Just one day after Microsoft announced its phone-based voice assistant Cortana, Apple made known its plan to dramatically improve Siri. With 15 acquisitions under its belt in the last fiscal year, Apple’s latest purchase is of Novauris Technologies.
The UK-based speech-recognition software company has a team of former Dragon Systems R&D employees. Some of its clients in the past include Panasonic, Verizon Wireless, BMW and Samsung for speech recognition system integration.
Apple’s acquisition, of undisclosed amount, is said to actually have happened last year. Analysts have pointed out that the tech giant seems to be working on Siri’s offline capabilities. One of the shortcomings of Apple’s signature voice command system is its reliance on an Internet connection to function.
“Given Apple’s recent CarPlay initiative, the importance of having stable voice command functionality while on the road is increasingly apparent.
“Meanwhile, we can expect to see intense competition from rival Microsoft’s Cortana, which is set to become smarter. Apple is quietly swallowing a number of smaller companies, giving it the advantage of fast integration and turnaround,” says Vivek Sood – CEO of Global Supply Chain Group.
Unlike its rivals such as Google and Facebook who routinely spend billions of dollars on high-profile purchases, Apple tends to acquire smaller tech companies along with their technology before launching new products or features.
In fact, Siri came to life after Apple’s purchase of a company of the same name in 2010.
Kristin Huguet, a spokeswoman for Apple, says: “Apple buys smaller technology companies from time to time, and we generally do not discuss our purpose or plans.”
Also recently, Apple is looking to improve product displays and battery life through a potential purchase of a Japan-based company. Renesas SP Drivers, a unit of Renesas Electronics, develops LCD chips for mobile devices and owns about one-third of the global market share.
Investors are expecting a lot of product launches from Apple, who have just rebounded from the worst monthly loss in a year. Among the anticipated products are Apple’s iTV and iWatch.
Not only developing new products, Apple is also trying to protect its patents. The most recent, yet familiar lawsuit against Samsung, has evolved to include Google.
At the same time, Amazon is taking on both Apple and Google on the TV device’s front. The world’s biggest online retailer unveiled Fire TV priced at US$99 on April 3rd.
“One of the biggest challenges in this TV gadget market is setting up a network of partners that lets you fully showcase your product’s functionality.
“Google’s Chromecast has had recent issues persuading British media companies, Apple is negotiating with Time Warner, while Amazon’s Fire TV already includes Netflix and Hulu applications. The winner will be the one with the most extensive reach within its business network,” said Sood, author of the book “The 5-Star Business Network“. “Gone are the days when companies used to create products on their own and market them on a standalone basis. In today’s networked business world, both product creation as well as marketing required strong ties with an A-class business network.”
As everybody knows, three giants in the tech and software world have amassed an incomparable power in recent years from their networks and their strategies. With a vast range of products, they have stitched up the market amongst themselves. But what are the strengths and weaknesses of each giant?
What are the deep business and supply chain implications of the battle of these Titans?
Each one of them is a Business-to-Business Network in its own way with excellent partners and supply chain participants. Apple has its own ecosystem, which is not just their customers, but also thousands of programmers and app developers as well as millions of sellers on iTunes. That is Apple‘s biggest strength.
The same goes for Amazon, with an ecosystem including a very large customer base as well as thousands of sellers that sell their products on their website.
On the other hand, almost everybody uses Google as a search engine, which means they have the largest market share now in the mobile operating systems with Android. Google also owns YouTube and many other digital properties. Each one of them has a formidable Supply Chain, Business-to-Business Network or Supply Network in its own right.
Yet now, all three of them are facing problems in different ways.
Apple is facing problems because its success has always been based on creating the next big product, especially if you look at Apple’s history (iPod à iPhone à iPad). Now, Apple is launching the new Apple watch, which is not a very successful product in my mind. IPhone 6 is obviously just a minor update of the previous successful iPhone. That is where Apple is currently failing. However, they are creating some really innovative services such as Apple-Pay, which allows you to use your mobile as a NFC-based payment option, and Apple-SIM, which allows you to roam at a very low cost in foreign countries.
Apple continues to profit from past supply chain and product successes, and sits on top of huge pile of cash. Amazon, on the other hand, does not make much profit, although it has a very high growth rate of revenue (it grew by around $24 billion in two years) and still growing.
But they invested in a number of things, which did not turn out that well. This type of experimentation is in the DNA of the company, and at the moment, it is not a big problem, at least not yet. Nonetheless, a couple of these investment, noted by analysts and commentators, have raised red flags in my mind. Amazon Fresh seems to be a resurrection of the business model of an failed company called Webvan, which invested $1 billion in this field and went bankrupt in two years.
Amazon also continues to invest in expanding its business in India, which is a very competitive environment. With local market players who know the local characteristics much better, and a chaotic marketplace, this is perhaps the most uncertain field for Amazon in my view. The competition may not even be from other B2C e-commerce companies; every man with a mobile phone and a bicycle is a potential competitor. Amazon persists in investing in these two markets.
This could be much more harmful to Amazon than their mobile phones or other hardware devices that they keep creating every few months. They are losing money on those but for a purpose: they are trying to lock customers into the Amazon Network. Nevertheless, these products will never replace iPhones/iPads or equivalent Samsung products and will always be number two in customers’ minds.
The question is: Where is Amazon’s next platform for growth?
Amazon’s “unsexy” B2B business, a “$8 trillion bet”, has been growing silently in the background, perhaps making it eight times bigger than Alibaba and the biggest 5-STAR Business Network on earth.
AmazonSupply, a wholesale and distribution hub, started in 2005 and has grown to carry 2.2 million products, ranging from office equipment to industrial components, materials and more. After nearly 15 years of languishing on the wayside, the B2B exchanges are finally coming true, slowly.
Already, wholesalers are whispering about the threats from AmazonSupply; although many specialty wholesalers and distributors are somewhat confident that their turf is safe from the giant’s claws due to their highly segmented market.
Nonetheless, AmazonSupply, Alibaba, or B2B exchanges, could become so powerful that they will suck small players into their enormous vacuum of suppliers. The process can even accelerate if trust keeping mechanisms are built into B2B exchanges.
Seller and buyer ratings, as well as seller/buyer protection seen on sites such as eBay and PayPal are not enough to cover the sheer size of B2B transactions. Even the current rating system on Alibaba will not suffice, should this attractive market grow in the years to come.
Looking at Google, basically revenues of advertisements relating to search engine are stagnating/saturating. Fake clicks are being identified much more easily. People are becoming more careful of what they are spending on online advertisements. Android and YouTube are two engines of growth for Google. Google has declared a strategy of continuing investment in its YouTube products
It is easy to argue that Apple has the best chance of leading the pack in 5 years’ time depending on what kind of new hardware they manage to create in the next 2-3 years. Google and Amazon are probably equal second depending on whether Amazon succeeds in its strategy to capture Business-to-Business markets or whether Google manages to monetise YouTube as much as they can.
Equally likely, new competitors might emerge on the horizon – like superUber! That will be very interesting to see.
ABOUT VIVEK SOOD:
Vivek is the Global Supply Chain Strategist and Author who works globally with large and mid-size corporations to FIX their Business-to-Business Networks in order to their multiply profits.
In that last 14 years he created several new breakthroughs in Supply Chain – including business transformations led by SCM 3.0. His more than 400 projects have spanned approximately 84 countries on five continents, with clients ranging from fortune 500 companies to innovative green technology companies.
Get free extracts of his books and see why thousands of executives at the world’s leading corporations trust Global Supply Chain Group to build brilliant business-to-business network strategy.
We are rapidly growing and hiring. Exceptional (world’s best) Outsourcing Experts, Logisticians, Strategists and Supply Chain should contact me directly.
Follow Vivek here and @GlobalSupplyCG
If you are a HR professional, recruitment or HR consultant – and you think your clients might benefit from these insights about business transformations – feel free to forward this blog series via email or linkedin. The nature of your industry is changing rapidly as a result of forces mentioned in this article.
Most effective business leaders relish the challenge of answering questions such as the following:
If you are as deeply passionate about the world of business and supply chain networks as I am, and enjoy exploring similar questions and coming up with answers that will help immensely in using this wisdom to build your business, then you will enjoy this blog. When General Motors filed for Chapter XI protection in 2008, it also marked the closing of a chapter in modern commerce. General Motors was seen as the paragon of modern American management theory as popularized by Peter Drucker in the middle of the twentieth century. It was at this venerable company that Peter Drucker formed his early thoughts about management as a profession, separation of the ownership from management of enterprise, the key functions of management, division of labour, theory of leadership of enterprise, indeed the very concept of the corporation. His writings were the need of the time, and were picked up by ivy league business schools and corporations alike and formed the basic foundation of management profession. Indeed there was a time when General Motors and the US commerce were thought of as interchangeable entities with popular aphorism that “what is good for GM is good for America and vice versa.” Some people still think this is the case. They see the decline of General Motors as symptomatic of a wider malaise in the US economy. Others think that General Motors will rise like a phoenix again to become an industrial powerhouse. While we do not know what will eventually happen to General Motors, we know that new models of commerce, new industries, new technologies and new ways of solving old problems will be required to build a stronger economy on a global level. All of these will not necessarily come out of one country, one continent or even one region. In this (Your business model is obsolete) article published in the Fortune, Author Geoff Colvin, senior editor-at-large says: Not since the Industrial Revolution have we seen a longer or broader list of companies whose business models are suddenly obsolete. Start with virtually all companies in the media business, or any company that relies on owning copyrights or selling advertising. Then look at how major retailers — Best Buy (BBY), Target (TGT), Wal-Mart (WMT) — are rethinking their models in response to showrooming (browsing in-store and buying online), eBay (EBAY), and Amazon (AMZN). The whole education industry needs a new model. So do banking, the post office, computer makers, Big Pharma, music, and the telecoms. They all need new business models, and almost all are having a hard time finding them. There is no doubt you will have encountered many other examples of companies – whether in your supply chain, customer base or in the eco-system around you who are struggling on with broken business models. Inevitably these struggles are inelegant and fruitless. Recall the music industry’s struggle against the iTunes. Are there any others that come to mind? Share your thoughts below.
Changing Business Models – Push television/video to YouTube:
Videos ad revenues from YouTube in the US would hit $1.13 billion by the end of 2014. In 2015, Google is making a huge change in the way it has been promoting YouTube: they are going to put significantly higher focus on it.
Why Google is making this move? Let us unpack Google’s strategy.
Google’s traditional advertising revenue from SEO is starting to stagnate. Among the explanations, one is all robotics clicks are starting to disappear because Marketing Managers have begun to understand that not all clicks are from interested costumers. So they are questioning more and more: Are the clicks they are paying for actually leading to customer purchase or not?
Google’s traditional business is under threat from those who are more in touch with the changing SEO landscape, and are now starting to demand value for money.
At the same time, Market penetration of Search Engines is saturating. Thus, the growth in their market is not as high as it was in the last decade. Google has to search for new revenues of growth and YouTube is one of those new revenues.
YouTube is a growing business. Why? Because an average American, European or Australian still watches numbers of hours every week on televisions and Google is capable of facilitating high quality contents available on demand on any screen at anytime.
Transitioning consumers from cable television or Free-to-air television to online YouTube consumption will have huge implications for the business models of traditional television, as well as Marketing and advertising companies.
Big budget TV advertising will start to diminish. Most of the YouTube’s ads can be produced on much smaller budgets. Because of the fact that customers can be very highly profiled on Google/YouTube, using Google Analytics, one big ad can be replaced by a multiple of highly targeted storyboards speaking directly to each of the niche segments. Typically big advertising agencies are not very good at speaking to the small niches.
That means a number of small advertising companies who are good at low budget niche advertising will crop up. These companies maybe eventually be acquired by large advertising companies, under one umbrella, but they need to have reasonable amount of autonomy and independence to operate on small budgets and retain their key characteristics.
The CEOs and Executives need to know this: their entire world of Sales & Marketing is going to change in the next five years due to the breakdown of the traditional television and advertising model .
The public should know that more and more relevant and highly targeted programs will be available on YouTube, in paid and free formats. On-demand will become the norm: when you want it, where you want it, how you want it, big screens, small screens, tablets, and smartphones.
This change will also have implications for recorders like TiVos and PVRs – people will stop using those, or use less and less of personal video recorders. So if you are thinking of buying one those things, hold off because the price is going to fall!
Sydney, 13 November 2013
Latest developments in the unfolding saga of sales halt of HP Chromebook 11 have seen both the key retail outlets now pulling it off the shelf following customer complaints of overheating chargers. HP is asking the existing owners of the product to use ‘any other Underwriters Laboratories-listed micro-USB charger’ with the product.
Chromebook 11 was launched for $279 with much fanfare by HP and Google last month and was strategically placed for sale at Best Buy and Amazon. Despite the high expectations, the reviews found performance issues with the trackpad. An HP spokesperson – Sheila_Watson – posted on their blog:
‘Google and HP are pausing sales of the HP Chromebook 11 after receiving a small number of user reports that some chargers included with the device have been damaged due to over-heating during use. We are working with the Consumer Product Safety Commission to identify the appropriate corrective action, and will provide additional information and instructions as soon as we can.
In the meantime, customers who have purchased an HP Chromebook 11 should not use the original charger provided with the product. In the interim they may continue using their HP Chromebook 11 with any other Underwriters Laboratories-listed micro-USB charger, for example one provided with a tablet or smartphone. We apologize for the inconvenience.’
A similar statement was also posted on the Google Chrome Blog by Caesar Sengupta, VP, Product Management.
Frequently well made products are let down by peripheral accessories manufactured by third party suppliers that are part of the business networks of large corporations. This is not the first time HP has been let down by its supply chain partners noted Vivek Sood –author of the book “Move Beyond the Traditional Supply Chains: The 5-STAR Business Networks”. In the past there were instances in 2008 when up to 24 HP laptop models were affected by the NVIDIA chipsets overheating. Both Dell and HP were affected in that instance. In another instance Sony manufactured batteries that overheated during use in Dell laptops, affecting the results of both companies.
“It is critical that companies choose their supply networks diligently, and test the products rigorously before releasing them in the market. The recall and sales halts do not only affect the company reputation but also its financial results. Chromebook 11 is not yet a major part of HP’s product portfolio, yet this fiasco will adversely affect the business network relationship between HP and Google for several product planning cycles”
said Vivek Sood
HP will bear the brunt of this sales halt, not only because of its deeper involvement in production and supply of the product, but also because of its history of similar problems in the past. However, Google will also be adversely affected due to its supply chain and business network relationship with HP in this case. While it is impossible to predict the total impact at this early stage, as a preliminary estimate 2%-4% overall switch in market share can be expected over the holiday period, as a result.