BUSINESS MANTRA

*Have Breakfast… or…Be Breakfast!*

 An interesting management article from Dr.YLR Moorthi.

/Dr. Y. L. R. Moorthi is a professor at the Indian Institute of

Management Bangalore. He is an M.Tech from Indian Institute of

Technology, Madras and a post graduate in management from IIM, Bangalore./

 **Have Breakfast… or…Be Breakfast!**

Who sells the largest number of cameras in India?

Your guess is likely to be Sony, Canon or Nikon. Answer is none of the

above. The winner is Nokia whose main line of business in India is not

cameras but cell phones.

Reason being cameras bundled with cellphones are outselling stand alone

cameras. Now, what prevents the cellphone from replacing the camera

outright? Nothing at all. One can only hope the Sony's and Canons are

taking note.

Try this. Who is the biggest in music business in India? You think it is

HMV Sa-Re-Ga-Ma? Sorry. The answer is Airtel. By selling caller tunes

(that play for 30 seconds) Airtel makes more than what music companies

make by selling music albums (that run for hours).

Incidentally Airtel is not in music business. It is the mobile service

provider with the largest subscriber base in India. That sort of

competitor is difficult to detect, even more difficult to beat (by the

time you have identified him he has already gone past you). But if you

imagine that Nokia and Bharti (Airtel's parent) are breathing easy you

can't be farther from truth.

Nokia confessed that they all but missed the Smartphone bus. They admit

that Apple's I phone and Google's Android can make life difficult in

future. But you never thought Google was a mobile company, did you? If

these illustrations mean anything, there is a bigger game unfolding. It

is not so much about mobile or music or camera or emails?

The "Mahabharata" (the great Indian epic battle) is about "what is

tomorrow's personal digital device"? Will it be a souped up mobile or a

palmtop with a telephone? All these are little wars that add up to that

big battle. Hiding behind all these wars is a gem of a question – "who

is my competitor?"

Once in a while, to intrigue my students I toss a question at them. It

says "What Apple did to Sony, Sony did to Kodak, explain?" The smart

ones get the answer almost immediately. Sony defined its market as audio

(music from the walkman). They never expected an IT company like Apple

to encroach into their audio domain. Come to think of it, is it really

surprising? Apple as a computer maker has both audio and video

capabilities. So what made Sony think he won't compete on pure audio?

"Elementary Watson". So also Kodak defined its business as film cameras,

Sony defines its businesses as "digital."

In digital camera the two markets perfectly meshed. Kodak was torn

between going digital and sacrificing money on camera film or staying

with films and getting left behind in digital technology. Left undecided

it lost in both. It had to. It did not ask the question "who is my

competitor for tomorrow?" The same was true for IBM whose mainframe

revenue prevented it from seeing the PC. The same was true of Bill Gates

who declared "internet is a fad!" and then turned around to bundle the

browser with windows to bury Netscape. The point is not who is today's

competitor. Today's competitor is obvious. Tomorrow's is not.

 In 2008, who was the toughest competitor to British Airways in India?

 Singapore airlines? Better still, Indian airlines? Maybe, but there are

better answers. There are competitors that can hurt all these airlines

and others not mentioned. The answer is videoconferencing and

telepresence services of HP and Cisco. Travel dropped due to recession.

Senior IT executives in India and abroad were compelled by their head

quarters to use videoconferencing to shrink travel budget. So much so,

that the mad scramble for American visas from Indian techies was nowhere

in sight in 2008. (India has a quota of something like 65,000 visas to

the U.S. They were going a-begging. Blame it on recession!). So far so

good. But to think that the airlines will be back in business post

recession is something I would not bet on. In short term yes. In long

term a resounding no. Remember, if there is one place where Newton's law

of gravity is applicable besides physics it is in electronic hardware.

Between 1977 and 1991 the prices of the now dead VCR (parent of Blue-Ray

disc player) crashed to one-third of its original level in India. PC's

price dropped from hundreds of thousands of rupees to tens of thousands.

If this trend repeats then telepresence prices will also crash. Imagine

the fate of airlines then. As it is not many are making money. Then it

will surely be RIP!

India has two passions. Films and cricket. The two markets were

distinctly different. So were the icons. The cricket gods were Sachin

and Sehwag. The filmi gods were the Khans (Aamir Khan, Shah Rukh Khan

and the other Khans who followed suit). That was, when cricket was

fundamentally test cricket or at best 50 over cricket. Then came IPL and

the two markets collapsed into one. IPL brought cricket down to 20

overs. Suddenly an IPL match was reduced to the length of a 3 hour

movie. Cricket became film's competitor. On the eve of IPL matches movie

halls ran empty. Desperate multiplex owners requisitioned the rights for

screening IPL matches at movie halls to hang on to the audience. If IPL

were to become the mainstay of cricket, as it is likely to be, films

have to sequence their releases so as not clash with IPL matches. As far

as the audience is concerned both are what in India are called 3 hour

"tamasha" (entertainment). Cricket season might push films out of the

market.

Look at the products that vanished from India in the last 20 years. When

did you last see a black and white movie? When did you last use a

fountain pen? When did you last type on a typewriter? The answer for all

the above is "I don't remember!" For some time there was a mild

substitute for the typewriter called electronic typewriter that had

limited memory. Then came the computer and mowed them all. Today most

technologically challenged guys like me use the computer as an upgraded

typewriter. Typewriters per se are nowhere to be seen.

One last illustration. 20 years back what were Indians using to wake

them up in the morning? The answer is "alarm clock." The alarm clock was

a monster made of mechanical springs. It had to be physically keyed

every day to keep it running. It made so much noise by way of alarm,

that it woke you up and the rest of the colony. Then came quartz clocks

which were sleeker. They were much more gentle though still quaintly

called "alarms." What do we use today for waking up in the morning?

Cellphone! An entire industry of clocks disappeared without warning

thanks to cell phones. Big watch companies like Titan were the losers.

You never know in which bush your competitor is hiding!

On a lighter vein, who are the competitors for authors? Joke spewing

machines? (Steve Wozniak, the co-founder of Apple, himself a Pole,

tagged a Polish joke telling machine to a telephone much to the mirth of

Silicon Valley). Or will the competition be story telling robots? Future

is scary! The boss of an IT company once said something interesting

about the animal called competition. He said "Have breakfast …or…. be

breakfast"! That sums it up rather neatly.

/—Dr. Y. L. R. Moorthi is a professor at the Indian Institute of

Management Bangalore. He is an M.Tech from Indian Institute of

Technology, Madras and a post graduate in management from IIM, Bangalore./