cloudalps (hidden peaks)

High Tech Economics – implications from a global perspective.

Nokia CEO provoking the leak of new Windows Mobile Phone

Nokia is in need of some positive press these days but especially anything that can highlight future potential in order to reverse the trend of its stock.When you hear CEO Stephen Elop talk to Nokia employees about the “super confidential” device he is about to show and that they cannot blog about it…. this sounds like a marching order to do exactly that.What do you think? Watch the video by engadget!

Nokia CEO Stephen Elop shows N9 Windows Phone i…

Filed under: Hardware, Media & Entertainment

Can Hulu disrupt TV like iTunes the music industry?

The evolution (or rather disruption) of TV is an interesting and quite visible battle of digital convergence – essentially an extension of what happend to the music industry ever since digital audio appeared on PCs around 1988.

It will not take two decades for TV to be transformed fundamentally despite its more complex technology and business architecture compared to music because the key drivers of change are the same as for music and those are now progressing rapidly. Nevertheless, several critical components of the TV business model are about to be disrupted:

1. Content: the decomposition of the old, huge interest/target groups of TV into to ever more, narrowly defined groups due to ever more distribution channels immediately impacts the production of content through the decomposition of a few big budgets into many but much smaller ones trending down to free or user-generated content

2. Distribution: while actual  TV broadcasting evolved from analog over digital terrestrial and cable broadband to satellite, mobile data networks and the wireline internet provide formidable challenges today. In most countries, mobile and internet access are provided by different entities than those that broadcast TV which accelerates the dynamics. It also makes MSO (cable companies) enter the voice / telephony business to counter the telcos’ attack on TV which happens either indirect (by providing the bandwidth for Hulu & Co.) or direct (by IP-TV services or Over-the-Top TV offerings). In the US with its high cable internet market share, conflicting interests between content (TV) and bandwidth plus (regional) market dominance complicate the situation.

3. Devices: the plain old TV set dies quicker than “dumb terminals” did in IT. While today’s LED/LCD/Plasma flatscreens come with enough computing power to access the internet directly – some even include a Netflix application – the consumption of TV is about to move to other devices including iPads, smartphones or PCs; the busier and more mobile the consumers the less will they sit in front of TV sets.

4. Advertising: with the falling apart of huge audiences (see 1), advertising has the chance to be sent to groups of much narrower socio-economics (e.g. watersports enthusiasts aged 25 to 45) that watch some sort of “minority” programming. While monetizing the “long tail” is still not trivial, advertisements will become more expensive in terms of individual impressions (an outdated metric since it lacks any indication of a response) but will be bought in smaller amounts for more specific target groups and often only for some sort of response (a click at a minimum but increasingly actual store visits).

5. TV-Complements: may be “TV dinners” are most tightly linked to traditional TV watching at home as a product category but so are DVDs (since those players are hooked up to TVs), a category whose shrinking revenues made Disney reduce its respective headcount just weeks ago. The common enemy here is again internet access (i.e. Hulu and Netflix vs. DVDs) and mobile data (e.g. smartphones to check on sports results vs ESPN-like TV channels).

While The Economist in a recent article foresees a “nasty, long-running fight between media companies and distributors”, the above components are under so much pressure individually and collectively that one could also imagine a more rapid decline of demand for traditional TV content from traditional distributors. Most under 20 years of age spend more time in front of an “internet screen” than in front of TV which makes building Brand Equity a challenge for many big advertisers which in turn will reduce the time for media companies to fight with their distributors.

Not only can Hulu serve the youth segment better than TV can today, it also gets more solid feedback in the form ad video banner clicks, Facebook “likes” or other consumer action while TV can still only provide statistics of their remaining audience that might or might not sit in front of the TV set. While this battle seems to have a clear winner, it will not imply an iTunes-like effect for now. TV/video content is much harder to decomposition into the equivalent of songs and its consumption requires more attention of eyes and ears so that advertisements likely will remain a currency that consumers can use to pay for not only content but even its transmission (the data caps in mobile or bandwidth limitations in wireline internet access).

Filed under: Media & Entertainment

Recovery ? QE3 ?

From a practical point of view, I would like to know wether I should switch my all-LIBOR mortgage of the last 3 years (yes, that was nice and still is) into one with fixed interest for 2, 5 or even 10 years. Less superficially, we wonder what comes next for the global economy after nervousness (a.k.a. volatiliy, e.g. http://www.msci.com/products/indices/strategy/minimum_volatility/performance.html) seems on the rise while the projected U.S. “technical default” of August 2 comes closer.

In his article “The road to recovery gets steeper” (http://on.ft.com/kkbhmT), Martin Wolf at FT highlights the surprising fact of what countries’ GDP have recovered the most relative to earlier recessions:

While the US recession recovery on the GDP level looks strong, other parameters like unemployment, deficit and consumer confidence are less reassuring. Will these ever come back to earlier and healthier levels too? Martin Wolf closes with “The biggest danger remains prolonged semi-stagnation in the post-crisis era, not excessive growth and high inflation”. I guess I leave my mortgage linked to LIBOR and wait for QE3….

Filed under: Macroeconomics

‘Chindia’ to rule the world in 2050, or the U.S. ?

“The economies of China and India will together be four times as large as the United States, restoring the historic order of Asian dominance before Europe’s navies burst on the scene in the 16th Century.” This sounds like the pre-dominant view on macroeconomic development but this article closes with “Perhaps the 21st Century will be America’s after all, just like the last”.

What lies in between are a difficult age pyramid for China, the absence of automatic convergence of developing areas including Africa and the GDP projection for 2050 with the US still 2.5 x India.

An HSBC report “The World in 2050” (http://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=ej73gSSJVj&n=282364.PDF) sees China – in terms of GDP – take the #1 spot from the US which will only move down to #2 [Chimerica – a concept that looks realistic given the symbiotic relationship of these nations today] while several European nations lose massively. George Magnus, UBS, warns of China’s investment-intensive growth model and in his book Uprising concludes the U.S. might very well stay in power.

Projecting 40 years of global macroeconomic outcome seems challenging to me and I think that the actual buying power for citizens in 2050 depends on factors that are overlooked, e.g. can multinationals repatriate their profits, will global mobility (i.e. immigration) ease out both differences in talent pool size and education. Moreover, the question of influence (or power) will stay relevant although it might be driven by factors like e.g. natural resources that most likely will be converted into (some sort of) military strength by developing economies that need to protect themselves.

February 28, 2011, Telegraph, UK: http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8350548/Will-Chindia-rule-the-world-in-2050-or-America-after-all.html#.TfEPNkl7axI;digg

Filed under: Macroeconomics

Influence – the shadow of Power

If “international reality is a zero-sum game shaped not only by absolute capabilities but the sway over others that comes with strength” [http://www.the-american-interest.com/article-bd.cfm?piece=924], the world’s realities might change in an accelerating way after the Global Financial Crisis.

The U.S. is not only plagued by budget issues but “Navy and Air Force budget growth [are] increasingly going to salaries, pensions and maintenance” [ibid]; of course, about the same is true for most European nations as well as Japan.

While we have certainly noticed the growing influence of “Chindia”, we might not yet fully understand all the drivers of that new influence. “Disruptive Change” is a concept that might not be limited to (high tech) industry markets even when the build-up phase here might be longer.

Filed under: Macroeconomics

Nokia – a loser (?!) selling more than twice as many devices as Android, 10 times as iPhone

A great story that highlights why market success of technologies is about distinct Global Strategies that center around buyers’ preferences – and how those are influenced digitally (millions of buyers in developing economies have never seen billboards for Android). How Symbian and MeeGo led to eroding margins while (still) delivering volume. Losing has never been easier and quicker than today and hardly as devastating. What applies to Mobile Phones now, will apply to other product categories soon – think about (efficient) Cars, Education, and so forth… 

http://www.businessweek.com/magazine/content/11_24/b4232056703101_page_4.htm

Filed under: Hardware

Correlation between GDP Growth and Government’s Political Orientation ? Probable in Europe…

When the going gets tough, voters seem to have one common preference across Europe:

Copyright: Economist (http://www.economist.com/blogs/dailychart/2011/06/europes-left?fsrc=scn/tw/te/dc/leftout)

From a global perspective, that creates an opportunity for countries without the GDP growth issues of Europe to adopt more progressive approaches. And suddenly, a few gaps typically perceived in the West will be narrowed down in at least some nations in the Eastern hemisphere.

Filed under: Macroeconomics

U.S. (nonfarm) jobs reduction in this recession: -6.4m

Is it “just” recession impact? Or some globalization, i.e. structural unemployment ? Will these jobs ever come back ? If anyone knew, stock market volatility would be smaller.

Graph: Copyright by The Wall Street Journal, http://online.wsj.com/article/SB10001424052702303657404576363783070164132.html

Filed under: Macroeconomics

Rising pressure on CEOs of (dominant) global IT vendors

http://bloom.bg/kKnmp6

The more decades those blue chip IT companies have spent to establish their hugely profitable platform businesses, the more pressure they now seemingly get for risking to lose the technology future.

Either that technology future is so unclear (I guess it’s no less clear than it was in the past) or driven by fundamentally different drivers that these companies cannot understand. May be “understanding” is largely about having the right company incentives to “see” the future – and that is not really something new at all.

Filed under: Leadership & Management

Currencies Aren’t the Problem | Foreign Affairs

Currencies Aren’t the Problem | Foreign Affairs.

With the US dollar used for most of global trading – namely commodities like oil – Monetary Policy remains popular ever since the Fed softened the landing after the burst of the Dot Com Bubble in 2000.

At the end, it’s all about national economic strategies or about what citizens save or spend in what nations.

Filed under: Macroeconomics

About Thomas Rupp

Economist & MBA focused on leveraging Disruptive Technologies in IT and Telecommunications, mostly for Enterprise clients. More than 15 years at Microsoft, currently as Global Program Manager for Cloud Support Transformation. Sloan Fellow 2010 (MSc in Management) at Stanford Business School. Ultra Marathoner, Foodie, Diver and Audiophile.