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Yahoo! just redesigned the Yahoo.com home page, its crown jewel for a decade. The big change is a bar on the left with widgets that display updates from Facebook, Gmail, New York Times and some 60 other sources. The company made a big deal of it, but on the whole it’s failed to impress.

I won’t regurgitate the bucketfuls of painstakingly-written criticism of the redesign itself that I’ve read over the past few days. In any case it’s too early to measure the impact of this change. I think the problem with the lukewarm, even negative reviews was with how Yahoo! announced the change to the world. In other words, this was a communications, not an execution problem.

Why everyone said “Ho-Hum”
The verdict is that this is old hat, and too little to make a difference – and there’s reason to be skeptical. The web has seen at least two major paradigm shifts since the late 1990s (first search and then social media), but Yahoo! has persisted with the original portal paradigm – making money off visitors to its home page by keeping them on its properties. But Yahoo! now ranks 2nd behind Google as the most visited property on the web – and Google makes money by sending people away from its search page!

Yahoo! is under tremendous pressure to 1. innovate and 2. stay relevant in the future. Any move by the company needs to score very well on these two parameters. Redesigning a home page, however dramatically, is not such a move.

Let your users say how great it is
Any pragmatist at Yahoo! would have anticipated that news of a home page redesign would not be seen as game-changing by itself – either by Yahoo’s users or by its advertisers [1].

That’s why it probably made more sense to simply spread awareness of the impending redesign than to generate buzz and create hype. CEO Carol Bartz called it “most significant change in our home page since the company’s inception”. So what? While the redesign effort was probably significant internally (money, time, CEO attention), it’s presumptious to assume users will find it just as significant. Bring out the tom-tom drums after your users have given you the thumbs-up.

As for advertisers, Yahoo! would probably have been far better off sharing metrics with them on a one-on-one basis after the launch. Display new targeting capabilities. Show user adoption rates. Show clickthrough statistics. Things that will bring a grin to advertisers’ faces, especially when they’re under pressure to get the most bang for buck with dramatically reduced budgets. Of course, all this is only if the redesign really works.

In other words, it’s time for Yahoo!, in an infinitely more transparent world, to put its money where its mouth is.

[1] No kidding. Tapan Bhat, Sr. Vice President at Yahoo, crowned himself Supreme Emperor of Unintentional Irony by declaring that the new home page would put Yahoo! at the “center point of people’s lives online.”

For the longest time, the only two entities that made money from a mobile phone were the carrier and the handset manufacturer. Open and shut [1].

No longer. Not only are more mobile phones being sold now than ever before, there are more types of folks making money off it. For smartphones with an ecosystem such as iPhone, there is

- Apple, the iPhone manufacturer

- AT&T (in the U.S.) that provides cell phone connectivity

- tens of thousands of developers who sell their iPhone applications through the App Store (with Apple getting a cut). And this is not just indie developers. Amazon stands to make a huge bundle through book sales via its Kindle Reader app for iPhone [2]

- businesses that create free iPhone applications but make money off ads within their applications [3]

- record labels that offer their music for sales on the iTunes Music Store

- television networks and Hollywood studios that offer their TV shows and movies (respectively) for sale/rent, also on the iTunes Music Store

Of course, this runaway success has inspired every smartphone label to scramble to bake its own pie. Witness the plethora of application stores (Palm, Nokia, Blackberry, Windows Mobile, Android) [4], and Nokia’s attempts to sell music.

 

Open or closed?

The more mature a product category gets, the more players there are that stand to make money off it. That’s because the pioneer quickly realizes that for true scale, it must “open up”  the product to entities other than itself. And that’s where it seems we have from history, a clear lesson: IBM opened up the specs of its original PC, and hordes of beige box manufacturers crowded Big Blue out of its own market. Apple itself nearly destroyed all that the Macintosh stood for when it licensed the Mac to other manufacturers.

“Opening up” a successful product and creating an open ecosystem divides the pie into so many slices that the pioneer is left picking up only crumbs. Apple’s iPhone ecosystem has been “opened up” to all those players above through the iPhone OS developer API, the iTunes Music Store and the iPhone App Store, but the ecosystem itself remains tightly closed.

 

[1] OK, so there were (are) electronic component manufacturers on the source side and advertising agencies on the sell side. But let’s limit ourselves to those that gained directly from the mobile phone. 

[2] Also with iPhone OS 3.0, developers can now charge for features within the application (unlocking extra weapons and purchasing weaponry within games being the most commonly cited examples), so you could have a free basic application with paid features if you like. Before OS 3.0, the best that developers could do was offer separate “free” basic and “paid” full-featured apps.

[3] Take Twitterific, for instance. The free version of the application inserts ads into your tweetstream.

[4] With comical attempts to make them sound different (Palm Software Store, Nokia Ovi Store, Blackberry App World, Windows Mobile Marketplace, Android Market). 

When it comes to the Internet in India, the low-hanging fruit has beeen picked, across sectors. Think Travel. Books. Jobs. Dating. Electronics. Money. In his post today, Rajesh Jain lists a few more: Search (dominated by Google), News (Rediff, NDTV, CNN-IBN), Email (Yahoo, Google, Microsoft, Rediff), Cricket (Cricinfo/ESPN), Video (YouTube/Google).

Online pioneers have lapped up the biggest brands and most popular goods: the largest cities, the biggest hotel chains, the most popular travel destinations, the widest marriageable demography, the most desirable gadgets, the most viral videos, the news everybody reads, the the matches everyone watches.

Now comes the hard part. The cities only a few want to travel to [1], the outliers for whom it isn’t easy finding a match [2] , books in regional languages, people with odd skills, niche but tremendously useful gadgets, highly technical videos. There’s a market for all those. In aggregate, they’re as large and lucrative as those that have already been monetized [3].

Then there’s an even larger market – for individual professional services. The mother of all yellow pages, with a location-based and rating-based component. One that connects me to the nearest puncture shop when my car has a flat on a stretch of highway (and takes Rs. 10 for that connection), directs me to the nearest ATM in any city, to the most reliable service center for my phone.

There is no technological barrier to setting up these businesses anymore (you really don’t need broadband for most of this – just plain Internet access, and in some cases, a cellphone). What makes this hard is convincing small businesses/individuals to sign on. Building trust and credibility. Selling to Jet Airways is much easier than to Pravin Puncturewalla on a random national highway. If you’re willing to tackle that, you have a successful business.

Finally, Rajesh has a compelling vision of the “now-new-near” web, which you should read. I think that “niche” is about as much the future as the others. I also think that “now” and “new” are synonymous for the vast majority of cases, so I propose that tomorrow’s web will be the “now-near-niche” web (built around the evolving Internet Operating System)

[1] RedBus.in is doing a spectacular job with that, by my estimates. Driving to work today I spotted a travel service that did a Hyderabad-Kolhapur (!) bus route. And hey presto, Redbus.in has that route listed.

[2] Secondshaadi barely scratches the surface, but hey, it’s a start.

[3] Yes, yes. It’s the same old tired Long Tail phenomenon. Let’s set aside discussions of how cool the phenomenon itself is and why it works, and explore how you can build businesses in India with it.

Small and medium businesses can’t afford splashy advertising campaigns on TV and billboards that large corporations can, so their marketing strategies need to be smarter.

The most popular of the smart marketing strategies today is about building customer “stickiness”. Making your customer return to you for repeated service. Staying engaged with him/her. Online, you’d do this by creating, say, a Twitter account with updates about new deals,coupons and discounts [1]. Or staying in touch through a company blog. Or having your customers sign up for a regular newsletter (so old school). Or building an iPhone application (so hot!)

Stickiness is often held up as the best way to market a small business. But the basic assumption of stickiness is that you want your customers to return repeatedly. What if your business just isn’t like that? What if you’re a user-car evaluation service? Or an apartment broker? Regardless of how much they love you or your service, stickiness is no use with them.

Your marketing strategy then needs to focus on referability: getting existing customers refer you to other potential customers. Offline, you could offer your customer, as part of the deal close, a choice of one piece of merchandise: a t-shirt, a key-chain, a cap, a set of stickers, whatever. Online, you could build a Facebook application that your customers could display on their page. For the apartment broker business, the application could have you enter your location, size of apartment, approximate rent and display snaps of sample apartments, with directions to call you. You get the idea. If your customer is satisfied, he/she will be glad to help you with this.

Your business needs to choose between stickiness and referability. And it’s not an either/or choice. Sticky customers are also likely to refer you to their friends. Also, customers that care enough to refer you will come back to you. But the focus of your marketing strategy must be one or the other.

 

[1] Dell is doing this pretty well. It’s not a small business, but the principle remains the same.

GigaOM announces the release of Microsoft Internet Explorer 8

So far [Microsoft] has been on the losing side of the equation, ceding market share to its upstart rivals, all of whom are touting ease of use, simplicity, security and speed. Microsoft’s browser chief, Mike Nash, thinks the new IE 8.0 has got all that and more.

So true, except that none of it matters to Microsoft. If it cared about  “simplicity, security and speed”, it’d install Firefox + extensions with every copy of Windows.

It’s become pretty clear that the only way you can make money off a browser is by driving traffic from it to a search engine results page with advertisements. That’s how Mozilla makes over 80% of its revenue – driving traffic to Google from its search box and its default home page.

Earning revenue from ads on Microsoft Live Search pages through IE traffic is the only imperative driving IE development. And its getting costlier by the day to keep up with the competition.

Market segmentation by demography, by population, by purchasing power, by usage, by geography – marketers have used all these to plot product targeting.

But segmentation by product features alone?

That is what several well-regarded bloggers were doing when the Sony Vaio P was launched at CES in January.

Was the Sony Vaio P a netbook or a notebook? After all, it was ridiculously small, light and portable. That made it a netbook. But it was expensive, had a high-resolution screen and ran Windows Vista effortlessly. That made it a notebook. No consensus.

Then some among the tech punditry had a brainwave and realised they had been asking the wrong question. So they sparked another round of heated discussion “What makes the netbook a netbook?” Size? Cost? Operating System? 3G connectivity? Optical Drive? Again, no consensus.

The real question that the real buyers in the real world are asking is “Is the Vaio P the machine that *I* want?” They don’t care a battery’s cell if it’s a netbook or a notebook.

If you think you’re a tech pundit, find who those buyers are. Find what makes them collectively tick. Find why they want what they want.

That’s real market segmentation. And real insight.

Recent smartphones from Samsung, HTC and LG indicate that Nokia’s finally got competition in the high-end space. However, it’s going to take more than engineering skills to succeed in India’s tough mobile market. Consistent phone branding, clear messaging and a solid distribution network are as important, and that’s where Nokia’s streets ahead. Can the competition catch up?

It isn’t about features

There was a time when the only competition Nokia’s smartphones had was from the odd, super-expensive PDA-phone that was more the former than the latter. Over the last year though, the competition has dramatically upped the ante in terms of what it packs into a handset.

A case in point is the near-simultaneous release of Nokia’s new flagship phone, the N96, and Samsung’s Innov8. The Innov8 outclasses the N96 on nearly every count, making it a widely-awaited contest. And that’s not the only notable example: the Samsung Blackjack II is a very capable Windows Mobile QWERTY phone, matching Nokia’s E61i. The Samsung Instinct was hailed the iPhone killer, offering a full-face touchscreen with touch feedback – touchscreens are something Nokia doesn’t even have in the market yet. LG’s not far behind in the race either. The LG Viewty, released around the same time as the N95 sported a 5MP camera with “image stabilization”, and a touchscreen.

Yet, in spite of these releases, both Samsung and LG lag far, far behind Nokia in the Indian smartphone market. Admob’s June 2008 Mobile Metrics review states that 97% of ad requests from smartphones were from Nokia handsets. It’s more or less clear that Nokia’s built a solid reputation in India as *the* smartphone brand. And at the heart of that is its N and E series branding strategy.

Nokia’s smartphone strategy: Product, Brand, Distribution

Nokia’s strategy of creating two lines of positioning for entertainment (Nseries, with advanced imaging, video, internet and gaming capabilities) and business (Eseries, with focus on connectivity, productivity and email) certainly seems to have paid off over the last 3 years.

Nokia’s used these brands to create multiple, successive communications campaigns around the terms “Nseries” and “Eseries”, which marked a break from the number-oriented labeling custom. Consider Nokia’s own phones; could you infer anything at all about the 3650 from its name? The 7610? The 9200? Contrast that with, say, the N81 – I can tell at a minimum (because its an Nseries) that it’s a phone with reasonably good looks, stereo music, large storage capacity and a 2MP+ camera. Here’s a decent article about Nokia’s efforts to build the Nseries brand. Ditto for the Eseries.

Finally, think about the massive investment Nokia’s made in its dedicated priority and concept stores. While it already has an extensive distribution network for its low-end line (see the section “The Distribution Edge” in this article on Knowledge@Wharton – free reg. req’d), these stores are a great way of showcasing your top-line phones to people for whom the purchase is a high-involvement decision.

Samsung’s strategy (or the lack of it)

While this is a discussion about Samsung, it holds equally – if not more – true for other handset manufacturers.

In contrast, Samsung’s strategy seems to be all over the place. No, let me correct that – I don’t think they have a strategy. They know at a minimum that their phones need to do music, video, photos, the Internet, and that touchscreens are good to have. That’s about it.

From a product perspective, there doesn’t seem to be any great deal of thought on timing launches (relative to market conditions or relative to previous releases). Further up the development cycle, what features go into which product (or, more importantly, what features to leave out). Or even further up the cycle, what OS to use on their phone (they use several).

On the marketing side, from a branding perspective, each phone seems to be a brand unto itself. What can explain names like Innov8, Instinct, Glyde, Blackjack, F-480, SGH-i780, U900 Soul? (All are recent releases packed with features). There’s no consistent product look (you can, in one look “tell” that a phone is an Eseries device, can’t you), color or name.

If your phones don’t use a consistent Operating System (the way Nokia uses Symbian+S60), it’s impossible to develop an active developer community. If you don’t have a consistent brand identity, it’s difficult to develop ambassadors for your phones. If you keep developing a different website for each of your phones, its impossible to build communities online.

What markets is Samsung chasing? What positioning is it considering for its phones to gain share in these markets? More abstractly, what do Samsung’s phones “stand for”? What is the message they’re trying to get out? Even SonyEricsson has a rudimentary strategy that says “We make entertainment-centric phones. Some of them make great music devices – the Walkman series, other are great for photography – the Cybershot series”. HTC has a less clear strategy around its Touch line of phones, but at least they’ve got a consistent name and OS in place.

From an advertising perspective, the only shred of consistency I’ve seen over the past months is the “Next is What?” Samsung campaign. However, I don’t see the campaign tied to a product that anyone will remember. Nokia, on the other hand, has run periodic campaigns for each generation of devices it releases – in print, on TV, online.

From a distribution perspective, I don’t see why Samsung doesn’t leverage its extensive distribution network for its home appliances and entertainment devices – it’s a channel where it has one heck of a headstart on Nokia. I see digital cameras and Indian-manufactured laptops sold in those sorts of electronics stores. Phones seem to make just as much sense.

Conclusion

While the Indian mobile market is (still) seeing explosive growth, the high-end of the market is maturing. The implication is that features are no longer the USP for a smartphone; brand is. And how well you communicate that brand to your audience. Nokia has done a stellar job since 2005 by investing in its Nseries and Eseries strategy – in product design, marketing and branding, advertising and distribution. The competition seems to already have the engineering capability to match Nokia. But it needs to get its act together if it needs to take on Nokia in the marketplace.

Xobni is an Outlook plugin that has proven remarkably useful in managing managing bloated inboxes. It’s generated its fair share of buzz lately, and most users seem to love it. Apart from a clutch of very well-implemented features, what it is about Xobni that make it such a inherently popular tool?

Visibility: Xobni is a sidebar for Microsoft Outlook 2003 and 2007. With tens of millions of people using Outlook at work and, indeed, spending all day in it, Xobni is constantly in its users’ view. Contrast that with applications like Facebook, which live in a tab in your browser and will be out of view most of the time. (Serendipitiously, widescreen monitors are more popular than ever before, so a sidebar works well).

Ready-to-go: Unlike Facebook, xobni doesn’t need a first-time user to enter profile information, build a network over time by inviting friends, or accumulating wall posts or scraps. Xobni uses as fodder the tons and tons of information that’s already accumulated over the years in your inbox. That means once it’s done indexing, Xobni gets you up and running right away – discovering your network instead of you building it.

Intent-based: Xobni understands how you ‘do’ email. Users don’t view email as a chronological list of tasks at all – they either want to look at email as boxes of tasks (or projects or events), or as a collection of people whom they talk with. Xobni does the latter, and very well. So it’s a cinch looking up attachments from a contact, or the time of day you typically communicate with someone, or schedule time with someone.

Cool: Xobni’s done a terrific job of being viewed as something cool to transform drab old Outlook into. That’s why so many early adopters have turned passionate evangelists.

Do you use Outlook at work? Have you given Xobni a spin? What else (apart from specific features) do you think makes Xobni popular?

Seth Godin quotes Gavin Potter about the 21st century being about ’sorting out demand’. “When your messages reach the right people at the right time in the right way, magic happens”, Seth says.

Social networks are changing that. In fact, Facebook and its ilk are obviating the very need for traditional STP (segmentation, targeting, positioning).

Why? Because one, Facebook has made it easy for developers to create applications that run inside of the social network itself. Think the ever-popular Scrabulous. Two, there is a massive swarm of people on Facebook that represent every possible demographic, spanning all sorts of likes, dislikes and tastes. Last, the viral nature of communication makes it easy for information to spread through the network.

This means that marketers can now stop thinking of how to segment and reach out to their audience. Once an application’s been created, simply “drop” it into the network; the swarm will pick it up. The network will figure out the target segment by itself. It’ll definitely reach the segment the marketer had in mind; chances are it’ll also reach several other audiences that the marketer didn’t anticipate.

The flip side is, of course, the utter lack of control. Apart from the application, both positive and negative feedback could spread alarmingly fast too. The latter could prove fatal in the early stages of distribution.

In a sense, this is similar to viral marketing campaigns carried out over email (Yahoo!’s and Hotmail’s campaigns about their own service by tagging on a small line at the end of every message) and other channels. However, back in those days, all a marketer could do was spread a message to “pull” the audience to the advertised service. Today it is the application/service itself that’s being spread.

There’s no Pull, no Push, only Release into the Wild.

Sramana Mitra wonders what Jonathan Schwartz is thinking after being elevated to the hot seat at Sun:

SUN, like Apple, has made its mark as a vertically integrated computer company with proprietary computer hardware and operating system. However, unlike Apple, the importance of the computer business has become questionable. The significance of the OS is questionable. The relevance of the chip business is definitely questionable.

To re-invent itself, Sramana avers that Schwartz ought to be looking for one product that Sun can use as its competitive advantage. In other words, the million-dollar question is “What is my equivalent of the iPod?”

Indeed. Is it Sun’s servers? Surely not in the hopelessly commoditized market, where “cheap eats better” is the norm. Is it SPARC? Nopes – Intel and AMD rule the roost here, and Sun, even under Scott McNealy, realized that, by releasing Solaris for the i386 architecture. Is it Solaris?

This is probably Sun’s best bet. Linux, although very popular, has nowhere the kind of brand that Sun has built up around Solaris 10. This is one area where Sun has gone about its marketing with a kind of holy zeal. And Sun has put in a lot into the OS – Dtrace, ZFS, Predictive self-healing, and Zones. Now is the time to decouple the Solaris brand from the rest of Sun’s hardware and make it an enterprise OS across vendors’ server lines.

Releasing Solaris to the Open Source community is also a very strong strategic move. If Scott McNealy is recognized as the father of the Open Systems revolution, then opening up Solaris must be his most significant achievement. It is upto Sun now to build as enthusiastic a community around Solaris as Linux has, and that is the challenge that faces top management at Sun. Blogs are one way of accomplishing this – getting the most out of Bryan Cantrill, Adam Leventhal, Eric Schrock, Mike Shapiro, Alan Hargreaves, and even Andy Bechtolsheim, one of the original founders of Sun and still one of its most respected individuals. Get them to discuss their vision, their code, their problems online, solicit opinions from developers across the community. Sun’s engineers are its biggest PR officers – get them to attend and speak at Developer Conferences, host Solaris-specific equivalents of the Ottawa Linux Symposium, even participate in events like the OLS.

Sell the Solaris brand as a sort of a “premium Linux”. Adopt a more Cathedral-style approach to its development (as opposed to Linux’s bazaar-style), but always develop in the community, not inside hermetically-sealed labs inside of Sun. Those kind of days are over. Sramana answers the iPod question in a related way:

“What are SUN’s major assets? The brand, particularly the enterprise computing brand is perhaps the biggest at this point. But we are trying to leverage it in very traditional ways, mostly by selling servers and services around servers, while margins in that business keep shrinking. We need to get out of this commodity business, and find a related but non-commodity niche.”

In the last quarter of 2002, LG Electronics and a few other computer makers introduced a line of PCs into the Indian computer market. Nothing new – except that these PCs came pre-installed with Linux. My initial reaction was one of delight and euphoria! Perhaps 2003 would indeed be the Year of the Linux Desktop – and that India was where the seed of that revolution was being sown!

But sadly, these PCs have failed miserably, in every possible aspect, to make any sort of impact on the massive Indian PC market. They came and went without so much as a whisper. Why? In this essay, I react to this market failure. Using a couple of reports that appeared in some Indian online tech magazines, I discover a few shocking facts about Indian PC manufacturers’ attitude towards Linux.

It isn’t very surprising that LG’s MyPC failed to make any significant inroads into the Indian market. It’s not just cost alone which is going to make users shift from Windows.

LG has been bundling Red Hat 7.3 along with it. A default install of RHL 7.3 would make any linux newbie cringe. It isn’t even as good as Windows 98 as far as looks and ease of use is concerned. (Not that I’m blaming RH for the whole thing.) They ought to have tried Mandrake 9.0, ELX Linux, SuSE 8.whatever, Xandros, even RHL 8.0 (but Bluecurve’s got too corporate a look for the home desktop user). But RHL7.3?!

It just seems to me that this entire exercise of Linux-based PCs was a failure because of complete and total lack of planning. Short sighted opportunism on the part of LG and Champion Computers led them to introduce such PCs into the market. No one is going to shift to Linux just because it’s cheap – least of all the individual home desktop user. He’s got to have compelling reasons to do so.

More than anything else, I find the reactions of the managers of these firms particularly disgusting :

Manikandan, deputy general manager, LG Electronics India said,

According to Kapil Wadhwa, who is the director of Champion Computers,

True, but weren’t efforts lacking on your part? You need to bundle a better OS than RHL 7.3 (at least, a better-looking OS ) if you want to realistically compete with the pirated Win2K -WinXP market. 99% of your target market uses their machines essentially as a games and entertainment machine. Ever thought of the fact that users wouldn’t be able to run these games? Ever thought of bundling Transgaming or some other such software along with it and using this fact as a marketing ploy?

Wadhwa said that it is only after educational institutes begin teaching Linux, that users will begin feeling comfortable with it.

To say that people will start using Linux only if educational institutes start teaching it is ludicrous! Surely people don’t use Windows just because it’s been taught in school?! Did people start to use Windows simply because institutes started teaching Windows, or was it the other way round? MS has spent billions of dollars into user-interface research just so that any ordinary person can use their systems. What about the 40yrs+ generation? They use computers at home and at work without them being taught any of this in school. Computers are easy enough to use without them being taught. Don’t blame the consumer for your faults. You will alienate your market faster than you can say “GNU!”.

What about the visibility factor? This is what Kapil Wadhwa of Champion had to say:

And who, dear sir, is going to create this visibility, if not you? If you want your PCs to sell, and if you know that Linux’s visibility is low, is it not up to you to create it? I would never have known about this LG MyPC thing if I had not been flipping through an obscure channel by the name of TMG Enter where this was a 1-minute report.

Basically, this comment sums it up for me:

said Manoj Kumar of Champion Computers.

These are people who care nothing at all about the real advantages of Linux. They neither know, nor do they care, about GNU, the Free Software and Open Source movements. For them, Linux is nothing other than a cash-saver. Free as in speech, control over software, means nothing to them. That is why they will eventually fail. If they use their marketing skills and money power to highlight the correct aspects of Linux, then they will be able to convert even those who have been using pirated Windows for years.

What about support? How about manuals, guides, included simplified documentation, always-available helplines? What about marketing? Linux-based PCs came and went, leaving quite a bitter taste in the mouth as regards India Inc.’s views on Linux’s advantages.