Friday, July 29, 2005

IPTV is coming !!

on Economist

There are four players :
  1. Traditional Landline providers
  2. Mobile Telephone providers
  3. TV Broadcasters and associated players
  4. Internet Service providers

The industry is on a collision path where each of the above players is set to cross the path of every other. A very interesting article discussing the possibilities.

Happy Birthday DotComs

on Economist

Heartening to see some people think business do need MBAs to succeed ;-)

All successful online sites have had to reinvent themselves continually, points out Andrew McAfee of Harvard Business School. Only that way have they been able to evade predatory newcomers. “The only survivors,” he says, “are the ones whose managers are able to move on.” Mr Murphy says he has “an open mind about the future”—not the sort of strategic planning that traditional boards like to hear.

Most online successes began, as the myth requires, with a couple of geeks in a garage and were then taken over, sooner or later, by professional managers. Geeks are not generally good at moving on from the ideas they give birth to.

I somehow feel these guys are jumping the gun. I still believe the current web technologies have matured enough for us to be thinking of the next generation.

What might drive the next round of e-commerce business models? Mr Brynjolfsson says that two new technologies are already throwing up opportunities: mobile access to the internet and RFID tags, which enable the non-stop monitoring of the whereabouts of goods. Wharton's Mr Amit says that the old-fashioned offline world was one where producers said to customers: “I've made this; buy it from me at this price.” In the online world, customers are saying, “I want this; sell it to me at this price.” That is why these internet birthdays really are worth celebrating.

Thursday, July 28, 2005

Do Used book sales affect New Book Sales ?

This NYTimes article quotes research in this area showing that the cross elasticity of demand between new and old book sales is not significant.

Consider a recent paper, "Internet Exchanges for Used Books," by Anindya Ghose of New York University and Michael D. Smith and Rahul Telang of Carnegie-Mellon. (The text of the paper is available at

The starting point for their analysis is the double-edged impact of a used book market on the market for new books. When used books are substituted for new ones, the seller faces competition from the secondhand market, reducing the price it can set for new books. But there's another effect: the presence of a market for used books makes consumers more willing to buy new books, because they can easily dispose of them later.

A car salesman will often highlight the resale value of a new car, yet booksellers rarely mention the resale value of a new book. Nevertheless, the value can be quite significant.

This is particularly true in textbook markets, where many books cost well over $100. Judith Chevalier of the Yale School of Management and Austan Goolsbee at the Chicago Business School recently examined this market and found that college bookstores typically buy used books at 50 percent of cover price and resell them at 75 percent of cover price. Hence the price to "rent" a book for a semester is about $50 for a $100 book.

Ms. Chevalier and Mr. Goolsbee found that students were well aware of industry practices and took resale value into account when they bought books. (The study, "Are Durable Goods Consumers Forward Looking? Evidence from College Textbooks," is available at Mr. Goolsbee's Web site,

Back to Amazon. Professors Ghose, Smith and Telang chose a random sample of books in print and studied how often used copies were available on Amazon. In their sample, they found, on average, more than 22 competitive offers to sell used books, with a striking 241 competitive offers for used best sellers. The prices of the secondhand books were substantially cheaper than the new, but of course the quality of the used books (in terms of wear and tear) varied considerably.

According to the researchers' calculations, Amazon earns, on average, $5.29 for a new book and about $2.94 on a used book. If each used sale displaced one new sale, this would be a less profitable proposition for Amazon.

But Mr. Bezos is not foolish. Used books, the economists found, are not strong substitutes for new books. An increase of 10 percent in new book prices would raise used sales by less than 1 percent. In economics jargon, the cross-price elasticity of demand is small.

Tuesday, July 26, 2005

The China Syndrome

If the number of articles in leading newspapers covering a particular topic is any indication of how serious a country is about an issue, America's hidden paranoia appears exposed.

Three NYTimes articles sum it up all.

Who's Afraid of China Inc.?

This article worries China could be the Walmart in World Business, but with an army !!

In China, there are also two camps - the security hawks and the economic modernists, according to China analysts. The modernists see China joining the United States as the second great economic power of the 21st century, and the two nations sharing the gains from increased trade ties and global growth. The hawks regard that view as naïve, and fret that American policy is to remain the world's only superpower and to curb China's rise. So China's response, the hawks say, is to try to erode United States hegemony and reduce America's power to hold China down.

Senator Byron Dorgan, a North Dakota Democrat, has drafted three pieces of anti-Cnooc legislation that range from calling for a six-month Congressional inquiry into the bid to a bill that would prohibit the deal. Mr. Dorgan objects to the Chinese move on fair-trade grounds. The Chinese government, he says, would not allow an American company to buy a Chinese oil company. "So why on earth should they be able to buy an American oil company?" Mr. Dorgan said.

Perhaps, but many economists and trade specialists contend that the American angst over the Cnooc bid says more about the United States than it does about China or Cnooc's tactics. "All this really points to the anxieties about globalization in our own society," said Clyde V. Prestowitz, a trade official in the Reagan administration and president of the Economic Strategy Institute in Washington. "We are so economically interdependent with China now and we chose that path."

"We handed China the money they are using to try to buy Unocal," said Mr. Prestowitz, author of a new book on the shift of wealth and power to Asia, "Three Billion New Capitalists" (Basic Books, 2005). "And now we're telling the Chinese, please keep investing in our bonds but you can't invest what amounts to a sliver of their surplus in an oil company. That's really confused and hypocritical on our part."

There's a New China Syndrome on Wall Street

This is getting interesting !Three big IBanks pitted against each other in the CNOOC bid.

Lehman Brothers (Chevron)
The most likely winner.And who knows? If Chevron wins, Lehman's defense of it could prove to be the best way to win favor in China. After all, the Chinese may just say, "If you can't beat 'em, join 'em."

Morgan Stanley (Unocal)
Morgan Stanley, which is also trying to create a franchise in China, is representing Unocal. Relying in part on Morgan Stanley's advice, Unocal's board has rejected Cnooc's bid - which is actually higher than Chrevron's offer - as too low, considering the political risks.

Goldman Sachs (CNOOC)
Goldman's decision to pursue working for Cnooc was a calculated one. It knew full well that Cnooc had a long shot of winning. As adviser to the losing side in the takeover fight, Goldman would make virtually no money for its months of strategizing and number-crunching all-nighters. But for Goldman, it may have looked like a no-lose situation. If Cnooc won, it would be a watershed deal that would reap millions of dollars in fees for Goldman. But being on the losing side would offer rewards, too. The experience itself has already helped Goldman build deep relationships inside the Chinese government that may give it a leg up in the coming years.

But the baseline : While China's executives and, more important, its government officials, must realize that bankers are mercenaries, it's also true that loyalty and long-term relationships matter.

In Takeover Dance, the Chinese Miss a Step

These stumbles might temporarily ease the political backlash in Washington over the perceived onslaught by China as it seeks to build global corporations. But that relief could be short-lived.

"This won't slow things down at all," said Jerry J. Kong, a lawyer at Grandall Legal Group, which is based in Beijing. "On the contrary, I think Chinese companies will be more aggressive."

Now the question is how far Cnooc will go to try to regain the initiative. So far, it has not indicated its next move, but the company still has some time and leeway to raise its offer. Both bidders are racing against an Aug. 10 deadline, when Unocal's shareholders will be asked to approve or reject Chevron's offer.

While the Unocal and Maytag contests may prove to be setbacks for two of China's star companies that are seeking to become global corporations, they and others are expected to return to the fray.

As Mr. Kong, the lawyer at Grandall, put it: "This will help these companies mature."

Chain Email

How do people believe in such stupid e-mail chains ? Why on earth would Bill Gates share his wealth to people who forward an email ? And why do software engineers of all people believe in this crap and forward this email ?

Dear Friends,
Please do not take this for a junk letter. Bill Gates is sharing his fortune. If you ignore this you will repent later. Microsoft and AOL are now the largest Internet companies and in an effort to make sure that Internet Explorer remains the most widely used program, Microsoft and AOL are running an e-mail beta test.

When you forward this e-mail to friends, Microsoft can and will track it (if you are a Microsoft Windows user) for a two week time period.

For every person that you forward this e-mail to, Microsoft will pay you $245.00, for every person that you sent it to that forwards it on, Microsoft will pay you $243.00 and for every third person that receives it, you will be paid $241.00. Within two week! s, Microsoft will contact you for your address and then send you a cheque.

Charles S. Bailey
General Manager Field Operations
1-800-842-2332 Ext. 1085 or 904-245-1085 or RNX 292-1085

Saturday, July 23, 2005

Coimbatore KrishnaRao Prahalad

A must read on the man behind the writings that changed western business thinking.

One of nine children of a well-known Madras judge and Sanskrit scholar who wrote and edited 40 books, Prahalad (that's his first name, actually; C.K. stands for Coimbatore Krishnarao, the names of his town and of his father, respectively) was born to study. But early in his career, he managed people. A brilliant student of physics, he was recruited by the manager of the local Union Carbide battery plant. He promised his father he'd try it for a year, then return to school to get his PhD.