iPad with keyboard docking station

Buying a Kindle DX ten months ago and now an iPad (delivered in the first batch on April 3rd), it really struck me recently how messy (or exciting!) everything is getting.  Mash-ups of business models are happening everywhere, and at an accelerating pace.  Here are a dozen big trends that I’m watching for this year, some relevant to Bazaarvoice and others not so much:

  1. After Amazon.com launched the Kindle, it quickly became their number-one seller.  The free wifi to download a book from anywhere was just too compelling to pass up, along with the very easy to read screen.  Amazon projected that it would increase compulsive buying of books to the point where the wifi was subsidized by Amazon.com.  And it is working (for now).
  2. And while we’re talking about compulsive buying, consider Amazon.com Prime for “consolidated” buying vs. other retailers.  Other retailers have tried to emulate Prime and failed to do so.  It is difficult to do – you have to be very quick to ship (i.e., many distribution centers), with the availability (i.e., tons of inventory), to really trigger the compulsive buying effect.  There are profound implications on the long-tail as Amazon.com expands.  And, in their most recent quarterly report, Amazon’s same-store U.S. sales were up a staggering 75%.  It seems that both the Kindle and Prime are triggering the compulsive buying effect, coupled with Amazon’s long-tail inventory.  Many retailers same-store sales are flat to down as we come out of the Great Recession, and Amazon.com’s stellar performance has to be noticed by them.  Our Chief Marketing Officer, Sam, blogged about this in November of 2008 and it is even more true today.
  3. Enter the iPad.  The week Apple launched the iPad it sold 450,000 units with 600,000 books (via iBooks) shortly after.  Now that I have had the iPad for awhile, I don’t just think of it as competitive with the Kindle or other eReaders or “tablets” – it is also competitive with netbooks (another mash-up), as Steve Jobs eagerly stressed.  Just project out a few years when the iPad has 256gb capacity, instead of the 64gb my model has today, combined with the new iPhone 4.0 OS (coming out at the end of this year) that enables multitasking, a micro-USB port or two, and wireless streaming everywhere allowing for seamless connectivity no matter where you are.  The iPad already has a keyboard docking station, which I also bought, and, of course, bluetooth for connecting to wireless keyboards.  And new TVs and DVDs are coming out with built-in home network and wireless capabilities, allowing you to stream TV to laptops, netbooks, desktops, iPads, iPhones, or whatever you choose to use around the house (or while you are on the road if you have a Slingbox or something similar).  The bottom line is that the genius author, Kevin Kelly, got it right in this Wired magazine article (comparing tablets to a portable window into the world).
  4. Will the iPad hurt Kindle sales?  Many Wall Street analysts and journalists think so.  My personal take?  Well, I was skeptical about whether or not I would enjoy reading books on it as much as I do the Kindle.  Initially we were just buying the iPad as a family device for watching movies, playing games, and keeping up with blogs, Facebook, and Twitter.  But now with the Kindle app loaded on my iPad, adjusted to a sepia “paper” color and 60% brightness, I can read for hours just fine.  But to really see how the iPad transforms books, just check out the book it comes pre-loaded with (a Winnie the Pooh children’s book, which is, of course, in beautiful color).  No color on the Kindle.  Every try to read a no-color book to a child?  And then check out the app, The Elements, which has gorgeous color, 3D illustrations, and full-on video.  Or look at what Wired magazine may be planning to do with tablets.  I was watching Alice in Wonderland with our daughter recently, and Alice said (shortly before falling down the rabbit hole), “What is the use of a book, without pictures or conversations?”.  Just look back in history at the adoption rates once color television came out vs. black-and-white television.  It is just a matter of time before our children are carrying interactive tablets in their backpacks instead of heavy textbooks.  Yes, I think it is going to impact Kindle sales.
  5. Ok, let’s talk about mobile.  Google’s Android (open platform) continues to gain traction vs. Apple’s iPhone OS (closed platform).  It wasn’t surprising to me when Eric Schmidt resigned from Apple’s Board of Directors.  I moderated a panel of amazing venture capitalists at NRF and Shop.org’s Innovate conference back in March, where my good friend Peter Fenton of Benchmark Capital predicted that Android would overtake the iPhone OS over time.  Of course, Android will power tablets too.  We’ve seen this movie before as Apple stayed closed vs. the PC world being open.  Will the movie be the same this time?
  6. Mobile is now at a tipping point, with GPS built in, good camera phones, and great web browsers (e.g., Safari and Chrome).  We’ll see a lot of mash-ups in this area as mobile is increasingly used by consumers while in stores, which will one-up the mobile use we’ve seen in social commerce so far.  Interestingly, the VCs on my NRF and Shop.org panel in March thought it would take several years, so our prediction about “the year of mobile” in 2009 may have been a bit early, although I would argue that the iPhone’s rapid adoption that year did change the game.  And it certainly hasn’t slowed down Mary Meeker at Morgan Stanley to produce the most comprehensive report (at 424 pages) I’ve ever seen on the state of the mobile industry, nor did it prevent NRF and Shop.org from having a Mobile Boot Camp at the March conference.
  7. How about blogging?  My guess is that blog-post length has decreased (this post aside!) as Facebook has increased to a longer status format and people have become more and more used to Twitter’s 140-character length updates.  Perhaps blog views have also decreased.  This leads to more “lightweight”, or surface-level, conversations than the deeper-thinking conversations on blogs.  But we’ll survive just fine.  I simply don’t buy Nick Carr’s arguments but I’ll debate that later if you wish.
  8. Although this would be the obvious place to discuss this trend, I’ll purposely stay away from Facebook Like vs. Google Buzz vs. Google AdSense as my co-founder and our Chief Innovation Officer, Brant, is addressing that in a future post.  But needless to say, social is permeating the Web and that trend is accelerating, so we will continue to innovate quickly in this area.
  9. Let’s talk about transparency.  At the Liberty Interactive NetLeaders Forum in 2008, I remember Rich Barton, founder of Expedia and Zillow, presenting, “everything that can be reviewed will be reviewed [on the Web]”.  He showed us examples of CEOs being reviewed on Glassdoor.com.  My opinion?  This will lead to a company culture revolution, which is part of the reason I feel so compelled to write my forthcoming book, How to Make Your Company Suck Less.  And Chris Fralic of First Round Capital as well as Kamal Kirpalani of Bazaarvoice recently asked me to review them on UnvarnishedI wrote about transparency awhile back, based on a leadership talk I gave at The Wharton School.  In short, I think this is a very profound trend that will not only cause a renaissance in commerce but also in politics, government, and all types of human activities and relationships.
  10. At Bazaarvoice, we’re leading a revolution of marketing and merchandising with social commerce and user-generated content – or (my preference) digital word of mouth.  Digital word of mouth is quickly becoming the central point of insight for marketers and merchants.  We are writing the marketing and merchandising textbook of the future in our work with our clients (read my previous thoughts on this, from when we reached out 100-billion-impression milestone in February).  Digital word of mouth is getting mashed-up versus the aging focus group, NetPromoter, customer survey, and other methods that get “close” but aren’t nearly as pure as how customers speak to each other with no bias vs. how they communicate while in the context of talking to the company.  Things for you to consider here: a) the market has always been based on conversations (read this chapter that was the namesake of our company), b) reviews are the new advertising as we are already beginning to commonly see, c) consumers write reviews to help each other (i.e., altruism, or with no bias), and d) this trend is why Google and Nielsen partnered with us.
  11. Channel marketing is becoming more wired.  We see a major trend in this area with the adoption of our BrandVoice and BrandAnswers solutions.  We are at the beginning of this shift, and it is logical to think that, just as offline to advertising shift has fueled online advertising, we will see a similar accelerating trend as suppliers of retailers become more savvy at online channel marketing in a world where 80% of consumers read reviews while they are shopping (Nielsen’s most recent stat).  And, of course, mobile is a major accelerant of this trend.
  12. Finally, the digital executive will continue to rise in prominence as companies work hard to make sense of the rapid shift to a more digital, hyper-connected world.  For some early indicators of this, look at Raul Vazquez’s promotion from CEO of Walmart.com to EVP and President of Walmart West.  Or Toby Lenk’s, the founder of the original eToys, rise to President of Direct at Gap.  (I should mention that both are among the best speakers we have ever had at Shop.org events, where I proudly serve on the Board of Directors.)  These are very exciting times for those who really “get it” in digital.

For the long-term potential of the Web, I recommend you check out Kevin Kelly’s speech at TED in Dec 2007 or his similarly brilliant article in Wired magazine.  And if you have time to get really far out in thinking about technology’s impact on the world, just read chapter 1 (trust me, it’s enough) of Ray Kurzweil’s The Singularity Is Near: When Humans Transcend Biology (thanks to my good friend, Ethan Holland at American Eagle, for suggesting it to me).

10 Responses to “A dozen big trends and business model mash-ups”

  1. Brett Hurt

    Great post, Kevin. Good point on multichannel retailers using their stores for frequently bought item pick-up to combat Prime. As long as they have it shipped in the same amount of time (two days, and for free), it could work. However, they don’t have as much long-tail choice as Amazon, which I think makes Prime more appealing. But there is an 80/20 rule here – where 20% of the merchandise is bought 80% of the time. But Prime may work best because it is so long-tail – it would be interesting to see data on that.

  2. Brett Hurt

    Great post, Kevin. Good point on multichannel retailers using their stores for frequently bought item pick-up to combat Prime. As long as they have it shipped in the same amount of time (two days, and for free), it could work. However, they don’t have as much long-tail choice as Amazon, which I think makes Prime more appealing. But there is an 80/20 rule here – where 20% of the merchandise is bought 80% of the time. But Prime may work best because it is so long-tail – it would be interesting to see data on that.

  3. Brett Hurt

    Great post, Kevin. Good point on multichannel retailers using their stores for frequently bought item pick-up to combat Prime. As long as they have it shipped in the same amount of time (two days, and for free), it could work. However, they don’t have as much long-tail choice as Amazon, which I think makes Prime more appealing. But there is an 80/20 rule here – where 20% of the merchandise is bought 80% of the time. But Prime may work best because it is so long-tail – it would be interesting to see data on that.

  4. Great post, Brett. Your observations about Amazon Prime are spot on. It’s incredibly convenient, and it really takes advantage of people’s aversion to paying for shipping. I think multichannel retailers have opportunities to combat Amazon Prime by making more use of their stores as local shipping hubs. While they might not stock as much inventory as Amazon, they do stock the most frequently purchased items and can solve a lot of customer needs pretty quick. Today, all too often the store operation is completely separate from the online operation and that separation causes disconnects that limit retailers’ ability to respond quickly to changes in the marketplace. I’m sure some will start to change soon, but not before Amazon takes significant market share.

    I wrote some other thoughts about the Future of Retail on a post a few months ago. It’s at http://www.retailshakennotstirred.com/retail-shaken-not-stirred/2009/08/predicting-the-future-of-retail.html.

  5. Great post, Brett. Your observations about Amazon Prime are spot on. It’s incredibly convenient, and it really takes advantage of people’s aversion to paying for shipping. I think multichannel retailers have opportunities to combat Amazon Prime by making more use of their stores as local shipping hubs. While they might not stock as much inventory as Amazon, they do stock the most frequently purchased items and can solve a lot of customer needs pretty quick. Today, all too often the store operation is completely separate from the online operation and that separation causes disconnects that limit retailers’ ability to respond quickly to changes in the marketplace. I’m sure some will start to change soon, but not before Amazon takes significant market share.

    I wrote some other thoughts about the Future of Retail on a post a few months ago. It’s at http://www.retailshakennotstirred.com/retail-shaken-not-stirred/2009/08/predicting-the-future-of-retail.html.

  6. Great post, Brett. Your observations about Amazon Prime are spot on. It’s incredibly convenient, and it really takes advantage of people’s aversion to paying for shipping. I think multichannel retailers have opportunities to combat Amazon Prime by making more use of their stores as local shipping hubs. While they might not stock as much inventory as Amazon, they do stock the most frequently purchased items and can solve a lot of customer needs pretty quick. Today, all too often the store operation is completely separate from the online operation and that separation causes disconnects that limit retailers’ ability to respond quickly to changes in the marketplace. I’m sure some will start to change soon, but not before Amazon takes significant market share.

    I wrote some other thoughts about the Future of Retail on a post a few months ago. It’s at http://www.retailshakennotstirred.com/retail-shaken-not-stirred/2009/08/predicting-the-future-of-retail.html.

  7. Brett Hurt

    Jason, I think that is already happening. There is an outstanding amount of creativity being expressed in online businesses, worldwide. I think that we’ll have the same garage start-ups in areas like nanotech, biotech, and clean energy once the technologies become more commercialized. This is where the U.S. government can help by subsizing them to the point where the cost falls to a point of commercial viability. That is happening right now in the auto industry, with companies like Tesla receiving major funding from our government. Hopefully other very exciting industries will also get the push they need (I’m an optimist and think they will).

  8. Brett Hurt

    Jason, I think that is already happening. There is an outstanding amount of creativity being expressed in online businesses, worldwide. I think that we’ll have the same garage start-ups in areas like nanotech, biotech, and clean energy once the technologies become more commercialized. This is where the U.S. government can help by subsizing them to the point where the cost falls to a point of commercial viability. That is happening right now in the auto industry, with companies like Tesla receiving major funding from our government. Hopefully other very exciting industries will also get the push they need (I’m an optimist and think they will).

  9. Brett Hurt

    Jason, I think that is already happening. There is an outstanding amount of creativity being expressed in online businesses, worldwide. I think that we’ll have the same garage start-ups in areas like nanotech, biotech, and clean energy once the technologies become more commercialized. This is where the U.S. government can help by subsizing them to the point where the cost falls to a point of commercial viability. That is happening right now in the auto industry, with companies like Tesla receiving major funding from our government. Hopefully other very exciting industries will also get the push they need (I’m an optimist and think they will).

  10. I like these observations and feel particularly enthusiastic about this digital age. As better bandwidth and form factor technologies allow us to cater more and more to the mind, the body, and the way we naturally express ourselves, I see a world where collective and collaborative innovation exponentially increases to the point at which the true inventors can get back in the ‘garage’ rather than some well-funded lab with a significant barrier to entry.

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