Planning for the future

I just got back from my international business midterm. I got to say that this is definitely one of the most exciting classes I’ve taken. It has given me all sorts of knowledge on international trade theories and insight into global economies that I would have never had. In other words, I no longer have to be completely ignorant of what’s happening in the world and can at least understand the basics.

So coming out of class, I decide to continue reading the textbook by Charles hill (yes, I am a nerd) and there was a short case study on Nokia’s dominance in the wireless industry. Basically, the reason why Nokia kicks butt is that their environment forced them to develop wireless capabilities sooner and faster than the rest of the world. Apparently, the book says, if you want to understand the future of Cellphones, go to Finland.

Now, I know Nokia is good, but I would not have thought of the Scandinavian countries as being the leading edge of cell phone usage. I would have picked South Korea instead buy It shows how little I know.

A friend of mine is working a project for a large us cellphone company about the future of Cellphones. If you are reading this, get thee to Finland before you do anything else.

Apple’s business model

Saw this article today about Gartner, a Boston based advisory firm (and competitor to AMR Research where I used to work) announced that the iPhone is ready for business applications. As my friend Ash had written about earlier, one has to wonder about the future of Apple’s business model.

Apple is the darling of many and people love the products they make. But public consumer product companies, for anyone who has looked at their revenues and earnings are notoriously volatile. Consumer products take a lot of resources to develop and there is no guarantee that they will be successful in the market. This results in revenues that look like a roller coaster which is makes it hard for management to make long term decisions about the company, such as what investments to make, how much to invest in R&D, how much to hire etc.

Any management company worth its salt will quickly try offset the volatility of their earnings by finding additional sources of revenues besides products. Most companies do this by including a service or subscription based revenue. Apple tried to do this without a subscription model by introducing the iTunes platform. This platform ostensibly would allow them to offset the valleys of product revenues through more predictable revenues from individual song and music purchases.

However, this morning’s Financial Times reported

“Apple, which is thought to make relatively little money from the iTunes store compared with its hardware sales, is also understood to be examining a subscription model”

This is interesting news and provides some insight into the crisis that Apple is facing.  As the purveyor of consumer goods which are priced at a premium, Apple is susceptible to the vagaries of the broader economy as a whole. Combine that existing risk with the risk from getting most of their revenues from product launches and suddenly, their outlook is not that strong.

It makes complete sense for Apple to start looking to get more predictable cash flows from a iTunes subscription model, as opposed to a pay-per-purchase model. Observant users will note that the model proposed by Apple in the FT article is not that different from Amazon’s Kindle business model – where the product and subscription are bundled in together at a single price.

Designing for children

I’ve probably come up and down in my buildng’s elevator several hundred times but never noticed this till today. I was riding the elevator up today with an older woman who offered to press my floor – but couldn’t find it. We started talking about how it might help to have a standard arrangement for elevator keys and then started talking about the height of the keys etc. I always figured that the keys were placed so low to allow people in wheelchair s to press them. However, the woman told me that she had been in an elevator with a child, who because of the design of the elevator keys, could never reach the higher floors.

This story got me thinking about designing for children – It’s something that I have never thought about consciously and I’m guessing that not a lot of us do. I would venture to guess that we think about designing for handicapped people before we think about designing for children.

The story was certainly timed well – I’m in day 2 of the Physical Human Factors class, taught by the very famous Bill Verplank where he teaches you to be more aware of physical limitations and preferences. We spent the bulk of the class today, trying to understand the concept of Webers law and lowest perceptible differences. My understanding of the law states that you need a greater amounts to preceive differences as you go up the scale. In simple terms, when you have no coins in your hand and you place a quarter, it’s easy to tell the difference in weight. However, when you have 40 coins in your hand and you add another one, it’s harder to perceive the difference. Weber’s law gives you a method to calculate how much weight in coins you’d need to add before you could notice the difference.