July 28, 2008
I commented last week on how many businesses are turning to innovative telephony services such as conferencing to avoid the high costs associated with employee travel. Today while reading about Netflix’s second-quarter net income, which climbed 3.8%, I thought to myself “How did they do it?”
In the middle of googling for other reports about Netflix it hit me – technology is saving their business!
As the price of gas continues to rise, so do the cost of going to the movies. As a result, more consumers are staying at home to watch movies & many of them are renting those movies through Netflix. Unfortunately for Netflix, higher fuel prices are also driving up the costs to deliver movies to the consumer’s mailbox. Netflix’s margin is already pretty thin & those margins can be completely eaten up if you have a consumer base that is exchanging movies almost as fast as they get them. Netflix’s subscritpion model allows their users to exchange as many movies as he/she wants per month & their subscription fee stays the same. This model works very well for the consumer & until recently worked for Netflix too.
Rather than drastically changer their model & risk loosing existing subscribers, Netflix responded with an innovative solution using technology to their advantage. This new solution actually provides more to the consumer & cleverly works in Netflix’s advantage too!
First Netflix began offering a “Watch Instantly” option from their website. Users were allowed a certain amount of hours per month to watch streaming movies to their PC for free. Netflix realized very quickly that this feature resulted in the shipment of less movies to their consumers because they were watching more movies on-line. The costs for Netflix to offer live streaming videos versus mailing movies was significantly less & they quickly removed any maximum on the amount of viewing hours they offered to their users in hopes that the number of shipments required would continue to drop while usership would continue to rise.
Netflix also just announced a deal with Microsoft to stream movies directly to a user’s Xbox 360 game console. It obvious that Netflix is looking to offer their consumers as many options as possible to view movies as long as it doesn’t involve shipping that movie to the consumer. Again, the rationale being that as more users view their movies on-line, the less likely they are to order their movies through the mail & the net result is higher margins & ultimately more profits for Netflix.
Each day I imagine more things that companies can do with technologies to save their company time, money, & resources. One of my greatest pleasures at work is seeing so many companies actively taking advantages of the technologies that we & Jaduka have developed to save money & improve their business processes with communications.
July 24, 2008
A recent Cardbeat report from Auriemma Consulting Group reported that “contactless credit cards that allow cardholders to wave-&-pay at checkout terminals fitted with contactless technology sensors is not yet the smash-hit that industry leaders had expected.” The report also suggested that “consumers have indicated that contactless technology is not an easy sell. In light of the credit crunch, and increasing insecurity about the risk of identity theft, consumers need additional encouragement to acquire a new card – even if it features a compelling new technology.”
Other highlights from the report included that only 3% of the population is familiar with contactless technology & that 23% of consumers interviewed would not use contactless cards due to concerns with identity theft.
Like any new technology that is introduced, education about that technology is needed. Granted we do live in a digital age & IT gadgets are popping up everywhere; however, you can’t expect consumers to gravitate to your product if they don’t understand how to use it & more importantly if they are scared to use it.
Contactless payments offer a significant convenience factor for the consumer. Not only are they able to process their payments quicker, they are also able to reduce the amount of “stuff” that they have to carry with them on a daily basis. As this contactless payment solution finds its way to mobile phones — trust me, it’s coming — such a product will be even more attractive to the consumer.
I was in a big box office supply store a couple of weeks ago when I spotted a contactless payment setup at the check-out counter. I asked the clerk behind the counter how often customers use the contactless payment service. She said that in the 6-months that she worked at the store she has only had 2 to 3 customers use it & every time it’s been used something went wrong & she ended up manually typing in credit card information.
I know a bit about the solution that was deployed in this store & I doubt that the system wasn’t working. I believe it was the clerk (the retailer) that didn’t know what she was doing that was causing the problem. This example makes matters even worse. The consumer obviously had the education about the product & decided to adopt that product, but when clerks at stores for example don’t know anything about the product or how to support your product it does the consumer no good to use it. So not only is consumer education important, but education to those that are providing & servicing new products need to be educated.
Regardless of how great your product is & even if it does provide a solution to a problem, do *not* expect overnight success unless your market & the market distributing your product is well educated on the product you are offering.
July 23, 2008
Let’s face it, the costs associated with travel are only going to continue to rise & as a result company travel budgets will be strained. Whether we are talking air travel or simply getting in a car to commute for an across town meeting, rising fuel costs are affecting all modes of travel. At NetworkIP & Jaduka we have over 300 miles separating our three offices located in Texas (Austin, Dallas, & Longview). We are part of a growing number of companies that are reducing the number of face-to-face meetings that we have with our teams in order to save money.
Telecom technologies such as voice, web, & video conferencing that have been around now for many years are really beginning to experience an upswing in their usage. We have always taken advantage of our own audio & web conferencing services & today that statement is truer than ever. Given that we can host up to 50 participants on a single conference call & because everyone at the company has access to the conferencing product we host conference calls all day long for any number of reasons. After adding document sharing capabilities to our web conferencing solution a few years back it really did become hard to justify traveling between offices for presentations.
In just the past few months, we’ve seen significant increases in the volume of conferencing minutes hosted through our solution. While a good portion of this increase in conferencing minutes is a result of the new applications & services from 3rd party developers that are using Jaduka’s conferencing API (announced at the Web 2.0 Expo in April of this year), our NetworkIP customers who are rebranding & selling our conferencing solution have seen a significant increase in usage too.
In addition to saving companies money & still allowing employees to effectively communicate these innovative telecommunications products are also creating a greener environment for the world. I read an article in the New York Times this morning that said Cisco alone is avoiding $100 million in yearly travel costs & reducing its green house gas emissions by 10% by making use of these types of products. Imagine that, companies can save money by using these telecom products & at the same time they are supporting a greener environment. It’s a win-win solution.
July 22, 2008
Tomorrow AT&T will release its second-quarter earnings. It is projected that AT&T will fall short of their projections for this past quarter & many suspect that AT&T will lower expectations for 2008 as a whole.
AT&T, along with other major phone companies, has seen a significant decrease in landline services in Q2 of 2008. The Wall Street Journal reported yesterday that the phone companies used to be largely insulated from economic downturns because most consumers considered their home service a necessity. However, now that over 80% of Americans own cell phones, the home telephone isn’t the necessity that it used to be.
It is my opinion that many Americans realized long ago that the home phone wasn’t a necessity, however, we choose to avoid the hassle of calling up the phone company & turning off our service & then having to inform all of our family & friends that we now only use our mobile phone. Now that the price of gas is $4 plus dollars we are willing to accept these hassles & actually disconnect our home phone services.
The disconnecting of home phone services also points to a number of other realities. First, the wireless networks have improved such that we aren’t worried so much about poor quality during our phone calls. Two, the cost of mobile phone services has decreased significantly & the notion of domestic long distance no longer exists. Three, the mobile phone has become such an integral part of our daily lives that we always have it with us & it is no longer something that we only use when we are away from home.
As we see a decrease in home phone services I suspect we’ll see an increase in business for prepaid calling card providers. Regardless of how much better those mobile phone calling plans have gotten, it is still quite difficult to find a good international long distance rate for mobile phone calling plans. Prepaid calling cards offer a great alternative for consumers that are looking for a low cost & good quality international long distance plan. With many prepaid long distance services offering PINless* dialing features & auto-recharge options it has become more convenient for users to gravitate to this type of service. These services have become practically invisible to the consumers using them.
I suspect that over the next 5 years we will continue to see the number of home phones diminish. Not only will more Americans cancel their existing services, but younger generations won’t even bother having them installed. Mobile services will continue to expand & until mobile international calling plans improve the prepaid long distance businesses will prosper.
* PINless dialing is a convenient feature that allows you to register your phone number(s) at the time of purchase so that you can place long distance calls without having to dial a PIN.
July 18, 2008
My summer conference schedule so far includes the Prepaid Press Expo in Las Vegas in August & Mobilize in September in San Francisco.
NetworkIP is a regular at the Prepaid Press Expo. We’ve supported this event for many years now & it’s a great opportunity for us to get out & share with our clients what we are up to, what trends we see occurring in the prepaid industry, & what we plan to do to ensure our clients can take advantage of those new trends.
This will be our first year attending Mobilize, in fact I believe this will be the first year this show is held. We have the highest respects for the folks at GigaOm & believe they have pulled some of the brightest people together for this conference. We’ve been following the mobile space & working more closely with partners in this space this year. This event is sure to shed some light on where things are heading, or at least where we think this space is heading. With more mobile devices becoming open & network speeds increasing this is an exciting space for us to be involved in.
About the Prepaid Press Expo:
The prepaid industry has grown in three distinct branches – calling cards, wireless, and gift cards/alternative payments. These three diverse sectors converge at the retail level, but are still approached as different industries. No trade event today features the convergence…until now!
Mobilize is a conference developed by award-winning technology writer Om Malik to inform the entrepreneurial community about the opportunities present in the next phase of the mobile web. Working with Om on the program is GigaOM‘s resident technologist Surj Patel.
Industry-leading speakers will share their unique perspectives with Mobilize participants to guide them through the emerging opportunities in the next phase of the mobile web. We will feature the best technologies, the best thought leaders and the most innovative and inspiring startups.
July 18, 2008
As a leader in the prepaid industry we realized the value of our clients building successful brands long ago. We take every opportunity to advise clients on what to do (brand-builders) & more importantly what not to do (brand-killers) in order to build a strong & successful brand for their product. We even went so far to develop a 3-part Branding Toolkit that provides our clients the tools & techniques to manage, measure profit, & protect their prepaid brand.
You can download NetworkIP’s 3-part Branding Toolkit from our website.
At NetworkIP we make it a point to continue building our knowledge base & sharing with our clients what we have learned & what others are saying about brand building. Just yesterday we caught a post from Om Malik describing the frustration he has with advertising being every where. Om initially opened with Delta’s plan for printing advertisements on their boarding passes & then he lead to talking about how IDT is going to begin inserting advertising messages on their prepaid calling cards. IDT, using VoodooVox as a technology provider, will play an advertisement to consumers based on the consumer’s demographic profile (where they are calling from or to) when making phone calls. While there may be additional dollars for IDT to gain from advertisers; will this strategy hurt their brand & ultimately generate in fewer prepaid calling card sales?
Before you rush to do the same as IDT is doing, consider for a moment what this will do to your brand’s image. How will your customers react to having advertisements played to them when making phone calls? Will you be able to offer your customers better rates because of the additional revenue made from the advertisements? Will the advertisements themselves offer value to your consumers or simply be a nuisance that they will not put up with?
We advise making sure you can answer these questions before doing anything to risk your brand. Brand awareness creates demand for your product & your brand can be your company’s most valuable asset!
July 16, 2008
We are happy to see people talking about the value of APIs & specifically the value of voice APIs. Dameon Welch-Abernathy asked the question, “Is there money in voice APIs?” in a post yesterday on GigaOm. Daemon’s question resulted with mixed comments from the community & also got some real thought leaders like Thomas Howe, Ken Camp, & Doug Mohney giving their take on the topic.
Our answer to the question is absolutely yes, but only if you have an API this is versatile enough for almost any market & you have a scalable infrastructure that supports the growth of the solutions developed using your API.
When NetworkIP decided to form Jaduka the goal was to unleash the power & performance developed in 10 years of engineering a scalable & reliable telecommunications & transaction processing platform. The metrics don’t lie; we do process 450 million minutes each month on average with calls originating & terminating from all corners of the globe. Today we are processing 200 million database queries across a proven & award winning database solution. Our volume of transactions are only increasing too! We don’t hide what we have under the hood. On the contrary, we want to make this already proven solution available for the development community & businesses to take advantage of.
As Jaduka began developing APIs for the development community & businesses they didn’t limit those APIs to voice only. We have an entire suite of APIs to include account management, payment, transaction processing, point of sale, conferencing, & SMS to name a few. Whether you are looking to develop solutions for the web, retail, or mobile space Jaduka provides the API & NetworkIP provides the proven infrastructure to support your business case.
The products that Jaduka showcases in its Labs are only a small example of the products & solutions that companies can develop with Jaduka’s many APIs. We have some exciting news to come about what others have been developing with our transaction processing engine & we are actively involved in developing relationships to support the activity that is taking place in the mobile space.
As Ken Camp stated, “the community is overlooking the basics: Value, Sustainability, Scalability, & Proven Success.” Jaduka, combined with NetworkIP, has all four basic qualities & a whole lot more! Come take part in discovering more about what is under our hood & the value with not just one, but our many APIs.