JupiterResearch Analyst Weblogs2008-05-09T17:43:06Ztag:weblogs.jupiterresearch.com,2008:/toplevel//3Movable TypeCopyright (c) 2008, JupiterResearchLamenting Air Canada's "new era"2008-05-09T17:43:06Z2008-05-09T17:43:06Ztag:weblogs.jupiterresearch.com,2008:/analysts/clarkson//9.98152008-05-09T17:43:06ZIt is a New Era in Travel, at least according to the subject line in an email I received yesterday from Air Canada. Air Canada has launched On My Way, which they advise is the “new name for peace of mind”. This program gives access to 24/7 customer service to...Diane Clarkson
It is a New Era in Travel, at least according to the subject line in an email I received yesterday from Air Canada. Air Canada has launched On My Way, which they advise is the “new name for peace of mind”.
This program gives access to 24/7 customer service to rebook on the first available flight and arrange complimentary hotel, car rental, ground transport or meals in the event of a flight delay.
As an added bonus, Air Canada offers “automatic flight information updates sent to you by SMS and email.”
The price of this “New Era” is not mentioned in the email, nor is it mentioned in first page of the website promotion. So three clicks in, I learn the “New Era” costs $25 for short haul (under 1000 miles) and $35 for long haul (over 1000 miles).
Air Canada, of course, understands travelers are frustrated by “unpredictable weather conditions, airport and air traffic delays”, a legitimate list for which they are blameless (though I find it somewhat incomplete since I’ve had flights delayed on the airline for reasons including needing to siphon off fuel when too much was mistakenly loaded, and waiting for a new flight crew due to union regulations)
I’ve been a big fan of Air Canada’s marketing, their well-branded flight classes and website features. I’ve defended their a’la carte pricing as one of the earlier carriers to introduce fees for second bags.
Entrepreneurial, perhaps. But this fee for service offends me on principle.
Flight delays top the list of travelers concerns, as is addressed in our recent report called “Airlines and Leisure Travelers: Understanding Issues and Opportunities”. Some airlines are trying strategies based on the premise that their customers deserve a level of customer service. According to the Boston Globe, American Airlines Inc. is testing out a gate-side customer service center and a phone bank at Logan intended to help passengers get rebooked on alternate flights faster while US Airways plans to have several agents dedicated to tracking flights that will arrive late and rebooking passengers who will miss their connections.
Regrettably, Air Canada now considers customer service to be an opt-in a’la carte revenue generator.
Yet I fear they are correct: this, sadly, could be a new era in travel.
Google, Yahoo Remain Favorite Brands Online2008-05-09T17:18:03Z2008-05-09T17:18:03Ztag:weblogs.jupiterresearch.com,2008:/analysts/card//4.98142008-05-09T17:18:03ZGoogle's nosing ahead of Yahoo as the top online brand, according to a Jupiter consumer survey. But the kids like the social media. The question asked respondents to pick their top two favorites. Clients can check out the data on Quantify, and compare it with the results last June....David Cardhttp://www.jup.comMedia
Google's nosing ahead of Yahoo as the top online brand, according to a Jupiter consumer survey. But the kids like the social media.
The question asked respondents to pick their top two favorites. Clients can check out the data on Quantify, and compare it with the results last June.
Alternative Payments Update : Consumer Drivers in a Multi-Sided Market // U.K.’s Carphone Warehouse Goes Mobile (Payments)2008-05-09T15:31:03Z2008-05-09T15:31:03Ztag:weblogs.jupiterresearch.com,2008:/analysts/ekountz//47.98132008-05-09T15:31:03ZClients and prospects will likely already know my views on the space of alternative online payments (PayPal, BillMeLater, Google Checkout and eBillMe, in particular). For those who don’t, here’s a quick synopsis: While credit cards remain the number-one online consumer payment option for purchasing goods and services, this is not...Ed Kountz
Clients and prospects will likely already know my views on the space of alternative online payments (PayPal, BillMeLater, Google Checkout and eBillMe, in particular).
For those who don’t, here’s a quick synopsis:
While credit cards remain the number-one online consumer payment option for purchasing goods and services, this is not necessarily a function of having been designed for web usage.
Put simply, credit cards weren’t designed for the web. But their ubiquity in the U.S marketplace….and the leading role the U.S. played in the early days of e-commerce…has made cards (debit as well as credit) the natural way to facilitate online transactions. JupiterResearch survey data reflect this.
Since then, of course, a variety of other payment options designed for Internet usage have emerged. Some, like PayPal, BillMeLater, Google Checkout and eBillMe, have been relatively successful. Others, like Beenz and Flooz, have come and gone. The difficulty of balancing development of a multi-sided market—in which success is predicated on overcoming the “chicken and egg” nature of generating enough consumer demand, while ensuring adequate merchant acceptance—can be significant, and requires resources adequate to sustaining visibility, and generating demand. Not a path for the faint of heart, or weak-of-capitalization.
A new JupiterResearch report indicates that consumers who are turning to alternative online payments are doing so for two primary reasons. The first is security -- in the form of not having to enter card information online. The second, convenience, is related—as anyone who has ever wanted to make a purchase on a PC upstairs, using a credit card located in a wallet or purse a floor or two away has found. In a time-challenged society, speed of throughput takes on many forms. True, consumers report wanting the ability to still use cards, when they want to, reflecting the value of consumer payment choice. But while it takes time to expand new market offerings, JupiterResearch believes that the significant expansion in merchant acceptance over the last 18 months … and the consumer factors outlined above … bode well for the continued off-eBay expansion of PayPal, and the continued consumer adoption of BillMeLater and other services which can deliver on consumers’ needs by tapping into the speed, convenience and security aspects associated therewith.
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Beyond online, another area in which managing the development of a multi-sided payments market will present challenges is in mobile payments. An interesting deal to note out of the U.K. this week on the subject. Monitise plc and Metavante, with whom Monitise plc is co-backer on their U.S. JV, Monitise Americas, announced the introduction of a mobile payments service tied to a prepaid payments card tied to, and distributed via, Carphone Warehouse.
Despite the name…a relic of the days when mobile phones weighed ten pounds and sat in the “boots” of vehicles…Carphone Warehouse is one of the U.K.’s largest mobile phone and phone accessory chains, making the inclusion of a Carphone Warehouse an interesting synergy in a prepaid-centric nation. In the U.K., Monitise plc operates the Monilink mobile banking and payments network, which is available to customers of HSBC, first direct, Royal Bank of Scotland, NatWest, Alliance & Leicester and Ulster Bank, plus the major UK network operators.
Maintaining an advantage in global customer care2008-05-09T15:01:12Z2008-05-09T15:01:12Ztag:weblogs.jupiterresearch.com,2008:/analysts/wigder//43.98122008-05-09T15:01:12ZOur global online retail report, which will be published next week, ended up so long that we decided to spin off a couple of topics into separate reports. One of these topics is global customer care. Many US-based companies look at the global landscape and balk at having to support...Zia Daniell Wigder
Our global online retail report, which will be published next week, ended up so long that we decided to spin off a couple of topics into separate reports. One of these topics is global customer care. Many US-based companies look at the global landscape and balk at having to support multiple customer service channels in multiple languages. As a result, both support channels and languages are often sacrificed outside of the US to try and keep costs in check.
A handful of companies are getting creative to maintain multi-language support. In a conversation with eGain’s CEO Ashu Roy earlier this week, for example, he indicated that some multi-channel merchants in international markets have turned to their local employees to assist with customer service requests. These employees are obviously well versed in the local language, as well as aware of local customer preferences and resources. As companies expand into markets where there may be multiple languages or dialects spoken, not all of which are supported through traditional customer care channels, such a strategy can help fill in the gaps.
Indeed, while there are certainly areas where companies can contain costs in international markets (and the report will help identify these areas), companies must ensure they don’t miss out on an opportunity to differentiate based on customer care. US-based companies are often taken to task for their missteps in global markets; by contrast, there is often a perception that these companies provide superior customer care. In our report, we outline how US companies can take advantage of their expertise in customer service, and identify which tools and options can help them build a leadership position in customer care outside of the US.
Microsoft and the Limits of Scale2008-05-08T21:26:01Z2008-05-08T21:26:01Ztag:weblogs.jupiterresearch.com,2008:/analysts/schatsky//25.98112008-05-08T21:26:01ZWhy has Microsoft found it so difficult to fulfill its online ambitions? After all, according to comScore, Microsoft properties attract a vast number of visitors, not too far behind Google properties (in the US, 121M vs. 137M). With such a gigantic audience, all that would seem to be missing in...David Schatsky
Why has Microsoft found it so difficult to fulfill its online ambitions? After all, according to comScore, Microsoft properties attract a vast number of visitors, not too far behind Google properties (in the US, 121M vs. 137M). With such a gigantic audience, all that would seem to be missing in its competition with Google is a competitive search experience. Doesn’t it seem that Microsoft would have as good a shot as any company to field a competitive experience, considering the vastness of its resources compared to Google:
Over 4 times as many employees
Over 5 times as many employees in R&D
Over 3 times as much R&D spending
Nearly $12 billion in cash on hand as of March 31 (a hair less than Google’s cash on hand).
All of this is surely enough to neutralize scale economies as barrier to entry, as I wrote about yesterday.
But those vast resources are spread across multiple Microsoft businesses. And Microsoft’s Online Services Business is losing a billion dollars a year. Meanwhile, the company cannot afford to neglect its cash cow and other emerging businesses either. So focus is one advantage that Google has. Another would have to be incumbency, Porter’s #5 mentioned in yesterday's post. No matter how many resources you throw at competing with Google, you can hope--for but not count on--matching or exceeding the technological breakthroughs that have given them this lead.
Acquiring to Change the Playing Field
Microsoft seems to have reached this conclusion, leading them to make an aggressive acquisition bid that they hoped would allow them to reap further scale benefits and enhance their competitive position not so much in search but in the portal and display advertising business. That logic still applies. The question is whether Microsoft will turn its attention to acquiring some other online player with a similar rationale.
Hence today's reports that Microsoft has been in talks with Facebook.
NBC streaming full episodes to the iPhone2008-05-08T13:44:29Z2008-05-08T13:44:29Ztag:weblogs.jupiterresearch.com,2008:/analysts/gartenberg//15.98102008-05-08T13:44:29ZYou may not be able to see The Office or 30 Rock in the iTunes store but NBC is offering full episodes of the Office and 30 Rock streamed to the iPhone with no commercials. (using Quicktime, since the iPhone currently doesn't support Flash). Just go to NBC.com on your...Michael Gartenberg
You may not be able to see The Office or 30 Rock in the iTunes store but NBC is offering full episodes of the Office and 30 Rock streamed to the iPhone with no commercials. (using Quicktime, since the iPhone currently doesn't support Flash).
Just go to NBC.com on your iPhone and click on the video tab. Bottom line, no matter what differences there me be between Apple and NBC, the iPod/iPhone eco-system is just too important to ignore.
Thoughts from Digital Hollywood2008-05-08T01:22:52Z2008-05-08T01:22:52Ztag:weblogs.jupiterresearch.com,2008:/analysts/btulsiani//48.98092008-05-08T01:22:52ZI have been in LA all week attending the Digital Hollywood conference. I had the opportunity to host a panel and attend several others, and heard a few key themes emerging in all of them: Monetizing Video: Jeff Zucker’s "broadcast dollars versus digital pennies" quote was commonly repeated at the...Bobby Tulsiani
I have been in LA all week attending the Digital Hollywood conference. I had the opportunity to host a panel and attend several others, and heard a few key themes emerging in all of them:
Monetizing Video: Jeff Zucker’s "broadcast dollars versus digital pennies" quote was commonly repeated at the conference, reinforcing the challenges of building significant video business online.
Original Web Series: Well it is LA, but it did seem like there was real momentum in talented individuals creating web series and drawing an audience. A studio and distribution ecosystem seems to be forming around it as well led by Vuguru, MySpace, and Bebo.
Pay TV’s Future: With increasing amounts of video online, the role of a subscription TV service (be it from cable, satellite, or telco) seemed uncertain. Different challengers, each taking a different approach, seemed poised to make inroads into the biggest screen in the home including Sezmi, ZeeVee, and Microsoft’s Media Center.
I’ll miss the last day of the conference tomorrow, but enjoyed the opportunity to attend. My tips for LA if you attend next year, bring a jacket, the weather wasn’t quite up to Spring standards and try a breakfast burrito at the Baja Hollywood.
Why There Are No Credible Competitors to Google2008-05-07T19:38:11Z2008-05-07T19:38:11Ztag:weblogs.jupiterresearch.com,2008:/analysts/schatsky//25.98072008-05-07T19:38:11ZContinuing my attempt to apply Michael Porter to the Internet search business, we left off talking about barriers to entry. Porter says that if profit potential is high enough (it sure is) and entry barriers are surmountable (the subject of this post), then a market will attract new entrants, and...David Schatsky
Continuing my attempt to apply Michael Porter to the Internet search business, we left off talking about barriers to entry.
Porter says that if profit potential is high enough (it sure is) and entry barriers are surmountable (the subject of this post), then a market will attract new entrants, and this will depress profits. The barriers to entry in the Internet search market are distinctive, and they have given Microsoft a run for its money.
Porter identifies 7 main barriers to entry:
Supply-side economies of scale. There are obviously economies of scale in Internet search. These are an advantage to incumbents like Google but should be easy enough for global competitors like Microsoft to exploit. After all, Microsoft attracts over 100 million monthly visitors in the US to its Web sites. But as my colleague Emily Riley pointed out to me in an e-mail, "Simply having access to 100mm is not enough to change consumers' search behavior. Yahoo has the largest email product and is still miles behind Google in searches." There is scale and there is SCALE, however; Microsoft cited scale benefits of a merger with Yahoo! that could have produced $1B in infrastructure savings annually.
Demand-side benefits of scale (network effects). The kind of benefits that accrue to incumbent market makers like eBay are somewhat weaker in search. After all, a lack of advertisers shouldn’t necessarily make a search engine less appealing to users, who are more sensitive to organic results and performance. Emily points out, though, that the relevance of Google's organic results may benefit in part by all of the SEO benefits that focus on them--a level of focus they attract because of their market leadership.
Customer switching costs. Negligible here. Search is the quintessential market where competition is “just a click away.”
Capital requirements. There is no question that massive capital is required to build out the massive infrastructure required by any search capability that hoped to compete with Google. Microsoft is one company that with the cash on hand and access to capital that would help it hurdle this barrier.
Incumbency advantages independent of size. This is a catch-all that could include access to proprietary technology; establish brand identity; cumulative experience that allows an incumbent to learn to produce more efficiently; and more. Clearly Google’s proprietary technology is a major asset. And three times as many online users cite Google as a favorite online brand than cite Microsoft. (An impressive 7 times as many 18-24 year-olds do.)
Unequal access to distribution channels. A classic dimension of strategy off-line, this has been largely irrelevant online, though the multi-year deals Google has been striking with high-traffic online partners have the potential of creating a barrier here.
Restrictive government policy. Not relevant, unless you believe that Microsoft’s competitive options are limited because it may attract greater anti-trust scrutiny than other companies.
Most of these barriers are not relevant or could theoretically be easily overcome by Microsoft, who has indeed entered this space and is attempting to compete vigorously. But the company nonetheless sought to acquire Yahoo! believing that its own assets and efforts inadequate to the task of establishing a strategically advantaged position online.
My next post on this topic will look a bit more at the scale issue and why Microsoft hasn't been able to exploit it to field credible competition to Google.
Deal for a National WiMAX Network Announced2008-05-07T21:45:25Z2008-05-07T21:45:25Ztag:weblogs.jupiterresearch.com,2008:/analysts/isebastian/44.98082008-05-07T21:45:25ZSprint, Clearwire, and additional investors (Intel, Google, Comcast, Time Warner, Bright House Networks) have reached an agreement regarding a national WiMAX build out through a new company named Clearwire. My colleague Julie Ask wrote a very insightful blog on the motivations of the investors yesterday. As she implied, success of...Ina SebastianWireless
Sprint, Clearwire, and additional investors (Intel, Google, Comcast, Time Warner, Bright House Networks) have reached an agreement regarding a national WiMAX build out through a new company named Clearwire. My colleague Julie Ask wrote a very insightful blog on the motivations of the investors yesterday. As she implied, success of the network and potential services is not clear. The business model will require a lot of thought, multiple revenue streams, and potential tiered access including advertisement. Our new consumer survey shows that more than half of online users are interested in connecting to the wireless Internet outside of the home. There is also interest in connecting devices other than laptops – such as cell phones, cameras, media players gaming devices – however, interest in connecting laptops is highest at this point. This demand is well served by Wi-Fi, which focuses on indoor locations, for which laptops are best suited. Providers have to create demand for mobile Internet access from smaller portable devices. This includes improving the browsing experience, which is still fairly painful. Another issue is the lack of willingness to pay for high-speed access outside of the home. Not that many public Wi-Fi users are willing to pay for services. Even frequent business travelers use free Wi-Fi when available. Wide availability of free Wi-Fi is one of the reasons for this, and it will also compete with fee-based WiMAX (in particular considering the increasing ubiquity of Wi-Fi in portable devices). Even fewer people are willing to pay for 3G access from laptops. Clients should contact us to discuss our consumer data on demand for wireless broadband and devices, as well as upcoming research on WiMAX and the impact of open access on carrier business models.
BT Broadband Goes Mobile, Sortof2008-05-06T23:13:01Z2008-05-06T23:13:01Ztag:weblogs.jupiterresearch.com,2008:/analysts/fogg//14.98052008-05-06T23:13:01Z[updated 15.04 UK time] BT has just announced that they are bundling a mobile smartphone service as part of their home broadband package. Interestingly, this new bundle will be presented as a new top tier for BT's Total Broadband home DSL, rather than as a mobile tariff. The name for...IanFoggBroadband
[updated 15.04 UK time]
BT has just announced that they are bundling a mobile smartphone service as part of their home broadband package. Interestingly, this new bundle will be presented as a new top tier for BT's Total Broadband home DSL, rather than as a mobile tariff.
The name for this service is BT Total Broadband Anywhere (my emphasis). There's a good product here, struggling to get out, but BT's positioning is in danger of putting the product at risk.
BT have built some nice enhancements to the Windows Mobile UI, similar to HTC's efforts. They've extended the BT Digital Vault, Broadband Talk (VOIP), BT Yahoo email and a number of other BT services out onto the mobile phone, where previously they were limited to use at home on BT's DSL.
Most interesting is BT's choice of Windows Mobile and qwerty for a consumer mobile Internet play: This is BT thinking differently from received wisdom in Europe that qwerty == business. I agree, and think there's a place for qwerty on consumer-centric devices here.
But there are devils in the detail: Broadband Talk only works outside the home within WiFi hotspot coverage. Why? Well, while the proposition talks about broadband, the actual mobile service is limited to GPRS speeds -- i.e. narrowband -- and GPRS is too slow for VOIP.
Equally poorly, the service includes just 10Mb of mobile data in the bundle. BT offer an unlimited mobile data bolt-on for UKP 5 per month. Astonishingly, BT appear to offer no higher amount of bundled mobile data across their four mobile tariffs (e.g. BT BB Anywhere 600 vs Anywhere 250 etc.). This compares poorly with the major mobile players who are moving to between 500Mb and 1Gb data on a fair use basis. For example, Vodafone are bundling unlimited 3g mobile Internet as standard for new contract customers. BT must be careful to ensure their use of the term "unlimited" is clearly linked to the 'DSL' part of the bundle and not the 'anywhere' piece.
BT argues that usage of its WiFi hotspot network is sufficient for them to call this broadband anywhere. BT's challenge is that they intend this to be a mass market product, and only savvy early adopter types are going to understand the difference between unlimited use on (the right) public WiFi hotspots, or at home, but not anywhere else.
BT are also limiting their future positioning when they secure a suitable 3g MVNO/roaming tariff. If this service is marketed as broadband, what will a true 3g service be called?