Booz Allen Global Innovation study shows rising R&D investments in 2011 … what about 2013?

The global innovation report is a yearly report showing R&D spendings across different industries. For reference, I have included the 2009 results by industry and the 2011 version below. The sectors which invest in R&D do not differ much from one year to another.

Although the report states that R&D investments doesn’t always mean that innovation is produced, or that this innovation is performing better than other products investments diluted across other budgets, there a precious few metrics that make it possible for us to measure how innovation is faring. So we’ll have to make do with this.

What the report shows as well is that rising investments mostly happe in America, whereas Europe was already deep in recession at that time. I can’t wait to see what the 2013 report will show.

At last, the report shows a strong correllation between sales and R&D investments. One could read this either of two ways: when sales are good, R&D investments grow, or … when R&D investments grow sales are better.

An interesting question would also be to wonder what is actually meant by R&D spending and whether all product development efforts are measured under that umbrella. I have seen a lot of companies in which R&D is kept as a separate effort and doesn’t represent the main area for product design and development ; this is significant in a world in which innovation is driven by vendors’ offerings, mostly in the Computing & Electronics world, the first sector for innovation in that study.s

R&D Spending Returns to Pre-Recession Levels, Finds Booz & Company Global Innovation 1000 Study | Innovation Management

key findings from this year’s Global Innovation 1000 study:

• The three industries with the greatest R&D investment were computing and electronics, health, and automotive (28 percent, 21 percent, and 16 percent of the total Global Innovation 1000 spend, respectively).
• Two-thirds of the $53 billion increase in R&D spending between 2010 and 2011 came from the computing and electronics, automotive, and industrials sectors.
• 75 percent of companies increased their R&D spending from the previous year in 2011, up from 68 percent in 2010.
• This year Amazon joined the top 10 “Most Innovative” companies pushing out Facebook. For the third straight year Samsung rose in rank on the list (to fourth place, up from seventh place last year), and Apple, Google, and 3M took the top three positions, respectively, also for the third consecutive year.
• Regionally, companies based in North America grew their R&D spending by 9.7 percent—just above the global average of 9.6 percent—while Europe and Japan grew theirs at below-average rates of 5.4 percent and 2.4 percent, respectively.
• India- and China-based firms again increased R&D investment at the highest rate overall across regions (27 percent on average), although from a small R&D spending base.

via R&D Spending Returns to Pre-Recession Levels, Finds Booz & Company Global Innovation 1000 Study | Innovation Management.

of geeks and men … a case of “us and them”

I spotted that picture (or rather, my wife did, let’s be honest) posted by Physicisttv on their Facebook page last night and I couldn’t help share it with you on this blog. The fact is we could change the caption for almost any kind of job that you/others/we (change pronoun) don’t – quite – understand.

Very often I have seen “business” people label their digital experts “geeks” while meaning “martians”. Even myself (roarrrrrring laughter!). Conversely, programmers see users as dummies (remember the intelligence chart in the Dilbert Principle in which Dilbert descibes end users as more stupid that hammers  and “silly putty”?!)

 [in Dilbert Principle]

After all, I could well place an accountant in that chair and I’d see him as a martian because I never understood what these guys were up to. A case of “us and them”… a bit like what’s happening with helpdesks …

QR codes are for everyone!

It is not just professionals who are using QR codes, even during the special week dedicated to the Mobile World Congress in Barcelona. On our way to the convention centre 2 days ago, I noticed A4 pages plastered on the walls on the side of the road with special QR codes advertising the Omnium.cat organisation. They had used the walls and these QR codes to voice the claim for an independent Catalan State; of course I am not taking sides or judging them in this article, but merely reporting on what I saw. If anything, for those who ever doubted it, mobile devices and QR codes are becoming tools for mass communications these days, and not just for professionals like us.

Catalan activists use QR codes to advertise cause

ZTE launches Grand Memo mega phone and announces shift in mobile industry – #mwc13

This post was written as part of a blogger trip I organised for the Live Orange Blog. Connect to the blog for the latest on that event!

On February 25th, at ZTE’s press conference at Mobile World Congress, the show was not where you’d think it was. The announcement of ZTE’s new launch of devices (one of which with the brand new Firefox OS) has given way to a real scrum amongst journalists who were fighting for a good space in conference room 1 of the MWC media village. Why so?

Heads; it was a Press Conference

Tails; Journalists fighting for a scoop (already leaked on CNET 3 hours before)

Even though the video demo of the brand new ZTE Grand Memo led to chuckles in the room when the conference room’s sound system refused to reproduce anything more than hisses, the launch of the large screen high end smartphone by the Chinese manufacturer was nothing to laugh at. Indeed, our 2012 live Orange blog readers had already got a hint of the Chinese offensive on the Western front. ZTE and Huawei were indeed very present at MWC last year (remember the horse?). 2012 was the sign that Chinese manufacturers were entering that market and penetrating foreign markets way beyond the borders of China.

Now, today’s announcement was anything but laughable, it was a clear signal that, to put it in the words of He Shiyou EVP and head of mobile devices division, the main objective of the company is to “be a player in high-end devices and even become one of the top 3 players in the World by 2015”. As a matter of fact, Chinese manufacturers benefit from a very large domestic market and now it is time for them to deploy around the world. Once again quoting the ZTE exec, “IDC declared we sell 65 million devices per annum” he said, “we are the fourth device manufacturer in the world and 70% of ZTE’s revenue is made of mobile devices”; the company also expects to grow its revenue y 30% in 2013.

The now famous ZTE Grand Memo (photo ZTE)

What was new today is the Grand Memo smartphone “4S” (as in slim/screen/speed/safe), a super-sized 5.7 inch screen device packed with features (including full 1080p HD video recording), which also includes Dolby’s sound solution. This shouldn’t come as a surprise, as “70% of smartphone users think that sound quality is essential in providing great experience for a phone” the Dolby representative said. The big phone also has designed a special interface so “that dialling is possible even with one hand despite large screen” therefore showing that “one of the key areas is the development of the user interface and easier navigation menus, which have been created and are unique to ZTE”. The launch will take place this year and should “provide the springboard for success” He added.

ZTE also announced a brand new entry-level smartphone based on the Mozilla Foundation’s brand new Firefox operating system, and the phone is named, very logically, “ZTE Open”. Even though there are still some grey areas such as pricing, availability, and – in the case of the ZTE open phone – specific number of applications running, one can sense that the mobile industry is just about to turn a new page. China is no longer the place for producing cheap phones which were originally designed overseas, it’s mostly becoming a centre for innovation and mobile phones are no exception.

The magic left the building with Jobs

Reblogged from Mario Sundar:

• 

I remember the moment Steve Jobs scrolled through his music and uttered those magical words - "scrolls like butter" - while illustrating the beauty of the original iPhone.

It's moments like this that you lived for, as a technology obsessed professional in Silicon Valley. And with Jobs we got to watch the Michael Jordan of technology, courtside, at his best.

Read more… 712 more words

This Is Not What Social Media Was Meant To Be today's selection is ... LinkedIn's Mario Sundar's piece is, despite its title, not just about Steve Jobs, it's about the way that PR is done, and the fact that Social Media wasn't meant to become what it is now. He describes a PR exercise by Zuckerberg and Facebook officials which lacks both the lustre and pizazz of Apple's classic keynotes. I am not an Apple admirer I must admit, even though I own Apple products and acknowledge that they are beautiful products, but I'm not in synch with the philosophy behind Apple. Yet, Jobs's keynotes were undoubtedly personal and performed with style. What is most annoying is indeed, as Sundar remarks, all those who try to mimic Jobs's methods... not always with great success. As pointed out by Herman Mellville: "It is better to fail in originality than to succeed in imitation.

LinkedIn Reaches 200 Million Member Limit

By Yann Gourvennec

As an early adopter (beginning of 2004) adopter and future “ambassador” of LinkedIn, I am very pleased to be able to reblog Deep Nishar’s post about the professional social network reaching the 200 million user bar today. A great achievement for what I consider one of Social Media’s best tools in the market. For memory, as of Dec 2011, LinkedIn only had 136 million users. The growth has been staggering, as stated in this earlier blog piece.

200 Million Members!

We recently crossed an important and exciting milestone for the company. LinkedIn now counts over 200 million members as part of our network, with representation in more than 200 countries and territories. We serve our members in 19 languages around the world.

I’d like to thank each of you for helping build the LinkedIn network into what it is today. It’s been amazing to see how our members have been able to transform their professional lives through LinkedIn. You truly grasp the power of LinkedIn when you start to focus on these individual success stories.

Take for example, Akshay Chaturvedi from New Delhi, India who was able to use LinkedIn as a launch pad for his career. Not only was he able to lead an international project at AIESEC for a project on AIDS right out of university, with the help of LinkedIn, he was recruited by KPMG and continues to receive career guidance from his LinkedIn network. Then there’s Robyn Shulman who stepped out of her comfort zone from teacher to now a published writer and leader of a ESL Bilingual Educators group on LinkedIn. She has rediscovered former talents and changed her life through LinkedIn. One of my favorite stories comes from Leonardo Brant from Brazil who founded Cemec, an organization to help Brazilian professionals and entrepreneurs think creatively about their business challenges. Today they use LinkedIn as their digital classroom to exchange information and foster a meaningful community to share relevant knowledge. Everyday we hear stories like these from our members and we look forward to hearing many more.

So, who are LinkedIn’s 200 million members? This infographic captures the diversity and magic of your professional peers.

via 200 Million Members! | Official LinkedIn Blog.

New Innovation Blog Launched

A few years ago, I used to be a regular contributor to bnet in the UK but the site pulled out of the European market in 2010. Fortunately, a new project has just been launched and I’m very happy to embark on it. It is named innovation generation and it is sponsored by our peers from Alcatel.You can find my first piece on that blog under the following title: Governments Ease Into Cyberspace. Below is the announcement for the new website; stay tuned for more info …

We are living in a truly connected world. That’s something most people might take for granted when they make a phone call or watch TV, but when you consider how a wireless network brings books to your e-reader, an Ethernet network keeps your savings account secure, and a cloud holds most of your online identity, it becomes a pretty powerful proposition.

It is the services that run on these networks that are the lifeblood of society, and the potential for innovation here is limited only by our own creativity.

Enter Innovation Generation. It’s a generation that’s not confined to baby boomers, Gen Xers, or smartphone-toting Millennials, but rather encompasses everyone living in today’s globally connected society. Our goal here is to explore the potential for personalized, interesting, and, of course, innovative new services that can increase the quality of life and work for end users while also increasing the value of the service provider in the process.

How are service providers delivering these new services to businesses and consumers? How can they get more from their infrastructures than they already do? What are the opportunities for business model innovation? How can service providers improve the customer experience?

These are just a few of the questions we’ll strive to answer on Innovation Generation. If you’re a global communications service provider or enterprise IT leader, Innovation Generation is your guide to navigating the challenges and opportunities in creating innovative business opportunities for your company and your customers. Here, we explore innovation at all levels of today’s connected businesses, from software to services to groundbreaking business models – with an eye on what’s practical, what’s clouded by hype, and what’s going to help the bottom line.

These are services that are transforming industries like utilities, transportation, the public sector, healthcare, oil and gas, manufacturing, defense, railways, and even the government. And service providers are at the heart of it.

via Innovation Generation – Named Documents – About Us

Yossi Vardi’s top tips for start-up owners – #leweb

Israeli entrepreneur and business leader Yossi Vardi came on stage at Le Web 12 in Paris today to deliver some of his tips. Unfortunately he was a bit rushed out and didn’t have time to finish his presentation. Here are the tips I was to able to pick up as I was listening to him.

[this piece written during a blogging stint for Live.Orange.com]

Yossi Vardi What should start-ups do to succeed?

1- What it takes to succeed?

The most important factor for success is luck. People who are hard-working though are often in the best position for being able to reap the harvest of serendipity. Trying and reaching out to people increases your ability to be lucky, Vardi said.

2 – raising too much money can be toxic

Start-ups which raise too much money want to show their investors that they are using the money and they are often led to burn too much money too early and fail to make a profit

3- right size for team?

Vardi suggests that the optimal size for initiating a start-up is 3. Having only 1 is too hard and above 3 it’s too difficult to get oneself organised.

4 – a mentor is needed

A mentor is needed to help support the team and help them meet the right people Vardi went on.

5 – pivoting

Start-ups have to pivot, i.e. be able to modify the concept so that it adapts to the Market. Pivoting is important but it can also prove that the founders can’t learn from experience if they are pivoting too often. This is a double-edged sword.

6- attracting investors’ attention

Finding an introduction to the right investors is important, this is why networking is key. The is also confirming what we had witnessed in  Silicon Valley last September.

7- exits

There is a debate – in Israel and elsewhere – between experts about whether it’s better to do an early or late exit. When doing exits, one has to remember that one is not selling one’s company to another one, one is selling to an individual Vardi said.

As mentioned above, Yossi Vardi’s presentation was unfortunately interrupted. There a many other recommendations Vardi can deliver to entrepreneurs, we’ll probably have to wait until the 2013 edition of Le Web for us to hear the rest of the presentation and Vardi’s advice.

Brogan Declares Social Media Not Dead But Boring

Today’s selection is…

Chris Brogan’s latest piece which shows that those who were in first, had to go out first too. I remember Chris from his presentation at Like Minds 2010 in Exeter where I keynoted too: he was passionate, energetic… and warning the world that something big was happening.

with Chris Brogan after Like Minds 2010

All that is gone now! three gazillion repetitive blog pieces later, you now know everything about how to optimise your corporate Twitter account and/or how to trick (or survive) Facebook’s ever-changing edge rank algorithm. Or rather, you don’t! because possessing focus focusing on tools is useless! Take a bit of hindsight with this piece and find out why…

by Chris Brogan

Isn’t it time we started telling bigger stories than this?

When Julien Smith and I wrote The Impact Equation, we had a very specific goal in mind: help people get attention, understanding, and eventually a relationship of value. We built the book around the premise that well-defined goals were needed to craft ready-to-understand ideas, and that people could build a platform to spread those ideas to a network of people who cared enough to share those ideas with others. That’s the simplest possible summary of the book.

What people maybe thought they were getting was a book about social media and social networks, about marketing and campaigns. Some people believe that’s what Julien and I do. Social media are a set of tools. They’re not all that interesting to talk about in and of themselves. The “gee whiz” has left the station. We want to talk about action– or if you’ll pardon the self-reference, impact.

via Social Media Isn’t Dead: It’s Boring.

of entrepreneurship in Silicon Valley –#blogbus

On day 4 of our Blogger Bus Tour, we met with Carlos Diaz, the CEO and founder of Kwarter and Guillaume de Cugis, CEO and co-founder of Scoop’it, two French entrepreneurs who left their country in order to take their venture to the next level and … change the world! (this post was originally written for the Live Orange Blog)

Kwarter, how it all started

Kwarter started off with sports. The idea is to use your mobile in order to connect and comment, hangout. There is also a gamification (see my Vlab piece on that subject) angle of using such kinds of applications while watching TV and changing the user experience: the more you engage, the more you get points and also credits and eventually, you are able to redeem your credits to get t-shirts and other freebies.

The start-up decided to tackle sports as their first topic (Fan cake, the first social game to be edited and released by Kwarter is just about that) because “just watching TV isn’t enough anymore. The trend seen in Silicon Valley is to turn each passive experience into an interactive one”. The focus is on American sports only at the moment: American Football, Hockey and Baseball … but it should be a piece of cake (sorry, I couldn’t resist it) to extend it to European preferred games such as football and handball.

[Carlos Diaz, CEO and founder of Kwarter]

Diaz, the founder of Bluekiwi Software, whom I have known for years and I was very happy to see again in San Francisco, started the company in Summer 2011 and did a quick prototype which helped him raise  seed money very quickly. All this is very classic, although many start-uppers tend to forget about it; the name of the game is: prove the concept quickly, put together the technology, build the user engagement model, and find the business model … fast. Things have to go fast in the land of the Gold Rush.

a pivot around the initial business model

“The first idea was to have our own application and build traffic based on our brand. The ten next years will be about Gamification” Carlos Diaz added. In 2011 they Kwarter’s pilot was turned into a platform for other brands because they realised that they had to do this for others, not under their own brand. A few weeks later, they signed a deal with Turner and Bud Light; just that! Turner will kick-start its operation about the Baseball playoff. And we are not talking about small business but “half million dollar deals!”.

Diaz – like many others we saw in Silicon Valley – has managed to make his company pivot around its existing business model and hit the bull’s eye. Well done!

big corporations doing their shopping

“I was really amazed at the way on how large corporations were shopping for innovation in the Valley” Diaz went on. “What we do with Turner will be very disruptive: whatever you do will be displayed on the screen. For instance, as baseball players will be displayed on the screen, an overlay bubble will be shown with comments from Kwarter such as “20% of people believe this player will do a home run!” Baseball fans won’t have to wait for too long for the launch date will be October 5th, 2012.

Twitter (but not Facebook) is paying for TV channels to use its service

“So far we see the Twitter mentions on TV. But Twitter is paying broadcasters for this” Diaz said. “This is why Facebook isn’t seen on TV because Facebook refuses to pay for that kind of display”.

setting up one’s business in the Valley

Is it easy to set up a business here when one comes from Europe? “Sometimes I feel like Silicon Valley is like Disneyland” Diaz explained facetiously. “People are very naïve and they think that building a business is easy but it’s not. Just being turned down in Europe isn’t sufficient to launch a good company in the States” the French entrepreneur added.

“in 1999, Silicon Valley was a boring place!”

De Cugis said that “in 1999 and 2001 Silicon Valley was a very boring place. It all changed with Social Media, when some tech tsars became stars. It took me two years to adapt to the way of doing business here. After six months you realise that if you want to be part of this game, you can’t be part of it because you’re not part of the ecosystem and I started getting very frustrated. Then I realised all this was for real and I adapted to the way I needed to think of this as a real business. One year isn’t enough, it takes two years at least. And partnering is one thing but you need to have a good reason to come here.

living in the Valley is expensive, taxes much higher than France

“This is a difficult move” Diaz went on. “Personal life is very expensive here, even more if you have kids. A house with 2 kids costs $6,000 per month! Taxes are a lot higher than even in France. And this is because life is so expensive that people want to get very fast. This is why people want their projects to take off in such a hurry. People are very focussed on their jobs but they sort of work round the clock and have no vacations. Here there is nothing apart from tech, everyone is in high-tech. Even the salesman from the AT&T shop wants to start his own start-up”.

Scoop’it, from Toulouse to the Valley

Scoopit also went to NYC and hesitated between NYC and Silicon Valley. In NYC, the tech scene is competing with a lot of other things though. “If you go to the local Starbuck’s there, there are few chances that you will bump into a tech entrepreneur” De Cugis explained. “Here it’s a small city, there are only 700,000 inhabitants. You could go to a meet-up every night. And all that happens in Soma, you don’t even need to drive up to Silicon Valley.

setting up your business in Paris is a mistake

Although many would disagree, Diaz declared that “founding your start-up in Paris is a mistake, unless you are into Fashion or if you want to become a leader in your own country. All successful French start-ups (e.g. Meetic, Priceminister,…) aren’t known by anybody here. In order to do something to change the world, to be a game changer, one has to have a large market to start with” Diaz contended.

changing the world is hard

Yet, changing the world is hard… even in the Silicon Valley, and if believing in one’s dreams is important, one needs to avoid pulling the wool over one’s eyes. This, in a nutshell is what I withdrew from that passionate exposé by Carlos and Guillaume.

Gamification at Vlab: buzzword or real business driver? – #blogbus

The MIT Stanford lab was founded 22 years ago. Orange is a sponsor of VLAB and we attended a meeting on Sept 19 on the Stanford campus on the subject of gamification. Vlab had gathered a unique bunch of top international experts from Silicon Valley in order to debate this concept. Despite the fact that many think badly of Gamification, our users have explained that gamification isn’t about games but bringing gaming mechanism in business activities and this was all about rewarding and creating a great experience.

[this post was originally written on behalf of the live.orange.com blog]

1. Margaret Wallace(below)introduced the session. Margaret is the CEO and founder of Playmatics. She began her pitch by saying that games have been around for thousands of years. Her definition of gamification is “the application of games mechanisms in non gaming situations, it’s not about angry birds and such like” she said. Why bother gamification? there are a lot of detractors of gamification Margaret said; the Gartner hype cycle is placing gamification at the very top of the Gartner hype cycle “so you are here at the right moment” she added. There are many ways that games can be inserted in business, such as Nike running, Ford’s mobile app, energy orb (an orb which changes colour according to the status of the electricity grid) … even political groups are using gamification to recruit people Wallace said; Pdt Obama has a Foursquare account for instance. From then on she handed the floor to the other panellists.

Margaret Wallace (above)

2. Courtney Guertin (above), Co-founder of Kiip was next on the stage and he presented the concept that he and his partner have designed. The idea was to reward users, through mobile apps and disrupt the mobile app space. In July 2010 they built a demo and started sharing this idea around them. They ended up raising $ 300 k. But “raising money is the easy part he said; the difficult thing is building the business”. They then built the platform for rewards (thanks & acknowledgements). They also wanted to avoid building something “intrusive or annoying”. The business model is simple. They charge brands and users are rewarded for their engagement. Among his advice were to understand that the team is everything, and to be prepared for difficult days too. He added that brands, at the outset, didn’t realise that people of all ages were playing games. Not just kids but middle aged mothers and even people above 50 he said. Brands are now, after a few years, very knowledgeable about that and this is why gamification has got a bad name. What you really need to do is how you can create a great experience like this company that decided to change an escalator which no-one wanted to use, by turning it into a living piano; instantly people started to use this escalator for the sake of the experience that it was providing.

3. Andrew Trader (above), venture partner at Maveron was next. He has been part of the gamification world on both side: as part of the family team at Zynga and from the investment side too.  The value of gamification in his mind starts with the value of relationship capital. This is what – in his mind – makes farmville so relevant. One has to try and incentivise users to engage more deeply; gamification mechanisms are similar in games like Farmville and business gamification he said.

4. Joshua Williams  (above) from Microsoft jumped in the conversation at that time. The idea of gamification according to Joshua is “how we can get a task done in a more engaging and fun way, and less painful. To him there are a lot of challenges with gamification which are overlooked. It’s a double-edged sword but he think that it’s worth looking into.

5. Amy Jo Kim (above), founder and CEO of Shufflebrain said that a lot of her practice recently has been to tune reputation systems to make them more engaging. “We could call that gamification” she said. Her perspective, is that what makes games compelling is in the design; people are getting smarter faster she said. You have to design systems which have the dynamics of games she said. You have to look at the “large word of zero sum gaming” she said. She predicted we would see a lot of innovation in that space in the future.

3. Rajat Pahsaria (above) was last. Rajat is the founder and chief officer of Bunchball. Beyond the buzzword he said there are values to gamification such as rewarding users, enhancing the experience etc. “We have a wealth of big data which is telling us what our users are doing” he said. And this is what gamification does” he said, using these techniques which have been going for years, i.e. rewarding users.

Rocketspace ‘s Logan: “even Russian companies go to the US to conquer the world!” – #blogbus

Duncan Logan, founder of Rocketspace is originally Scottish and moved to San Francisco some time ago. His first venture didn’t work but 20 months ago, he then decided to found Rocketspace. Rocketspace could be described as “offices as a service” Logan said. He confided to our team of bloggers that he had read the Lean Start-up and he tested the principles he’d found in the book by creating a fake company and posting an ad on Craigs’ list. He got something like 10 requests by companies in 12 hours. Then he tried again by adding that only tech companies are wanted and he got 15 responses in 12 hours. That’s how Rocketspace, start-up accelerator in downtown San Francisco, was born. Today, Duncan Logan delivered his vision of why the Valley is the world’s most exciting place for high tech entrepreneurship. 

[note: this piece was originally written for the Orange Live Blog which I manage and created]

Duncan Logan, founder of Rocketspace delivered his 360° view of entrepreneurship

a start-up accelerator in downtown San Francisco

15 companies are hosted by Rocketspace, and there is space for 150 people. According to Logan, this is the largest “tech accelerator” in San Francisco. “30% of companies hosted here are from overseas who want to mix with the ecosystem in the Valley. 30 other co-working spaces exist but this one is dedicated to tech companies” Logan added. Spotify was hosted here for instance, but there are also companies at seed money stage.

“Overseas companies have too broad offerings” Logan said, “US companies have narrower offerings and they therefore, they are much more focused; because it’s such a huge country” he said.

co-working spaces have nothing to do with real-estate

Within about 6 weeks from creation, it dawned on Duncan and his teams that “real estate has nothing to do with co-working, and that it was all about the eco-system. It’s all about speed here, most start-uppers don’t care about privacy” Logan added. As a matter of fact, most of them don’t worry about building a sales team either. ‘The real trend behind Rocketspace Duncan said is that before, you would have to raise a lot more money and spend more time on getting yourselves organised, now you don’t”. So how much would you need to get started? “Under half a million dollars” he responded “and after 15-16 weeks, they can have large numbers of customers without spending too much money” … that is in case it takes off, but the system is such that investors know what to expect.

young people don’t want to commute … nor get into an office

“Over here, young people don’t want to commute, they don’t want to own cars, so there has been a real emphasis for young companies to be based in San Francisco [rather than Silicon Valley which is an hour away from the City] and this is why real estate prices doubled in 18 months!” Duncan Logan added. Besides, “the valley is more about infrastructure start-ups (i.e. cloud computing, storage and servers etc.) whereas “the City is about young companies” he said.

“Tech founders aren’t very social”

Most of the companies here are at “A” stage he said. For most of them, the risk is on the entrepreneurs, VCs are always pushing for more evidence of future success, and when you are a first time founder you have to think about what business can be financed vs. trying to build the most amazing business” Logan said.

the 3 pillars of Rocketspaces’s business

Now we hit what was the most interesting part of the meeting. Logan delivered his vision for Rocketspace and described what makes it special. “We see ourselves as a kind of platform” he said and he described the 3 pillars of Rocketspace’s business:

1. access to capital: close relationship with business angels, venture capitalists and Rocketspace have a very good view of deal flow, Logan said. Specially for outside companies, this is essential
2. access to talent: MIT, Harvard, Stanford etc. “talent is one of the overriding factors” Logan said. “We nurture those relationships in order to bring talent to new start-ups and we can do this for nothing” he said
3. access to customers: this is an “enormous growth item for Rocketspace” Logan said. Large companies like IBM or Microsoft are connected to the Office Space and this is what makes it possible for start-ups to connect to that ecosystem. “Smart companies are engaging with start-ups early in the process. They will come in here and they will say ‘we have a real interest in mobile payments’ for instance and we’ll start to shortlist maybe 4-5 start-ups and this is a very symbiotic way of doing business he said. IBM is working with dozens of start-ups for instance, and Rocketspace is constantly organising demo days and start-ups networking events. “Kodak, Blockbusters etc. took a different approach and refused to change the way they worked and they aren’t here anymore” Logan said.

“There are probably 250 very exciting companies around the world” Logan said, and we’d like to have them at least for Rocketspace for a year. This is our goal for the next 10 years.

How do you do networking?

We have four floors and 2 next door. We do a lot of dinners. “Tech founders aren’t very social” Logan said. We have up to 20 people at dinner and we have all the VCs that count at these dinners he said. There are 10 events going on every night on average in San Francisco and there are a lot of opportunities the entrepreneur said.

“We are not coaching hands-on like an incubator. Obviously it’s all our interest that they succeed. We never publicise who is here. We are fiercely independent. We give 3 contacts for bankers, VCs, partners etc. Rocketspace refuses to take sides.

A lot of this has a lot to do about how companies are getting funding. “VCs are aggressive. They probably see 250 companies before they invest in one. Yet, once they do they are pretty nervous. By the time a start-up is raising money, there will be up to 3-4 VCs competing with one another. So once they are committed they are pretty aggressive. It’s so hard to get in for them… Yet, for start-ups it can take them months before they can find an investor” Duncan Logan added.

I don’t think there is too much money, but the amount of money required to start a new company has dropped the founder of Rocketspace said.

why is Silicon Valley different?

There are great start-ups in UK, France and other places. But when you are in football you have to be in a environment in which you can rub shoulders with top class teams otherwise you don’t know whether you are good at the game or not. That was Logan’s way of explaining  that the premier league is taking place in Silicon Valley, this is where you compare yourself to the best companies. People like Reid Hoffmann (founder of LinkedIn), you understand that they have a different understanding of the world Logan said.

but there are other reasons why …

Scale is the issue, mostly in Europe (where there are many languages spoken and smaller numbers of users who are culturally very fragmented). Indian and Chinese companies can scale Logan said. We see copycat ideas happening in certain places like China and India and “they can crack America!” he said. You have to be in the sort of size like dropbox, airBnB etc. and India and China can achieve that kind of scale and found multibillion dollar companies”.

“Even Russian companies” he added “when  they want to conquer the world, come to America!”.

plans to expand to other countries?

“US immigration laws are ridiculous” Logan said. “We are tripling our size here in San Francisco but  it would make sense to have a Rocketspace in Europe (it could be London or Berlin) and one in Asia” Logan added. Plug and play tech centre  (where we are headed to now) were the pioneers he said, but their mentality is very commercial, and there is an obligation to fill the spaces. Roketspace sees themselves as very different from that.

5 major trends for the future of IT and the Web – #blogbus

The Orange Blogger bus tour – of which I am the organiser on behalf of Orange of which I am the Director of Internet and social media – was stopping by San Francisco today and the whole day was hosted by Orange Silicon Valley

Georges Nahon delivered a very inspiring keynote today before our panel of bloggers in which he shared his vision with regard to what is happening in IT in general, and in the Valley in particular. I will begin my account of Georges’s visionary presentation by detailing his conclusions. As I always do, I have taken detailed notes of the pitch and they are made available at the end of this piece. If there is one thing that should be remembered from that pitch is that the Web is everywhere and in everything that will be happening in the future. Something which established players don’t like according to the Head of Orange Silicon Valley. However, Nahon insisted on the fact that it won’t be the same Internet we used to know.

Facebook will be “Yahooed!”

“Social” has been going through a rough patch over the Summer, with the now infamous Facebook IPO, dubbed “IPOcalypse”, IPO meaning “It’s Probably Overpriced” Nahon said facetiously. Yet, Europeans are wrong when they interpret these issues as the end of social media, Georges Nahon said in essence. Social is here to stay, and beyond, it will change everything which takes place on the Web, even though Facebook itself will probably be “Yahooed!” Georges added.

But the worrying thing I got from his pitch is that, according to his analysis, next to the World Wide Web that we all know, an increasing number of companies, including Amazon, are creating a “non-searchable adjacent Web” which sounds very much like the end of the Web as Chris Anderson announced in Wired a few years ago. I think Georges is right indeed, there is a growing concern that Net neutrality is being sacrificed for the sake of user experience. Time will tell, but there are indeed worrying signs.

Georges Nahon, head of Orange Silicon Valley, on the first day of the blogger bus tour

Here is how I summed up Georges’s 5 trends for the future of IT:

1. Tech is all about mobile: “Twitter is a mobile-first company” and thriving he said, “Facebook isn’t and is suffering”. 10% of Internet traffic is made of mobile traffic. Yet, 25% of US users are using the Web from mobile only, but in Egypt, this number soars up to 70%, and India is close to 60%! And 68% place their mobile next to their bed while sleeping at night.
2. The default is now social: and social meets mobile (over 50% of smartphones connect to Facebook). Social graph (Facebook), interest graph (Twitter) and influence graph (Klout) are the new frontiers of the Web and “they are here to stay … for a long time” Nahon said. For many, Facebook is the new web (“find us on Facebook, follow us on Twitter). What is the future of search? it is social and both Google and Microsoft are working on it… “and Facebook search is coming fast” Nahon added.
3. Another Web: At the same time, traditional web development is slowing down, and Apple, Amazon, Facebook and Mobile will continue develop their “non-searchable adjacent webs” as Nahon called it.
4. The Cloud as a new frontier: “The new guys are Amazon, Zynga, Rackspace and even people like Google were taken by surprise” Nahon said. But there are even newer guys you may never heard of such as Bluejeans, Alfresco, Joyent and many many more. Explosive data growth is also forcing companies to develop solutions for data reduction. And “the next big thing isn’t Software, it’s data” Nahon concluded on that subject.
5. All video will be on the Net: most players in that field are coming from the Internet world, not the media world. “We think that the future of TV is to be streamed” Nahon said. There is more innovation than ever before in that area he said. Nahon added though that the concept of app-centric TV on smart TVs wasn’t entirely convincing. Time Warner see their future in apps but another trend is Social TV (described by Nahon as “a descendant of interactive TV which never worked”. 85% of tablet owners use their device while watching TV he said. What are they doing? Social websites, Zynga, Search, Craigslits (an old web survivor!) according to Nielsen.

the future of the World Wide Web

So, what is the future of the Web? Georges Nahon highlighted 10 trends in that area too:

1. the web is becoming data centric
2. apps will rule consumer and entreprise innovations and html5 will infiltrate apps and web services
3. non searchable adjacent webs will continue to develop and the web will be fragmented and site-less (mobile, apps)
4. the web of sites is dead and Facebook like buttons are the new hyper links
5. Real-time multi-user game cloud platforms will influence enterprise cloud technologies: the main issue will be “latency” ‘as already explained on that blog)
6. 4G/LTE (which we all were using to day via local mifi devives) will trigger innovation
7. mobile payment will kick off from 2015
8. all video will be on the web
9. Enterprise IT will shift to the cloud.
10. Facebook will rule the web during the next 2 years and Google will be in catch-up mode and within 3 years they will be “Yahooed!” Nahon said
11. Amazon will continue to diversify and will create more online commerce/entertainment clouds and mobile devices (tablets/phones). “Amazon is belittled in Europe” Nahon added, “and it should be considered as a major player, for Bezos is the new Steve Jobs”.

Started as an R&D organisation and evolved towards what they are today (scouting organisation). 60 people, 40 of  which are in a position to file patents and they file 20 per annum. Often, it’s about reviewing the strategy. Statement from Prussian general “no plan survives contact with the enemy” e.g. 5 years ago, no one had seen the iPhone coming. Even analysts. An none of these people has seen Apple becoming a major player in the Telecom industry => be prepared for the unexpected. There were times in which you telcos could go to the ITU organisation and get things sorted but this isn’t the case anymore.

Essentially Orange wants to get prepared for the future. One of the key elements for Silicon Valley is capital investment. In Bay Area only, venture investments represent $3.2 bn 46% of total investments in the USA (San Jose chronicle on Q2 results). Texas only represents $ 179 m (3%) despite the huge tech firms in that state. The core subjects is ICT and media but not only.

The software industry in Q2 of this year received the highest level of funding. (34 out of 39% other source) $2.37 bn i.e. 32% of the total.

Market capitalisation: Apple + Cisco +Oracle +Google +Intel have a total of $ 1,261.82 bn (IBM is only $236b or FTE $37b). What this hides is the myriad of small companies which help these companies become what they are.

today’s presentation at the Sugar CRM “acceleration” conference in Paris

These are today’s slides for my presentation at the Sugar CRM “acceleration” conference in Paris. I will also comment on my views with regard to “Social” CRM and the integration of barely repeatable processes within CRM processes. Check my other pieces in which I mention Sugar CRM for more details on that company and its products/services.

Plugandplaytechcenter’s Wu: “We want to give birth to the next big thing like dropbox”– #blogbus

On day two of our Blogger Bus Tour in Silicon Valley, we went to Sunnyvale, California in order to pay a visit to the Plugandplaytechcenter. This wasn’t my first time at this location for I had already visited the start-up accelerator more than two years ago (see that interview with one of their executive in residence, Howard Greenfield). I had found the visit so inspiring that I had decided to put it back on the agenda in 2012. We received a warm welcome from the staff and even the President of the centre, Canice Wu. Here is what I saw and heard based on the notes I took during that visit [post originally composed for my business  live.orange.com blog]:

Saeed Amidi wasn’t meant to become a business angel, let alone the founder of a start-up accelerator. As often, and especially in Silicon Valley, businesses are started with a particular objective, and then things shift and move to the next iteration of a business model. Amidi started with real estate as he was renting space to entrepreneurs. His love affair with start-ups and high tech started with “danger“, a smartphone (see the danger hiptop model on the right) company founded by Andy Rubin. As Amidi developed an interest in technology, he even decided to invest in danger, then PayPal and others. A new business was born.

[Canice Wu, President of the Plugandplaytechcenter]

In 2006, the US entrepreneur purchased the current Sunnyvale building, an “old Philips Semiconductor facility” according to Robin Ardeshir, Corporate development manager at the centre; yet, “old” is a very relative adjective in Silicon Valley! The building’s big, with its 17,000 m² and it can host up to 350 start-ups, from early two growth stages. On average, the start-ups employ five people. There are also “virtual members” who have no fixed space but can enjoy all of the services. This building is one of several buildings which are owned by the Plugandplaytechcenter company.

5 things that plug-in plaintext centre offers

The centre is a start-up accelerator, not an incubator, and they work with partners such as Y-combinator for instance: “our focus is not on competition but partnership with people like that” Plugandplaytechcenter President Canice Wu added. So here is what the centre does, in just five points:

1. office space: that includes pretty much everything, from facilities, Internet access, conference rooms to data centre on premises. This is the legacy business of Saeed Amidi.
2. events and networking: the centre puts together 120 events per annum, that is one every 3 days!
3. access to capital: this is typically done via the so-called “deal flow sessions”. The centre receives 3000 resumes each year, 200 are pre-screened, 10 are selected and 4 to 5 go through the whole process until they eventually are offered to see the VCs. Out of these 4 or 5, there is a 50% follow-up rate, the centre representative told us. As one can see, this process is fairly strict; this is a means of ensuring quality and, eventually, success.
4. access to large corporations: is also one of the main ingredients of success at the Plugandplaytechcenter. Large enterprises like IBM and others are present onsite even though some of them are not in high-tech at all. The automotive industry is particularly well represented.
5. last but not least, mentorship is delivered thanks to the centres executive in residence, while former sea level execs either in between jobs or even retired. They might even join start-up for a while in order to monitor its takeoff.

the centre abroad

Towards the end of 2010, while on visit to the Egyptian version of Silicon Valley I had noticed a booth which bore the logo of the centre. Unfortunately, Plugandplaytechcenter was launched in Cairo for only 3 days, right before the Arab spring Canice Wu told us. Yet, there many other locations in which a Plugandplaytechcenter can be found such as Canada, Malaysia, Singapore and Russia

beyond Facebook

“This is definitely not the end of innovation” Canice Wu told us while we were there. “There is more than just Facebook going on here!” he said, “there are a lot of things going on in B2C and B2B alike”. “We even have a 15 year-old entrepreneur in the center” Wu added.

giving birth to the next big thing…

“We are looking for big things. We are ready to screw up a few, to give birth to the next big thing like dropbox” Wu declared in front of our bloggers. We don’t encourage failure, we encourage them to try, sometimes they fail but they manage the third time round! We can tell when we have found a good guy and then we encourage him” he concluded.

the Silicon Valley 2012 blogger bus tour (Sept 17-22)

This is neither my first blogger tour nor my first visit to Silicon Valley, but this is probably the most interesting tour I have ever put together. This is why I can’t help but share and relay Glenn’s excitement about the tour as posted on the Orange Live Blog which will serve as the platform for our reports in September. More will be said about the tour on this and other blogs, as soon as I’m back from vacations, recharging the batteries and getting ready for that new adventure.

Orange Blogger Bus goes to Silicon Valley in search of the future | live Orange blog

by guest blogger Glenn Le Santo

I’m excited! Genuinely excited, in that kid-the-night-before-Christmas way. Why? Because I’m one of the lucky 13 writers from Europe, Australia and China to have been chosen by Orange to go on a blogger bus tour of San Francisco and Silicon Valley in September.

The tour aims to find out what makes Silicon Valley tick. We want to examine the culture of the Bay Area and meet the companies, institutions and individuals that make the area what it is: a world leader in technological innovation.

The area spawned the giants such as HP and Apple – and latterly Facebook and Twitter. We want to know how the area does this. We also want to find out if it will continue to do so, especially as some observers (such as Y combinator’s Paul Graham) think the Facebook IPO might have signalled the end of the Valley’s long reign.

via Orange Blogger Bus goes to Silicon Valley in search of the future | live Orange blog.

4 suggested business models for Facebook to make money with its platform

by Alban Fournier (http://www.value2020.net)

QQ ID: 1557637787

Alban Fournier is a graduate from Essec Management School in Paris. He has proficiency in Management, Change Management, Marketing and Consulting services. He has worked on various engagements with Schneider Electric and Tencent, the leading Chinese Internet company.

value creation and monetization at Facebook: to succeed, other revenue streams than advertising and app revenue share should be developed now

For many, including Google, Facebook is a distraction from regular Internet surfing. The Palo Alto-based social network company firm has developed an engaging experience for users which creates some sort of addiction to the social network: almost all your “friends” are here and such a sheer volume of users is not available anywhere else.

currently Facebook data is available for free

Facebook offers its service in exchange for the right to capture and collect a huge volume  of demographic and preference data from its users. That data is extremely valuable to brands. Marketers and advertisers can use the data efficiently because it is detailed and personal.

the social graph … a core asset

The social graph is a core asset of Facebook representing people and the connections they have to everything they care about. Today, the social graph, or profile information database, is not used for business with third parties outside the Facebook website: Facebook has prevented its business partners from using the data it provides to approach users exclusively within Facebook. Through the social graph, it is possible to find and match data across different groups of people. It is also possible to produce a graph of preferences and identify people who share a common liking for a brand.

The Graph API presents a simple, consistent view of social graph objects (such as people, photos, events, and pages) and the connections between them (friendships, likes, and tags) (Facebook Inc, 2012). The Graph API also enables partners to read and write data into Facebook. Through “Facebook Connect”, a protocol also allows businesses to make all the features currently found on Facebook available on their own websites. For instance the “Like” feature, allowing user actions to show up on people’s profiles, publish actions across their friends’  newsfeeds etc.

a huge volume of data

Facebook is now building an ever bigger volume of data on how its users interact with sites within and beyond its walls. The feature called “Facebook Connect” is a win-win mechanism: the firm gives brands access to Facebook’s users’ real names, email addresses, profile pictures and friends lists. In return, the brand shares the activity of its Facebook users on its brand web pages. Both Facebook and its partners can improve their understanding of users’ habits across the world wide web.

automatic opt-in!

The Open Graph Protocol allows third-parties to access most, if not all, of a Facebook user’s data as long as he has opted in via the privacy settings. Yet, please note that by default all users are automatically enrolled into the Open Graph Protocol (Open Graph protocol, 2012)! [editor’s note: therefore it’s not opt-in]

The volume of participation is a critical component. With the right level of engagement and participation, a social circle may influence another social circle to participate in an external offering, whereas previously, I mean without a “friend” connection, that level of comfort to engage with an external site may not have existed. Brands have the opportunity to track and offer incentives for people promoting their brand.

building the semantic web

Facebook might be able to build a web ecosystem where a user’s needs can be anticipated, understood and personalised for them: it is called the semantic web. The social network firm did understand the opportunities of collecting user data on their interests much more than we could have expected.

Yet, as of today, Facebook is mainly an advertising platform but its business model of Facebook should change from a pre advertising-based model to a combined business model covering: advertising, revenue sharing, merchant, and infomediary services.

1. advertising model

Facebook sells ad space on its site. Like other Internet firms, it is offering personalisation options in online advertising. Facebook helps its clients target their ads at specific groups of Facebook users, based on elements of users’ profile data. In the online-advertising ecosystem, the brand or individual is able to collect metrics and analytics. This means that the brand or advertiser can predict the impact its campaign will have. This demand of brands for users’ data is crucial for Internet players.

One of the issue with the advertising model though is that it is prone to fluctuations due to the economic situation. With the current crisis, Google’ revenues were impacted with a light decrease in advertising revenues in the first half of 2009. However, the main challenge for Facebook is the behaviour of its users: advertising on smartphones seems less efficient than on computers. On the other hand, advertising on tablets shows some results and the growth will come from such devices too.

2. revenue-sharing model: applications and virtual goods

Facebook is getting a percentage of the revenue it generates with applications hosted on its platform through revenue-sharing agreements with developers who created and own the application. Facebook hands over a few categories of public profile data (such as sex, age, location etc.) to the app makers, enabling them to personalise the end-user experience. In 2011, Facebook got 12% out of the revenue coming from Zynga thanks to a 30% revenue share with Facebook (SECURITIES AND EXCHANGE COMMISSION, 2012).

The business of micro transactions for virtual goods is booming. When users purchase virtual goods using Facebook payment infrastructure, the firm receive fees that represent a portion of the transaction value. The opportunity for Facebook is not only in social games. Taking the example of Tencent, virtual goods can be used for many other purposes like avatars and other online benefits internally or through other business partners.

According to the report of Strategy Analytics called “Virtual Worlds Market Forecast 2009-2015” (Gilbert, 2009), the worldwide revenue generated from the sale of virtual goods is forecasted to increase to $17 billion by 2015. Facebook currently requires the integration of a payment system in games. The firm should seek to extend the use of online payments to other types of applications and mobile tools in the near future. Its App centre will come handy.

The use of a virtual currency like Facebook credits (editor’s note: Facebook credits were discontinued in 2012 but will soon be replaced) makes easier micro transactions of real and virtual goods over the Internet. Those credits could be used both within Facebook and on partner websites. The decision to have credits in local currencies should accelerate the use of micro payments over the platform.

3. Infomediary services Model: anonymous social marketing?

Facebook could start charging for access to its user data. User data is potentially highly valuable. Facebook collects a rich set of information from its user profiles. Each profile contains not only the user’s demographic data, but also data about the user interests. Every action adds an additional piece of information: adding a friend, liking a brand, looking at a page or a video…The tastes and buying habits of the users and connections (or “likers”) are much better indications of what the user is likely to buy than are its demographics (i.e. age, sex, and location data…). As a consequence, selling anonymous user data is a good way to make money sharing knowledge of people interests, those people being potential buyers of products.

Application developers could have to share a higher percentage of revenue in order to benefit from user data.

Facebook could dissociate its users’ data from its platform and license it to web data brokers or directly to large CPG businesses, once all personally identifiable information has been expunged. External marketers and advertisers might also be interested to use the data to target ads or other content at potential customers either online or offline. A marketer from CPG firms such as Procter & Gamble or LVMH, could compare this combination of demographics and preference data, and determine similarities with people who have bought their products previously.

The sale of users’ data is a good and easy way to quickly monetise Facebook’s assets. Besides, market insights is another source of cash that could be created through Facebook. With its huge database, the firm can sell specific insights matching the needs of its clients.

4. Merchant model with e-Commerce Transactions: Facebook can become a key tool in the purchasing decision process

E-commerce is expecting opportunities to leverage the existing platform thanks to: a massive logged-in user base; insight into users’ interests; and the network’s ability to generate “word-of-mouth”. Facebook should therefore seek to build payment relationships with consumers; and promote its existing billing system. With the amount of volume of activity and users the firm has at its disposal, extending the current business model with its existing customers is easier and faster (Zhenga Lindgardt, 2009).

The firm should therefore be able to charge a fee based on a percentage of revenue sold through the platform. The knowledge of actual tastes and preferences of Facebook users makes the social network very attractive for the discovery of products and services, and online purchases. Provided Facebook sorts out and improves its mobile strategy, mobile commerce could its first source of revenue as early as 2020. The firm could indeed charge a fee per store and asks for a percentage against each transaction (1%-3% according to the product or service). We can expect Facebook to become a link between a brand and a potential customer through his or her history.

For most users, Facebook is able to carry out the promise of personalisation better than any other e-merchant and deliver a purchasing experience around the data it owns. At the time of decision to purchase or not a product or a service, the social connection gives confidence in buying if the perceived value and benefits of the products are recommended by “friends”.

Nobody knows what the future holds for Facebook, and even though the task is difficult and risky, here are two cents and a projection available from my site at value2020.net

follow in the steps of Tencent!

As a conclusion, as explained, Facebook Inc. is likely to generate much more revenue from user data through mobile & tablet commerce, and infomediary services in the years to come. The profitability of the firm could increase in case the company follows the path of Tencent, one of the world leaders in the business of micro transactions. The business of virtual goods is growing and highly profitable: Facebook should take advantage of this kind of opportunities.

Bibliography

Facebook Inc. (2012, May). Core Concepts – Open Graph – Tutorial. Retrieved May 29, 2012, from Facebook Developers: http://developers.facebook.com/docs/opengraph/tutorial/

Gilbert, B. (2009, June 1). Virtual Worlds Market Forecast 2009-2015. Retrieved January 21, 2011, from Strategy Analytics: http://www.strategyanalytics.com/default.aspx?mod=reportabstractviewer&a0=4779

Open Graph protocol. (2012, March 22). Open Graph protocol. Retrieved April 12, 2012, from Open Graph protocol: http://ogp.me/

SECURITIES AND EXCHANGE COMMISSION. (2012, February 1). REGISTRATION STATEMENT ON FORM S-1. Retrieved May 27, 2012, from SEC: http://www.sec.gov/Archives/edgar/data/1326801/000119312512034517/d287954ds1.htm

Zhenga Lindgardt, M. R. (2009, December). Business Model Innovation. Retrieved April 23, 2012, from BCG: http://www.bcg.com/documents/file36456.pdf

Follow me on Twitter: @value2020

this piece is also available from http://value2020.wordpress.com/2012/06/28/value-creation-and-monetization-at-facebook/

2012, Year of the Chinese Internet industry growing beyond borders: it is just the beginning

What is currently planned at Alibaba, Tencent, Sina, and Baidu worth an additional paper. My duty is to continue the story published last year and called “Chinese Internet industry ready to grow beyond borders”.

Some of my readers were quite skeptical in 2008 when I announced that China was a country good at disruptive innovation following a trip in Beijing. At that time, I bet for a Chinese Internet becoming almost the only alternative to American Internet. Who would have imagined at that time that it would accelerate as soon as year 2012?

China becoming an Internet giant

China has the world’s largest Internet audience thanks to its population, the world’s biggest with more than 1.3 billion people. With the strong increase of its Gross Domestic Product, extraordinary engineering talent, plenty of venture capital, Chinese entrepreneurs and large firms have now the resources to compete worldwide.

Looking at social behaviors, there is a main difference between American people and Chinese people: in the U.S.A. and Europe a majority of online users are “Spectators” while a majority of users in China are “Creators”[1]. China is a market more active and users generate a lot of content every day. This behavior explains part of the success of QQ games, a service of Tencent focused on online games.

More people than anywhere else, and a more active profile than European and American users enables the development of robust Internet firms. Now that China is an Internet giant, time to grow beyond borders is coming.

Strategic investments before 2012

In 2011, Tencent formed several strategic partnerships in China: among them, Kingsoft Corporation Limited., a firm providing software focused on Internet security and eLong, Inc, a leading online travel service provider in China. Outside China, in addition of being active in the U.S.A., Russia, India, Vietnam, Thailand, Tencent acquired a majority stake in Riot Games, a Los Angeles-based developer and publisher of online video games. [2]

Digital Sky Technologies

In 2010, Tencent invested $300m in Digital Sky Technologies (DST) of Russia, bringing two internet powerhouses of the emerging markets together in a long-term strategic partnership. In 2009, Sanook of Thailand became a partner of the Chinese firm.

Alibaba prepared the future of Alipay reaching an agreement with Yahoo!, and SoftBank. Alipay is a leader in China in providing payment processing services. Alibaba also developed operations in the U.S.A. and formed a partnership with Turkey’s Logo Group to reach Turkish companies.

Among others, Renren and Dangdang are listed on the New York Stock Exchange. We can expect more US IPOs by Chinese companies. There are at least 10 Chinese Internet companies who have made confidential filings through the Security Exchange Commission. Those Chinese tech companies aiming to IPO are also growing their business through innovation.

Development of operations outside China: starting to use the powerful strength of overseas Chinese presence

The strategy to develop operations outside borders is focusing on emerging countries with growing markets or developed countries where Chinese people and Chinese firms are well established. Expand abroad is a service for overseas Chinese and for non-Chinese users a form of outreach to Chinese audiences.

The service developed by “QQ International” division of Tencent is an instant messenger in either English, French or Japanese.

QQ International – Chat Messaging

This new service, launched in 2010, allows non-Chinese speaking people to use the service and communicate with Chinese people easily: they can talk to local Chinese people and stay connected with them in case they go back home.

The same is true with the English version of Sina Weibo microblogs. Sina Weibo has not only built a platform for interaction in China public, but Sina Weibo’s influence has also extended abroad. Recognizing Weibo’s importance, almost all foreign missions have started their Weibo tweets to highlight their activities and policies of their countries. Microblogging enjoyed explosive growth and emerged as a major social media contender in China. Taobao is the e-commerce firm that benefits the most from clicks on Sina Weibo.

There are 2 million Chinese living in Western Europe. To expand abroad and explore new markets, Chinese companies target the Chinese communities. The nation’s third-largest wireless carrier, China Telecommunications Corp,[3] ,facing an intensifying competition at home, has started to expand in Europe with the U.K. targeting more than half a million Chinese citizens living in the country since May. The company will become the first Chinese operator to start a mobile virtual network outside China. The service, aimed at Chinese residents, might expand to France in 2013 if it’s successful.

Alibaba aims to reach the whole world and to turn the services into a global marketplace for importers and exporters. The successful business model can work almost anywhere. The firm is establishing partnerships with other companies well established in other emerging countries, Turkey being one of them.

Alibaba is able to challenge eBay and Amazon.com for the top spot in e-commerce around the world.

Baidu is positioning itself as an access to mobile commerce in China, therefore it is a way for non-Chinese companies to reach the Chinese markets. To differentiate from the competition (mainly Google), the company focuses its efforts on emerging markets (Brazil, Argentina, Egypt among others). The firm is currently opening offices all over the world.

Tencent launched in January 2011 Weixin (微信), a free mobile application for instant communication. Weixin supports mobile instant communication through photo and video sharing, voice chatting (one to one and group chatting), and of course traditional text messages.

Social Part of WeChat Application

Weixin’s success is explained by the integration of all Tencent communication tools including QQ, e-mail and Tencent’s Weibo platform. Moreover, comparing with telecommunication operators’ services, the use of the app is free for its users. The social feature allows to find if a contact or another Weixin user is nearby!

The international version is called “WeChat” since April 2012 and users cannot guess the service is Chinese. Strategy for WeChat is to customize the product to local markets, rather than simply translating into local languages. After successful launches in Taiwan, Thailand, Vietnam, India and Singapore, the service is now marketed in Malaysia. [4] For Tencent, Malaysia is a new country and the firm continues its growth outside China. We can expect over 200 million users at the end of the year.

Promotion of WeChat in Thailand (2012)

Partnerships of US firms with Chinese firms

We could believe there is a business war between Chinese companies and US companies. This is not always true as they seek to cooperate in several projects.

In December 2011, in China, Dell has unleashed the Dell Streak Pro, an Android handset with a special feature.[5]

This device uses “Baidu Yi”, the Operating System (OS) from the Chinese search giant, that is modeled and built on top of on Google’s mobile platform. In this case, “Baidu Yi” replaces Google’s options for many of the handsets core functions, such as the search engine, instant messenger, ebook reader, and the app store.

American firms are investing money and time in reaching the Chinese market what could be helpful for Chinese Internet firms to expand abroad through partnerships. In China, Microsoft is using its new partner Nokia to gain market share in the internet industry in China investing in Ganji.com, and creating location-based services with Sina Corp and Tencent.

We are likely to see a greater cooperation and competition all over the world.

Conclusion

The Chinese Internet industry through innovation, but above all, a very good understanding of what a user values, is on the road to globalization. This process can count on other existing Chinese firms already well-established outside China, on overseas Chinese and on the universal need for a quick and friendly Internet.

Mobile commerce, through the power of social commerce and other strategies of combined business models, is the long term goal for the current efforts for being a place of interactions. Through QZone and Weixin, Tencent is well positioned in China and Asia. Facebook is dominating the social network market outside China. What can we expect from the Chinese industry in the years to come?

WeChat Expansion – June 2012

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[1] http://blogs.forrester.com/gina_sverdlov/12-01-04-global_social_technographics_update_2011_us_and_eu_mature_emerging_markets_show_lots_of_activity

[2] http://usa.chinadaily.com.cn/epaper/2011-03/01/content_12095412.htm

[3] http://www.bloomberg.com/news/2012-01-04/china-telecom-to-start-first-u-k-mobile-virtual-network.html

[4] http://sfluxe.com/2012/06/26/tencent-marks-malaysian-debut-with-wechat-tech-news/

[5] http://www.pocket-lint.com/news/43552/dell-streak-pro-baidu-yi

 

source:

http://value2020.wordpress.com/2012/06/28/2012-year-of-the-chinese-internet-industry-growing-beyond-borders-it-is-just-the-beginning/

SAS can’t “buy” fans but knows how to attract customers #csmb2c

The second usefulsocialmedia presentation this afternoon was presented by Christian Kamhaug from Scandinavian airline SAS. Scandinavians are known for flying a lot for business. And Scandinavians have 5 weeks holidays so they fly a lot for leisure too; also because Summers are wet and cold in Scandinavia and they want to fly where the sun is shining. “Unlike Nissan we can’t buy any fans” Kamhaug said, so they decided to do something else instead, like using their own customers, a first-rate free resource SAS had… and that proved to be a very good idea!

from simple Facebook questions …

SAS asked its 100,000 Facebook fans “where do you want to fly this Summer?” and they asked them to suggest a destination. SAS received 800 suggestions in one week and more than 180 destinations were suggested. The top 10 destinations went for vote and Alanya (Turkey) was the winner. FLights started July 3, 2012 and will be operated twice a week year-round. SAS also used this vehicle in order to make it known that a new service is on offer: after a number of years, SAS decided to offer coffee on board after years of buy-on-board policies.

to mySASidea.flysas.net 

After these 2 small campaigns, SAS decided to take the initiative to the next level. Two weeks ago, SAS walked in the steps of Dell’s Ideastorm and launched mySASidea.flysas.net. What SAS has realised is that not only customers are adding their ideas, they are also commenting on other people’s ideas. “This is really what crowd-sourcing is about” Christian Kamhaug added.

In 6 days, SAS got 500+ new regostered members, 400+ ideas and 2000+ votes. “You can save millions in consultants’ fees” Kamhaug said, “all can be done online”.

social media is like pinball wizardry Heineken social media head says

This was the second panel at the useful social media conference and it was devoted to customer interaction. This is the report for part 1 in the panel with Lennart Boorsma who works for Heineken (Global Brand Team). The moderator was Mike McGrail from the SocialPenguinBlog

Heineken presentation

It was entitled “igniting conversations” preferably over a beer, Lennart said as part of his introduction.  Heineken believe that it is  social since 1873! Beer is social by definition (as long as you don’t have too much of it though). The idea is to turn digital into a true marketing tool and Lennart sees “social as a means to create engagement and deepen connections with the audience”. Heineken mainly started its social activity 2 years ago with the merger of the most important facebook page and decided to “have more stuff in place” which meant Youtube, Twitter and a few others like Pinterest and Iinstagram. “Nobody is interested in the back-office tools for managing social media” Lennart added. “If you say you implemented a new CMS for Facebook no one is going to be thrilled”. Yet, without it, nothing is possible he said. Nowadays, social has to be embedded in the brief from the start Lennart Boorsma went on.

“Old media used to be like a bowling alley and now it’s like pinball” Lennart said. Your messages are changed and bounce around. Likewise, content has to change and has to be fun and tell a story. It’s theory but it is hard and it takes a lot of time and requires luck too! The goal is to generate more engagement and conversations about the brand. Today a TV commercial isn’t sufficient, one has to provide a real-life experience.

This is why Heineken launched their star player dual screen app to enable football fans to score points as they answer questions wile watching football matches on their TV. It was launched on April 26th and was hugely successful. Yet there are challenges such as latency in the distribution of TV programmes, namely over cable, DSL or satellite, for users must be given a fair chance to answer all the questions in a reasonable timeframe.

Lennart also showed us a new experience around an enhanced TV commercial whereby real customers could “serenade their dates” and it provided more experience than just a classic commercial. 8 hours worth of streaming were delivered, people from 160 countries played, and 4.3 billion hits were achieved. Lennart concluded by saying that they are only at the beginning and that the work is paying off nicely with over 7 million fans now, up from above 2 millions 2 years ago and “one of the fastest growing pages worldwide”. When asked about cost, Lennart added that “when you have a great shareable idea, you don’t need to spend a lot of money”. I couldn’t agree more with that statement.