Monday, February 18, 2008

Apple's business model in China

I talked to a friend in China last week, and he is expecting that his friend is going to bring him an iphone from U.S. later. "Could u use it in China?", I asked. "Definitely, a lot of my colleages have been using it for a long time", he said.

The fact that the decoded iphone has become very popular in China. According to unofficial data, there are already 400,000 decoded iphone running on China Mobile's network. Of course, it is illegal, but people seems pretty much enjoy the service....(not sure if all the applications will work, but definitely surfing on the internet is the best attraction).

Speaking of this, Apple and China Mobile are still yet to start the official negotiation. I guess the point is that Apple is stick to the profit sharing model it was using in the collaboration with AT&T or some European Carriers. However, in China, the dynamics between carriers and service providers are not quite the same. And more importantly, China Mobile dominates over 60 percent of the market, which has much more market share compared with AT&T in U.S.

Besides sharing profit with carriers, Apple should focus more on selling the content to users via iphone, such as music or video. In some extent, it's more like printer business. firms make 90 percent of the money from cartridge instead of selling the printers along.

In addition, China is going to issue mobile licenses to fixed-line operators such as China Telecom and China Netcom soon this year. Apple's iphone is definitely a big attraction to customers, which will help carriers increase the user loyalty. Some investment bank in Hong Kong said Apple shouldn't partner with China Unicom, but I don't think it is 100 percent true. China Unicom definitely needs iphone more compared with China Mobile, which may lead to a better deal for Apple.

For emerging markets with more carrier monopoly, Apple should change its strategy to a more user-friendly one. Users are everything, and it's better to provide users service sooner than later. There is also chance to cooperate with small/new carriers in those countries, if Apple could assure the service quality of customer support is the same.

It's always not wise to wait for things to change. Better change something first, my two cents to Apple.

Thursday, February 14, 2008

iphone's Chinese sister

You may not believe this, and I don't believe it as well. But according to this website, some Chinese manufacturers developed a phone called Hiphone with the similar interface and application. It is only sold for less than US$125.

First, they have to watch out the certain legal lawsuit from Apple. But I have to admit those manufacturers become more and more innovative and creative. In fact, they have enough ability to develop their own design, instead of copying others. That's why China should implement IP protection regulation strictly. The law itself will help push manufacturers to be more creative, instead of trying to steal sth from others.

Monday, February 11, 2008

Facebook Mobile

I signed into Facebook Mobile last week. It's very convenient to receive and send updates for the Facebook mobile. However, the service is kinda of expensive since my AT&T carriers will not only charge me messages I send, but also messages I receive. I would call the second charging "passive payment", since I couldn't really control on how many updates I will receive from facebook every day. It's a business model which expels customers from using the SMS service more.

That's the situation in the fragmented U.S. mobile market. Since there are many carriers, the interconnection cost is so high that customers have suffered a lot of benefit. In the terms of MicroEconomics(which Amy is studying on), the high price of interconnection(such as SMS between different carriers) have created a dead weight loss in the whole revenue map. Both carriers and mobile users leave money on the table.

Internet could help change all this. There was once a website which has the potential to challenge the whole situation. It is the skype. However, since Ebay itself doesn't have a lot of operating experience in telecom, Skype now becomes something stuck in the middle without any future innovative move.

For Facebook Mobile, I would suggest them learn from Tencent in China, which provide the service of Mobile QQ to customers. (5 yuan per month for unlimited messages between online and mobile chatting service, that's the price I remember). It is the only way to attract users to the SMS service, since we know customers always want to control on how much they gonna to pay.

Saturday, February 09, 2008

Happy Chinese New Year

Amy has been busy with her mid-term.......

So forgive me for the late New Year wishes. Hope every wonderful dream will come true in the year of rat.

Saturday, February 02, 2008

What could we do?

I remember one thing impressed me most of Stanford Graduate School of Business is its mission to "change lives, change organizations, and change the world". Students come to school with strong feeling about this mission, and they are willing to bear the mission in their mind for the whole life.

It's easier said to be done, people always say. I feel the same way, especially in the current moment that China is experiencing the worst-ever winter storm in the southern part. (pic from Red Net) It's horrible to see a lot of people suffer from the cold weather. The direct loss already reached 54 billion yuan today. It is so unusual for South China to have snow, since I know a lot of my friends from south China never saw snow before. Now the whole public transportation system, including railway and flight, has been affected, and millions of people may not be able to make it home to celebrate with family for the Spring Festival. The Chinese government spent a lot of effort in securing people and arranging transportation, but the situation has been difficult.

What could I do? It's hard to change the world this time because the weather is out of my reach. It's definitely not an easy call for a MBA student. It feels bad to think in that way, but it is the fact. However, I am now thinking of the reason for the terrible snow storm, and more importantly, what I could do to help in the daily life, such as how to stop a warm earth, or how to reduce the use of "dirty" energy. I believe the effect will be big if everyone on the earth could do a small thing. and I will start doing it now.

I will be involved in organizing a service learning trip of 20 people from Stanford GSB to West China, focusing on environmental protection and clean energy. Let me know if you have any contacts or advice. Thanks for supporting our first step.

Friday, February 01, 2008

Start-ups in the valley

It's amazing to meet a lot of creative and sharp entrepreneurs in the valley. Everyone has a lot of wonderful ideas, and more importantly put them into reality. I met two great enterpreneurs tonight. Amar Goel and Rajeev Goel set up an online advertising agency connecting publishers and ads network, using auction strategy to serve the advertisers more efficiently. I used to think it's hard for Internet people to understand traditional advertising, but I know I was wrong when I met them. People talk about online advertising more like a thief who stole revenue from newspaper and TV, but that's not true. Pubmatic does provide the service that no one provided before. It is easily set up to target at certain users group, and more importantly, advertisers easily know if they get a good deal.

It reminded me of the managerial economic lesson I learnt today. There was once a fish market in Indian that people only trade verbally. The volatility of the price was very high. However, with the cell network coming to the village, the fish men could call around to look for the price, and then trade. The price became stable since then. It's amazing to see how communications change the village. Now, the same thing applies to Internet advertising: every thing becomes transparent, which means more capital will be willing to come in.

So that's the future.