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Happy 10th Birthday Google!!!!!!  Drinking a little too early, I see!

Nokia must turn itself into a platform, which must be more open than existing ones.

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[+] Handset operating systems are getting increasingly unimportant.

 

In the mobile communication industry, Nokia is a legend of invincibility. According to the data released at the end of January, Nokia sold 134 million handsets in the 4th quarter of last year, with a market share as large as 40%, way ahead the 15% of Samsung, the closest follower.

 

If you were the CEO of Nokia, you would think: "can I further do something with these users?" when you see the data. Lucrative as the handset business is, isn't it better to squeeze something more out of the users? Internet becomes a target.

 

For years, Nokia has been dedicated to the development of its handset operating system Symbian and a series of smart phones to battle with Microsoft - with eye-catching sales. Worldwide, 60% of the smart phones are driven by Symbian. Only 11% use Windows Mobile.

 

What's clear is, however, amid the tide of wireless Internet, handset operating systems are getting increasingly unimportant. It is not that players on the stage will give up operating systems, but they have found that the ability to provide services is even more important.

 

If, as described in the previous section, Yahoo! introduces Yahoo! Go to enable service delivery across operating systems on the wireless Internet, and Google's operating system becomes available to handset developers for free. Where is the value of those different operating systems? The users would care nothing else but the services available.

 

Apple iPhone is an amazing product. But the central topic is not the operating system iPhone uses. In terms of sales, it would have a long way to go before becoming a threat to the market leader Nokia. However, iPhone's ability to drive sales with its music service is something that Nokia cannot afford to ignore.

 

[+] Nokia moves into the Internet market.

 

According to data released by Google internally in January 2008, during the 2007 Christmas season, page views of Google through iPhone was next only to that through the Symbian smart phones. iPhone's share of the smart phone market was as low as 2%, while that of Symbian was 63%.

 

What's the reflection it would give Nokia? Obviously, iPhone offers better Internet experience than Nokia - easier to use, more user-friendly browser functions. Maybe Apple is better able to attract users with high demand for Internet accessing to buy its smart phones.

 

To Nokia, both the improvements to the interface and the selling model of handsets bound with Internet services are shockingly new. A player that has been traditionally regarded a computer manufacturer is now one step into the telecom industry after a successful transformation into an Internet service provider and a consumer electronic product manufacturer.

 

What will be the right move for Nokia to infiltrate into the territories of its rivals? The first idea would be to provide proprietary contents, which could be obtained through M&A or through partnerships. Fortunately, many Internet players are interested in getting their services available on Nokia phones.

 

Therefore, Nokia introduced a series of services, including Nokia Search, Nokia Maps and Nokia Music. Most of the services, however, require download of special software into handsets in prior, and are not compatible with all Nokia handset models. Therefore, pre-installation of the software becomes a necessary means to sell handsets.

 

Nokia Search is a service offered jointly with search engines such as Google, while Nokia Music is a fee-based online music store through partnerships with leading labels - something similar to the iTunes music store of Apple. To Internet players, Nokia is both a partner and a rival.

 

Nokia service list: http://europe.nokia.com/A4496273

 

[+] WidSets: an open platform that pulls together the Internet world

 

It takes time to build such services. To establish itself in the Internet world as soon as possible, Nokia will have to pull the entire Internet over to its side. Don't forget that the Internet is a huge eco-system that needs a common leader to open the gate to the world of wireless Internet.

 

Nokia must turn itself into a platform, which must be more open than existing ones, to enable the upload of any service, regardless of the handset operating system - Symbian, or whatever else. If the handset operating system is no longer important, sticking onto Symbian would become Achilles' heel.

 

To Internet players that Nokia wants to pull over to its side, the prospect of handset-based Internet services available on any handset is a deadly attraction. Perhaps it was based on this idea that Nokia introduced its open platform WidSets.

 

For handsets, this open platform is a small Java program. Any handset that supports Java can run the software. Theoretically, Internet players would be able to provide services to all Java-enabling handsets, so long as the services are developed on the basis of the small program.

 

In terms of operation logics, what WidSets offers is similar to that Yahoo! Go does. Internet service providers could ignore the specifications of various handsets and make their services available on the wireless Internet through simple programs, so long as the receiving handsets have WidSets.

 

Currently, a number of leading Internet players, such as Wikipedia, Blogger and Flickr, as well as news media including Routers and BBC have started to develop applications on the Widsets platform. In addition, many amateur players are developing small games on it for downloading by users. Obviously, application development has become an easy thing.

 

Download WidSets at: https://www.widsets.com/widgets

 

[+] Can handsets be free?

 

Theoretically, Nokia's WidSets can be installed into a GPhone, or an iPhone, so long as it supports Java. In this regard, what operating system a handset uses is really unimportant. Why then is Google still sticking on the development of its own handset operating system?

 

What's really in the mind of Google, perhaps, is to extend its advantages in online advertising. By knitting Google services closer with handset functions, it would be able to continue its leadership in the handset-based advertising market as the wireless Internet population grows, or even use the income to offer cheaper or free handsets.

 

Of course, Nokia and other handset manufacturers would hate the idea. Instead of selling products, they would have to depend on advertising to make money. Will this wild dream of Google become true? First of all, handsets will never really be free. They are just paid by somebody else.

 

Telecom operators were once bill payers that made handsets free through bound service contracts with consumers, who were thereby requested to pay subscriptions, which they had no way to cancel for a given period of time. With the subsidies of telecom operators and Google, it is indeed possible to further drive down the prices of handsets.

 

If the appearance of GPhone means that telecom operators would pay less subsidy, that's absolutely good news for them. The problem is it will have to be paid, either by telecom operators, or by Google, because handset manufacturers such as Nokia will not sell handsets at prices below costs.

 

If Google pays the subsidy to make handsets free, it will have to earn the money back from follow-on handset-based ads. To spend the money before there's an income, is this a good deal? Google will have a huge amount of cash to give away as subsidy. It seems exactly what powerful telecom operators did in the previous years.

 

Compared with those of Yahoo! and Nokia, Google's wireless Internet plan seems more like a big bet. ( 2008/03/23 - By Digitalwall.com - Way to China Internet/Telecom )

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Prev : Great Changes in Wireless Internet Industry (2) Yahoo!'s Strategy
Next : Great Changes in Wireless Internet Industry (4) Apple's Strategy

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- Today in History

Great Changes in Wireless Internet Industry (3) Nokia's Strategy - 2008/03/23

Predictions on China Internet Market (5) Search Engines - 2006/03/26

Media, Community, and Blog (4) Production-Marketing Relations - 2005/03/27

Media, Community, and Blog (3) Deconstruct Blog - 2005/03/20

Stop Internet Marketing (3) All Determination; No Distribution - 2004/03/21

3G Time Comes (3) SMS, Email and MMS - 2003/03/23

The Internet in the future will become a place for group therapy.

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[+] Emotional products in the physical world

 

There are many ways to sell "happiness." One is to write a book on "happiness" (hedonics), turn it into some kind of study and sell it in bookstores. Or, you can package it in a mineral water advertisement and represent the bottle of water as an indispensable thing when families and friends get together happily.

 

In a fiercely competitive car market, a car dealer seeks to boost sales by presenting its car as "the only car that equipped happiness." In a trendy sitcom, the leading actor would win the heart of thousands of female audience by calling," I swear I'll bring you happiness."

 

This is the power of "emotional products," Marketing experts in the traditional business world have long noticed that the key to a consumer's purchasing decision, sometimes, is not the function or price of the product, but something that can trigger certain memory or emotion deep inside the mind of a consumer.

 

For those who buy the book/mineral water/car/trendy sitcom DVD, do they then live happily ever after? No. More precisely, their feeling of happiness reaches completion right at the moment of consumption. Emotional products that cannot achieve such effect would definitely fail.

 

Certainly you can say that emotions are added value to the above mentioned products; they are not the products themselves. Yet after ten years of development of the Internet, we begin to see that "emotion" per se can become a product and has the potential to change the look of the business world.

 

Yes, the dawn of emotion economics is upon us. In the past, "It" is the added value of some products; now "It" will become a product and will revel "Its" value through the form of Web 2.0. Strong emotions will become a kind of belief, so the reference for emotion economics will be religion.

 

[+] Internet from physical to spiritual

 

I sort out the characteristics of traditional Internet, Web 2.0, and Web 2.0 Next in the following chart. Simply put, the mission of the Internet will evolve from "carrying information" to "carrying emotion."

 

 

From eCommerce to emotion-centric websites, ordered from left to right of the chart above, we can see that during these 10 years, the Internet has evolved from more physical to more virtual and from material to spiritual.

 

Though eCommerce is an important business of the Internet, 70% of the operation, such as warehousing, logistics and payment processing, is done in the offline world in a way similar to that of mail order or brick-and-mortar retail stores.

 

Information processing is a critical issue in Web 1.0. The lessening of the problem of product information asymmetry has led to the emergence of eCommerce. Users can compare prices online with just a click, and they can easily find product information or even other people's experience of the product before making purchasing decisions.

 

Web 1.0 media have moved a lot of content online and even produce their own in order to reduce the cost of acquiring information. Too much information however creates the problem of overload. Then there is the search engine that provides precision to help filter undesired information.

 

In this phase, the trait of the Internet as a "tool" is very obvious. People use the Internet to make their life more convenient, with a focus on how to "improve efficiency." As a result, many traditional business models are gradually replaced by the Internet for better efficiency.

 

[+] Web 2.0 Next: the emergence of "emotion centric websites"

 

Blog ushers in the era of Web 2.0, empowered people to publish their own work - the so-called "individual publishing" - for the first time. There is no problem for us to download information anymore; now it's time for us to upload and express our voice.

 

Such characteristic then starts to push Blog to the way of Social Networking. People of similar interests and tastes are gathered and get to know each other through well-designed guidance. Content on Blogs only provide an excuse for people to start a talk.

 

Well, the kind of blogs mentioned above are only those that are focused on content sharing. The number of bloggers is increasing, and it is impossible that every one of them is good at writing or photography. As a result, a lot of bloggers are just letting off their feelings of these days. Normally there are only a few words on the Blogs.

 

Yes it's about emotions. So what to do next is to lead the people who have similar or opposite emotions to get gather and allow their emotions to vent and thus reach completion through some kinds of rituals or activities.

 

Just like the one who buys "the only car that equipped happiness" - his desire for a happy family reaches completion at the moment when he pays for it. It is easier for us on the Internet than in the physical world.

 

What kinds of (good and bad) emotions and desires do people have? They may include:

 

- Hope. (It's said that among all living beings, only humans will have hopes.)

 

- Happiness. (Longing and expectation for happiness that one lacks or desires.)

 

- Hatred. (To smooth it away through some kind of ritual.)

 

- To be loved, cared and blessed (and thus gain strength).

 

- To know if there are other people in the world who have similar weird thoughts or particular experience or so on.

 

- To enjoy solitude (while keep in touch with the world!)

 

- To fulfill the desire and enjoy the excitement to peep and to be peeped.

 

- To satisfy the sense of vanity or accomplishment (or to find motivation to catch up) through comparing with others.

 

- To do good and help others (everyone wants to do a little good as long as s/he has a chance.)

 

- A secret whim to "kuso" or to do non-sense reckless doings (and enjoy the pleasant sensation to break the rules and customs of the society).

 

- Greed (and jealousy and desire to monopolize that comes along.)

 

- Innocence and the desire to be like a kid. (This is why Little Prince is so popular.)

 

- The hobby to collect things (We are all more or less obsessed with collecting some things.) and fetishism.

 

- Hesitation when faced with choices and desire to pry into the future. (This is why fortune telling is so popular.)

 

- ...

 

The more subtleness of human nature you observe, the more you can grasp the essence and spirit of emotion economics. What will people get gather for, and what kind of emotion will they pay for its completion? Through creative packaging, the items listed above can be developed into interesting and colorful "emotion centric websites."

 

Simply put, the Internet in the future will become a place for group therapy. ( 2007/08/26 - By Digitalwall.com - Way to China Internet/Telecom )

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Prev : The Spirit of Web 2.0 New Media Lies in "Inter-personal Communication"
Next : The Next Step for Web 2.0 (2) The Fourth Flow: Emotion Flow

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- Today in History

The Next Step for Web 2.0 (1) The Dawn of Emotion Economics - 2007/08/26

The Web 2.0 Revolution (2) the Emergence of New Media - 2006/08/27

The Web 2.0 Revolution (1) the Root Cause is Cost - 2006/08/20

Envisioning China's 3G Market (1) 3G Will Not Increase ARPU - 2005/08/28

PDA in Siege (2) Bottlenecks of the Smart Phone - 2004/08/22

If you begin to think about expenses right after your income prospect, congratulations, your idea is one step closer to real business.

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[+] Pageview-based advertising income

 

As a matter of fact, your income and cost are known as soon as you get the most critical information: user number. With regard to income, the most important thing is the business mode: are you choosing advertising-based or subscription fee-based (e.g., VIP subscription fees or virtual items sales income) revenue model, or both?

 

The fact is, in some sectors, charging your users (e.g. white collars), would be very hard, while in other sectors, your users (e.g., blue collars) would be of high value in terms of fee charging, but little appeal to advertisers. It is hardly possible to develop both, particularly for highly sector-specific Web 2.0 sites.

 

What's more, there are often conflicts between catering for your users and your advertisers. Obviously, the later prefer large-size, eye-catching ads, while the former hate the disturbance of such ads. If you decide to cater for your advertisers, the possibility of charging your users would diminish, or vice versus.

 

Therefore, instead of rough estimation of the proportions of income from both modes, we might better start the process from the very beginning. First of all, we need to estimate the average pageviews per user each month. Then we could multiply it by the average user number to get the total pageviews of your website of the month.

 

For example, your website has 100,000 users as of April 30 and 140,000 as of May 31 (obviously, you get 40,000 new users in May), and you have 20 pageviews per user, then your total pageviews in May would be:

 

[ ( 100,000 + 140,000 ) / 2 ] x 20 = 2.4 million pageviews

 

If 80% of your webpages are used as the ads inventory of Google Adsense, or if you have a known click-through rate of 0.1%, you could easily get the total number of clicks each month. As the price of each click is no secret in the industry, you can easily get an estimate of your advertising income.

 

[+] Estimating the proportion of fee-based subscribers in total users

 

This advertising income is just a bottom line. If you are an Internet startup, and you do not have the budget to hire an ad sales person at this stage of business, or you have too few users to attract large advertisers, you have at least this amount of income. You could expect to launch ads at higher prices later when you grow big enough.

 

The key is: how to estimate pageviews per user per month? Similarly, it depends on whether your website is a tool site, or a content site, or a community site. Data for these sites are no secret in the Internet industry.

 

The total pageviews of different types of websites might be close, but they do have different meanings. A user might view only 2 web pages on a search engine, e.g., Google, but would come back a lot of times each day. For a community site, however, it is just the opposite.

 

Now let's discuss the possibility of charging your users. The simplest way is to divide your features into free ones and fee-based ones. For the later, you can offer different grades, such as platinum subscribers and diamond subscribers and charge them at different rates.

 

In this case, what you need to estimate is "the proportion of subscribers in total users". Generally, you should be satisfied with 3%. Then you should estimate "how much each subscriber spends per month". Multiply the two and you will be able to get your income from the subscribers each month.

 

As an Internet business operator, you would then begin to weigh how much resource you need to invest in your subscribers? Is it feasible to offer free contents and bet your income completely on ads? Why not increase your income by securing more users, since the proportion of subscribers is fixed? However, securing more users means more costs?

 

[+] The estimation of marketing and expenses

 

If you begin to think about expenses right after your income prospect, congratulations, your idea is one step closer to real business. In fact, the expenses of an Internet company usually include a few parts: marketing, bandwidth and others (including personnel and office expenses, which are beyond the scope of discussion here).

 

One cost-effective marketing approach might be to purchase ads from Google Adwords or some other ad networks. The best modes for startups are to charge by clicks or by results. Multiply your clicks by your conversion rate, and you would get your user number, and then a clear picture of how much you need to spend each month.

 

As to the bandwidth cost, the first thing you need to figure out is the total data volume your users would consume each month. Multiply the known pageviews per user per month by the average Kbytes per page, and then by the number of users per month, and the result is here (should be in GB).

 

ISPs offer two types of bandwidth prices. Perhaps we can explain them better with a comparison to water pipes and water volumes. You can either limit the total volume of water each month, e.g. to 120GBytes, or limit the diameter of the water pipe, e.g., to 1M Bits. The thinner your pipe is, the slower the speed.

 

How thick does your water pipe need to be? Let's make an example. Assuming that your total data volume is 120GB per month, of which, 45% take place in 10 given days, while 50% of the volume each day happen in 8 given hours. To be able to handle the peak volumes, you need an instant bandwidth of 0.768M Bits per second.

 

{ [ ( 120 x 45% / 10 ) x 50% ] / (8 x 60 x 60 ) } x 1024 x 8

 

The above estimation is for general HTML web pages. If you offer upload/download of a lot of photos or movies, that's another case. The method is still to calculate the data volume of average photo/movie upload/download per user. However, if you are not able to get particularly favorable prices from your ISP, it is highly possible that your business end up in failure.

 

[+] The development of strategies - right in these calculations

 

So much estimation, would that work? As a matter of fact, hardly any winner in the Internet community relies on such estimation for his/her business success. Sometimes, what's behind a successful business is sheer guts, which might be what's appealing to adventurers.

 

However, if you intend to mortgage your house or your car to start your business, instead of just giving your ideas or comments on your Blog, thinking about it a little more will do you no harm. Yes, you are a hero if you burn your money and succeed. What if you burn your money and end up in failure? (It depends on whose money it really is….uhm).

 

The Internet is a semi-traditional industry. Using the experience of others to do the calculation and to improve your chance of winning is, after all, rewarding. Just think more about the way to reduce your bandwidth cost, or stunning viral marketing skills to save cost, or raise more money in the initial stage for advertising. The development of strategies lies in these calculations. ( 2007/07/22 - By Digitalwall.com - Way to China Internet/Telecom )

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Prev : From Idea to Business (1) How to Estimate Your User Number?
Next : The Spirit of Web 2.0 New Media Lies in "Inter-personal Communication"

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- Today in History

New Landscape in China's Telecom Market (7) The Pricing of 3G Value-added Services - 2008/07/27

New Landscape in China's Telecom Market (6) Insight into 3G Price War in Taiwan - 2008/07/20

From Idea to Business (2) How to Estimate Your Income and Cost? - 2007/07/22

New Era of Online Advertising (2) from Exposure to Deal - 2006/07/23

Ultimate Mobile Device (5) Universal User Experience - 2005/07/24

What's important is the process of estimation. You will get a clear picture about whether the business is worth your money, whether its outlook is as promising as you have thought and what's the right pace.

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[+] Estimation is for real war

 

Amid the tide of Web 2.0-driven online businesses, many young players can no longer sit tight. Weird ideas and comments on cliches of traditional online companies and new tricks of startups in the cyber space are emerging on Blogs across the Internet.

 

Making a comment is always the easiest thing to do. We can marvel the brilliant interface design of a website, or their understanding to the behavior of a user. Yet we have no way to understand the real thinking of an website operator, not to mention the compromise that he has to make.

 

It's easy to "have an idea", or even to set up a team to start your business right now. However, to turn your idea into real business, you need to make the right estimate. Particularly, in the Internet industry, where there's still not a definite answer to whether user number is a reflection of revenue or of cost, such an estimate could be not so easy to make.

 

Lately, a friend of mine, who's a member of a leading Internet company in the United States posed to enter the China market, asked me over MSN: "how should I estimate my user number right from zero?" Indeed, this is the right question for anyone planning to start a business on the Internet.

 

He showed me the user number growth curve of a few listed U.S. Internet company and said that he wanted to follow suit in China. What he failed to mention was that, none of those companies were more than 10 years, and they had particular backgrounds that could never recur. In fact, he was not able to find a company with a background similar enough for him to copy its business mode.

 

He used all his knowledge about statistics, including Bezier Curves and regression, which puzzled me even more. Finally, I had to let him know that such a purely academic approach might be good for the calculation of an accurate figure in theory, but would never work in field practice. For people engaged in field work - like me - there's another way.

 

[+] No marketing ads, no user

 

To prepare a budget for an Internet business, one has to have in mind a few key points. First of all, it need not and cannot be clock accurate. Then you need to know what's important is the process of estimation. You will get a clear picture about whether the business is worth your money or not, whether its outlook is as promising as you have thought and what's the right pace.

 

For the estimation of your user number, there are a few key aspects: 1) you cannot expect to have your first customers without an investment; 2) you might get your first customers without spending a cent, but you will be much slower than your rivals; 3) if you have an advertising budget, you should spend it in the first 3, instead of 12 months.

 

I was personally involved in the building of many websites. A terrible experience I got was that you got practically zero page view without advertising. Unlike the situation 10 years ago, in today's Internet world, users have numerous options. It is unpractical to expect them to just bump into your site.

 

With advertising, the cost of acquiring a user is much easier to estimate. For the simplest cases of some Internet ad network or Google Adwords, you can easily get the normal ad click-through rate, or conversion rate, or even the average cost of acquiring a user. Therefore, you would have a clear picture of how many users you would have - just look at your initial budget.

 

If you don't want to spend the money, you can attract a user group quickly through a PR event, too. In additions, there're cases in the market to attract visitors to a website through PR press coverage, or a TV report or a headline in Sina News, or the recommendation of a popular Blogger.

 

Therefore, the number of new users each month you get depends on your marketing activities in the month. Isn't this a burning of your money or merely a hype show? Fortunately, there's one unique feature about Internet businesses that could provide you a touch of comfort: Network Effect.

 

[+] Identities of Network Effect

 

Existing users of yours might strongly recommend your site to their friends, or bring them there by casually clicking the "send to a friend" button. They can also be mere victims of the trap you have prepared and promote your site without knowing it, the way they are caught in the transmission chain of a "viral marketing".

 

I define the factor that helps you to attract new users without advertising "Network Effect Coefficient (NEC)". For example, with an NEC of 1.1 and 100,000 users at the end of this month, you can expect to increase 10,000 new users by the end of next month without advertising.

 

Therefore, by the end of next month, you will have 110,000 users plus the new users you have secured with marketing/advertising efforts. Multiplying the sum by the NEC, you could estimate the number of new users by the end of the month after next.

 

See? The more users you have, and the earlier you have them, the stronger the momentum of your business development would be - thanks to the exponential growth enabled by the NEC each month. This is just like the way your money grows in the bank: you deposit 100,000 and you get 10,000 in interest; you put 20,000, and you get only 2,000.

 

Now you understand why I say if you have an advertising budget, try to spend it in 3 months! The faster you get your users, the better. In fact, for two similar websites, the one with more users has higher NEC. In other words, the more money you have, the more you earn.

 

Generally, the NECs of content sites, e.g., news portals, and tool sites, e.g., search engines are estimated to range between 1.0 to 1.1, while those of online communities (as most Web2.0 sites are) could be anywhere from 1.2 to 1.4, depending on the ability of viral marketing of your site.

 

[+] Estimation, the gap between ideas and businesses

 

When you have only a few users, your NEC is practically 1. For most sites, an explosive growth (steep rise in user number curve) comes only after their user numbers break a critical point, which is also the start point for the sharp rise of their NECs.

 

For a saturated market or a reverend Internet company, the change in NEC could be stable and minor, which, however, is beyond the scope of this article, as its focus is how to estimate the increase of user numbers for Internet startups.

 

If you, having read all above, can't help opening your Excel spreadsheet to see how much you need to spend to secure one million users in the next 12 months, believe me, you will faint at the result. The reality is to start a business on the Internet, you need some extraordinary means.

 

Is securing users something to be happy for? As a matter of fact, user number is an underlying factor of both revenue and cost. I am not writing this series to scare you. In fact, anyone preparing a budget for a new business would become more realistic. ( 2007/07/15 - By Digitalwall.com - Way to China Internet/Telecom )

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Prev : Web 2.0 Think Again (5) Unearth the Value of "People"
Next : From Idea to Business (2) How to Estimate Your Income and Cost?

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- Today in History

New Landscape in China's Telecom Market (5) Fee Rates of 3G Services - 2008/07/13

From Idea to Business (1) How to Estimate Your User Number? - 2007/07/15

New Era of Online Advertising (1) from Media to Channels - 2006/07/16

Ultimate Mobile Device (4) Email Service Anywhere Anytime - 2005/07/10