NBC Universal--Apple Relationship Shifts

Today's NY Times is reporting that NBC Universal has decided not to renew the contract with Apple for digital downloads.

The media conglomerate — which is the No. 1 supplier of digital video to Apple’s online store, accounting for about 40 percent of downloads — notified Apple of its decision late yesterday, according to a person familiar with the matter who asked for anonymity because negotiations between the companies are confidential.

This situation highlights some of the key requirements of winning in a network era.

1.Winning depends on managing a portfolio of relationships. Not all relationships are equally important. The real analytical challenge is to prioritize the relationships for today (current conditions) and for tomorrow (a range of plausible scenarios). Where's NBC Universal in the scheme of content providers today and where would it be in the future? .

2. The relationship interdependency is dynamic. Clearly, Apple-NBC intedependency has changed over the years. In the beginning, iTunes would have failed but for good quality content (from NBC and others). Now, can NBC Universal do without Apple? Will Apple customers desert iTunes in favor of an alternative if their favorite content is not made available on their iPod?

3. Will the shift in the relationship between two entities (Apple and NBC) impact a third entity (such as Microsoft or a different content provider like CBS or Disney) to gain an edge? [I had hinted about this possibility earlier.] Is the move by NBC because Apple is closer to Disney (by virtue of board-interlock with Steve Jobs on Disney Board)?

4. Winning strategies requires anticipating likely moves in the network. These involves not only realignment of relationships amongst existing players (example Apple and NBC) but also new players that may enter the market in the future.
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Contract negotiations depend on an analysis of how nodes (companies) and linkages (relationships) are today and how they are likely to evolve in the future. Both Apple and NBC know that this contract renegotiations will alter not only their specific relationship but also the broader network of content creation and delivery. These moves--individually and collectively--will shape and reshape the media landscape.
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Update: There's a Sept 1 posting at Business 2.0 blog that speculates on what iTunes looks like without NBC. It's worth reading.

Microsoft-RIM (M&A)--A Real Possibility or Just Speculation?

Over the last few decades, companies have always explored mergers and acquisitions as ways to grow out of trouble. Horizontal acquisitions and vertical integration emerge as first courses of actions for many companies. Microsoft has historically stayed away from major acquisitions that could change their corporate strategy, structure and culture.
Now, I saw this news story about possible acquisition of RIM. This may be nothing more than idle speculation. But it is worthwhile thinking how the mobile market will evolve: Specifically, what roles will Microsoft, Google and Apple have? Will Symbian and Palm have any distinctive value plays at all or are they nearly-closed chapters? What about the convergence of applications symbolized by Apple iPhone but we all know that it is only the beginning.
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Clearly, we will see some acquisitions. But acquisitions should not be constraining as companies such as Microsoft strive to be relevant and dominant in the fast-changing marketplace. Will Microsoft-Blackberry combination win? We cannot really answer that question till we take a more complete look at the network of linkages that exists amongst the key players that straddle hardware, software and service domains. Also, acquisition is not always the most effective startegy under fast-changing conditions of convergence in functionality as we see in this space.

Outsourcing to India--Homer Simpson Style

Here is a somewhat irreverent look at outsourcing The Simpsons Style.

Towards a Web 2.0 Infrastructure for the Network Era Business Models

There has been a lot of excitement about web 2.0--mostly in the consumer space but it is also gaining traction in corporations. Andrew McAfee at Harvard Business School has spearheaded the excitement around Enterprise 2.0 and has a useful framework to think about it in an article published in the Spring 2006 issue of the Sloan Management Review. I particularly like Andy's definition of Enterprise 2.0 as:

Enterprise 2.0 is the use of emergent social software platforms within companies, or between companies and their partners or customers.

The reason I like the definition is that it allows the scope of the platforms to extend beyond a single enterprise to include a network of partners and relationships that are central for creation and delivery of products and services demanded by the customers.
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So, what's the state of art in our understanding of how the web 2.0 infrastructure shapes and supports the emergent business models of the network era? Well, we have a good set of leading-edge case studies. These studies serve as a good foundation to understand how companies are experimenting with web 2.0. There are the initial case studies as Dresdner Kleinwort Wasserstein where JP Rangaswami was a keen proponent of blogs and wikis as critical building tools for the next generation infrastructure. (JP now is at BT and has a thoughtful blog here.). There are also attempts by many other companies to embrace the principles of web 2.0. I had previously blogged about BBC 2.0; there is some news recently about what SAP Imagineering Unit creating tools by adopting the web 2.0 philosophy of embracing the user community as part of design and development. I am not surprised that software companies like SAP are developing tools to create the web 2.0 infrastructure. I like to see what evidence we have of user companies embracing web 2.0 and creating a business infrastructure that is in sync with Andy's definition.
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Then I saw this CIO Insight Survey about the State of Use of Web 2.0 by CIOs. A caveat here: I am not a big fan of such surveys of managers in general because personal use of applications rarely captures how enterprises uses tools such as video, blogs, wikis, mashups, podcasts, social networking tools etc. For instance. the #1 application is the use of video over the web (no big deal there as I am sure many CIOs are at least casual visitors of YouTube or Google Video or videos embedded in WSJ and Ny Times). The real question is what is the degree of reliance and use of videos for internal and external collaboration on critical projects that deliver superior value to customers.
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I think time is ripe to carry out a systematic study of how web 2.0 tools and applications are reshaping the business infrastructure in different vertical industries. Such a study should also see how companies may be deploying these applications across organizational boundaries so that we can discern the opportunities and challenges.
We are still in the early stages of web 2.0 infrastructure but the business potential seems promising. I am bullish not on any specific web 2.0 start-up but on how enterprises to embrace the new tools and applications to usher in a new era of business strategy and practices that truly reflect a network era.

Distribution of Lunch Boxes in Mumbai--a World Class Process

Some of you may have heard of the century-old process of distributing lunch boxes in Mumbai.

here is a good overview video.
Find more videos like this on NewTeeVee Pier Screenings

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This is world-class.

Web 2.0: A Funny Look

A good way to restart my blog after a long break!

glumbert.com - Supermarket 2.0

Thanks JP.

Apple iTunes and Universal Music: Does Microsoft Zune Have any Role?

Now that iPhone is launched and the craze has somewhat subsided, it's a good time to look at iPod [and iTunes]--the second leg of Apple's transformation from Apple Computers to Apple inc.

In the midst of the hype surrounding iPhone, there was an announcement from Universal Music. Business Week reported that:

The music label is balking at renewing a deal that gives Apple unfettered access to Universal's massive music catalog and limits Universal's ability to strike exclusive distribution deals with competing download services.
But sources close to Universal say the company has moved to what's known as an "at will" arrangement that enables it to strike exclusive distribution deals with other digital music providers for individual artists or tracks, though it will continue to sell music through iTunes. Under the new arrangement, for example, Universal could charge another music e-tailer (or Apple, for that matter) a premium to sell Jay-Z's latest single exclusively for a limited time.

This announcement highlights the need to adopt a broader network perspective in analyzing the relationships. It is not just about Apple and Universal. Universal needs Apple and vice versa. But, there are other players. It is equally about Universal and Microsoft (yes--Zune that you may have discarded as an also ran offering!). If Apple iTunes was the only game in town, Universal may sing a different tune. Microsoft's Zune may not win any design contests but it is myopic to discount Microsoft's capability to orchestrate a network of complementors to make its platform succeed.

The strategy message for the network era is: Behind every announcement between two companies, look for the invisible role (often implicit) of a third company that is seeking to rebalance the power.