"Have Breakfast… or…Be Breakfast!"
By Y. L. R. MOORTHI
Who sells the largest number of cameras in India ? Your guess is likely to be
Sony, Canon or Nikon. Answer is none of the
above. The winner is Nokia whose main line of busin ess in India is not cameras
but cell phones. Reason being cameras bundled with cellphones are outselling
stand alone cameras. Now, what prevents the cellphone from replacing the camera
outright? Nothing at all. One can only hope the Sonys and Canons are taking
note.
Try this. Who is the biggest in music business in India ? You think it is HMV
Sa-Re-Ga-Ma? Sorry. The answer is Airtel. By selling caller tunes (that
play for 30 seconds) Airtel makes more than what music companies make by
selling music albums (that run for hours).
Incidentally Airtel is not in music business. It is the mobile service provider
with the largest subscriber base in India . That sort of
competitor is difficult to detect, even more difficult to beat (by the time you
have identified him he has already gone past you). But if you imagine
that Nokia and Bharti (Airtel's parent) are breathing easy you can't be farther
from truth. Nokia confessed that they all but missed the smartphone bus. They
admit that Apple's Iphone and Google's Android can make life difficult in
future. But you never thought Google was a mobile company, did you? If these
illustrations mean anything, there is a bigger game unfolding. It is not so
much about mobile or music or camera or emails? The "Mahabharat" (the great
Indian epic battle) is about "what is tomorrow's personal digital device"? Will
it be a souped up mobile or a palmtop with a telephone? All these are little
wars that add up to that big battle. Hiding behind all these wars is a gem of a
question – "who is my ompetitor?"
Once in a while, to intrigue my students I toss a question at them. It says
"What Apple did to Sony, Sony did to Kodak, explain?" The smart ones get
the answer almost immediately. Sony defined its market as audio (music from the
walkman). They never expected an IT company like Apple to encroach into
their audio domain. Come to think of it, is it really surprising? Apple as a
computer maker has both audio and video capabilities. So what made Sony
think he won't compete on pure audio? "Elementary Watson". So also Kodak
defined its business as film cameras, Sony defines its businesses as
"digital."
In digital camera the two markets perfectly meshed. Kodak was torn between
going digital and sacrificing money on camera film or staying with films
and getting left behind in digital technology. Left undecided it lost in both.
It had to. It did not ask the question "who is my competitor for
tomorrow?" The same was true for IBM whose mainframe revenue prevented it from
seeing the PC. The same was true of Bill Gates who declared "internet
is a fad!" and then turned around to bundle the browser with windows to bury
Netscape. The point is not who is today's competitor. Today's
competitor is obvious. Tomorrow's is not.
In 2008, who was the toughest competitor to British Airways in India ?
Singapore airlines? Better still, Indian airlines? Maybe, but there are
better answers. There are competitors that can hurt all these airlines and
others not mentioned. The answer is videoconferencing and telepresence
services of HP and Cisco. Travel dropped due to recession. Senior IT executives
in India and abroad were compelled by their head quarters to use
videoconferencing to shrink travel budget. So much so, that the mad scramble
for American visas from Indian techies was nowhere in sight in
2008. ( India has a quota of something like 65,000 visas to the U.S. They were
going a-begging. Blame it on recession!). So far so good. But to think
that the airlines will be back in business post recession is something I would
not bet on. In short term yes. In long term a resounding no.
Remember, if there is one place where Newton 's law of gravity is applicable
besides physics it is in electronic hardware. Between 1977 and
1991 the prices of the now dead VCR (parent of Blue-Ray disc player) crashed to
one-third of its original level in India . PC's price dropped
from hundreds of thousands of rupees to tens of thousands. If this trend
repeats then telepresence prices will also crash. Imagine the fate of
airlines then. As it is not many are making money. Then it will surely be RIP!
India has two passions. Films and cricket. The two markets were distinctly
different. So were the icons. The cricket gods were Sachin and Sehwag. The
filmi gods were the Khans (Aamir Khan, Shah Rukh Khan and the other Khans who
followed suit). That was, when cricket was fundamentally test cricket
or at best 50 over cricket. Then came IPL and the two markets collapsed into
one. IPL brought cricket down to 20 overs. Suddenly an IPL match was
reduced to the length of a 3 hour movie. Cricket became film's competitor. On
the eve of IPL matches movie halls ran empty. Desperate multiplex owners
requisitioned the rights for screening IPL matches at movie halls to hang on to
the audience. If IPL were to become the mainstay of cricket, as it is
likely to be, films have to sequence their releases so as not clash with IPL
matches. As far as the audience is concerned both are what in India are
called 3 hour "tamasha" (entertainment) . Cricket season might push films out
of the market.
Look at the products that vanished from India in the last 20 years. When did
you last see a black and white movie? When did you last use a fountain
pen? When did you last type on a typewriter? The answer for all the above is "I
don't remember!" For some time there was a mild substitute for the
typewriter called electronic typewriter that had limited memory. Then came the
computer and mowed them all. Today most technologically challenged guys
like me use the computer as an upgraded typewriter. Typewriters per se are
nowhere to be seen.
One last illustration. 20 years back what were Indians using to wake them up in
the morning? The answer is "alarm clock." The alarm clock was a
monster made of mechanical springs. It had to be physically keyed every day to
keep it running. It made so much noise by way of alarm, that it woke you
up and the rest of the colony. Then came quartz clocks which were sleeker. They
were much more gentle though still quaintly called "alarms." What do
we use today for waking up in the morning? Cellphone! An entire industry of
clocks disappeared without warning thanks to cell phones. Big watch
companies like Titan were the losers. You never know in which bush your
competitor is hiding!
On a lighter vein, who are the competitors for authors? Joke spewing machines?
(Steve Wozniak, the co-founder of Apple, himself a Pole, tagged a
Polish joke telling machine to a telephone much to the mirth of Silicon Valley
). Or will the competition be story telling robots? Future is scary!
The boss of an IT company once said something interesting about the animal
called competition. He said "Have breakfast …or…. be breakfast"! That sums
it up rather neatly.
—Dr. Y. L. R. Moorthi is a professor at the Indian Institute of Management
Bangalore . He is an M.Tech from Indian Institute of Technology, Madras and
a post graduate in management from IIM, Bangalore .
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