian management deals with this will be worth watching. One hopes they are prepared a tough week and don’t enjoy the festivities too far past midnight.

    Another problem for Uber is going to be Sydney’s mobile data networks which are horribly unreliable during peak periods. It may well be that Uber’s customers and drivers never get a fare anyway.

    Last year I was near the Habour Bridge and didn’t have a Vodafone signal from 8pm onwards. I’ll be comparing the performance of all three Aussie networks from the same place tonight.

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  • NFC and the car key revolution

    NFC and the car key revolution

    Many businesses have made easy money by ‘clipping the ticket’ of the customer, new technologies like Near Field Communications and cloud computing threaten the easy profits of many organisations.

    During yesterday’s 2UE Tech Talk Radio spot where Seamus Byrne and I stood in for Trevor Long, host John Cadogan raised the prospect of replacing car keys and even dashboards with smartphones equipped with Near Field Communications (NFC) systems.

    Since NFC technologies appeared we’ve concentrated on the banking and payments aspects of these features but there’s far more to this technology than just smartphones replacing credit cards.

    With the right software an NFC equipped smartphone, tablet computer, or even a wristwatch could replace any electronic controller – this is already happening with Wi-Fi or Bluetooth enabled home sound systems, TV remote controllers and games consoles.

    An important effect of this is that it cuts out expensive custom replacements like bespoke control units or electronic car keys.

    Car keys are a good example of how what was previously a high cost profitable item becomes commodified and those business that had a nice revenue stream find new technology cuts them out.

    As keys become replaced with NFC enabled devices then then the scam of with new sets of keys costing up to a thousand dollars with fat profits for everybody involved becomes redundant.

    This is something we’re seeing across industries as incumbent businesses find their profitable activities disrupted by smart players using new technology.

    Just as manufacturing and publishing have been dealing with these disruptions for the past two decades, it’s coming to all industries and it’s going to take smart operators to deal with the changes.

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  • Is Facebook the new Microsoft?

    Is Facebook the new Microsoft?

    One of the problems with dominating your field is that to find new growth opportunities involves becoming distracted with your core business and damaging your reputation. This is what hurt Microsoft over the last decade and now threatens the internet’s big four.

    App.net CEO Dalton Caldwell wrote an open letter to Facebook CEO Mark Zuckerberg describing how the social media giant is trying to wipe out competitors through bullying them into being acquired.

    If a business doesn’t succumb to Facebook’s seduction, then they risk being wiped out by the social media giant setting up their own version of the product which they can push out to a billion subscribers.

    Jason Calacanis explores this strategy with Facebook’s launch of Poke, designed to compete with the instant messaging service Snapchat.

    In many ways this is the same model that Microsoft employed in the 1990s as it worked towards dominating the desktop computer market – bully innovators into selling to them and, if that fails, copy the product and crush the opposition.

    It worked for Microsoft because they controlled the distribution channels through their tight relationships with computer manufacturers.

    Microsoft created their own applications, or features in their products, which would be bundled onto Dell, Gateway or Compaq computers. Once users had functionality built into Windows or Microsoft Office then they didn’t have to buy a third party app.

    Bundling network protocols destroyed the business models of LANtastic and Novell, in the browser wars Microsoft killed Netscape by putting Internet Explorer on the desktop and in the office suite predatory pricing killed WordPerfect and Lotus while resulting in acquisitions of companies like Visio.

    This way of business cemented Microsoft’s domination of their desktop, office productivity and server markets at the turn of the century. It was a true river of gold that continues to flow today.

    Unlike the personal computer software markets, bullying or buying your way into market dominance doesn’t work online as the barriers to entry that protected Microsoft from competitors are nonexistent on the web.

    Both AOL and Yahoo! learned this the hard way as their acquisition sprees through the dot com boom didn’t prevent them from sliding into irrelevance.

    A good example of how hard it is for the Internet giants to execute a plan for world domination is the rise and fall of Google’s Knol as described by Seth Godin, who thought his own Squidoo startup would be crushed by the Internet giant. It turned out not to be so.

    For the web incumbents the fundamental problem are, as Jason says, that they are not focusing on their core businesses and they have plenty of Plan Bs as Seth Godin described.

    The manager who fails with Knol or Poke moves onto another division with a pat on the back and a safe claim on their bonus. The startup founders on the other hand are fighting for survival.

    All four of the Internet’s giants have similarities to Microsoft in the 1990s as every single one dominates its niche and wonders how to expand outside their core business – for Google, and possibly the other three, there’s the added problem of managerialism as a large cadre of managers worries more about maintaining privileges over competing in the marketplace.

    Managerialism ended up crippling Microsoft and continues to do so today, whether Facebook and Google can avoid that fate remains to be seen.

    A bigger problem for Facebook is losing trust – Microsoft’s conduct, particularly with WordPerfect and Netscape in the late 1990s made a generation of developers and entrepreneurs cautious about dealing with the company.

    For many that suspicion remains and is one of the barriers the company now has to overcome in the smartphone and cloud computing markets where it is one of the crowd of scrappy challengers.

    In the social and online worlds, collaboration is one of the keys to success. If Facebook, or any of the others, lose the trust of the community then they’ll become irrelevant a lot faster than WordPerfect or LANtastic did.

    Becoming irrelevant is the real worry for Facebook’s tenured managers and their investors.

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  • Australia’s high cost quandary

    Australia’s high cost quandary

    “Around the world our towncars are usually 30% more expensive than taxis, in Sydney it’s 20% as the cabs are pretty expensive,” said Travis Kalanick on launching the Sydney version of Uber’s hire care booking service.

    It’s not just hire cars which are expensive in Sydney – the soaring cost of living in Australia is bourne out by Expatistan, a web site that crowdsources the cost of living in various cities.

    Expatisan’s comparisons find Sydney up with Tokyo and London as the most expensive towns on earth.

    That conclusion means Australian businesses, governments and policy makers have some important decisions ahead of them.

    Cholesterol in the veins

    High property prices have been the norm for two decades in Australia, the middle class welfare state that both political parties support gives tax and social security concessions to property owners while the banking system requires most business lending to be secured by property.

    As a consequence, generations of Australians see property as the only path to financial success. If Bill Gates, or any of today’s entrepreneurial wizz-kids, had been born in Australia, they’d be encouraged to get a safe job and buy property than to take the risk of starting a new business.

    The property obsession has another perverse effect in that it creates a short term outlook for Aussie business owners who have to consider getting,  and paying off, a mortgage quickly to secure their financial foundations.

    A few weeks ago a business owner was profiled in the Sydney Morning Herald, which some call the Sydney Morning Property Spruiker, who paid 1.1 million Aussie dollars (a million US) for a property in Redfern – which is Sydney’s Bronx.

    That poor guy not only has a fat mortgage to pay off, but he has to pass those costs onto his customers. Just to pay the bank is a fat chunk out of his business before he pays his staff, landlord and the various other expenses before he can take his profits.

    Having to pay the bank for living costs is the main reason why Aussie businesses don’t invest in capital equipment, which in turn makes  them less competitive than overseas competitors.

    One of the myths in Australian business is that competitiveness is solely due to labor costs, what the ideologues preaching this miss is that even if Aussie workers were paid a bowl of rice a day, Chinese and Mexican factories would still be more productive due to the investment in modern equipment.

    For the sake the argument, we won’t even discuss German, Japanese or Swiss manufacturers who are still competitive despite Australian level cost structures.

    This last point is what’s missed in much of the discussion about Australia’s economic future – apologists for Reserve Bank governor Glenn Stevens and the self congratulatory Canberra monoculture say that the high Aussie dollar is here to stay and mining will be driving the economy.

    Should the mining sector stall, which currently seems to be the case, then housing development will pick up the slack according to the policy-makers’ groupthink.

    That housing development is going to come at a high price, with Australian land and homes already among the world’s highest. Given Australia’s private sector debt is among the highest in the world already, it’s hard to see where the money will come from to fuel further property speculation.

    Right now Australia has a serious problem in determining what the future will be for the country.

    If the future is a high cost economy underpinned by massive property property prices, then the future has to lie in high value added sectors.

    The question is ‘what sectors’? Australian business, governments and society in general seem to think that property speculation is the future.

    Property speculation turned out not to be the future for Spain and it looks like China’s speculative boom is meeting its obvious end.

    Australians are going to have to hope that it really is different down under and that young people and immigrants are prepared to spend huge amounts of money to keep the economy afloat.

    If the policy makers are wrong, then the worry is that there is no Plan B.

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  • Connecting the household to the internet of everything

    Connecting the household to the internet of everything

    The development of intelligent household appliances like lights is changing our lives in subtle ways, Australian startup Moore’s Cloud is a good example of how cheap computing, accessible internet and open applications are coming together.

    One of the frontiers of technology right now is the internet of things, where machines connect directly to each other, cutting out the requirement for people to monitor them.

    Good examples of these devices is the internet connected fridge – which was the poster child for pointless connectivity during tech wreck in the early 2000s but is now standard equipment in hotels, restaurants and hospitals where monitoring stock levels has become wholly automated.

    Cheap hardware has driven this trend, as processor prices have tumbled it’s become cost effective to incorporate intelligent systems into almost every household device. Everything from the kettle to the washing machine now has some sort of CPU in it.

    Moore’s Cloud is a good example of how the internet of machines is coming together. A simple cube shaped device has the electronic smarts to connect with other lights and be controlled by software apps.

    Being able to create is important as the software interfaces – the APIs – are open which people to write programs that take advantage of the light’s features. A video from the Moore’s Cloud builders showcases twelve of the apps which have been developed so far which include weather forecasting, night lights and changing moods.

    Having an ‘ecosystem’ of apps is now driving innovation in consumer electronics. The iPhone started the app revolution and now everything from stereo systems to lights are being controlled by them. Devices that don’t have open APIs are at risk of being left behind.

    With systems being open to interested designers, anybody can create their own way of controlling device which opens the way for some innovative, left of field ideas.

    In many respects, Moore’s Cloud is one of the early wave of smart features we’re going to see in the next generation of household appliances that will change how we use these tools.

    The team behind Moore’s Cloud is still raising money for the project through Kickstarter, their campaign finishes this Friday. Hopefully they’ll meet their targets and take the project further.

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