The Network Garden - Mark Sigal's Blog

Understanding Retail's Reboot: Four 'Big Picture' Trends

Jeff Jordan of Andreessen Horowitz has written in a compelling piece that we are in the midst of a profound structural shift from physical to digital retail.

Having written about the need for the retail industry to undergo a reboot myself, he's preaching to the choir.

What the above graphic (from the article) illustrates are the segments of the market getting most disrupted by online.

Between 2007-2011, in these segments online gained $35B in sales, while bricks and mortar lost $30B in sales.

In the big picture, there are four trends that are transforming everthing in retail:

1. Ecommerce: Push button purchasing, payment and physical delivery is alive and real;
2. Mobile Cloud: Post PC is mobile, social, client, cloud and context. It's growing to 10 billion devices. The field of play has changed dramatically.
3. Generational Shift: The generation that read the paper, used the yellow pages and eagerly checked the mail is fading. That irrevocably changes how merchants connect with consumers. How could it not?
4. Big Data: The data 'firehose'' from back office to market facing is wide and deep. The ability to visualize the flow of a business and tune its mechanics will yield many new and interesting personalization, marketing and marketplace experiences.

Not to long ago, Marc Andreessen astutely observed that "Software Is Eating The World."

What's playing out in retail is emblematic of this truth.

Related

1. Retail needs a reboot to survive (GigaOM)
2. The Mobile Native Cloud (SlideShare)

Mobile 'native' publishing: Why our concept of content must evolve in the post-PC era (O'Reilly @TOC)

One reason that industry disruptions prove so vexing to market leaders is that disruptive waves simultaneously barrel through assumptions about customer needs, industry economics and operational best practices.

Consider the case of the motion picture business, an industry that was disrupted when the “talkie” — once derided as a costly gimmick — subsumed the silent picture in the 1920s.

The takeaway from the film industry’s transition is instructive. The talkie not only changed how movies were made and the economics of the business itself, but critically, it changed our concept of what a movie could be.

In doing so, it transformed the medium forever (The Speed of Sound by Scott Eyman is an excellent book on this topic).

Disrupted by digital

As we move toward a post-PC universe of 10 billion mobile devices, a similar disruption is playing out in the publishing business.

Print media is patient zero in the ongoing saga of “disrupted by digital,” an unstoppable force that has decimated one time toll road businesses like newspapers, and is threatening to squeeze out the last breaths of magazine and book publishers.

That this occurs at a time when physical bookstores are also under assault is hardly a coincidence given the tight links between publishers and bookstores on book distribution, discovery and monetization. The brutal reality is that when an industry is disrupted, the entire ecosystem feels the pain.

The rise of dynamic content services

So if publishing must evolve, what does this mean for publishers?

Most basically, it suggests that whereas static text and pictures define our current concept of publishing, in the mobile era, we need to think about what is being “published” as a native app that re-configures itself based upon the content being served. Logically, this type of system autonomously generates data.

This has significant ramifications for how such content is made, what it can do, and the underlying systems required for delivering and receiving the same.

Read the full piece at O'Reilly Tools of Change for Publishing by clicking HERE.

Related:

1. You say you want a revolution? It’s called post-PC computing (O'Reilly Radar)
2. Rebooting the Book: One iPad at a Time (O'Reilly Radar)
3. Anatomy of an eBook App: Lessons learned building a Top 20 eBook App (O'Reilly Radar)

 

Comic-Con, Convergence and the Rise of Integrated Media

"Here’s my prediction: Almost every dotcom idea from 10 years ago that failed will succeed." - Marc Andreessen

When I got into tech back in 1994, convergence was was the holy grail.

It was borne of the idea that one day the then-immovable boundaries between the following industries would collapse, enabling a new kind of integrated value chain to emerge:

• Television
• Motion Pictures
• Music
• Consumer Electronics
• Internet
• Telephony
• Print Media
• Advertising
• Videogames
• Computing

The promise of this concept led Sony, the inventor of the Walkman, to acquire Columbia Pictures. It led regional phone service provider, Bell Atlantic, seeking to re-factor the communications and entertainment landscape, to pursue a merger with cable TV giant, TCI.

In fact, over the next decade, the 'promised land' of convergence drove a flurry of mergers and acquisitions, reaching its apex when Time Warner merged with AOL.

That many of these deals failed disastrously (in the case of AOL Time Warner) or were never consummated (in the case of Bell Atlantic-TCI) is besides the point.

Poor execution aside, the pursuers of convergence were simply ahead of their time, a truth bounded by the way that:

1. Apple has reshaped so many of these industries by vertically integrating them across media, mobile and tablet device form-factors from distribution channel to software platform, apps and media marketplace.
2. Comcast has leveraged physical connectivity to so many homes (and a commensurate billing relationship) into owning NBCUniversal, extensive cable channel holdings and a growing telephony business.
3. Amazon has emerged as Walmart, Cloud Computing platform and Kindle/tablet maker, rolled into one.

Put another way, as a VC friend of mine once said, "It's as lethal to be too early, as it is to be wrong."

It's this truth that gives folks like Marc Andreesseen the confidence to predict that many of the lamest ideas of the dotcom period will yet be vindicated (I think that he's right on this one), and it's this same truth that was on display at Comic-Con 2011 aka San Diego Comic-Con International.

A Snapshot of how 'Integrated' Media has Become

For me, the AHA moment in planning my Comic-Con experience was attempting to digest a priori an event guide that was almost 200 pages, and it was full of...actual events!

Consider, a four-day long event that literally envelops the city and county of San Diego, bringing in over 130,000 fans of comic books, horror, animation, manga, games and fantasy, making it the single largest convention in America.

If you want to see how integrated media has become (and can become), ponder an event that provides a unified sandbox for:

1. Content Producers to showcase, screen and publicize their new Comic Books, Movie Releases, Cable TV shows, Videogames and Toys;
2. Fans to meet cast members, industry luminaries and their favorite artists, and get their autographs; see their latest projects and hear them talk about them; and, oh yeah, dress up as their favorite characters;
3. Vendors to sell Books, T-Shirts, Posters, Toys, Artwork, Comics and other industry paraphanelia;
4. Artists to present their portoflios for review and potential hire by content producers.

Btw, if you're familiar with the integrated media unit known as a "home page takeover" on a web site, consider what Syfy channel did in taking over an actual, physical restaurant (Maryjane's Coffee Shop in Hard Rock Hotel), and rebranding it for the event as Syfy's CafeDiem, down to the signage, tabletops and menus.

One can only wonder if the boring, staid Oscars and Emmy Awards events were reinvisioned as a like-type festival for producers, fans, vendors and artists alike if, maybe, just maybe, the industry would foment a deeper bond between their audience and their slate of programs/movie releases, not to mention the publicity and promotion food chain.

The Moral of the Story

When I think of the enormous success of Comic-Con (especially relative to the general lameness of the trade show industry in general), and I ponder the recent blowout earnings of both Amazon and Apple, I think about how often conventional wisdom gets things wrong specifically by creating false 'Either/OR' dichotomies.

In the tech business, for the longest time it was not only conventional wisdom, but it was the gospel and hardline religion, that you had to be horizontally organized, and focused on one thing, one discrete line of business, or you were destined to the scrap heap of history.

The truth of the matter is that a lot has to go right, both tactically and culturally, for convergence and integration to work.

But seeing how much of a win (for all types of users) such integrated platforms are across Post-PC (Apple), Commerce (Amazon) and Media (Comic-Con), I think that it's just a matter of time before the next wave - Convergence 2.0 - is born.

After all, where visionary leaders show the way, smart students will follow.

Related Posts:

1. Ruminations on MacWorld 2011 and the Future of Trade Shows
2. The Programmable Fan Site: A New Media/Ad Unit Model
3. Apple's Segmentation Strategy (and the Folly of Conventional Wisdom)
4. Thoughts on Book Expo America trade show: Rebooting the Book - Part Two

 

Quick Take on Google Earnings Call: Put me in the bucket of being a Larry Page 'fan'

In today's Google earnings call, Google CEO Larry Page said two things that frame why I believe that the Larry Page era is going to be very different from the Eric Schmidt era.

The first was his commentary on how Google thinks about what it is; namely, that he thinks of Google as three businesses:

1. Search and Ads;
2. Products enjoying high Consumer Success -- YouTube, Android, Chrome;
3. New Products like Google+ and Local, where the bet is long term, and the investment is made with an eye to securing returns on that time horizon.

IMHO, this type of framing is great, inasmuch as it gets the company both internally and externally beyond being perceived as a one-trick pony (search and ads), solely defined by revenues and profits.

In other words, it provides a clear context for gauging how Google is going to invest time and effort, as well as a clear demarcation line (especially, internally) on projects that will lose their oxygen if they don't yield results.

Contrast that with the Schmidt era, where it was never clear how all of the various Google projects fed the larger gestalt of the company (other than being cool).  

"Exhibit A" is the delta between the Schmidt Way and the Page Way is the deeply flawed launch of Buzz at the tail end of Schmidt's run, contrasted by the highly successful launch of Google+ with Page at the helm.

My only comment regarding the Google buckets is that it would be great to see the company articulate metrics that define what it takes to fit into buckets 2 and 3 (a measuring stick, if you will), although I'd caveat that comment by saying:

1. The company is certainly not shy about sharing them post-facto (Google+: 10M users & 1B items shared daily; Android: 550K daily activations; Chrome: 160M users);
2. I am guessing that those metrics are codified internally.

The second thing that Page said, which I found resonant, is that Google wants to create products that people use twice a day, "just like your toothbrush."

I love it, inasmuch as if I am working at Google, I'm thinking that we can crush that number, and that there are more of these types of "jobs" that can grow usage from 2 to 5 to 10 times a day.

In other words, Page's crisp articulation simplifies even for the layman outsider how the company grows from a $40B run rate business (i.e., $9B this quarter) to a $200B business in the not too distant future. 

What does it all mean? If am an employee, I am psyched because my CEO just defined the step-stones from R&D to Core Consumer Engagement to Cash Cow, and if I am an investor, I now have a mental framework for better understanding the relationship between HOW the company is doing and WHAT the company is doing.

Smart guy, great communicator.

Related: 

1. Horizontal, Vertical and the Google Path to Riches: Ruminations on Today's $GOOG Earnings Call
2. Google Buzz: Is it Project, Product or Platform?
3. Built-to-Thrive - The Standard Bearers: Apple, Google, Amazon
4. Apple's segmentation strategy, and the folly of conventional wisdom