Crossroads

At the intersection of technology, finance and the Pacific Rim.

Tuesday, May 23, 2006

Yesterday, we spoke at length about network convergence--the fact that if the services do not get differentiated then we will end up with an industry where the sandboxes come together and the profitability of the sector will decline materially. And new competitors will appear who have brand or a customer base that can provide a good jumping off point to getting into the business. An example is TESCO, the supermarket chain who is rumored to be getting into the Voice over wireless lan (VOIP) business. And why not?

As some of you may know, the latest DoCoMo phones have bar code reading capabilities that are offered through their Felica service. What is the practicality of this? In concept, you can read a product bar code from a package and instantly download product information on the net about a potential purchase. In an open system, you will be able to instantly compare this product to other competing products, enabling you to compare price, quality and other feature fits. I have no idea whether TESCO is considering this capability or not--but technology opens up many avenues to engage the customer. You can imagine putting in place a "closed" system with only information on their products on the shelf made available. So for TESCO in the future, the question may be how to get the handset into the hands of the customer for higher engagement, in addition to the usual "how to build a workable application." This workable application follows the strategy of engagement--not the other way around.

So there can be many reasons to enter the communications business--reasons outside the normal "new business investment parameters. " Another example could be MTV or Virgin Mobile with their mobile virtual network operator strategy (MVNO) as a way to further their interests with their generation set of customers. Businesses are increasingly trying to throw a hidden net around their customers, which technology can enable or disrupt.

7 Comments:

Anonymous Jung Daiyoung said...

We can't imagine how some companies could apply IT Technologies to avenues to engage the customers and
could expect them to put this Technologies into their use.
If the company do internalize this technologies and differentiate their application(services), it will seek sustained economic growth.

10:08 PM  
Blogger Jinwoo IM said...

Nowadays, I'm finding some national R&D institutes to be benchmarked. And, I got to know that one of prominent American national labs is putting almost 10% of its budget to equip the IT infrastructure annually. Isn't it amazing?

10:55 AM  
Blogger Jinwoo IM said...

In some articles the professor gave us, the importance of company's "Brand" is emphasized in a convergence market because many customers are likely to follow their perceptions relevant to the "Brand".
Hmm... Aren't there problems in using existing "Brand image" to attract when the existing brand seems to be far from the type of launching service?

11:00 AM  
Blogger LeftBack said...

Another area where the use of bar codes may come in handy for TESCO is in their relationship with their suppliers. Using technology, (an advanced bar-code system being but one example), TESCO can develop a supply-chain system that is so integrated with its suppliers that the switching costs to those suppliers would make moving to a TESCO competitor prohibitive even if that competitor is offering more attractive prices.

4:12 PM  
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