Paul Wallbank – Brilliant Communications

Category: Innovation

  • Twenty years of text messages

    Twenty years of text messages

    When the mobile phone arrived we thought that text, particularly those clumsy pagers people used, would be dead.

    Little did we know that an overlooked part of the newer digital cellphone technology would see short messaging become a key part of the phone system and a major income generator for telephone companies.

    Short Messaging Services – or SMS – was an add on to the digital Global System for Mobile communications (GSM) standard which became the second generation (2G) of mobile phones.

    While intended as a control feature on the phone networks, SMS took off as a popular medium in the mid 1990s and soon became a major profit centre for mobile carriers.

    The Twentieth anniversary of the first SMS being sent passed last week and the BBC has a great interview, conducted by text message, with Matti Makkonen who came up with idea.

    One of the notable things in the interview is Matti’s humility – he doesn’t like being called the inventor or founder of text messaging as he explains,

    I did not consider SMS as personal achievement but as result of joint effort to collect ideas and write the specifications of the services based on them.

    We can only imagine what would happen if the idea of SMS messaging was invented today, there’d be an unseemly struggle over patents while hot young Silicon Valley entrepreneurs would pitch venture capital firms with plans for niche services that will make a billion dollars when sold to Yahoo! or HP.

    As it was, SMS services were insanely profitable for the telcos. In the early days, text messages were being charged at over a dollar each – for a service that cost the carrier almost nothing.

    Over time those handsome profits have been eroded as SMS became bundled into all-you-can-eat packages and then the internet introduced new mediums to send short messages.

    While SMS isn’t going away while mobile phones are an important part of our business and personal lives; the service isn’t going to be as critical, or as profitable as it was over the last twenty years.

    Short Messaging Services are a great example of how individual technologies rise, evolve and fade with time. They are also a good lesson on how quickly a premium, highly profitable service can become commodified.

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  • Bringing manufacturing home

    Bringing manufacturing home

    In the 1980s General Electric, like most US companies, sent most of its appliance manufacturing offshore.

    Now its coming home.

    The Atlantic Magazine looks at how General Electric is resuscitating manufacturing at Kentucky’s Appliance Park as management finds US workers are more skilled and productive than their equivalents in Mexico or China.

    An important part of the article is how critcal supply chains are; manufacturing hubs rely upon having a community of skilled service providers and suppliers around the factories while being close to customers improves and simplifies logistics.

    In the latter case, it now take hours or days to deliver products to customers’ stores or warehouses rather than the five weeks it takes from China.

    The cost of those goods is lower too, the Kansas made GeoSpring heater sells for $1299 while the Chinese product sells for $1599.

    What is most notable though is how designers and managers now have a better understanding of the manufacturing process; where under the oustourced model the difficulties in assembly were none of their business, now they are far more deeper and directly involved.

    This really goes to the core of what an organisation does – in the 1980s it was fashionable to talk of the “virtual corportation” where everything the business did was outsourced except for the managers who were employed solely to pocket their bonuses.

    In the 1990s and early 2000s that “virtual corporation” became a reality as manufacturing and customer support were offshored and logistics was outsourced.

    One of the best examples was customer support where looking after the needs of those who buy the company’s products were secondary to the need to cut costs.

    This focus on cost cutting over customer service hurt Dell badly in the 2000s and it continues to hurt many organisations – particularly telcos and banks – today.

    The weakness in the “virtual corporation” model was the company ended up adding little more value than the brand name and eventually those offshored manufacturers and call centres took control of the business’ goodwill and intellectual property.

    Eventually the hidden costs of offshoring became too obvious for even the most craven, KPI driven manager to ignore and suddenly manufacturing in the Western world became competitive again.

    Sadly, the fixation on dirt cheap labour has damaged many industries beyond the point where they can be salvaged with too many skilled workers lost and the ecosystem of capable suppliers destroyed. These are costs where tomorrow’s managers will rue the short sighted actions of yesterday’s corporate leaders.

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  • Reinventing the connected bank

    Reinventing the connected bank

    Yesterday the National Australia Bank had a media briefing to show how they, like their competitors, are revamping their entire business around new technologies.

    The investments are substantial and the re-organisation of the business is too as the old model of branch based banking only available from 9am to 4.30pm is superseded by the always on model of Internet banking delivered through tablets and smartphones.

    One of the notable points the NAB executives made was their move to authenticating customers through voice recognition. A trial had found the system reduced fraud and social engineering attempts dramatically.

    The use of voice recognition makes sense as it reduces the reliance on users remembering passwords or having to give over personal information that can often be gleaned off social media sites.

    Again we’re seeing data security evolving away from passwords.

    On the social media front, NAB are also offering their small business customers Facebook selling tools in collaboration with social media sales platform Tiger Pistol.

    While it’s questionable that businesses will get that much from a Facebook store, it’s a good attempt from the bank to add some value and encourage their commercial customers to move online.

    The move online is essential as the bank noted that online sales through their merchant platforms are up 23% as opposed to an anaemic 2.5% in general sales.

    Along with passwords dying, the NAB also found that the cash register is dying and being replaced with smartphone and tablet apps. The bank itself is moving its online platforms to being ‘device agnostic’ so as not to be locked into any one technology.

    What the NAB, and its competitor the Commonwealth Bank, are showing is the importance of having modern systems which are flexible enough to evolve with changes in the marketplace.

    Smaller businesses could learn from the banks on just how important this investment is. The organisations who aren’t making these changes are steadily being left behind.

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  • What is an Internet company?

    What is an Internet company?

    Deloitte’s 2012 fast 50 list of Australia’s fastest growing technology companies announced last week is an impressive list of diverse businesses ranging from online retailers to technology support firms, but it raises the question of what exactly is a ‘technology’ or ‘internet’ company.

    A quick look at the top twenty illustrates how broad the “internet” category is, with eleven coming under the classification;

    . 1 brandsExclusive (Australia) Pty Ltd 1335.1% Internet
    . 2 Australian Renewable Fuels Ltd 1235.7% Life Sciences
    . 3 SolveIT Software Pty Ltd 678.9% Software
    . 4 Kogan Technologies Pty Ltd 515.6% Internet
    . 5 Neon Stingray Pty Ltd 467.7% Internet
    . 6 Infoready Pty Ltd 418.1% Software
    . 7 SMS Central Australia Pty Ltd 371.6% Communications
    . 8 Cohort Digital Pty Ltd 295.6% Internet
    . 9 Redbubble Pty Ltd 275% Internet
    . 10 astutepayroll.com 256.7% Software
    . 11 SurfStitch Pty Ltd 252.7% Internet
    . 12 BizCover Pty Ltd 249.9% Internet
    . 13 Appen Holdings Pty Ltd 225.5% Communications
    . 14 MyNetFone Pty Ltd 216.7% Communications
    . 15 Appliances Online 206.2% Internet
    . 16 Time Telecom Pty Ltd (Smart Business Telecom) 205.6% Communications
    . 17 BigAir Group Ltd 202.2% Communications
    . 18 Observatory Crest Australia Pty Ltd 198.1% Software
    . 19 Tom Waterhouse Pty Ltd 196% Internet
    . 20 Bulletproof Networks Pty Ltd 178.4% Internet

    Included among those eleven ‘internet’ companies is the winner, Brands Direct, along with Redbubble, Appliances Online and Tom Waterhouse.

    Tom Waterhouse is an online bookmaker, Appliances Online is a whitegoods retailer, Red Bubble is a design marketplace and Brands Direct is a fashion retailer.

    While the internet is the core distribution channel for all of these companies, they are not ‘internet’ companies – they are retailers, marketplaces and bookmakers. The web is important, but it isn’t their business.

    Calling them “internet companies” in many ways misses the point of just how ubiquitous the net has become to business operations. It also risks double counting as Appliances Online’s staff are counted both as retail and internet employees – something government agencies are notorious for.

    We’d understand a lot more about the web’s reach if we didn’t label these fast growth businesses with the somewhat meaningless term of “internet companies”.

    None of this detracts from the achievements of these businesses, their managers and proprietors. These companies are on track to being the leaders of the future.

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  • Silicon lemmings

    Silicon lemmings

    Despite their self proclaimed belief in thinking different, many of today’s internet entrepreneurs tend to travel in flocks and follow the whichever business model is currently being hyped by Silicon Valley’s insiders.

    From the original dot com boom in the late 1990s to today, web entrepreneurs and their investors jump onto the bandwagon of the day – it could be online shopping, photography applications, group buying services and taxi apps which are the flavour of the moment.

    The latest taxi app is Click-a-Taxi, a European venture which has raised a stingy $1.5 million in second-round funding, which joins a legion of taxi and hire car apps following in the wake of market leader Uber.

    Unfortunately for the investors in these taxi and hire car apps, these services are making some pretty powerful enemies.

    Around the world gatekeepers such as taxi companies and booking services do their best to keep drivers in poverty while over charging passengers for a poor service.

    The new apps disrupt that business model by offering a better service for customers and a better deal for drivers – most importantly it deprives the gatekeepers of their cut.

    Predictably, the backlash is fierce with 15 US and Canadian cities proposing to tighten the rules on the use of GPS and smartphone apps.

    These backlashes are going to prove expensive to the investors as Silicon Valley entrepreneurs have a habit of under-estimating the power of regulatory barriers. How the current crop of taxi apps deal with this will determine which lemmings go over the cliff* and which ones survive.

    One group of Silicon Valley lemmings lying dazed at the bottom of a cliff face are those who invested in the group buying hype of the last two years.

    Market leader Groupon is now reportedly moving away from daily deals to ‘always on’ deals, which kills the whole point of group buying sites. Most of the copycats are already dead.

    Former Cudo CEO Billy Tucker predicts that in the Australian market – which was flooded by a wave of Groupon imitators in 2010 and 11 – will only have a dozen survivors out of the top 50 listed earlier this year.

    Investors in these look-a-like services had a gamble that a greater fool would buy the operation, usually a big corporation run by executives with a fear of missing out. The ones who missed out quietly swallowed their losses and moved on to the next mania – which appears to be taxi apps.

    For the taxi applications, the buyers of the apps will probably be the incumbent gatekeepers, who aren’t really fools at all.

    It wouldn’t be surprising to find the smarter look-a-like operators are already talking to the taxi companies about an app which will, miraculously, comply with all the requirements of the local regulators.

    As for the rest, they’ll do their dough.

    What is going to be interesting though is the battle between Uber and the various taxi regulators around the world, particularly in countries where politicians jump to the whims of their business cronies.

    *lemmings don’t really throw themselves off cliffs, that myth was invented by the Walt Disney Corporation. Sadly Australian, particularly NSW, politicians favouring ticket clippers and rent seekers is no myth.

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