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)

 

Tim Cook on the relationship between collaboration and integration to Apple's success

This Businessweek interview with Apple CEO Tim Cook is an excellent read, but I really nodded when Cook talked about Apple's unparalleled level of integration and the role that collaboration plays in their culture and organizational structure, inasmuch as it points a bow around the core thesis behind my recent GigaOM article on the age of indivisibility and integrated systems design. Here's Cook:

"You look at what we are great at. There are many things. But the one thing we do, which I think no one else does, is integrate hardware, software and services in such a way that most consumers begin to not differentiate anymore. They just care that the experience is fantastic. So how do we keep doing that and keep taking it to an even higher level? You have to be an A-plus at collaboration."

Sounds sooo simple, yet just a tiny handful of companies on the planet have found a way to do this across products segments, product lifecycles, and do so at scale -- over a multi-year period. That's the magic of Apple.

Read the full Cook interview HERE.

Read my GigaOM piece HERE.

Pattern Recognition: Maps Mea Culpa; Marketplaces; Lesser Evils; Particularity

My goal is to write one 'Pattern Recognition' a week. Just the top 3-4 stories that stayed under my skin. Here's what stuck this week:

1. Maps Mea Culpa: Unless you were trapped in a bomb shelter all day, you probably read Apple CEO Tim Cook's 'owning' of the fact that the new Maps in iOS 6 is a poor replacement to the old Maps in iOS 5 (and before). First off, that's the textbook right way you do it. Accept full responsibility, without caveat, something that I blogged about regarding brands and trust. For good measure, Apple even created an App Store section for Maps Alternatives (meh). Second, as I blogged about a couple of weeks back, almost regardless of what Apple did in launching iOS 6 and iPhone 5, a backlash was inevitable. This just provided the match. Third, know this; while Apple was not perfect in the time of Steve (see Me.com, Ping, AirDrop, AntennaGate), this time is different. Those instances were new products, new features or instances that touched a tiny subset of users. Maps is a CORE feature, and this is the first time that Apple has taken users BACKWARDS based upon business goals conflicting with consumers' best interest. Consumers trust Apple because they have repeatedly protected consumers interests and by ensuring that the solution would always get better. In this context, sideways or backwards is not acceptable. COOK SPEAKS: "At Apple, we strive to make world-class products that deliver the best experience possible to our customers. With the launch of our new Maps last week, we fell short on this commitment. We are extremely sorry for the frustration this has caused our customers and we are doing everything we can to make Maps better."
2. Mobile’s Hidden Opportunity - Marketplaces: I love the evolution taken place in marketplace models (see: Kickstarter, 99Designs, Etsy). In fact, I blogged about the topic recently for O'Reilly with respect to my own experiences using 99Designs for design of a new logo; it's an article that pissed off a bunch of designers (see the comments section). This piece by Matt Cohler frames the role of mobile, and codifies what models are most interesting. MONEY SHOT: "The best opportunities for creating new marketplaces (or reshaping old ones) via mobile will be in markets where supply is inherently constrained and there are no viable (similarly priced) substitutes for that supply. Aggregate that scarce supply and the demand will follow. This playbook isn’t new to mobile. Mobile just makes it a whole lot easier."
3. The Lesser of Two Evils: A friend of mine noted that in recent times, elections seem to come down to a choice between the lesser of two evils. He notes, "If you play that one out, at the end, all that you are left with is evil." I thought about this in reading Matt Taibbi's excellent article, 'This Presidential Race Should Never Have Been This Close,' which forked me to a great article by Frank Bruni of the New York Times. Bruni suggests that the electoral process systematically generates (increasingly) shitty candidates. Regardless, of which candidate you are rooting for, the current scenario is pretty sad. I will, however, express a bit of schadenfreude for Mitt Romney, who if he had even one iota of intellectual honesty or personal humanity, and simply ran on his record and history, probably would have been electible by people like me. Instead, the '47 Percent' ads simply kill for the simple reason that it's a case of a man in his own words confirming how most people believe he thinks. JUST TRY SHRUGGING THIS OFF: "If this race had even one guy running in it who didn't take money from all the usual quarters and actually represented the economic interests of ordinary people, it wouldn't be close. It shouldn't be close. If one percent of the country controls forty percent of the country's wealth – and that trend is moving rapidly in the direction of more inequality with each successive year – what kind of split should we have, given that at least one of the candidates enthusiastically and unapologetically represents the interests of that one percent?"
4. Spray vs. Solve; AKA The Power of the Particular: In the movie 'My Big Fat Greek Wedding' there is a joke about Nia Vardalos' dad. He seems to think that Windex is a magic tonic for which the answer to every challenge is to spray some Windex on it; "it" being EVERYTHING. This is emblematic of what ails so much of tech where the ethos is to "spray," be it 'speeds and feeds,' lines of business, social, mobile, media, real-time, analytics, etc. when the answer instead is to "SOLVE." This is why I am such an acolyte of the Apple model (see 'HP, Dell and the Paradox of the Disrupted'). David Brooks ruminates on the outcomes that such particularity yields (''The Power of the Particular)'. EXCERPT: "It makes you appreciate the tremendous power of particularity. If your identity is formed by hard boundaries, if you come from a specific place, if you embody a distinct musical tradition, if your concerns are expressed through a specific paracosm, you are going to have more depth and definition than you are if you grew up in the far-flung networks of pluralism and eclecticism, surfing from one spot to the next, sampling one style then the next, your identity formed by soft boundaries, or none at all."

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