The Constant Observer

Yesterday we dealt with the idea of a Value Proposition and went deeper into the idea of ‘generic benefits’ that consumers experience (something that was floated in Part 1).

Today I am going to try and give you a closer look at Innovation and whether it should be branded. I will possibly try and outline where innovations tend to be over branded and how branding a technological innovation may ultimately lead to leadership.

I noticed something peculiar with Google Gears – it is probably one of the few Google Brands that does not have a completely generic brand name. You have GMail, GTalk, Google Reader, etc. True there are benefits of generic names and Google is probably not that great an example because its core brand has immense equity. But I think Gears is an attempt by Google to brand innovation.

Consider the iPod, iTunes, The Kindle by Amazon. All of them were technological innovations in their own right. Consider how they would have sounded if they were called Apple MP3 Player, Apple Music Software, and Amazon Electric Book Reader. Branding an innovation is central to the longevity of an innovation.

I also think that Branding an innovation is part of the ‘Generic Benefit’ that can be offered to the consumer in terms of the way he or she ‘feels’ and the way others look at and perceive him or her.

There are however, dangers of over branding – putting brands on innovations that do not warrant them in the 1^st place. What ultimately happens then is that the brands are created but later not supported.

Branding too can thus create a Shakespearean dilemma and make Brand Managers and CEO’s modern day Hamlets.

Branding an innovation or rather over branding an innovation can happen when there is a marketing or technical person who has brought up his or her baby through all kinds of meetings, budget reviews and then ultimately wants the innovation to have a name so that customers can identify with the innovation the way he or she does. So more often than not, brands are provided to innovations and the result if a large variety of brands, with a lot of underfunding, confusion, and lack of prioritization.

So ultimately the goal of branding an innovation should not be an excuse to slap a name on anything and everything.

I should probably provide an example from Foxy here. We have Foxy - The Services Brand, BeFoxy, BeFoxy TV, and A Network. Now BeFoxy is going to be our latest brand and it deserves to be branded solely because it is a property that is not easily available at other similar websites.

To have different brands there has to be differentiation in terms of processes, mind power, possibly even the work space.

While there may be a tendency to over brand innovations, there are also dangers in not branding and not identifying innovations, working on a family of brands and working on their tactical and strategic roles.

While branding an innovation, the 3 key questions that need to be asked are:

1) Is it a significant advance?

2) Do customers care?

3) Will it merit investment over time by bringing in sales and profit, market leadership, and other me too products?

Next post:

I will try and dwell deeper into these 3 questions that Brand managers and marketers need to ask.

If you have any similar examples of branded innovations that did work or branded innovations that were not branded, please do share them – I’d love to have the opportunity to learn and fine-tune my thoughts!

The number of ‘active’ Internet users in India currently stands at 32.2 million. In my post on the real internet ‘user’ I pointed out the problem with the word ‘active’ and other things that may be painting a picture that’s less than accurate with respect to the number of Internet users in India.

If the figures of the TRAI are to be believed, then it seems like mobile internet is overtaking broadband in a big way. Again the question is how often are people logging in? How much time are they spending? What is their use experience like? What are the capabilities of the Internet vis mobile?

Here are a few reasons as to why the mobile internet phenomenon is likely to be more sustainable than the Internet revolution:

-       There are low start up costs and low barriers to entry. A mobile phone is relatively cheaper than a computer. So it is more accessible than a computer.

-       A mobile phone is with a person most of the time. Well a laptop can be with a person as well but the real mobility factor inherent in a laptop is minimal – especially while travelling in crowded spaces which is what a lot of our country’s socio demographic spatial scenario is like.

-       Currently, Internet on the go is not available by any players other than telecom players. They use a GPRS or a CDMA format. So there is technically no high quality broadband on the go currently available. So in a sense, the same speeds for the internet on a laptop and the internet on a mobile are technically available. One has to also keep in mind that there are higher start up costs to use the same internet that is available on a mobile phone on a laptop. It costs around Rs. 3000 to buy a USB stick which gives you access via CDMA from Reliance or Tata Indicomm. For the Airtel GPRS enabled USB’s, the cost is slightly higher. So there are obvious cost advantages for the mobile as well.

One of the key learning’s from the mobile Voice revolution in India is that simplicity is the key to success. With a large population, that’s not extremely literate, success initially comes if a device offers obvious benefits that are simple and easy to access.

In developed countries the name of the game is ‘feature richness’. That phase will come to India as well – but maybe a few years later. Initially its all about getting individuals roped in to a technological phenomenal where there are no or low ‘perceived’ barriers to entry. The access to internet via mobile must not ‘appear’ elitist. If it does the entire brand of ‘mobile internet in India’ will have an intimidating feel which is never a good thing because operators can make revenues only if they rope in more people and have them using the Internet via the mobile often. 

In terms of allaying such fears of the Internet being elitist I do not see much in terms of communication happening. A heartening case study in terms of a brand that’s doing a lot of good to the mobile internet scenario in India is Tata Indicomm.

Tata Indicomm’s cheapest mobile internet phones cost around Rs. 2, 300. They have reasonable browsing capabilities and have been taken on by consumers in a big way.  

Apart from offering low cost phones, Tata Indicomm now offers internet packages that are extremely reasonable. 99 Rs/- a month unlimited access. Such pricing strategies will go a long way in accelerating the growth of mobile internet in India. For mobile Internet, pricing is the key element of the marketing mix that will probably allay fears of mass users. I don’t see any other operators doing enough. Some of the plans on Airtel and Vodafone are ridiculously expensive. On the GSM operators, one can pay a monthly fee of about Rs. 500 for unlimited access. For those not willing to pay those kind of fees, the cost is about 10 paise per 10 KB. On standard mobile browsers, a site may take up to 100 KB to load. So that model, even though it seems cheap, really isn’t.

This takes me to my next point – the mobile internet browser.

One of the other innovations that may aid the spread of mobile internet in India is the mobile internet web browser. On a normal mobile web browser, as stated earlier, it may take about 100 KB to load a website. So generic web browsers are taking up a lot of bandwidth that’s not necessary and also time, which makes the use experience less effective.

Apple has gone a step ahead by releasing Safari Mini. There is also Opera Mini. Both these browsers are extremely effective in the sense that a page takes about 15 KB to load.  The problem with these browsers is that they are not effective when it comes to the installing of mobile applications which have to be installed only through the generic mobile browsers. I see this problem being resolved very soon as phone companies will probably buy out technologies that will make the use experience better for their customers or integrate their services with these web browsers.

Specific specialized web browsers are also really effective when it comes to the arranging of content on the mobile screen. In a sense this is one more thing that probably hook the users on and give them an incentive to browse again.

Infrastructure to provide high speed internet over mobile phones still remains a problem which will have to be solved soon in order to maximize the capabilities of mobile Internet. A lot of phones are now available with Wi – Fi capabilities. In the future one may see 802.16 Wi Max enabled phones as well. That’s where the real action is going to be. High speed low cost internet over mobiles.

This week, a premier operator (Vodafone) experienced a failure of its voice services. Click here to read more on that.

If the infrastructure problem is not solved, and if there is no reinvestment into latest technologies by telecom operators, one can try and optimize the use experience and the prize of handsets as much as possible – the real fruits of internet over mobile can be enjoyed only with an infrastructure that’s superior. 

An emerging technique for new product development and technology optimization called ‘evolutionary design’ makes sure that while solving the problem of developing the ‘optimum’ product; a computer possibly runs through more than tens of millions of possible solutions.

To be entirely honest, evolutionary design is not a completely new concept. It has been used for quite a while in the development of aerodynamics for cars (supercars mainly), the modification and optimization of plane wings, and other aerodynamic related fields. The problem with evolutionary design was that it was restricted only to the larger firms who could afford the super computing power needed to generate more than 10 million ‘product gene’ modifications. The interesting development has been that primarily, the cost of super computers has fallen and this technology now comes within the reach of firms, which may not be mammoth in terms of turnover and market capitalization.

 As the name suggests, evolutionary design uses some mechanisms inspired by biological evolution: reproduction, mutation, recombination, and selection. This is done so with the help of an evolutionary algorithm, which takes into account all the possible solutions to altering a problem. It does so through the mutation of a basic blue print.

Anyone who knows the basics of evolutionary biology will tell you that most mutations are worse than the original. Few are progressively better. With respect to product and technology development, an evolutionary algorithm ‘identifies’ these better mutations and thus makes it possible for existing products to be more efficient.

The Evolutionary Algorithm for Products works like this:

1) It takes the design parameters such as length, width, height, current, voltage, material etc. into account.

2) It treats each aspect of the product as a different component.

3) It then tries to put together all possible combinations of the different aspects of a product and come up with the best possible solution.

Here are a few examples on product innovations that have come forth through evolutionary design

‘At the University of Sydney, in Australia, Steve Manos used an evolutionary algorithm to come up with novel patterns in a type of optical fibre that has air holes shot through its length. Normally, these holes are arranged in a hexagonal pattern, but the algorithm generated a bizarre flower-like pattern of holes that no human would have thought of trying. It doubled the fibre's bandwidth.’ (generated from The Economist)

There are also other uses, which have been developed with respect to cochlear implants. The cochlear implant is often referred to as a bionic ear. Unlike hearing aids, the cochlear implant does not amplify sound, but works by directly stimulating any functioning auditory nerves inside the cochlea with electrical impulses. External components of the cochlear implant include a microphone, speech processor and transmitter, which also provides an individual to adjust the sound for quality and amplification. So in essence, about 20 or more combinations of electrodes need to be precisely adjusted for EVERY individual in order to adequately stimulate the auditory nerve! Evolutionary algorithms are now allowing doctors to solve the problems of patients within weeks (a task that previously could often take years).

Evolutionary design could affect ‘super specialized’ businesses as well. A research team at Stanford University prepared a Wi – Fi antenna for a company that did not want to pay any patent fees to Cisco. The team basically fed in all the possible product dimensions and specifications into an algorithm and developed a product that worked around Cisco’s patent and was actually a better product!

So in a sense this is the death of new product development right? Well not really – as new individual needs evolve and people look for new benefits from technology, new products will automatically evolve. Also, evolutionary design develops the most optimum design for products with a given set of ‘raw materials’ so to speak. So in a sense it only develops the ‘best possible solution’ from what is fed in to it. There may be inputs for development that product developers and researchers may still not have discovered the use of. One must keep in mind that an algorithm is a list of well-defined instructions.

Also what Evolutionary design does is that it makes the product perform better. Now with respect to commercial and business products, this means that there will be fewer product defaults and a benefit in overall productivity hopefully. What evolutionary design still cannot do is this – it cannot create a better ‘use experience’, which may arise out of software that is culturally ingrained (eg. Linux is a better programming platform and technically the ‘superior software’ but Windows still sells more as it is psychologically and culturally accessible).

The aesthetic design element will thus play an even more important element in the purchase decision of consumers while deciding which product to buy because most of them will be ‘superior performers’.

It will all boil down to who understands the consumer better, creates a better brand and use experience keeping in mind culture, values, traditions, personal goals etc. (or will we have an optimizer for that as well?) 

A recent report by media analysts Screen Digest reveals that by 2011, 30% of all European households will have true Video on Demand capabilities.

As stated on Wikipedia, Video on demand (VOD) systems allow users to select and watch video and clip content over a network as part of an interactive television system. VOD systems either "stream" content, allowing viewing in real time, or "download" it in which the program is brought in its entirety to a set-top box before viewing starts. The latter is more appropriately termed "store and forward". The majority of cable and telecommunication based VOD systems use the streaming approach, whereby a user buys or selects a movie or television program and it begins to play on the television set almost instantaneously.

By that definition, one can already observe that approximately 2.5 million households in India already have access to VoD facilities. These are the households that have DTH services installed for their TV’s. A miniscule 2% (India has approximately 110 million TV households) but a number that is definitely slated to grow as costs drop further and the logistical benefits of DTH are more apparent to the masses.

One looks at the history of VoD in Europe, one can see that in the early days 60% of revenues came from blockbuster movies. We expect this to be the scenario in India as well – and this is already being seen with respect to the kind of VoD services such as Tata Sky and Dish TV offer.

In 2006, revenues from blockbusters in Europe dropped to 30% and people were demanding more content related to sports. This may happen in India if people stop buying bouquets and choose to view sport related content match by match. Thus if viewers are not watching Neo Sports all day and they feel that they need it only for the match, they may pay an access fee only to watch the match live and decide to forego the entire month’s payment for Neo Sports. This kind of a strategy has also taken off in the US as well where people have less time and do not necessarily watch all the matches thus they find it useless to pay the monthly fee and it is a better option for them to pay only for the matches they watch.

It may seem that video on demand seems very similar to pay per view. That is because it is. The only difference between VoD and PPV is that in pay per view systems, The event is shown at the same time to everyone ordering it, as opposed to video on demand systems, which allow viewers to see the event at any time.

In the future, VoD services will probably generate more revenues over the internet or they may follow the current television model and be supplemented with ads. The internet though will hold an advantage because ads can be contextually sent to users keeping in mind their IP addresses. This will also gain increased relevance in India as broadband speeds further increase.

Looking at the Indian scenario and India’s changing environment, we have seen that companies are forming alliances and joint ventures e.g. Broadcasters are creating strategic alliances with digital networking companies and teaming up with Internet companies and wireless providers to stream programming, both over the Internet and mobile devices. Technology companies are  also creating alliances to support the expansion of digital and mobile distribution of content.

The future of VoD worldwide certainly seems to be showing promising signs as a result of which people have been talking about the death of cable TV and the like. In India however, the mass proliferation of these services will still take a long time.