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High School Business - Concepts & Learning Aids

(See the McKinsey & Co. enduring ideas concepts at the bottom of this post)

 

THE BASICS OF BUSINESS

 

 

Overview

 

The single most important key to business success is taking action. A good company has common sense in abundance and deals with people issues successfully.

 

The company should identify and measure everything that matters in the business using KPI’s (Key Performance Indicators) to monitor performance against targets, and structure the business properly, setting out who’s responsible for what (accountability), and who is answerable to whom (hierarchy).

 

The company should know the value of first impression (its brand). There is only one chance to get this right. When a new customer phones, or calls, they form a lasting impression of the business in less than 20 seconds.

 

The company must use communications to advantage. The internet is not just a faster way of doing things, it has changed the whole marketing concept of  business (think of social networking, e-commerce, even virtual businesses).

 

 

Customers

 

The company must never presume that customers are getting what they want, regular meetings, and even telephone calls (customer and market research)  can gain advantage for the company in improving its services and customer satisfaction levels

 

Equally, regular contact can discover areas of company services the customer base may dislike and raise awareness of competitive threats and even opportunities.

 

Providing new services to an existing customer base is far preferable to chasing new business (generally it costs 5-10 times more to acquire a new customer versus keeping an existing customer, known as customer retention).

 

The company should identify its sources of business and strengthen its links within that sector of the market.  Known as the 80/20 rule or the Pareto Principle: generally, 20% of a company’s customers accounts for 80% of its revenues and/or profits.

 

 

Employees “The Team”

 

Hire personality and attitude, and teach skill. An enthusiastic and positive attitude is more important than job experience. You can teach staff how to do the work, you can’t teach personality or attitude.

 

Most small businesses stay small because they abdicate responsibility by hiring inexperienced people set in their ways and not compatible with the companies culture or structure. Short term appointees or external management agencies seldom benefit the company as they demote and demotivate existing staff often leading to resignations and a rapid turnover in staff.  It is always better to appoint senior management and executives from within a company structure.

Show appreciation for a job well done and make the job alive by giving responsibility, and always ask for opinions, staff can often provide the format for doing the job better (team members that deal with customers ARE the front-line of any company).

 

Staff can and do share the companies vision of the business future, share good news, and request opinions on how in the future to avoid mistakes that may happen, and do not over-react to mistakes, everybody makes them, including senior management.

 

Delegate areas of authority and explain what the customer would like, and how this can be achieved. This permits the passing on of responsibility and creation of an internal reporting process.

 

Permit the stature of staff to grow with the business by including key people into customer meetings and letting them deal with customers themselves (team empowerment). As they train additional staff during the company’s growth and meet both potential and existing customers, the company benefits from a wider perspective of opinion.

 

The company must adopt a realistic attitude to all aspects of customer services related to the performance and ability of its staff. Nothing drives customers away from a successful business as easily as uncaring, incompetent, or unprofessional staff.   Again, and just like a good customer in the 80/20 rule above, a good employee costs a lot less than hiring and training a new one (employee retention).

 

 

New Sources of Business (ie. Generating Revenues)

 

The company should adopt policies that make it stand out from the crowd. A unique business is compellingly attractive to potential customers and provides them with value (known as a Customer Value Proposition).

 

New sources of business are the life blood of any company and first impressions matter. When a potential new customer inquires (calls, walks into a store, checks a website, etc.), they form a

lasting impression of the company within the first 20 seconds.

 

Use the 6 P’s of marketing to drive success here:

 

   1. Product - What should or shouldn't you offer? What is your real product?

   2. People - Who uses your product? What do they care about?

   3. Price - Can people afford your product or service? How do they value it?

   4. Place - How do people get to your product? Where is it distributed? How is it delivered?

   5. Production - Can you meet demand? Is your production flexible enough to meet changing needs?

   6. Promotion - How do you let people know what you have? How well does your promotion work?

 

 

Data & Analysis

 

Build your knowledge of your customers and record it, what they like, what they dislike, and most importantly, find out what “connects” with each customer..

 

A good company inspects what it expects, and good customer databases provide the company with its competitive advantage, along with its employees, brand and products. The data the company has can reveal its strengths and weaknesses, use it to identify where you need to concentrate the company’s energy. Again, direct effort and energy at 20% of areas that make an 80% impact on company performance.

 

With solid analysis (customer, employee, product, competitive, market and financial research) a company will be able to develop its business and strategic plans.

 

 

Finally

 

Question everything, review procedures to see if there is a better way of doing things, and never be afraid of change. All successful businesses evolve as they grow and the company infrastructure will forever be constantly changing.

 

Set goals for the company to achieve.

 

--------------------------------------------------------------------------------------------------------------------

McKinsey & Co. links to concepts and strategic ideas:

Enduring Ideas: The business System

Enduring Ideas: The Industry Cost Curve

Enduring Ideas: The GE-McKinsey Nine-Box Matrix

Enduring Ideas: The SCP Framework

Enduring Ideas: The 7-S Framework

Use comments to question or add valuable content.

 

 

 

2009 Key Business Terms to use for Harbord Business Case Compeition

Applying long-standing business concepts and popular terms, can help you break-down a business case and can exemplify your team's critical thinking to judges familiar with the business world.

Terms shown below that are boldface and underlined are several key concepts you fill useful as you explain your analysis in any Business Case competition.  After the brief introdcution on Market Segmentation below, many general business conecepts and terms are shown for further team discussion and their related application.  Along with the "BASICS OF BUSINESS" post below, these terms should give your team a competitive advantage!

Marget Segmentation

 

Market segmentation is one of the key approaches to defining and targeting specific markets. Dividing a market into distinct groups of buyers enables the planning of product mixes, marketing mixes, growth and retention strategies, and overall corporate and competitive strategies.

 

Effective market segmentation:

Improves understanding of the customer base

Provides a clear classification of the customers

Enables the generation of a targeted product portfolio that responds to the needs of the market place

Helps gauge a company's market position relative to the competition

Leads to the effective fine tuning of marketing strategies

 

Types of Segmentation are vaired, and can be uniqly tailored to an industry or even a company.  Popular segmentation models can often be split amongst companies as they focus on the Consumer (B2C) or Business market (B2B).

 

Popular Consumer Market Segmentation approaches:

• Geographic (urban vs. rural, regional, by city, etc.)
• Demographic (age, gender, education, etc.)
• Psycographic (values, attitudes, lifestyles, etc.)
• Behaviourial (loyalty, price sensitivity, etc.)

Popular Business Market Segmentation approaches:

• Geographic
• Buyer Behaviour (payment terms, etc.)
• Customer type (industry, size of company, position in value chain, etc.)

Business Terms:

• Customer Retention
• Customer Loyalty
• ARPU (Average Revenue Per Unit)
• Corporate Strategy
• Customer Value Proposition
• Brand
• Brand Positioning
• Competitive Analysis & Strategy
• Market Share
• Key Success Factors (KSFs)
• Key Performance Indicators (KPIs)
• Shareholder Value
• Accountibility
• Customer and Market Research
• 80/20 Rule (i.e. Pareto Principle)
• Empower vs. Delegate
• Competitive Advantage vs. sustainable Competitive Advantage
• 4Ps and 6Ps of Marketing
• High-Value Customers vs. Mass Market (see 80/20 rule)
• Cross-selling vs. Up-Selling
• Management Team
• Leadership
• Direct Marketing (Direct Mail, Telemarketing, Email, etc.)
• Social Marketing (Facebook, Twitter, Digg, etc.)
• Mass Marketing (Newspaper, TV, Radio, Outdoor)
• Affinity Marketing (Loyalty Programs, Sponsorships, etc.)
• Public Relations and Corporate Communications
• Value-Chain
• Franchise
• Centralization vs. Distributed
• Commoditization
• Cash-flow vs. Profitablity
• First-mover Advantage
• Organic growth
• Partnership
• Patent
• Product Life-Cycle
• Share of Wallet
• Channel Partner
• Strategic Alliance

Many of these terms can be further researched online and via this resource at Wikipedia: http://en.wikipedia.org/wiki/Category:Business_terms.

 

VON Radio - Canadian Podcast on Canadian ILEC scene

As part of Jon Arnold's Canadian IP Thought Leaders series on VON Radio, he invited me to join in a quick discussion on the Canadian ILEC landscape, including BCE's recent divestiture of a large portion of its media holdings.

I know its not like me to post twice in one day to Bitpad.com, with the Microsoft Paid Search post below, but in this case Jon Arnold and the Pulver team did most of the work in getting the Podcast online.

People interested in VoIP should seriously spend some time looking over the recently upgraded VON Radio website that is part of ever growing Pulver portfolio.

As part of his work with the Pulver organization, Jon Arnold of Jon Arnold &  Associates airs a weekly podcast titled "Canadian IP Thought Leaders" and was gracious enough to invite me to join him last week.  It's a quick 15 minute discussion on discussion on BCE-Bell Globemedia divestiture deal, and the ILEC landscape in general in Canada.  You can listen to the Podcast directly at VON Radio or even subscribe to its RSS feed.

In the end, neither Bell or Telus will have it easy going into 2006; and the relatively slow push (not as price competitive as Videotron) by Rogers and Shaw Cable on their VoIP offering may allow the ILECs time to re-think their revenue cannibalism equation as their own VoIP and IPTV offerings come to market.

Jon and I continue to discuss the industry quite frequently, and a more detailed version of the Podcast should lead to a new posting very soon on some of the opportunities and threats that face the entire Canadian Communications landscape (Cable, Wireless, ILEC, VoIP) going into 2006.

Please share your thoughts and any international readers, I'd love to learn parallels of what is taking place in your country. 

Thanks! Ash.

Microsoft to Pay Users to Use Their Search instead of Google

As first suggested here on Bitpad.com on June 22nd, 2005

CNBC this morning reported that Microsoft is to pay end-users a share of the revenues they generate via usage of the Microsoft search engine.  My original suggestion to Microsoft (or Yahoo, etc.) in June was an idea for Microsoft to kill Google's cash cow search business.

The permalink for the June 22nd article can be found at How Microsoft can kill Google.

This was apparently shared by Gates during his recent trip to India.  Until I can gather more facts on how the methodology would work, I suggest readers check-in at John Battelle's Infoworld article at his SearchBlog.

Great to see Microsoft steal an idea, even if it took them six months!

George Cope New Prez & CEO of Bell Canada

The Canadian Telecom market-place will be a lot more interesting in 2006.

Early this morning BCE announced that George Cope, who was the CEO & President of Telus Mobility, would join its Bell Canada unit as the President and COO.  His responsibilities at Bell will include: residential (wireline, internet and video) as well as Enterprise, SMB and Wholesale units.  He will start the new role in January.

Getting George Cope to join the BCE family is a tremendous win for Bell; and something that Darren Entwistle, CEO of Telus Inc., should have foreseen and could have avoided with progressive succession planning.  Mr. Cope is widely respected within the industry.  This is a gentleman who made his fortune getting Mr. Entwistle to bite on an over-valued Clearnet, yet operationally exceeded every target thrown at the Mobility group within Telus.

While Telus Mobility was treated as a high-performance fiefdom within the organization, with its own style of management, marketing and "team orientation", this level of independence will no longer be available to Mr. Cope.  Regardless, Bell desperately needs George Cope, no doubt it will help reinvigorate the organization and its brand.

To summarize my thoughts:

• Its not a money issue for George, so expect him to prove to Telus and its board, that he is the Canadian Telecom rain maker.  Expect Entwistle to try and beat Bell at every turn or react very quickly.
• All the Canadian telco's go crazy trying to protect a low margin $20M/year enterprise account, yet pay little executive attention to the ever changing mass market.  Expect Cope to  continue this focus, but take risks  in  the mass market to help margins and get back some much needed growth back to Bell.  Here, small improvements in retention, service or pricing strategies can move hundreds of millions of dollars over the P+L.
• Any Non-Compete Mr. Cope has on the wireless side with Telus will be honoured,  however interpretations related to bundling may be loose.  If longer than a year, Bell & Cope will always have the option to challenge the viability of a Non-Compete in a telecom market as small as Canada's.
• Expect Mr. Cope to make sound brand decisions and focus efforts to build on Bell's core strengths and out, with a strong emphasis on the brand, mass-markets, service levels, and retention.
• Watch out advertising companies!  Mr. Cope won't be mollified with what has satisfied Bell in the past.  Agencies like Grip, seeing its Bell account orbit back and forth to Cossette may have another chance.  Mr. Cope was a key driver behind keeping Clearnet's Taxi agency over to the larger Telus organization.  Expect him to come out swinging at Cossette, but with an open mind to everyone else.  Telus and Taxi would be smart to lock down key resources for the next 12 months.
• Telus should probably use Cope's departure as an opportunity to re-shape its organization.  With the Telus Mobility King gone, the fiefdom no-longer needs to exist; bringing Telus' Wireline and Wireless organizations together for the first time.
• While never working with Mr. Cope directly, any Bell employees reading this should feel pretty comfortable with the leadership announcement.  From what I have seen and heard, Cope is very loyal to his organization and rewards performance well.
• Investors should also like this move, now Sabia can focus on lobbying, convergence, deals and BCE's needs; Cope can focus on the market.  Not to mention a defined succession plan post-Sabia that should become much clearer after Cope notches a couple of wins.

Having worked for and/or consulted for senior executives of both Telus and Bell, both organizations are incredible strong, deep and should be well respected.  Having some long-term savings in both company's stocks (like most Canadians); and over the past few years being well rewarded holding onto Telus, I see this as an exciting time to see two great organizations compete.  Hopefully, Bell's rewards to its shareholders will catch-up to those of Telus.

Watch both Jon Arnold's and Mark Evans' blogs for more.  My intermittent posts will continue, but hopefully something every week or two.  Since I'm not trying to make ad revenues or anything, I only want to share with readers content and thoughts that are different.  I hope this is a value-add to all.  Please feel free to comment or send me an email.

A truly great mobile phone: The Sony Ericsson K750i

The Perfect Phone for Apple? And music lovers, business users, photo buffs, bluetooth junkies.

Here's the phone I mentioned in my Apple MVNO post earlier today that Apple should consider for its entry into the Wireless market with full support for MP3s (and with a little DRM firmware upgrade maybe iTunes' AAC format?).  The Sony Ericsson K750i is also known as T-Mobile UK's D750i.  The iTunes-enabled Motorola E790 maybe OK, but this one is better!

Check out the most detailed cell-phone review I have ever read at MobileBurn.com.  Michael Oryl goes into detail of the user experience -- not just data.  I wish I could get this level of detail for all my gadget purchases.  Info junkie I am.  I'm going to highlight a few spec's (see Sony Ericsson's site) and some of the phone's short-comings --- you can decide if this US$400-$500 phone is right for you

The Register and Pocket-Lint can be quoted to say "The K750i is fantastic!" with a 9/10 rating in the review.

The basics of the phone: 
- GSM (900/1800/1900), GPRS, email, T9 SMS/MMS, bluetooth, Infrared, WAP, USB
- Dimensions 100 x 46 x 21 mm, Weight 99 grams
- LCD display 256K colors, 176 x 220 pixels
- Ringtones: Polyphonic (40 channels), MP3, FM Radio (RDS)
- MP3 Player supports playlists, shuffle and graphic equalizer
- Vibration alert, Photo caller ID, Voice caller ID, voice calling
- PIM, Java Games (3 incl. + downloadable), voice recorder
- 34 MB shared internal plus 64MB Memory Stick Duo card incl.
- Camera 2 MP (1632x1224), auto-focus, video-recorder, dual LED flash
- Video player (supports streaming), Music DJ & Composer,  Picture Editor
-  Built-in speakerphone plus  includes  stereo handsfree earbuds
- two Li-Pol batteries included (900 mAh): Stand-by= upto 400hrs/Talktime= upto 9hrs

Shortcomings of the SE K750i:

- fat fingers may find the keypad cramped (especially the "2" key which is recessed very close to the mini joystick above it)
- firmware seems to have a bug (twice when sending a file via bluetooth to my iMac it locked up and I had to reboot the phone)
- handset volume and built-in speaker should be louder
- very slow camera shutter release
- needs a 1 megapixel camera mode (not just 2MP, VGA and quarter VGA)
- No EDGE for high-speed data

A couple of other points worth noting.  While other online reviews don't mention this and the slow shutter lag above maybe throwing me off; I found the picture images hit or miss.  My experience with image shake (with digital zoom off) forces me to be careful or take a few pictures, hoping a I get one stable one.

I have never been a fan Sony Ericsson's peripheral/power sockets.  They seem pretty big given how delicate the connectors looks.  The K750i's FastPort socket (for power adapter, handsfree, USB optional external flash) carries on in this tradition, but again, others don't seem to mind.

Lastly, a problem that all single colour backlight LCD screen cellphones have is that after the predefined time the screen basically goes dark.   With all the Rogers/Fido network integration activities underway; I'm always pressing a button on the phone to check my signal strength or to see if a message is waiting.  The same thing on my Blackberry 7100.  Vendors need to solve this, maybe a small b+w LCD panel on the back could provide status information (like clamshell phones).

The K750i is still a great phone, and a joy to use. I think the annoyances above deserve to knock another point off the reviews mentioned.  I would give the phone a 8 or 8.5 out of 10.

I picked mine up from Bongo Wireless north of Toronto.  Of course they knocked $100 off the price (US$480 no contract and unlocked) the week after I shopped.  Kevin Heffenden at Bongo says the firmware of the K750i can be flashed to the Sony Ericsson 800W in the near future, no idea what the cost will be. 

The 800W is basically the a rebadged version of the K750i twin, the D750i, with orange highlights, Walkman branding and the ability to turn off the cellphone (for airline travel) and use the unit for music exclusively.  Personally, other than a couple of design advantages of the D750i/800W design (the joystick and "2" key are better separated; the lens cover is auto-released, not a manual slider); I think the K750i's business-like styling will probably age better.

I still plan on keeping my Blackberry 7100 for those days when I'm stuck in meetings, airport lounges and when I don't feel like lugging my laptop to a short conference --- everywhere else I'll use the SE K750i.  Now my friends won't laugh at me for talking into a calculator!

Any suggestions for similar top-end cellphones to look at?  What about my next gadget purchase?

Apple as a Wireless Opperator: Great Idea!

Apple as an MVNO would have a fighting chance:  Stevie Just Do It

Forbes' David Walt recently posted what Om Malik termed a "seriously speculative" piece, on how Apple could enter the wireless market in the U.S..  Highlighted in the Forbes article was how by becoming an MVNO (Mobile Virtual Network Operator) like Virgin Mobile or the recent Disney wireless announcement; Apple could do an end run around the few network operators to control the revenue sharing of the soon to be released iTunes-enabled cellphones.

I like the idea.  Apple is one of the few brands in the U.S. that could do it, do it well, and sustain the operation.   Of course, Dell could do it, Walmart, Sony, AOL, NASCAR and a dozen or two other ubiquitous brands.  The reason why I would love to see an Apple entry is that Apple is already a progressive hardware company known for style, and as an operator Apple wouldn't have to play in the discounting games that most brands would centre their USPs around.  I believe they could attract premium prices or at least those ARPUs similar to what wireless carriers have attracted from the better SOHO and corporate segments.

Apple could leverage the coming avalanche of audio-enabled cellphones from Motorola, Sony Ericsson, etc. and stylize their iFon (see comments) models to suit the what Apple customers expect (iPOD/iBookish white, Power-based silver models, etc.).  As their iPOD success has shown us, Apple would not have to discount or subsidize (much) their iFon's and as long minute packages are comparable to carriers; Apple would likely attract a strong loyal niche following.  Add to this, Apple's ability to bundle in iTunes tracks (weekly ringtone of your favourite iTunes genre based on the charts, etc.), multi-platform licenses support (access your purchased music library via iFon or your desktop), integrated iChat/iPhoto/iMovie/.mac support, etc.   There's plenty of opportunity for Apple to attract higher than average MVNO margins.  The back-office carrier may even benefit from monitoring this Apple application iSandbox(?) to see take-up rates and grow their internal learning's.

As someone who in the past has had to negotiate directly with Apple executives to gain exclusive "official Australian Apple ISP" status; I know how well Apple can negotiate deals with carriers.  They would rather delay a launch, then see their brand risked or their vision sandbagged by an inflexible partner.  I can't imagine a progressive mobile carrier saying No to Apple; risk losing its brand momentum and market niche to a competitor just because Apple won't share its iTunes margins.

Let's face it, carriers aren't used to making money from mobile music in the USA anyway, so they aren't losing too much if they benefit from the learning's, the partnership,  and  Walmart-inspired margin pressure.  Apple customers may actually use the capabilities of a mobile 3G network! Apple would rather a flexible partner and pay an extra cent per minute (as an example only) then do without a partner that can see the benefits of muual market development.   I can't see this iPOD tidal wave going on for another three years, and Apple moving into the wireless business would have better margins, long-term recurring revenue streams and a better effect on its stock than focusing on just its Macs and iTunes markets.

All the rampant speculation online about Apple entering the the MVNO market-space maybe speculation, just as my comments above, however I see far fewer negatives for Apple behind this move and a lot of strengths.  The time is right for a market move in 2005 or early 2006; any later and Apple risks a slow-down in its iPOD business that would seriously cut the brand's current momentum amongst its users and investors.

What Pro's and Con's have I left out?  Ideas?  Please share your comments!  On the weekend, I'll post a review on the perfect mobile phone that Apple could launch with; I've been using it for two weeks and its near perfection!

Thanks,
Ash

How Microsoft can destroy Google (!)

An idea for Microsoft (or eBay?) to collapse Google's business model.

Disclaimer: With a few shares each of Microsoft and Google, I'm invested in both camps and not interested in seeing either die.   But that won't keep me from sharing an idea.

There has been a lot of discussion on how Microsoft can catch-up to Google's search business the momentum/leadership this has generated.  Fortune Magazine had a good article by Fred Vogelstein chronicling the giant's  catch-up activities (Fortune Magazine article "Search & Destroy" [May 2 2005]).  The article goes on to mention  that Microsoft's past competitive tactics of bundling (Office, IE, Windows Media Player) and/or giving away things for free (again IE vs. Netscape, WMP vs. Quicktime vs. RealPlayer) won't work against Google.   End users seem to love love the Google ideals: great free and  simple and web tools (search, gmail, picasa, desktop search, etc.  Try the new personalized Google home page at google.com/ig).

So how can Redmond (or other great online brands like eBay or Yahoo) battle Google?  Trying to outsmart geeks in one camp vs. another seems to be futile.  After all, how many search engines do we as users want to keep testing to see which one is better?  I really don't care to ever try A9 again, Yahoo's search and the 5-10 others that I may have spent a minute trying in the last year.  Not to mention the risk and expense playing technology leap-frog can lead to, and rarely guaranteeing a long-term win.

So if you don't want to 100% rely on a technical advantage, that users may or may not even appreciate, why not try to mess with the business model.  Especially if you think Google may one day build tools to compete with your business.

To do this against Google you have to realize that 90-95% of its revenues come from advertising related activities.  Google's Adsense and Adwords services have created industries and viral benefits to Google giving it's search and advertising exposure to probably the largest network of websites globally.   Who benefits right now: 1. Google, 2. Website owners, 3. Advertisers, 4. End users.   About 50% of Google's Ad revenues right now come from its Adsense network, where website owners share their traffic and give up a small block of real-estate and Google will advertise complimentary services where click-thru revenues are shared with Google and the Website owner.

If I was Microsoft, I would try and get End-Users into this revenue stream.  Imagine as an end user, getting paid each time you legitimately click on an Ad and getting a monthly cheque from Microsoft or a micropayment into Softies Paypal-type system.  Google already has to scan its logs to make sure Website owners aren't Google-bombing the ads on their sites to grow revenues, this same fraud detection would be needed at the End-user level (ie. make sure the same user doesn't click on a hundred ads in a session to grow their personal bank account, or alter the Advertising system to be Cost Per Acquisition vs. Cost per Click based).

For instance if I owned a widget site and wanted to grow my online sales, I may bid $1 per Click (known as Click-thru or CPC) to have my ad appear on a popular site.  Right now, Google displays this ad for the site owner and shares any CPC revenues with them in exchange for the traffic and the exposure on their popular site.

Microsoft could do the same, but bring End-users into the equation.  Microsoft just wants to hurt Google, so they could give end users a share of their portion.  Microsoft could also attract a higher bid by site owners if they went to a Cost Per Acquisition model.  Instead of just attracting online window shoppers for a $1/bid on Google's Click-thru model, I would rather bid $2 or $5 if I was guaranteed a sale in the Microsoft CPA model proposed.

Imagine what getting End-users into the money stream would do for Microsoft's Google-busting activities.  Customers would love to get into the action and get some cash coming in to subsidize their broadband costs or online purchases.  Site owner's would also like to a have  a real alternative to Google  (for my online businesses, I have turned off FindWhat, Overture, Looksmart, etc...they just were not delivering traffic that Google was, but given that, my bidding on Google's advertising just can't keep up with the bigger players).

I really think the business model above to take-on Google by a top-tier online brand has some legs.  Any feedback on why you think it may falter would be appreciated!

 

Is the Microsoft vs. LINUX war stalled?

Are large IT departments shifting their support back to Microsoft?

Last night I received a call from a friend, a CFO at a large multinational.  Seems that his ears are burning from the debates between the CIO shop favoring consolidation on a few Microsoft platforms and the CTO shop recommendations to continue to build out their Linux investments.

To acquaint yourself quickly with the MSFT vs. LINUX battle just click on Microsoft vs. Linux War search.

As you will see, there is plenty of material for both sides to fight with.  Lots of Linux positives, including the support of many rapidly developing countries (China, India, Brazil, etc.) and their governments showing strong support.  You also have articles like that at the NewScientest.com talking about some surprising positive results backing Microsoft in its article on which OS is safer?

After the huge Linux push over the last 5 years, why is Microsoft gaining back some ground amongst IT departments?

1. Linux isn't perfect! As more and more Linux installations occur, the "Linux-I'm a Bigger Geek! complex" hasn't been able to silence the news of its weaknesses, complexity/fragmentation between all the variants, and their vulnerabilities.  Frankly, I'm tired of wanna be uber-Geeks kicking Microsoft products blindly has some sort of badge of honor, as if Linux is perfect.  For most of us, the Microsoft products work pretty much as advertised and have the same weaknesses that the entire software industry is known for.
2. Is Linux really cheaper? The Linux license costs are definitely cheaper, but support costs are growing.  In general an expert in Linux can probably get 25-40% more than the hordes of MCSE holders out there.  Not just that, but a company has to be aware of its Linux-personnel leaving, getting a replacement at the same cost, quickly, and with hands-on experience in the same flavor of Linux isn't as simple as finding an MCSE holder or Microsoft Exchange professional.  If a corporation really has a problem they can always call on Microsoft's consulting group. Maybe the positive reception Linux has had from developing nations is that the cost of skilled labor in these countries is relatively cheap so developing and maintaining an abundance of expertise internally is viable.
3. Microsoft will do just about anything to remain a viable alternative on any large IT project or bid. I have had the pleasure of working alongside Microsoft personnel in Canada, the USA and Australia. Let me tell you, these people always work hard, are brighter than most, and you can call on them day and night.  They will also appear to do anything to keep from losing a sale! I am not sure if some of the AE's and Product Managers I have met are awarded for revenues and margins, or market share.   I have also worked with HP, Compaq and SUN on Linux projects, but when push comes to shove on a side by side comparison if you tell the Microsoft team what numbers they need to hit, they will meet them.  I have seen Microsoft take 80% off what they said was their best bulk license pricing, plus they'll throw in hands-on support like crazy to keep everyone happy (including feeding their business through a reseller).  As a business manager, you've got to like a professional partner that always wants to win and is on your side!
4. The old Cover Your Ass story! In the IT departments that I have had to manage, I have been lucky that this really never appeared to be a major issue; but I got to think in a more sink-or-swim environment that IT departments are OK managing the politics of Microsoft vulnerabilities.  No one is immune to them.  Yet on the Linux front, it was the IT groups who pushed and pushed for migrations strategies to move to Linux and open standards platforms.  So when the CEO hears of the billing system shutting down, a call center offline, or has email missing (or worse spamming his or her address book), who are they going to call on? And how much wiggle room is the IT department going to get to justify the failure?

As a technology-aware business person, I couldn't help but think that their own words are coming  back to haunt the LINUX soldiers.  They continue to show more success than just about anyone expected, but the story is getting old and buyers are getting smarter to look at the whole picture.  What are your thoughts on this battle?

UPDATE:  Via Slashdot and ZDnet I just saw a couple of relevant postings on this very topic:

 Study Shows that Microsoft vs. Linux Costs are Neck and Neck, in the Yankee Group study "88 percent of respondents said that the quality, performance and reliability of Windows was equal to or better than Linux." Interestingly, the study goes on to say that Microsoft's security rating by respondants doubled to 7.6 (out of 10) in a year, while Linux remained flat at 8.3.

Yankee Group Slams Linux Extremists. I doubt if a company spends its budget supporting extremist thinking, but there has been a definite bias; as I mentioned in point #1 above.

 

Why the fuss over the AOL Internet Phone Service launch?

Has AOL done anything right this millennium?

We all know the answer to this (and yet I continue to hold a few shares).  Then why does Jeff Pulver go on to say "I believe AOL will end up teaching the rest of the IP Communications Industry on how to market cool and geeky technologies to the masses. I look forward to being one of their students." (see: Jeff Pulver's blog)

It is disturbing to see the number of respected VoIP professionals supporting AOL's announcement.  I wonder if its time for bloggers to declare any affiliations with the company they mention overtly (i.e. consulting revenues, etc.). 

As some background, the company's membership continues to dwindle, with 4Q'04 results in its core domestic market dropping 464k* members in the quarter ending December 31st.  A 2mil member decline in a year, down to 22.2mil total.  This tells me that AOL ISP customers don't feel they are getting value and cannot avoid the offers being made by Telco the CableCo broadband bundles.  The gains in its domestic high-speed Cable offerings are still insufficient (with YE'04 total subscribers of 3.9M, up less than 700k during the entire year) to make up for the above retention issues. (* all figures come straight from filings posted on the AOL/Time-Warner corporate website).

Why do I regard today's AOL announcement weak?

• They are six months late!  With everyone and their brothers already in the market and many other great brands (Vonage, Packet8, Verizon) offering very competitive products and most at better price points.
• Speaking of Pricing, AOL's is off and clumsy from a customer value perspective.  AOL should be looking at VoIP as a retention tool (for the number of loyal customers who have stuck by them) and mirror the Apple iPOD "halo" effect to hopefully attract ISP customers via a competitive VoIP offering.  The current short-term promotional pricing is kind of attractive, but after a few months there really is no customer pull in the offer.  G4TechTV's AOTS "The Feed" segment already commented on tonight's episode that the pricing&plans AOL offers appear to be written in Latin.  Why not just do a simple value-add option to existing AOL users?  AOL needs to start looking at profitability from a customer bundle perspective rather than a product-centric view.  Imagine the confusion if they try and mix in a cellphone offering into the pricing?!?  AOL needs to make its pricing and plans more compelling... or customers just won't care.  AOL Canada's offered VoIP for a couple of months now, anyone think they are even close to 5000 sign-ups?  I'll take the action!
• More confusion and missed opportunities - People don't expect perfection from VoIP, and AOL should be able to easily meet these expectations.  AOL/Time-Warner have already been offering their Digital Phone service to Cable subscribers, so a VoIP offering (even if a little cheaper) just sounds like more technology being shoveled down to their customers.  They definitely need to clear up the confusion here!  On the plus side, why not use perceptions to their advantage?  Just the mere fact of using the same backbone and reducing hops should allow AOL to promise better quality to AOL callers within their network (aka "on-net").  Sure they could use QoS, etc... but just marketing the perceived notion of better quality could lead to some customer-get-customer pull through (think of MCI's Friends&Family).  Throw in a referral program and you've got viral marketing going!  Remember the good old LD days of the 80s/90s?  Sprint worked on improving their quality perceptions with a simple pin dropping next to their fiber network.  Of course, they didn't have any special network that others didn't, but they worked on the perceptions and their customers thought the Sprint lines were cleaner.  AOL needs to bring its network and heritage to the deliver the same kind of perceptual advantages.

What has AOL done right?

Simply, their web dashboard.  Something easy and interactive for customers to use and feel the benefits of using an Internet Phone.  Add in presence, integration with AIM (isn't it time for AOL to consolidate AIM and ICQ?), uniform buddy lists, audio calling via instant messenger users worldwide, SMS capabilities to the AOL IPS telephone number and smart call forwarding options (again integrated into the presence capabilities of AIM); and AOL may get a unique VoIP service that delivers retention benefits, all via delivering convenience and a seamless service.  AOL has the ability to leverage its product portfolio, why aren't they leaving it all on the field?

Please share your thoughts on the AOL IPS offering and most of all let us all know if you think customers will care!