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Last January I commented on Commander’s problems and made the point I thought they were doomed. Today they appointed official receivers.
I’ve made a comment on my Cranky Tech blog about the tragedy that companies with brilliant assets like Commander managed to squander them, but there’s many other lessons for Australian businesses which I’m mulling over at the moment and will post here later.
We’ve heard the promise of delivering TV over the Internet and now the ABC will follow the BBC with an IP TV service.
Coupled with the increased downloads we’ll see from the uptake of smart phones, we’re seeing the end of most Australian ISP’s business model of soaking users with excess use fees.
iiNET has done a deal with the ABC that traffic won’t be counted for their customers using the ABC’s service and you’d have to wonder how long it will be until others offer it.
The interesting thing with IP TV in Australia is just how badly the commercial TV stations are falling behind.
A good example is Channel 7 where their tie up with AOL should have made this easy, but they seem to have lost it. The other two networks have nothing.
Under the current pricing structures it’s difficult to see IP TV taking off in Australia, but this will change. The big question is just how visionary Australian Internet providers are and just how the commercial TV stations will deal with the challenge.
Reports the iPhone has triggered a rise in mobile Internet use in the US raises an interesting question on its effects on the Australian market.
Early this year Three Mobile touted their own report which found Australians were reluctant to do surfing the net on their phones due to the risk of copping a monster bill.
Sadly this belief is quite fair when you see some plans charging up to $3,000 a Gb if you go over a 5Mb monthly allowance.
While Optus has sweetened their plans slightly by offering better usage allowances on their iPhone plans, all the providers have done little to improve their mobile phone data offerings.
This stingy attitude to data by the Australian mobile operators is going to continue to cramp the growth in the Australian mobile Internet market.
Until one of the players drops their restrictive plans and outrageous excess use charges Australians will quite rightly shy away from embracing mobile web surfing.
New top level domains won’t change things for most businesses
Last week the proposal to allow a new breed of internet domains triggered talk of another “internet gold rush”. I’m not sure this is going to happen, however it is a timely reminder of the importance of protecting your own business name.
The Global Top Level Domains (gLTDs) are the suffixes such as .com and .net at the end of internet addresses. There are 22 of these and they are controlled by the Internet Corporation for Assigned Names and Numbers (ICANN) which is chaired by an Australian, Dr Paul Twomey.
ICANN has proposed to make new gLTDs available to anyone who makes a suitable application. So somebody can apply to create a .smartcompany or .australia domain to replace the boring old .com or .com.au.
I have to admit my first reaction was “this was just a revenue grab” by ICANN but Twomey, in an interview on ABC Local Radio last Friday morning, stated the expected “low six figure sum” for registering a gTLD will only recover ICANN’s costs.
Those costs are going to be substantial as the ICANN announcement indicates there is going to be quite a rigorous evaluation before any are approved.
The cost and evaluation process means we won’t get a repeat of the mess we have seen in spaces like the .com domain where the low cost and ease of obtaining an address has meant many opportunistic registrations.
Because of this, I doubt there will be a “gold rush” as the barriers for entry are too high. The business model of registering hundreds or thousands of potentially valuable names in the hope someone will offer big dollars for a few of them doesn’t work when each registration costs over a hundred thousand dollars.
I also suspect the branding aspect is overplayed. The cost and time of buying, setting up and establishing the new top level domains will put even some of the bigger brands off unless there’s a compelling business case for doing so. Many will simply defend their brands through the disputes system.
In his interview on ABC Radio, Twomey indicated this will probably be a similar process to the existing domain dispute mechanism – which only makes the risks for cybersquatters even greater.
At the moment, it’s cheap to register a name but expensive to dispute it. This works to the cybersquatters’ advantage as most business owners will pay $10,000 to buy the domain rather than $25,000 in legal costs to dispute the ownership.
Under the ICANN proposal, the legal costs will still be high, but not as high as the cost of registration. This means speculating on global Top Level Domains becomes a very risky proposition and probably beyond the resources of most speculators.
Another aspect working against a gold rush are the popularity of the current suffixes. Of the 21 existing gTLDs most haven’t worked; when was the last time you saw a .coop, .pro or .jobs internet address?
If you did see one of these addresses, did you automatically type .com or .com.au the first time you tried to use it?
This is the big problem for any new domain; internet users are already conditioned to identify .com, .com.au and similar suffixes as internet addresses. So any new domain owner is going to have to spend a lot of money and time convincing the community to use the new address.
Long time Crikey subscribers will remember Stephen Mayne’s struggle to remind radio interviewers to include the .au at the end of the Crikey web address. All too often it was back announced as crikey.com which sent potential subscribers to the personal website of a Seattle based British expat.
To overcome this confusion I suspect brands that do grab their own gTLD will also retain the equivalent .com addresses and point those to their new domains. So for instance were Gucci to obtain the .gucci domain they would arrange that when customers type in gucci.com it automatically resolves to the .gucci address.
Where I think the new names will be successful is in large corporations where it’s relatively easy for the system administrators to setup the entire company’s computer network to use the domain.
For instance Telstra would get the .telstra domain then have internal addresses like sales.mobiles.telstra or servicecentre.ballarat.telstra. These addresses could be exposed to the wider public internet when necessary.
Most businesses though will find these domains have limited effect. It may be that buying a new address on a domain like .shop or .sunshinecoast will be worthwhile, but registering your own global Top Level Domain is overkill and beyond the means for all but the biggest corporations.
Where business may be affected by this is with trademark infringements. So this is another reminder to protect your enterprise’s most import asset; its name.
For the moment, it’s not worth worrying about the new names, especially given they won’t be around until at least the end of 2009. In the meantime, stick with your existing internet addresses and make sure you are protecting your brand names.
Apple’s new store in central Sydney is certainly impressive. Ron Johnston’s opening speech mentioned how it’s their second biggest store after London and has the largest plate glass windows in the world.
The plate glass windows are the key to how this store works. It showcases Apple’s products beautifully and invites passers by to step inside and play with system.
That openness extends to the fact you can play with the systems. One of the things that’s always frustrated me with computer stores is that they don’t display what the systems are capable of. The Apple store does.
Also notable is the stock display; there’s no stack ’em high clutter that’s typical of many computer stores. The stock is laid out beautifully and takes advantage of the space.
The attention to detail is reflected in the staff as well. They are friendly, trained and knowledgeable. Again this differs from most computer stores where the staff are commission driven part timers.
All of this gives the store an atmosphere of restrained competence. These products that don’t need a hard sell.
On the top floor is one of Apple’s masterstrokes: The Genius bar. It was mentioned that this is the biggest Genius Bar of any Apple store but I’m not sure about this. Once again, the geniuses were well trained and presented.
One impression I did have was this area was a bit spartan and I expect there’ll be more facilities like couches, water dispensers and possibly even a coffee vendor in this area for people waiting for their turn with trainers or geniuses. It could easily become a focal point for Mac fans to gather and simply talk Mac stuff.
Overall, the Apple Store is a very well thought out and set up operation, as it should be given Apple’s attention to detail and the fact this is the 215th Apple store.
It’s a great flagship for Apple’s Australian operations and is going to be very interesting to see the role the store plays in the iPhone release next month.
Apple’s announcement the iPhone will be released in Australia through Optus and Vodafone sets the stage for a good fight in the mobile phone sector over the next twelve months.
Leaving Telstra out of the deal is going to put a lot of competitive pressure on the big T, but their advantages in brand name, market position and mobile coverage gives them plenty of scope to fight back.
Another interesting angle on this is the pricing. The $199 and $299 US dollar prices will probably translate to around half the price of the comparable Blackberry and a third of the Nokia smartphones. This is really going to make the incumbents sweat.
So we’re going to see some terrific deals over the next few months and the carriers and handset manufacturers jostle for space in the market.
If you’re looking at buying a mobile phone the best advice is to wait a month or two.
Telstra’s new bundled plans offering a free laptop with their wireless plans is a good move to improve take up of wireless Internet.
It’s surprising none of the providers haven’t offered these deals sooner given entry level laptops are cheaper than mobile phones and these plans have proved an resounding success in the mobile industry.
As with all these deals, the devil is in the small print. You may be getting a “free” laptop but the cost of the wireless broadband will easily make up for this. The total price of the plan over the 36 month contract is $3,564 which would buy you a lot of laptop.
36 months is a long contract and we can expect to see prices drop and better deals appear as the other companies respond.
Also, a $700 laptop is a pretty basic beast many business users will find doesn’t meet their needs.
Overall, this is an interesting deal that’s going to radically change the business market. However I’d recommend most users sit and wait to see what other deals become available.
The new Federal government’s budget shows Canberra as lost on IT and communications issues under this government as it was under the Howard administration.
An interesting development was the continuation of the Australian Broadband Guarantee. This flags the likelihood that all the proposed broadband rollouts are really still born with the 4.7 billion proposed being absorbed into the general 20bn building Australia fund.
It seems the obsession with controlling the Internet will continue with the trial of ISP based filtering to go ahead. At least we’re getting a few more details on how this will work, although I’m still not convinced our Federal politicians have any inkling of the scope of resources required to run this program effectively.
The changes to software depreciation rates and fringe benefit tax rules for laptops are a negative marginal effect which shouldn’t really change much.
Overall, this budget is best described as “mostly harmless” to the Australian tech scene.
Australian Internet providers must be wondering what they did to upset the new government. Not only does the Rudd government want ISPs to filter the Internet, they are now considering forcing them to police copyright infringement.
This idea that ISPs should monitor their customer’s usage is bizarre, not only will increase ISPs overheads but it will also mean thousands of users will be accused incorrectly of having copyrighted material on their computers.
The frustrating thing with this flawed proposal is that it protects the incompetent and greedy record labels while nobbling the telecommunications infrastructure most industries increasingly rely upon.
Rampant corporate welfare, favouring sectional interests and ignorance of the growing role of the Internet and communications were some of the reasons the previous government was thrown out.
If the Rudd government repeats these mistakes, then we can only conclude the problem is endemic in the Canberra public service and beyond the scope of either political party.
Hopefully both the Australian and British governments will throw these proposals in the bin, but it’s a worry that the new Labor administration seems to be following in the steps of its Liberal predecessor.
One of the great features of the IT industry is how incoming ministers and Managing Directors stand up and announce how they can save some improbable amount of money on their IT spending.
It always ends in disaster and usually ends up enriching one of the big multinational consulting outfits.
The finance minister, Lindsay Tanner, has fallen into the trap his Liberal Party predecessors fell into by announcing a program to find “double dipping” and waste in IT services.
The most delicious part of his announcement is that he will probably use external consultants to find this waste.
Will cutting senior management and 30% of the workforce be enough for Commander to survive?
The recent travails of Commander Australia are a lesson for all managers and business owners in technology industries.
When Commander were floated in January 2000 they had a wonderful position in the market with over 100,000 small business customers and being the name for small business communications systems. No competitor could come close to them.
So how did they manage to get themselves into a position where their stock price has dropped 80% in six months?
The first point was they became greedy; as the former small business arm of Telstra they tried to overcharge for the older systems many of those 100,000 customers had. So clients went elsewhere.
Faced with a declining market share they decided to look to new markets rather than examine why their core business was shrinking; they went on a bank funded acquisition spree.
Like many managers in the technology sector, the managers of Commander didn’t understand their own market. Nothing shows this better than the references to computer hardware in their announcement to the ASX.
In the ASX presentation they blame in part the “low margin” hardware business. This of course begs the question as to why they were there in the first place.
It’s no secret margins are awful in the white box business. Unless you have a very good business model you can’t survive in it and it’s questionable whether CDR had a model at all.
The lesson from Commander’s demise is that the technology sector is a tough market and to survive it takes tough management who understand that market.Too many businesses, like Commander, think a few acquisitions can grow their business into markets they don’t understand.
In Commander’s case they went into the IT hardware and enterprise support markets. These markets are as different as chalk and cheese to each other and totally outside Commander’s core telecoms business.
Personally, I think Commander is doomed. The brand name is tarnished and there are thousands of more nimble, better run competitors. It’s certain many of those competitors have learned from Commander’s mistakes.
Nothing gets tech people crankier than a call from a client or relative about a computer problem on Christmas Day. So at PC Rescue we’ve posted a quick check list on avoiding the common traps.
Merry Christmas and happy holidays from all of us.
