Business, Entertainment, Marketing, Planning, Strategy, Technology, Web

End of an era – Floppy Disk

I saw this news article on BBC News and it got so many memories back. We all are so lucky to be witnessing technology and the world around us changing so much. It seems like yesterday when I got my first computer which had a floppy disk and a CD drive. I played so many games even on MS-DOS which were actually stored on a floppy disk! A floppy disk in which I transferred programs to school from my home PC and made my school project.

floppy

On the left there is an image of a floppy disk. The simple device stored just 1,024 kilobytes of information but was so important to people. Because at that point of time even 1,024 bytes were sufficient for transfer of information but now even gigabytes don’t suffice.The first floppy disk was introduced by IBM in 1971 and it used to be read-only! After 40 years the floppy disk comes to an end and it sure seems like a new era is beginning.

CDusb-flash-driveSome of the devices which have replaced the floppy disk are CDs and USB drives. Two of the main reasons why these devices became so much more popular are storage capacity and resistance to data damage. Of course one of the reasons for their popularity was the ability to transfer movies and music. Next came DVDs and transportable HDDs and now Blu-Ray Discs. With each generation of storage we get more capacity to store information in smaller space.

ipodIt seems ironical that the company which started the slow death of Floppy Drives is the company which probably will take the storage industry to the next level – Apple! Apple was the first company which in 1998 stopped having floppy drives in its computers. Slowly Dell (2003), PC World (2007) and now Sony have also stopped providing it. iPod and iPhone store your music, your movies and a lot of your information. It also works like a hard disk and you can store everything you want on it, making all other forms of storage obsolete! Where will technology take us next? Only time will tell.

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Marketing, Strategy, Technology

Apple iPhone and its India Strategy

iphone-3gsAs we all know iPhone is one of the most sought after possession in the recent times. The phone which combines iPod with a mobile phone and wireless connection which enables us to connect to the web has captured the imagination of the people all around the one and lots of them are dying to lay their hands on it.

iPhone 3G was released on August 22, 2008 in India, thus allowing the Indians to lay their hands on iPhones legally. Indians who till then had mostly heard about the iPhones and a few had got it from US through some relatives could now “legally” own it. But as history tells us it was a flop in India. Now that Apple is preparing to release its next version of iPhone, iPhone 3G, we can try and see what went wrong with Apple’s strategy last time.

1. Pricing: Most people do tell that the high pricing of the iPhones were a deterrent to the people who wanted to buy it. The reason was that the people knew that iPhones were being sold at $199 in US which is equivalent to around Rs 10000/-. So they had expected that it will be around the same level in India too. But what they hadn’t factored in and what apple has till now failed to educate is that it is a highly subsidized rates being provided by the carrier and you need to get into a 2 year contract for that with the carrier.
The carrier, AT&T in this case, had used the opportunity to lock in thousands of users. Take for example the recently announced one of its best ever spring quarter results in which they added 1.2 million cell phone users and activated 2.4 million iPhones in the quarter. And most of them came in the last two weeks of the quarter when the new iPhone 3GS was released. Also many don’t know that you are forced to take up data plan with the carrier leading to its increased revenue. This is one of the main reasons that AT&T subsidizes iPhones in US.
But in India, though the people were bound by the contract to the carriers, they did not subsidize the phones, leading to the higher price. Though many blame apple for the high price, I think it should be the carriers in India who should be blamed for it.

2. Carriers: And now coming to the carriers, why were Airtel and Vodafone so uninterested in subsidizing the phone and in providing unlimited data access which Apple wanted.
For that let us see how AT&T benefits from being the carrier which enables it to give the subsidy. AT&T is a leader in the wireless provider market in US and it has exclusive distribution rights for iPhones in US. It provides GSM services whereas its closest competitors Verizon and Sprint are both CDMA shops. With the exclusive agreement with AT&T, Apple is barred from developing CDMA version of the iPhones for next 5 years. Thus, making this a much sought after item, if AT&T subsidizes the price, it can attract more users from its competitors and lock them in.
Whereas in India, Apple is going in with both Airtel and Vodafone as carriers. And they are the leading competitors in the wireless provider market, at least as of last year. And by simple logic as the prices were pretty much similar with both of them, they knew that attracting users from the other is very hard by giving subsidy as the other would also follow the suit. That way there was no guarantee of them increasing their market shares due to iPhones. Hence, the lackluster attitude of both the companies towards iPhone. It is also rumored that Apple is not happy with both of them as they did not aggressively market iPhones, but were interested in marketing blackberries and their own phones. The reason for this too would be the same.
Regarding unlimited data access, the reason for Airtel and Vodafone to not provide unlimited data access might be the very low ARPU. Since the ARPU in India is very low most of the companies make their revenues in the data access which they provide and Airtel and Vodafone would be very much disinclined towards reducing their profits by providing their main revenue earning service for unlimited use.

Although these are the main reasons, there are many other reasons for the failure too, like the non availability of 3G which was the selling point of the phones in US. But I don’t feel that that would be an important reason, because not many Indian users would be buying it for the 3G factor, but most of them would be buying it as a novelty factor.

So what should Apple do to improve its performance in India?

1. Try and educate masses about the price they see in US and that in India. Although unlocked iPhones in US and other places sell at almost the same or higher prices than in India, not many know it. All they see is the price on the apple store which lists the price at $99 for 8GB 3G phone and $199 and $299 for the 16GB and 32 GB 3GS ones respectively. What they don’t see is that an unlocked iPhone 3GS 16 GB costs $600+ and 32 GB $700+.

2. Stick to one carrier so that it has some incentive to provide subsidized rates in India. But again the problem here is up to what level the contract can be enforced by the carriers in India. Especially in a country where there is jugaad in every work, the users can easily get the phone unlocked and use it after buying it cheap. Can something be done to make sure that breaking the contract has the same penalty as in US? This is something for the carriers to think and make their contracts stricter.

3. Instead of selling iPhones at unsubsidized price and being locked to the carrier for a year, it would be better if they could sell the iPhones in apple stores. The people who were not buying it because of the contract (now I know this would be a very miniscule amount) would then consider buying it. At least I have seen many people buying iPhones from Hong Kong where the prices are almost similar (many be a couple of thousands less), just because you are getting an unlocked iPhone legally and for a lesser amount than in India.

4. Now that the iPhone 3GS is being introduced, instead of phasing out the older 3G version in India as it is being rumored now, provide it at a lower price, which could be affordable for the upper middle section of the society. This would allow more number of people to have the feel of an iPhone and as I have seen many of them would be hooked for a long time. And don’t give me the reason that Apple wants it to be a niche phone. When they can allow it to be sold at a subsidy (with many plans you get an iPhone without any payment and you pay the amount in installments over the period of contract) in US and can have 2.4 million people buy it in 10 days, does it really want to play to niche game in my view.

(This post was written by Arun K S. We thank him for his insights, and look forward to his further posts. For more on Arun, check his previous post here)

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Business, Marketing, Planning, Strategy

iPhone, Apple and Happy Customers!

iphoneApple and the way it makes its products is amazing! The pursuit of perfection is something that can be learnt from Apple. But recently when I was discussing with some friends regarding iPhone vs Other Phones another aspect of marketing came out regarding Apple.

In a small paragraph let us first discuss the history of iPhone. With the iPod Apple was able to revolutionize the music industry, made an entire industry for portable music players and their accessories and then capture market for online music purchases through iTunes. Next came iPhone, the perfect integration of iPod with a device which everyone needs today, a mobile phone. After an year came iPhone 3G and this year Apple released iPhone 3GS.

Now the reason I believe iPhone and Apple are so successful is because they keep their customers happy. Other mobile phone providers also keep their users happy but never as happy as Apple. Let me list some points why …..

  1. iPhone Software & Upgradation Options: The problem with other mobile phone operators is that when they take out a new phone they essentially make the old one seem pathetic. Probably it is a marketing technique by which they are forcing the user to switch his/her phone but the customer really isn’t happy. Assume you buy an N95 for Rs 30,000 in India and then they launch N97 with a wonderful touch screen and new applications. The problem is that my N95 phone cannot use those applications and seems kinda waste to me. In terms of iPhone when a new iPhone is being released there is always a software upgrade available for previous version to bring it almost at par with the new one (except the hardware, both the old and new iPhone will have same features same applications). Also if you want a new iPhone you can easily upgrade your plan which I think a lot of iPhone users want to do!
  2. Release Date: This point stands true for iPhone but not for all Apple products. I and many of my friends waited for the past 2-3 months because we were almost certain that the new iPhone will be released in June. The WWDC is a perfect launch platform for the iPhone and now everyone knows when a new version is launching. With other mobile phone providers you can never be sure when a new phone might be launched.
  3. Bringing the Software Developer Community to the iPhone: Apple is not a traditional mobile phone company, they are an operating system. So it was easy for them to release a developer toolkit for almost anyone to develop applications for iPhone. The result is a huge collections of applications developed specially For the iPhone which people can and want to use. I don’t think any other phone has been able to get so much support from developers.

Anyways iPhone is a great product and I hope to really enjoy using it for now! It is also an expensive product but then with Apple that is expected. I hope other mobile phones can also get on the applications bandwagon and bring wonderful applications to users so that later in case I need to switch then I can get a cheaper connection and the same features!

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