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Who is your competitor tomorrow? Management Views from IIM Bangalore - A Must read.
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 business in India is not
cameras but cell phones. Reason being cameras bundled with cell phones are
outselling stand alone cameras. Now, what prevents the cell phone from
replacing the camera outright? Nothing at all. One can only hope the Sony's
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 I phone 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 competitor?"
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 over's. 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? Cell phone! 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.
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