Starbucks: Helping Caffeinate and Juice Customers

by Gary Schwartz  (30/07/2013)

Starbucks Q3 2013 report is out: a 30 percent jump in My Starbucks Rewards spend and mobile app transactions in the US accounting for a whopping 10 percent of in-store US sales.

The only successful mobile wallet continues to grow market share

The one interesting development is the announcement that U.S.Starbucks is partnering with Duracell Power to provision in-store charging stations. With Starbucks’ success with its mobile wallet, the last thing the local Starbucks store wants is a dead phone at point-of-sale.

I have always said that wireless charging stations are honey to the wireless bee. Starbucks has already educated the consumer on the value of its retail network as a Wi-Fi network. Now it can it extend this utility to a charge-up affinity.

There are only two deleterious mobile states: a consumer with a lack of caffeine or lack of handset power. Starbucks in the natural brand to be associated with charging up.

 

Apple feels more gravity. What to do?

by Gary Schwartz  (24/07/2013)

In a post-Job’s era is Apple losing its innovation edge? While in Q3 ’13 results, Apple was upbeat on earnings, its revenue outlook dropped precipitously.

During a conference call with analysts to discuss its quarterly performance Apple’s CEO Tim Cook pointed to enterprise and horizontal product growth:

“From a growth point of view for Apple, our key catalyst will always be new products and new services in existing categories that we are in and in new categories. In addition to this, we have opportunities in distribution in terms of expanding our retail stores, expanding our online store.”

Apple continues to hold ground as an aspirational brand but the market for high-end devices is fast becoming saturated and the only growth window is low-cost devices in emerging markets.

Tim Cook tries to sound bullish: “I don’t subscribe to the common feeling that the high-end smartphone market is at its peak. I don’t believe that, but we’ll see.”

However, while some operators still are required to meet volume guarantees made to Apple, this will not continue. Consumers are no longer buying new phones based on glamorous launch campaigns that tout better cameras, higher-resolution displays or a reduction of a millimeter in its profile.

Apple’s needs to keep its loyalists buying across its portfolio of screens. Apple must focus on its multiscreen strategy with ‘Maverick’ and continue to expand its cloud and iTunes wallet positioning.

From Singapore to Moscow: Is OPEN a four-letter word?

by Gary Schwartz  (23/07/2013)

I recently returned from speaking in Singapore at the regional CommunicAsia conference and Rasia.com event in Moscow. Innovation was a central theme.

In Singapore I was in a discussion with Google, SingTel and Microsoft. I asked Doug Farber, managing director for Google in Asia-Pacific, if mobile innovation is stifled when there are only a few power brokers that control the mobile ecosystem.

Google has always had a “healthy disregard for the impossible,” Mr. Farber said. Agreed. However, while Google has a healthy internal innovation culture, is it allowing the ecosystem to do the same?

I recall Richard Kramer from Arete Research’s jab that in mobile O-P-E-N is a four-letter word.

There are only a few powers that are trying to lock the mobile ecosystem: Apple, Amazon, Google, Facebook, Microsoft and Du. And while Apple and carrier networks are unabashedly closed fiefdoms, Google’s Android empire may not be truly open.

“But,” Mr. Farber said, “I am the open guy.”

“Open only on the front end,” responded Bill Chang, CEO of group enterprise at SingTel.

Outside of a few global plenipotentiaries, mobile developers have had to pick from the crumbs at the table.

Twenty-five applications command 50 percent of the app store revenue. The billions in revenue do not feed many mouths. The average developer lives on $5,000 per month, which is a bread-and-water diet of $60,000 per year, said Richard Kramer. “Where are the developer’s yachts?”

Hardware innovation has flat-lined and power is exclusively in the hands of Apple and Samsung.

The yearly CES announcements have underwhelmed and recently left the Las Vegas melee altogether. Another handset release with faster “mega” screens does not excite the crowds. With $75 smartphones entering emerging markets, smart has become a commodity.

SingTel’s Mr. Chang said in a market where companies are “cost-cut to death, it is difficult to drive innovation forward. Mobile-first is a challenge.”

Mr. Chang talked about the importance of the CIO is this process. He plays the initialism game that we all do at public events: “The CTO is now the chief transformation officer and the CIO the chief innovation officer.”

But what does that really mean to companies trying to navigate the mobile marketplace?

The CIO never had power, said Michael Thatcher, chief technology officer of Asia for Microsoft. “It is only when something is broken they have power. How can we advance this and stop being tech centric? Stop being reactive. Follow the money.”

But is there money in mobile innovation?

Outside of the big six ecosystem players, there are few that command significant market share. We live in an “app store economy” where we all need to play the piper 30 percent and never own the customer. To make money on Apple’s SDKs or Google’s, dominant big data position is difficult.

The social leviathans are also closed.

Facebook has built a business on connecting people. With its post-IPO revenue focus, it has worked hard to create a media buying tollgate on the impressions and big data that it owns.

In social portals there is little big data sharing and little opportunity to make money as an outside developer. It is a bigger issue for the entire social ecosystem.

The more that these social portals try to leverage these assets to generate revenue, the less socially authentic they become to the consumer. Our social spaces have become more like driving down the public highway.

Social portals such as Tumblr and Instagram have generated such value in the market because they remain authentic – pre-revenue and pre-commercial, of course.

Everything is disintermediated. App stores and social portals are all controlled by Facebook, Amazon, Apple, Microsoft and Google, and somewhere we all have to pay the piper.

Telecommunications is the history of open and then closed systems, from RCA closing down FM Radio and early television.

It is the same recent history of Apple disintermediating the wireless carriers with an “Internet device” and then turning around and using the same iPhone to shut down the mobile Web with a closed App Store.

Are we entering another closed loop where innovation becomes stifled? What does this mean for business?

Google sponsors the ship, “Unreasonable at Sea,” to sail around the world evangelizing entrepreneurism and innovation. How can we make the power brokers more unreasonable at home?