Abhinav Agarwal

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Privacy - InMobi Pays $1M In Penalties

Thu, 2016-07-07 08:40
image credit: WDnet Agency, pexels.com
In 2015 I had written a series of articles on the e-commerce battle between Flipkart and Amazon, one of which focused on why companies are so obsessed with apps Mobile Apps: There’s Something (Profitable) About Your Privacy.
Now it turns out that InMobi has agreed to pay a US$950,000 in civil penalties to "settle charges it violated federal law." InMobi is described by the US Federal Trade Commission complaint thus: "describes itself as the “world’s largest independent mobile advertising company.” In February 2015, Defendant reported its advertising network had reached over one billion unique mobile devices, with 19% of those devices located in North America, and had served 6 billion ad requests per day."
According to the FTC complaint [bold emphasis mine], "Even if the consumer had restricted an application’s access to the location API, until December 2015, Defendant still tracked the consumer’s location and, in many instances, served geo-targeted ads, by collecting information about the WiFi networks that the consumer’s device connected to or that were in-range of the consumer’s device. "


Worse, since the InMobi SDK was used by third-party app developers to integrate within their apps and serve targeted ads to children, the FTC charged that InMobi had also violated the Children's Online Privacy Protection Act Rule (COPPA) of 1998.
In my 2015 article I had written about other notable privacy violations:
In 2012, before its IPO, JustDial’s app was removed from the Google Play Store. It was alleged that the updated version of the JustDial app had “started retrieving and storing the user’s entire phone book, without a warning or disclaimer.” Thereafter, JustDial’s mobile “Terms and Conditions” were updated to include the following line: “You hereby give your express consent to Justdial to access your contact list and/or address book for mobile phone numbers in order to provide and use the Service.”
In 2013, US-based social networking app Path was caught as it “secretly copied all its users’ iPhone address books to its private servers.” Action was swift. The FTC investigated and reached a settlement with Path, which required “Path, Inc. to establish a comprehensive privacy program and to obtain independent privacy assessments every other year for the next 20 years. The company also will pay $800,000 to settle charges that it illegally collected personal information from children without their parents’ consent.” In the US, a person’s address book “is protected under the First Amendment.” When the controversy erupted, it was also reported that “A person’s contacts are so sensitive that Alec Ross, a senior adviser on innovation to Secretary of State Hillary Rodham Clinton, said the State Department was supporting the development of an application that would act as a “panic button” on a smartphone, enabling people to erase all contacts with one click if they are arrested during a protest.” Of course, politics is not without its dose of de-rigueur dose of irony. That dose was delivered in 2015 when it emerged that Hillary Clinton had maintained a private email account even as she was Secretary of State in the Barack Obama presidency and refused to turn over those emails.
Privacy protection is an area that needs urgent attention from India's regulatory authorities. What the Indian telecom regulator, the Telecom Regulatory Authority of India, is doing remains a matter of speculation, unfortunately. Its flip-flops over the last one year on Net Neutrality do not inspire much confidence either.

References:
This post first appeared in LinkedIn Pulse on June 23, 2016.
Screenshot of article on LinkedIn Pulse


Rise of the Robots - Review

Thu, 2015-10-01 11:08
Rise of the Robots: Technology and the Threat of a Jobless Future
Martin Ford

Part 1 of 3

"I'm smart; you're dumb. I'm big; you're small. I'm right; you're wrong. And there's nothing you can do about it."

Thus spake Harry Wormwood in the movie "Matilda". This well could be the message that robots will have for us in the not too distant future. The dramatic improvements in the speed, the accuracy, and the areas in which computers have begun to comprehensively outperform humans leads one to believe that while a so-called singularity may well be some ways off, the more immediate effects of this automation are already being felt in permanent job losses. In a country like India, which has used digital technologies quite effectively in the last decade and a half to grow a $150 billion IT-BPM industry, the impact could be devastating - especially where an estimated 10 million people are employed.
In many spheres - chess for example - they could utter these lines to us humans today and there's nothing we can do about it - for the computer is right. The puniest of computers in the tiniest of smartphones possesses enough computing horsepower and smart-enough algorithms (written by us humans - oh yes, the irony!) to defeat the best of us humans in chess, every single time, without breaking a sweat. Computers have been able to add, subtract, divide, square, multiply faster and more accurately than us for decades now, and there's nothing we can do about that either.

From the time of the Luddites - who rose up against the machines of the Industrial Revolution in the early years of the nineteenth century - to the present-day "Judgment Day" Sarah Connor avatars, inspired as much by an acute awareness of the march of technology as by James Cameroon's "Terminator" movies, the refrain of the chorus has been more or less unchanging: the machines are coming for our jobs, our livelihoods, and will finally come for us (the Matrix was premised on a variant of one such dystopian future). Computing power of computers exploded in the second half of the twentieth century, obeying the inexorable pull of Moore's Law, and made feasible by advances in semiconductors, fabrication techniques, and electrical engineering. As did fears that similar software advances could somehow endow machines with intelligence - Artificial Intelligence. These fears however did not quite come to pass. For several decades, there were several false hopes and starts that were kindled and then extinguished. Till this decade. The congruence of seemingly infinite computing power - thanks to massive server farms running in the "cloud" (a mangled metaphor if ever there was one), cheap and lightning fast bandwidth available on tap, storage and memory that keeps getting impossibly cheaper every year, and sophisticated software algorithms - has however made it clear that "machine intelligence" is no longer an oxymoron. We are well and truly living in the middle of the machine age. The "singularity" may well be witnessed in our lifetimes, within a decade or two even.

Martin Ford's book, "The Rise of the Robots: Technology and the Threat of a Jobless Future" lays out the case for a not-so-distant future where machines make possible the automation of almost every task imaginable, but at a great social and economic cost. The book is neatly organized, lucidly argued, and except for a lengthy and somewhat incongruous chapter on the medical system, the book stays on point. Ford makes it clear that neither is this technological progress reversible, nor wholly desirable. Its consequences therefore cannot be wished away - income inequality as an example, which economists for three decades have been explaining away as a temporary anomaly. The last section, which is more contemplative and prescriptive, as opposed to the earlier sections which are descriptive, discusses possible solutions, some of which will shock free market proponents. Whether there are more practical, workable answers is quite another thing though.

Part 2 of 3

Machines have been able to do mechanical jobs faster than humans, with greater precision, and for longer periods of time - the cotton gin invented in the eighteenth century for example. The inevitable loss of jobs called for a re-skilling of the people affected, and the mantra went that you had to pull yourself up by your socks, learn a new skill, and get productive again. Martin Ford's book shatters that illusion. There is not a single profession left - whether unskilled or skilled, whether in technology or medicine or liberal arts, whether one that can be performed remotely or requires direct human interaction - that is not at threat from the machines. Whichever way you slice and dice it, you are left facing one or the other variation of a dystopian future, with stark income inequalities, a substantial population that will require doles on a permanent doles, and the concomitant social upheavals.

Some years back, when offshoring was in the news and concerns about its impact on US jobs was at its peak, with hundreds of thousands of jobs moved offshore to countries like India, there were stories coming out regularly, like the one about Southern California workers being made to train H1-B visa holders, many of whom took over their jobs. Pfizer made "hundreds of tech workers at its Connecticut R&D facilities" train their replacements - guest workers from India. If the economics of labor cost arbitrage precipitated the migration of skilled technology jobs away from the United States and to countries like India (being "Bangalored" entered the urban lexicon only a decade ago), technology could plausibly bring those jobs back to the United States - call it "reshoring". The quantum of jobs reshored, however, is going to be a massive disappointment. Consider this: "In 2011, the Washington Post’s Michael Rosenwald reported that a colossal, billion-dollar data center built by Apple, Inc., in the town of Maiden, North Carolina, had created only fifty full-time positions." But it is precisely this elimination of the need for many people that makes the economics of reshoring work out. Ironical.

While the United States can at least look forward to the reshoring of some jobs lost to manufacturing in China or services in India, the loss of such jobs is certain, on the other hand, to cause greater upheaval in these offshore countries. India's socio-economic progress is predicated in great deal on a re-skilling of its labour force to take advantage of an emerging "Digital India" both in the manufacturing and services sector, but which is in mortal danger of being blindsided by the rise of the machines. The use of IT-based services as a catalyst for driving economic growth in smaller - Tier B and Tier C - cities in India is a recurrent theme for planners. But this could be short-circuited by the rise of the robots, who, once trained - by humans - can perform the jobs of humans, better, and faster. Indians were trained by their American counterparts to do their jobs. Unbeknownst to many, these people are actors in the same offshoring saga that played out a decade ago, but with the proverbial shoe on the other foot now. "The bottom line is that if you find yourself working with, or under the direction of, a smart software system, it’s probably a pretty good bet that—whether you’re aware of it or not—you are also training the software to ultimately replace you."

India has been a spectacular laggard when it has come to industrializing its economy - it is probably unique among all developing nations to be progressing (or at least with ambitions of progressing) from a primarily agrarian economy to a services-based economy, skipping substantially the intermediate phase of industrialization that every single industrialized nation went through last century. It was industrialization that provided the bedrock for the middle-class in nations, which then aspired towards a better quality of life, with the ability to pay for it - thus driving the move towards a services-based economy. For India, it could be argued by some that this skipping may prove to be a blessing, since an industrialized economy is more susceptible to efficiencies wrought by advancements in technology. Consider these examples from Ford's book:

1. "in the United States, chickens are grown to standardized sizes so as to make them compatible with automated slaughtering and processing."

2. Momentum Machines, a San Francisco based startup has developed a machine that "shapes burgers from freshly ground meat and then grills them to order - including even the ability to add just the right amount of char while retaining all the juices. The machine, which is capable of producing about 360 hamburgers per hour, also toasts the bun and then slices and adds fresh ingredients like tomatoes, onions, and pickles only after the order is placed." The company's co-founder is clear that these machines are not "meant to make employees more efficient... It's meant to completely obviate them."

3. "Vision Robotics, a company based in San Diego, California, is developing an octopus-like orange harvesting machine. The robot will use three-dimensional machine vision to make a computer model of an entire orange tree and then store the location of each fruit. That information will then be passed on to the machine’s eight robotic arms, which will rapidly harvest the oranges."

4. "Researchers at Facebook have likewise developed an experimental system—consisting of nine levels of artificial neurons—that can correctly determine whether two photographs are of the same person 97.25 percent of the time, even if lighting conditions and orientation of the faces vary. That compares with 97.53 percent accuracy for human observers."

5. "A Facebook executive noted in November 2013 that the Cyborg system routinely solves thousands of problems that would otherwise have to be addressed manually, and that the technology allows a single technician to manage as many as 20,000 computers."

6. If reading certain news articles makes you wonder whether a robot wrote it, things are going to get better - or worse. Computer algorithms are at work to churn out articles that will be indistinguishable from those written by humans. Liberal arts became even more unviable - if ever that was possible.
"In 2010, the Northwestern University researchers who oversaw the team of computer science and journalism students who worked on StatsMonkey raised venture capital and founded a new company, Narrative Science, Inc., to commercialize the technology. The company hired a team of top computer scientists and engineers; then it tossed out the original StatsMonkey computer code and built a far more powerful and comprehensive artificial intelligence engine that it named “Quill.”
... One of Narrative Science’s earliest backers was In-Q-Tel, the venture capital arm of the Central Intelligence Agency"

"To keep instructional costs down, colleges are relying ever more heavily on part-time, or adjunct, faculty who are paid on a per-course basis—in some cases as little as $2,500 for a semester-long class—and receive no employee benefits. Especially in the liberal arts, these adjunct positions have become dead-end jobs for huge numbers of PhD graduates who once hoped for tenure-track academic careers."

7. "Radiologists, for example, are trained to interpret the images that result from various medical scans. Image processing and recognition technology is advancing rapidly and may soon be able to usurp the radiologist’s traditional role."

8. "In July 2012, the London Symphony Orchestra performed a composition entitled Transits—Into an Abyss. One reviewer called it “artistic and delightful.” The event marked the first time that an elite orchestra had played music composed entirely by a machine. The composition was created by Iamus, a cluster of computers running a musically inclined artificial intelligence algorithm."

9. "Perhaps the most remarkable elder-care innovation developed in Japan so far is the Hybrid Assistive Limb (HAL)—a powered exoskeleton suit straight out of science fiction. Developed by Professor Yoshiyuki Sankai of the University of Tsukuba, the HAL suit is the result of twenty years of research and development. Sensors in the suit are able to detect and interpret signals from the brain. When the person wearing the battery-powered suit thinks about standing up or walking, powerful motors instantly spring into action, providing mechanical assistance. A version is also available for the upper body and could assist caretakers in lifting the elderly. Wheelchair-bound seniors have been able to stand up and walk with the help of HAL."

As one goes over these examples, it becomes obvious that automation is a sword that cuts both ways. Is India equipped - and more importantly, are the planners aware - to handle the flood of automation that could wash away entire swathes of jobs being dreamed up by ambitions of a digitally-enabled nation?

Part 3 of 3

As 2014 drew to a close, the Indian IT industry was rocked by rumours that TCS (the largest Indian IT company by annual revenues) had completed an internal review and had initiated lay offs of thousands of employees - mostly in middle management. Some stories talked about a number as high as 30,000. The saga finally ended with a round of clarifications and denials by TCS and some well-deserved opprobrium over its inept handling of the needless controversy. What the fracas however served to highlight was a stark truth that's been staring at the Indian IT industry for some time now - the skills that the typical Indian IT worker possesses are mostly undifferentiated and prime candidates for automation.
What is worse, from at least one perspective, is the fact that (smart) humans have built technology that has becoming adept at "engineering the labor out of the product." One will need to be particularly myopic to not also recognize that "the machines are coming for the higher-skill jobs as well." This much should have been clear in part two of this series, through the examples I cited from Martin Ford's book.
One recurring theme in Martin Ford's book, "Rise of the Robots", at least in the initial chapters, is the permanence and acceleration of offshoring to countries like India, which he believes, "has built a major, nationally strategic industry specifically geared toward the electronic capture of American and European jobs." (As an aside, most Indians would be somewhat puzzled by this assertion, given at times the outright hostility which politicians in India display towards the IT industry, like the time when a former prime minister indirectly accused the Bangalore IT industry of "immoral, unethical and illegal prosperity"!) Anyway, leaving that aside aside, in advancing his argument Ford posits that as "powerful AI-based tools make it easier for offshore workers to compete with their higher-paid counterparts in developed countries, advancing technology is also likely to upend many of our most basic assumptions about which types of jobs are potentially offshorable. Nearly everyone believes, for example, that occupations that require physical manipulation of the environment will always be safe."

Ford believes that the development of a digital infrastructure in India and the advancement of AI and related technologies will make things worse for US (and Europe) jobs. True to some extent though that may be, you have to consider the fact that increasing automation makes it cheaper and less labor-intensive to maintain, run, and patch-and-upgrade software applications. Furthermore, any offshoring of jobs adds its own overheads by way of administrative and managerial redundancies that cannot be done away with. Automation efficiencies reduce the need for labour, which is the often the single biggest component in any software application over its entire life. Therefore, the very factors that Ford fears are threatening to make offshoring permanent and more widespread are also likely to make reshoring financially viable. It's a sword that cuts both ways.

To be fair, the digital economy in India has a lot of headroom to grow; especially as the Indian government's Smart City initiative brings e-governance and services to the common man through the Internet and technologies. This could well provide a second wind to the Indian IT industry for a decade or more.

However, it is a smart strategy to keep one eye on the what the winds of such a digital nirvana may blow in. An indicator of the direction in which the Indian IT job market is likely to evolve therefore can be found by looking at the US, where the "propensity for the economy to wipe out solid middle-skill, middle-class jobs, and then to replace them with a combination of low-wage service jobs and high-skill, professional jobs that are generally unattainable for most of the workforce, has been dubbed "job market polarization.""
This phrase - "job market polarization" should give us a fair indication of what is in store for the hundreds of thousands, even millions, of graduates in India, many of whom emerge today out of college with a stark degree of antipathy for doing the "9-5" grind that they saw their parents and its generation go through. Digital "start-up" nirvana beckons for them. Each sees himself as a digital entrepreneur of the new economy. They are ready to chuck the "dependable income stream that anchors them into the middle-class" - they view it not as an "anchor" but more a millstone. However, the vast majority is likely to find itself stuck in what "techno visionary" Jared Lanier calls the "informal economy that is found in third-world nations." It's a tiny minority that will "live at the extreme left of the long tail" of such a digital economy. For every Flipkart or SnapDeal (the final word on that fairy-tale saga is yet to be written), you will find tens of thousands of resellers at the other end of the payoff tail, paying these e-tailers money every month for the privilege of selling on their platforms, at prices that barely cover operating costs.

The Indian middle-class, for all its flaws, has represented for decades an aspirational lodestar for the vast majority of the country's poor. So what happens when the digital economy hollows out the middle of the job market - "job polarization" as described above? Again, we can look westwards for possible answers.
"In an analysis published in February 2014, MIT economist James Poterba found that a remarkable 50 percent of American households aged sixty-five to sixty-nine have retirement account balances of $5,000 or less. According to Poterba’s paper, even a household with $100,000 in retirement savings would receive a guaranteed income of only about $5,400 per year (or $450 per month) with no cost-of-living increases, if the entire balance were used to purchase a fixed annuity."
In other words, in the absence of both a retirement corpus and a government guaranteed pension, there is a real risk of an emergent middle-class sliding right back into the working poor or even the underclass - a recipe for social unrest.

An inevitable counter-argument to all this unease generated by the "rise of the robots" is the "humans are underrated" palliative. Championing this is Tom Davenport (of "Competing on Analytics" fame) who now talks of "amplified intelligence" (which unfortunately has more the stench of a seo-optimized buzzword than anything substantial at this point) - where "smart" humans work to "augment" "smart" machines. Then there is also Geoff Colvin, who penned the insightful 2008 book, "Talent Is Overrated", and who has returned with "Humans Are Overrated". I have yet to read Colvin's latest book, so judgment day is reserved on the book, but to Davenport's argument, some of the evidence suggests an easy refutation - "In his 2007 book Super Crunchers, Yale University professor Ian Ayres cites study after study showing that algorithmic approaches routinely outperform human experts. When people, rather than computers, are given overall control of the process, the results almost invariably suffer." In many fields where algorithms rule the roost, to argue for human "augmentation" or "amplification" is no better than to argue for more cooks to brew the broth - we know that aphorism, don't we?

In conclusion, and in many ways, the saga documented in "Rise of the Robots" calls to mind the ancient Indian tale of the four friends:
In ancient India there lived four friends. Three of them were very learned, while the fourth was a simpleton, even considered a fool. The four decided to go to the capital and seek their fortune from the king. Along the way, while passing through a jungle, they came across the bones of a lion long dead. The first friend used his knowledge to assemble the bones into a skeleton. The second friend used his skills to fashion a skin over the skeleton, while the third prepared to bring the lion back to life. At this the fourth friend - the simpleton - warned his other three friends of the perils of doing so, and was roundly rebuked by the three, wiser friends. The simpleton again warned them and upon being ignored, climbed a tree for safety. The third friend used his knowledge to breathe life into the lion. I don't need to tell you how this tale ended for the three wise men.

And I will end here.

Buying Info:
Hardcover: 352 pagesPublisher: Basic Books (May 5, 2015)ISBN-10: 0465059996ISBN-13: 978-0465059997

US: Rise of the Robots: Technology and the Threat of a Jobless Future
India: Rise of the Robots: Technology and the Threat of a Jobless Future

The first part was first published in PerformanceGurus on 8th August, 2015.
The second part was first published in PerformanceGurus on 13th August, 2015.
The concluding part was first published in PerformanceGurus on 15th August, 2015.

 
© 2015, Abhinav Agarwal (अभिनव अग्रवाल). All rights reserved.

Creepy Dolls - A Technology and Privacy Nightmare!

Sat, 2015-09-26 11:28
This post was first published on LinkedIn on 20th May, 2015.

"Hi, I'm Chucky. Wanna play?"[1]  Fans of the horror film genre will surely recall these lines - innocent-sounding on their own, yet bone-chilling in the context of the scene in the movie - that Chucky, the possessed demonic doll, utters in the cult classic, "Child's Play". Called a "cheerfully energetic horror film" by Roger Ebert [2], the movie was released to more than a thousand screens on its debut in November 1988 [3]. It went on to spawn at least five sequels and developed a cult following of sorts over the next two decades [4].

Chucky the doll
(image credit: http://www.shocktillyoudrop.com/)In "Child's Play", Chucky the killer doll stays quiet around the adults - at least initially - but carries on secret conversations with Andy, and is persuasive enough to convince him to skip school and travel to downtown Chicago. Chucky understands how children think, and can evidently manipulate - or convince, depending on how you frame it - Andy into doing little favours for him. A doll that could speak, hear, see, understand, and have a conversation with a human in the eighties was the stuff out of science fiction, or in the case of "Child's Play" - out of a horror movie.

Edison Talking Doll.
Image credit: www.davescooltoys.comA realistic doll that could talk and converse was for long the "holy grail" of dollmakers [5]. It will come as a huge surprise to many - at least it did to me - that within a few years of the invention of the phonograph by Thomas Edison in 1877, a doll with a pre-recorded voice had been developed and marketed in 1890! It didn't have a very happy debut however. After "several years of experimentation and development", the Edison Talking Doll, when it launched in 1890, "was a dismal failure that was only marketed for a few short weeks."[6] Talking dolls seem to have made their entry into mainstream retail only with the advent of "Chatty Cathy" - released by Mattel in the 1960s - and which worked on a simple pull-string mechanism. The quest to make these dolls more interactive and more "intelligent" continued; "Amazing Amanda" was another milestone in this development; it incorporated "voice-recognition and memory chips, sensory technology and facial animatronics" [7]. It was touted as an "an evolutionary leap from earlier talking dolls like Chatty Cathy of the 1960's" by some analysts [8]. In some ways that assessment was not off-the-mark. After all, "Amazing Amanda" utilized RFID technology - among the hottest technology buzzwords a decade back. "Radio-frequency tags in Amanda's accessories - including toy food, potty and clothing - wirelessly inform the doll of what it is interacting with." This is what enabled "Amazing Amanda" to differentiate between "food" (pizza, or "cookies, pancakes and spaghetti") and "juice"[9]. "However, even with all these developments and capabilities, the universe of what these toys could was severely limited. At most they could recognize the voice of the child as its "mommy".
Amazing Amanda doll.
Image credit:amazing-amanda.fuzzup.netThey were constrained by both the high price of storage (Flash storage is much sturdier than spinning hard drives, but an order of magnitude costlier; this limits the amount of storage possible) and limited computational capability (putting in a high-end microprocessor inside every doll would make them prohibitively expensive). The flip side was that what the toys spoke in home to the children stayed at home. These toys had a limited set of pre-programmed sentences and emotions they could convey, and if you wanted something different, you went out and bought a new toy, or in some cases, a different cartridge.

That's where things stood. Till now.

Screenshot of ToyFair websiteBetween February 14-17, 2015, the Jacob K. Javits Convention Center in New York saw "the Western Hemisphere’s largest and most important toy show"[10] - the 2015 Toy Fair. This was a trade-show, which meant that "Toy Fair is not open to the public. NO ONE under the age of 18, including infants, will be admitted."[11] It featured a "record-breaking 422,000+ net square feet of exhibit space"[12] and hundreds of thousands of toys. Yet no children were allowed. Be that as it may, there was no dearth of, let's say, "innovative" toys. Apart from an "ultra creepy mechanical doll, complete with dead eyes", a fake fish pet that taken to a "whole new level of weird", or a "Doo Doo Head" doll that had the shape of you-guessed-it [13], of particular interest was a "Hello Barbie" doll, launched by the Fortune 500 behemoth, Mattel. This doll had several USPs to its credit. It featured voice-recognition software, voice recording capabilities, the ability to upload recorded conversations to a server (presumably Mattel's or ToyTalk's) in the cloud, over "Wi-Fi" - as a representative at the exhibition took pains to emphasize, repeatedly - and give "chatty responses."[14] This voice data would be processed and analyzed by the company's servers. The doll would learn the child's interests, and be able to carry on a conversation on those topics - made possible by the fact that the entire computational and learning capabilities of a server farm in the cloud could be accessed by every such toy. That the Barbie franchise is a vital one to Mattel could not be understated. The Barbie brand netted Mattel $1.2 billion in FY 2013 [15], but this represented a six per cent year-on-year decline. Mattel attributed that this decline in Barbie sales in part to "product innovation not being strong enough to drive growth." The message was clear. Something very "innovative" was needed to jump-start sales. To make that technological leap forward, Mattel decided to team up with ToyTalk.

ToyTalk is a San Francisco-based start-up, and its platform powered the voice-recognition software used by "Hello Barbie". ToyTalk is headed by "CEO Oren Jacob, Pixar's former CTO, who worked at the groundbreaking animation company for 20 years" [16], and which claimed "$31M in funding from Greylock Partners, Charles River Ventures, Khosla Ventures, True Ventures and First Round Capital as well as a number of angel investors." [17]

Cover of Misery, by Stephen King.
Published by Viking Press.The voice recognition software would allow Mattel and ToyTalk to learn the preferences of the child, and over time refine the responses that Barbie would communicate back. As the Mattel representative put it, "She's going to get to know all my likes and all my dislikes..."[18] - a statement that at one level reminds one of Annie Wilkes when she says, "I'm your number one fan."[19] We certainly don't want to be in Paul Sheldon shoes.

Hello Barbie's learning would start happening from the time the doll was switched on and connected to a Wi-Fi network. ToyTalk CEO Oren Jacob said, "we'll see week one what kids want to talk about or not" [20]. These recordings, once uploaded to the company's servers, would be used by "ToyTalk's speech recognition platform, currently powering the company's own interactive iPad apps including The Winston Show, SpeakaLegend, and SpeakaZoo" and which then "allows writers to create branching dialogue based on what children will potentially actually say, and collects kids' replies in the cloud for the writers to study and use in an evolving environment of topics and responses."[20]. Some unknown set of people. sitting in some unknown location, would potentially get to hear and listen to entire conversations of a child before his parents would.

If Mattel or ToyTalk did not anticipate the reaction this doll would generate, one can only put it down to the blissful disconnect from the real-world that Silicon Valley entrepreneurs often develop, surrounded as they are by similar-thinking digerati. In any case, the responses were swift, and in most cases brutal. The German magazine "Stern" headlined an article on the doll - "Mattel entwickelt die Stasi-Barbie" [21] Even without the benefit of translation, the word "Stasi" stood out like a red flag. In any case, if you wondered, the headline translated to "Mattel developed the Stasi Barbie" [22]. Stern "curtly re-baptised" it "Barbie IM". "The initials stand for “Inoffizieller Mitarbeiter”, informants who worked for East Germany’s infamous secret police, the Stasi, during the Cold War." [23] [24]. A Newsweek article carried a story, "Privacy Advocates Call Talking Barbie 'Surveillance Barbie'"[25]. France 24 wrote - "Germans balk at new ‘Soviet snitch’ Barbie" [26]. The ever-acerbic The Register digged into ToyTalk's privacy policy on the company's web site, and found these gems out [27]:
Screenshot of ToyTalk's Privacy page- "When users interact with ToyTalk, we may capture photographs or audio or video recordings (the "Recordings") of such interactions, depending upon the particular application being used.
- We may use, transcribe and store such Recordings to provide and maintain the Service, to develop, test or improve speech recognition technology and artificial intelligence algorithms, and for other research and development or internal purposes."

Further reading revealed that what your child spoke to the doll in the confines of his home in, say, suburban Troy Michigan, could end up travelling half the way across the world, to be stored on a server in a foreign country - "We may store and process personal information in the United States and other countries." [28]

What information would ToyTalk share with "Third Parties" was equally disturbing, both for the amount of information that could potentially be shared as well as for the vagueness in defining who these third-parties could possibly be - "Personal information"; "in an aggregated or anonymized form that does not directly identify you or others;"; "in connection with, or during negotiations of, any merger, sale of company assets, financing or acquisition, or in any other situation where personal information may be disclosed or transferred as one of the business assets of ToyTalk"; "We may also share feature extracted data and transcripts that are created from such Recordings, but from which any personal information has been removed, with Service Providers or other third parties for their use in developing, testing and improving speech recognition technology and artificial intelligence algorithms and for research and development or other purposes."[28] A child's speech, words, conversation, voice - as recorded by the doll - was the "business asset" of the company.

And lest the reader have any concerns about safety and security of the data on the company's servers, the following disclaimer put paid to any reassurances on that front also: "no security measures are perfect or impenetrable and no method of data transmission that can be guaranteed against any interception or other type of misuse."[28] If the sound of hands being washed-off could be put down on paper, that sentence above is what it could conceivably look like.

Apart from the firestorm of criticism described above, the advocacy group "Campaign for a Commercial Free Childhood" started a campaign to petition Mattel "CEO Christopher Sinclair to stop "Hello Barbie" immediately." [29]

The brouhaha over "Hello Barbie" is however only symptomatic of several larger issues that have emerged and intersect each other in varying degrees, raising important questions about technology, including the cloud, big data, the Internet of Things, data mining, analytics; privacy in an increasingly digital world; advertising and the ethics of marketing to children; law and how it is able to or unable to cope with an increasingly digitized society; and the impact on children and teens - sociological as well as psychological. Technology and Moore's Law [30] have combined with the convenience of broadband to make possible what would have been in the realm of science fiction even two decades ago.

The Internet, while opening up untold avenues of betterment for society at large, has however also revealed itself as not without a dark side - a dilemma universally common to almost every transformative change in society. From the possibly alienating effects of excessive addiction to the Internet to physiological changes that the very nature of the hyperlinked web engenders in humans - these are issues that are only recently beginning to attract the attention of academics and researchers. The basic and most fundamental notions of what people commonly understood as "privacy" are not only being challenged in today's digital world, but in most cases without even a modicum of understanding on the part of the affected party - you. In the nebulous space that hopefully still exists between those who believe in technology as the only solution capable of delivering a digital nirvana to all and every imaginable problem in society on the one hand and the Luddites who see every bit of technology as a rabid byte (that's a bad pun) against humanity lies a saner middle ground that seeks to understand and adapt technology for the betterment of humanity, society, and the world at large.

So what happened to Chucky? Well, as we know, it spawned a successful and profitable franchise of sequels and other assorted franchise. Which direction "Hello Barbie" takes is of less interest to me as the broader questions I raised in the previous paragraph.

References:
[1] http://www.imdb.com/title/tt0094862/quotes?item=qt0289926 
[2] "Child's Play" review, http://www.rogerebert.com/reviews/childs-play-1988
[3] http://www.the-numbers.com/movie/Childs-Play#tab=box-office
[4] https://en.wikipedia.org/wiki/Child%27s_Play_%28franchise%29
[5] "A Brief History of Talking Dolls--From Bebe Phonographe to Amazing Amanda", http://collectdolls.about.com/od/dollsbymaterial/a/talkingdolls.htm
[6] "Edison Talking Doll", http://www.edisontinfoil.com/doll.htm
[7] http://www.canada.com/story.html?id=f4370a3c-903d-4728-a9a4-3d3f941055a6
[8] http://www.nytimes.com/2005/08/25/technology/circuits/25doll.html?pagewanted=all&_r=0
[9] http://www.canada.com/story.html?id=f4370a3c-903d-4728-a9a4-3d3f941055a6
[10] http://www.toyfairny.com/toyfair/Toy_Fair/Show_Info/A_Look_Back.aspx
[11] http://www.toyfairny.com/ToyFair/ShowInfo/About_the_Show/Toy_Fair/Show_Info/About_the_Show.aspx
[12] http://www.toyfairny.com/ToyFair/ShowInfo/About_the_Show/Toy_Fair/Show_Info/About_the_Show.aspx
[13] http://mashable.com/2015/02/15/weird-toys-2015-toy-fair/
[14] https://www.youtube.com/watch?feature=player_embedded&v=RJMvmVCwoNM
[15] http://corporate.mattel.com/PDFs/2013_AR_Report_Mattel%20Inc.pdf
[16] http://www.fastcompany.com/3042430/most-creative-people/using-toytalk-technology-new-hello-barbie-will-have-real-conversations-
[17] https://www.toytalk.com/about/
[18] https://www.youtube.com/watch?feature=player_embedded&v=RJMvmVCwoNM
[19] http://www.imdb.com/title/tt0100157/quotes?item=qt0269492
[20] http://www.fastcompany.com/3042430/most-creative-people/using-toytalk-technology-new-hello-barbie-will-have-real-conversations-
[21] http://www.stern.de/digital/ueberwachung/barbie-wird-zum-spion-im-kinderzimmer-2173997.html
[22] https://translate.google.co.in/?ie=UTF-8&hl=en&client=tw-ob#auto/en/Mattel%20entwickelt%20die%20Stasi-Barbie
[23] http://www.france24.com/en/20150224-hello-barbie-germany-stasi-data-collection/
[24] http://www.stern.de/digital/ueberwachung/barbie-wird-zum-spion-im-kinderzimmer-2173997.html
[25] http://www.newsweek.com/privacy-advocates-want-take-wifi-connected-hello-barbie-offline-313432
[26] http://www.france24.com/en/20150224-hello-barbie-germany-stasi-data-collection/
[27] http://www.theregister.co.uk/2015/02/19/hello_barbie/
[28] https://www.toytalk.com/legal/privacy/
[29] http://org.salsalabs.com/o/621/p/dia/action3/common/public/?action_KEY=17347
[30] http://en.wikipedia.org/wiki/Moore's_law


Disclaimer: Views expressed are personal.


© 2015, Abhinav Agarwal. All rights reserved.

Flipkart, ecommerce, machine learning, and free advice

Sat, 2015-07-04 13:08
I wrote about the obsession of Flipkart (and Myntra) with "mobile-only" without even having an iPad-optimized app! I also talked about the stunning advances being made in voice-search by using machine learning, cognitive learning, natural language processing, even as voice-based search capabilities of e-commerce companies - including Amazon - remain abysmal. Finally, I also included several use-cases that these companies need to work on incorporating into their capabilities.

That piece, Flipkart, Focus and Free Advice, appeared in DNA on June 27th, 2015.


My earlier pieces on the same topic:
  1. Flipkart vs Amazon: Beware the Whispering Death - 20th April '15 (blog, dna)
  2. Mobile Apps: There’s Something (Profitable) About Your Privacy - 18th April '15  (blog, dna)
  3. Mobile advertising and how the numbers game can be misleading - 14th April '15  (blog, dna)
  4. Is Flipkart losing focus - 12th April '15  (blog, dna)
Flipkart, Focus, and Free Advice – Shipping Charges Also Waived!What is one to make of a statement like this - “India is not mobile-first, but mobile-only country[1]”? Especially so if it is from the co-founder of the largest ecommerce company in India, and it turns out the company does not even have an app for the Apple iPad?

I have written at length on the distractions that seem to have been plaguing Flipkart and why it cannot afford to drop its guard in this fiercely contested space[2] - especially in light of all the noise surrounding its mobile ambitions. Somewhat paradoxically, this post is about offering advice to Flipkart that calls for some diversification!

As a logical next step, I wanted to take a look at Flipkart’s mobile apps – both on the iOS and Android platforms – to see how well they were executing on their very bold ambitions. As an aside, I also wanted to see if these (and competitive) mobile apps were leveraging all the computing power now available on tap inside these tiny devices. After all, apart from the recent – and amazing – advances Google has made in its voice-based search capabilities[3], there was this stunning demo from Hound[4] that gave a glimpse into the huge advances that voice-recognition, search, and machine-learning technologies have made in the last decade.
#MustRead - what next, e-tailing ? @flipkart Flipkart, Focus and Free Advice http://t.co/zincR6LS9D via @dna @AbhinavAgarwal
— Harini Calamur (@calamur) June 28, 2015
Flipkart, Focus and Free Advice http://t.co/UNF20JCqer by @AbhinavAgarwal
— dna (@dna) June 27, 2015The results were, to put it mildly, massively disappointing – which I will describe in some detail.
It should be clear that Amazon and Flipkart and SnapDeal are going to be at each other’s throats in the Indian online retail market. This is one battle from which neither player can walk away. Amazon has lost the China market to Alibaba (“In the first quarter of 2014, Alibaba's e-tailing site had a 48.4 per cent market share against Amazon China's less than 3 per cent.”[5] If that was not enough, Alibaba and Foxconn are in talks with SnapDeal for a rumoured $500 million investment![6]).

Amazon cannot afford to now lose the India market to a local upstart. Flipkart, on the other hand, has even less choice. It plays only in the Indian market. It cannot walk away either; there is no other market for it to walk towards. Its valuations – expected to rise to $15 billion after its next round of funding[7] make it way too costly for it to be acquired – at least profitably so for those funders who have put in hundreds of millions of dollars at these later and higher valuations. Amazon and Flipkart have deep pockets; Flipkart can afford to bleed hundreds of millions of dollars a year even as it grows, while Amazon has conditioned Wall Street to grant it the currency of ultra-high valuations even as it operates on razor-thin margins. It is unlikely that either will be able to deliver a knockout punch to the other anytime soon. This is a fifteen-round slugfest that will be decided by who can keep soaking in the blows and keep standing at the end of the fifteenth round; while they fight, the customer continues to win. Amazon has more diversity in its portfolio of business divisions than does Flipkart – ecommerce, cloud computing services, streaming audio and video, MRO and industrial supplies, smartphones, tablets, and more. While these divisions may at times face off against each other in expectedly healthy and sometimes unhealthy rivalry, they still form a formidable front against the competition. To quote these immortal lines from the Mahabharata, “we may be five against a hundred, but against a common enemy we are a hundred and five.”

So what does Flipkart do? Three things, to begin with.

First, it needs to get serious about software.
When you have a web site that offers millions of products from tens of thousands of resellers to millions of customers that reside in tens of thousands of cities and towns and villages, you need to make sure that your customers are seeing the products that are of most relevance to them, and which they are most likely to buy. If that problems looks like a nail to you, specifically a large-scale optimization problem with a huge number of decision variables, then large-scale computing and regression modelling are the hammer. You need to be applying this hammer to the almost infinite number of nails in front of you, all day and all night long. This is what enables you to present an ever-relevant basket of products to your customers, which keeps them engaged when on your site, and which hopefully makes them buy more often than not. Flipkart needs to take a close, long, hard look at its search capabilities – about which I will talk later in this post – and its suggestions engine, because both are very subpar at this point. If it’s any consolation, while Amazon is certainly better in the search department, its capabilities in this area are nothing great either, yet. Where Amazon scores over its competitors – every single one of them - is its huge and ever-growing corpus of customer reviews. Flipkart probably recognizes the important of this corpus of customer reviews, but has run into rough weather over the expected problem of fake reviews[8].

For inspiration on where the trifecta of search, machine learning, and e-commerce could venture – with Big Data in tow - one can turn to the story of how the popular American TV game show “Jeopardy” became the battleground for IBM researchers to build upon their experience with Deep Blue (the computer that had beaten world chess champion Gary Kasparov in 1997[9]) and to build a computer that would defeat the reigning champion of Jeopardy. That happened in February 2011, after four years of work led by IBM researcher David Ferucci and “about twenty researchers”[10].
This required advances in machine learning and other esoteric concepts like LAT (Lexical Answer Type), IDF (Inverse Document Frequency), temporal and even geospatial reasoning.[11] A new suite of software and platforms, built on a concept called genetic programming (“a technique inspired by biological evolution”) has started to make its way into mainstream commercial applications.  The algorithm here “begins by randomly combining various mathematical building blocks into equations and then testing to see how well the equations fit the data. Equations that fail the test are discarded, while those that show promise are retained and recombined in new ways so that the system ultimately converges on an accurate mathematical model.”[12] What this essentially means is going beyond keyword search-based correlations and moving to more semantic-oriented searches that combine machine learning with natural language processing. This in turn requires serious software brains (smart programmers using and refining the right algorithms and models) and muscle (massive learning and training sets in the hundreds of gigabytes running on clusters of tens of thousands of nodes).
If Flipkart is serious about the mobile ad business (about which I have expressed my reservations), even then it needs to get to the holy grail of deep-learning in ad-tech – “Inferring Without Interfering” the customer’s intent.”[13] In any event, this policy will only stand Flipkart in good stead. If they are already doing so, then good, but the proof is not in the pudding as much as in the eating of the pudding.

A critical differentiator in the coming times is not, I repeat, not, going to be driven by slick UIs or gimmicks on mobile apps like “shake to see offers”, but by offering truly intelligent and immersive experience that are feasible even today. Advances in machine learning, and capabilities such as voice, video, location, and more, when used in tandem will power the next set of innovations. Rather than stick to the tried and tested and old way of making users search using simple keywords and correlations and prior history, e-tailers need to make the shopping experience more intelligent.

Appendix 2 and 3 outline possible use-cases. It should be clear that both Flipkart and Amazon have a long, long way to go before realizing anything close to the vision outlined, but without such advances, competitors like Google will find the wedge they need to prise open this market for themselves.

Second, Flipkart (or even Amazon for that matter, or SnapDeal, or whichever competitor you happen to care about, though in this case the admonition is more targeted at Flipkart in light of its mobile-only pronouncements) needs to get serious about the mobile platform.

Browse to either Flipkart or Myntra’s websites from a browser on an iPad and you are asked to use their app instead. Would you believe if I told you Flipkart does not have an iPad app (as of 15th June 2015)? No? Go check for yourself – I did! Ditto for Myntra (the online fashion retailer Flipkart acquired in 2014)! See Appendix 1 for what I found when I downloaded their apps on my iPad tablet. This would be comedically farcical if serious money weren’t riding on such decisions.

Third, Flipkart needs to get into the cloud business.

Yes, I am serious.

Let’s look at the competition – Amazon. It is the 800 pound gorilla in the cloud computing industry, where its offering goes by the umbrella of AWS (Amazon Web Services) and offers almost everything you could think of under the cloud – platform, infrastructure, software, database, email, storage, even machine learning, and much more. How gorilla-ish? “AWS offers five times the utilized compute capacity of the other 14 cloud providers in the Gartner Magic Quadrant. Combined.[14]” Since 2005, Amazon has spent “roughly $12 billion” on its infrastructure[15]. It competes with the likes of Microsoft and Google in this space. Yet, Amazon’s cloud revenues are estimated to be “30 times bigger than Microsoft’s.[16]

And yet I argue that Flipkart should get into the cloud business. As I wrote last year[17], Flipkart had to invest substantially (per my estimates, more than one hundred crore rupees, or somewhere in the vicinity of $15-$20 million dollars – which is not chump change) to build its capacity to stand up to the traffic it expected for its “Big Billion Day”. This is in addition to the regular additions it must be making to its computing infrastructure. All this is not surprising, given that the retail business is prone to lumpiness in traffic – a disproportionate amount of traffic is concentrated around sale events, or holidays.

For example, while Amazon reportedly had ten million Prime subscribers in March 2013, it reported that over 10 million “tried Prime for the first time” over the holidays in 2014 (traditionally the period between Thanksgiving and Christmas).[18] To prevent web sites from keeling over under the crush of holiday traffic, companies invest substantially, in advance, to make sure the web site keeps chugging along. The flip side is that for those periods when traffic is more average and a fraction of peak traffic, all those thousands of computers, the hundreds of gigabytes of memory, terabytes of disk space, and gobs of network bandwidth capacity are lying idle – depreciating away, obsolescing away.

Amazon realized this a decade ago and started building a rental model around its excess capacity – this was the genesis behind Amazon Web Services. There is no reason for Flipkart to not do the same. What works for Amazon has worked quite well for Flipkart[19]. If it spins off its entire e-commerce infrastructure into a separate entity, it can palm much off the capital costs of its computing infrastructure to the cloud computing subsidiary, substantially improving its balance sheet in the process. You could argue this is nothing but an accounting gimmick, and I am not going to argue with that aspect of the decision - there would be undeniable and real benefits to this decision, and it’s childish to expect a business to be run on utopian principles. As things stand, the state government of Telangana is already assiduously wooing Amazon to invest in an AWS centre in the state[20]. Once operating on Indian soil, Amazon will be able to meet legal requirements that require certain categories of data to remain with the national borders.

Any industry so heavily influenced and shaped by technology as the e-commerce industry would do well to listen to the winds of change. If unheard and unheeded, these winds of change turn into gale storms of disruption that blow away incumbents faster than you can imagine. “Mobile-only” is a useful-enough mantra, but translating that into an “app-only” sermon hints at myopic thinking – a troubling sign for sure. It turns out that Google “secretly” acquired a company that specializes in “streaming native mobile apps”. Is this a shape of the things to come? How will this transform the world of mobile apps, or even the mobile landscape in general? Time will tell, but “lock-in” may well be a wise strategy for your customers, but a terrible one to apply to yourself.[21].

Appendix 1 - App-solutely Serious about Apps?Fire up your favourite mobile browser on an Apple iPad and browse to Myntra’s website (that would be www.myntra.com). You are greeted with a message to vamoose to their mobile app, because after all, Myntra is all about mobility – social mobility in fashion, and mobile devices when speaking more literally.
Figure 1 - Myntra web site on tablet browser

Incredulity hits you in the face when you realize that (on the Apple App Store) the Myntra app is “optimized for iPhone 5, iPhone 6 and iPhone 6 Plus”, but not the iPad. Yes, you read that right – the web site that tells you have to use its mobile app and mobile app only on an iPad does not have an app optimized for the iPad.
Figure 2 - Myntra app details on the Apple App Store

I am, however, somewhat of a cynical person. I tried searching for the keyword “myntra” on the Apple App Store. The only filter applied was to look for “iPad Only” apps. Here are the beatific search results. Indian gave the world the concept of zero, and the search results page gave one practical application of that elegant mathematical concept.
Figure 3 - Search results for "iPad Only" apps on the Apple AppStore for "myntra"

So where was that Myntra app hiding? I changed the filter to “iPhone Only”, and true-enough, there was that Myntra app.
Figure 4 - Myntra app on the Apple App Store

In case you are wondering how that was even possible, know that most apps created for the iPhone (or iPod Touch) can run on an iPad without any modifications – all that is required for you to keep this in mind when compiling the app. Apple calls this a “Universal app”[22].

Now that can’t be so bad, right? After all, the app is available on the iPhone and the iPad, so where and what is the grouse? I will come to that in just a bit, but take a look at what the Myntra app looks like when run on the iPad.
Figure 5 - Myntra app running on an iPad
This is how the app runs inside an iPad. You have the option of tapping the “2x” button, after which the app uses the full screen, but by scaling everything to twice its size. There is no other intelligence here being applied – like changing the icons, or the text, or adding more features. This is iOS doing what little work you see.
Why this arouses incredulity is due to the stunning dissonance one experiences – between the statements of the Myntra (and Flipkart) executives going to town about a “mobile-only” world[23] on the one hand and the reality of a missing-in-action iPad-optimized app on the other. Yes, one could make the argument that Apple commanded a stunningly low single-digit share of 7% of the tablet market in India[24], but to make this argument is to negate your very philosophy of a “mobile-only” world. Mobile includes smartphones, tablets, phablets, wearables (for which Flipkart does have an app![25]), smart-TVs, and even embedded devices.
Flipkart’s mobile web site works - at least for now - on the iPad (though it does not on a smartphone – you have no option but to use their app), but the story is not much different there. No iPad-optimized app, but a smartphone app that does duty on the iPad by virtue of it being a “Universal” app.
Figure 6 - Flipkart shopping app in the Apple App Store

 
Figure 7 - Flipkart shopping app on the Apple iPad
 It’s not as if Amazon’s iPad app is much better. Yes, they do have an iPad app, but it looks more like a hybrid app – a native shell with an embedded browser snuck in, and very little by way of any tablet optimizations.
Figure 8 - Amazon app for the iPad

Appendix 2 – Natural Speech SearchesMobile shopping apps like Flipkart and Amazon provide you the option of inputting your search query via voice (more because of the support the underlying mobile OS provides), but that forces you say out aloud what you have typed – keywords, and nothing more.
Unlike the stunning Hound demo or the capabilities of Google Now[26], e-tailers have yet to leave the stone age in search capabilities. While Hound can understand and answer (correctly) queries like “Show me hotels in Seattle for Friday, staying one night” and then support refinements to the query like “Show only the ones costing less than $300” or “Show only the ones that have three or four or five stars that are pet friendly, that have a gym and a pool, within 4.5 miles of the Space Needle”[27], and Google Now can understand foreign accents (like my Indian English accent) and parse phrases like “ghat”, “jyotirling” and more, a relatively simple phrase like - “What are the best sellers in fiction” – leads to disappointment on both Amazon and Flipkart’s mobile apps.
Figure 9 - Search results in the Amazon app
And to be clear, what was presented was not the bestsellers list, because the bestseller list looked like this:
Figure 10 - Non-fiction bestsellers in books as shown on the Amazon app

I tried another search – “Suggest books for children”. I don’t know what to call the search results, but one with “*divorce* your Child” as the first result is surreal.
Figure 11 - Search results on Amazon app

To complete my brief experiment on Amazon, I tried “Show me best sellers in electronics”. That also did not yield any relevant results.
Figure 12 - Search results in the Amazon app
Flipkart is not much better, and at this point we are really looking at rock-bottom as the baseline. Even a marginal improvement would be welcome here. Sadly, not the case. Though, Flipkart does separate each word out and allow you to delete any one word to refine your search. Given the abysmal quality of search results, it is somewhat of a zero-divide-by-zero case, resulting in only infinite misery trying to find the right combination of keywords that will yield the desired results.
Figure 13 - Search results on the Flipkart app

Does the Myntra app fare any better? Predictably, it doesn’t. If semantic search in the e-commerce space was a problem that had been cracked by either Flipkart or Myntra, it would have been shared across both platforms by now.
Figure 14 - Search results in the Myntra app

Even Google, with its oft-stated e-commerce ambitions[28],[29] , and the eye-popping advances that it has made with its voice-based search (Siri from Apple and lately Cortana from Microsoft also deserve to be included, but neither company seems to be quite interested in e-commerce at the scale of Amazon, yet) left me disappointed with a simple search like – “what are the fiction best sellers in India”.
Figure 15 - Search results in the Google app

Appendix 3What do I have in mind with respect to the kinds of queries that Flipkart (or Amazon) should be trying to enable? Without any further context, I present the following examples:
One:
(this is a comparatively simpler form of the semantic search capabilities I propose)
Me: show me the best sellers in non-fiction
App: [displays a list of book best sellers in non-fiction] [Optionally, excludes or places the ones I have bought at the bottom of the list; or marks them differently and provides me with an option of reading them online – assuming I had purchased an e-book version]
Me: show me only those books that have been published in the last three months;
App: [filters the previous set of search results to show only those non-fiction best sellers that have been published in the last three months]
Me: also include books that were on the bestseller list this year
App: [adds books that were in the top 10/20 bestsellers list in 2015 but have now dropped out of the rankings]
Me: cancel the last search, and show me those books that are also available as e-books, and then sort them by price
App: [displays a list of book best sellers in non-fiction, filtered by those available on the Kindle, and sorts by price, ascending]
Me: send me free e-book samples of the first five books from this list and remind me in one week whether I want to purchase them.
App: [downloads free samples of the first three books to my e-book app] [creates a reminder to remind me in one week]


Two:
(this is a more social and more nuanced form of the semantic search outlined above)
Me: show me a list of LED TVs
App: [displays a list of the bestselling LED TVs]
Me: show me LED TVs that are HD, 40 inches or larger, cost no more than Rs 60,000, and can be delivered in the next three days.
App: [displays a list of TVs matching the criteria, and adds – “there are only three TVs that match your search criteria, so I have changed the price to Rs 70,000, which has resulted in five more search results. Say “cancel” to undo.”]
Me: Which among these would be most relevant to me?
App: [displays the list sorted based on popularity in my postal code] [offers to show the list sorted on TVs sold in the last three months to the housing community I live in – or the company I work at – or based on people with my profile of educational qualifications or marital/family status – based on privacy settings of course]
Me: summarize the most useful reviews for the first TVs, and keep each under two minutes.
App: [summarizes the most useful reviews and then reads out a software-generated summary, in less than two minutes. Also sends a text summary to my WhatsApp or email]
Far-distant utopia? Naah, I don’t think so. This is within the realm of the possible, and I expect to see this become reality in the next two years. Today, however, we are some ways off from the innovations where online shopping will become a truly immersive, interactive experience akin to having a natural conversation with an incredibly knowledgeable yet infinitely patient salesperson.

Three:
(ratcheting things up one more notch)
Me: (standing amidst the ruins of Hampi) Suggest some good books about this place.
App: [suggests bestsellers or highest-rated books on three categories: coffee-table books on Hampi; history of Hampi and the Vijayanagar Empire; historical fiction books set in the fifteenth/sixteenth century Vijaynagara Empire]
Me: Also suggest something on the significance of this chariot temple
App: …

Four:
App: [reminds me that I have a party at my house this weekend where four families are coming over]
Me: I need some snacks and also suggest some recent action movies to rent
App: [suggests food-items to order and shows a list of the five top grossing movies of the year in the “Action” genre and shows options: buy, rent (really?), stream]
Me: place the first, third, and fifth items in the shopping cart, record this and deliver to my wife. Then rent to stream the third movie in HD format on Saturday evening.
App: [places these items in the shopping cart, records a 15 second video and pings the spouse via a notification/alert to view the video. It also places an order for the selected movie]

Disclaimer: views expressed are personal.

 References:
[1] "India is not mobile-first, but mobile-only country: Sachin Bansal, Flipkart's founder and Mukesh Bansal, Myntra's CEO - timesofindia-economictimes", http://articles.economictimes.indiatimes.com/2015-05-13/news/62124447_1_myntra-sachin-bansal-ceo-mukesh-bansal
[2] See http://www.dnaindia.com/analysis/standpoint-flipkart-vs-amazon-beware-the-whispering-death-2079185 and http://www.dnaindia.com/analysis/standpoint-why-flipkart-seems-to-be-losing-focus-2076806
[3] "Google Launches Custom Voice Actions For Third Party Apps", http://searchengineland.com/google-launches-custom-voice-actions-for-third-party-apps-220148
[4] "After Nine Years of Secret Development, Hound Voice Search App Has a Dazzling Demo | Re/code", http://recode.net/2015/06/02/after-nine-years-of-secret-development-hound-voice-search-app-has-a-dazzling-demo/
[5] "A missed opportunity in China has Amazon founder Jeff Bezos backing his India venture", http://indiatoday.intoday.in/story/amazon-jeff-bezos-india-business-venture-flipkart-snapdeal/1/393933.html
[6] "Alibaba, Foxconn in Talks to Invest $500 Million in India’s Snapdeal - India Real Time - WSJ", http://blogs.wsj.com/indiarealtime/2015/06/16/alibaba-foxconn-in-talks-to-invest-500-million-in-indias-snapdeal/
[7] "Flipkart set to raise up to $800 million - Livemint", http://www.livemint.com/Companies/j2B9ax1SNS4JrDdJAU19sO/Flipkart-set-to-raise-up-to-800-mn.html
[8] See "How e-retailers such as Flipkart, Amazon are keeping fake products at bay - timesofindia-economictimes", http://articles.economictimes.indiatimes.com/2015-01-08/news/57791521_1_amazon-india-sellers-mystery-shoppers, "Who Reviews the Reviewers? How India's Online Businesses Are Fighting Fake Reviews | NDTV Gadgets", http://gadgets.ndtv.com/internet/features/who-reviews-the-reviewers-how-indias-online-business-are-fighting-fake-reviews-697112, and "How genuine are product reviews on FlipKart? - Quora", http://www.quora.com/How-genuine-are-product-reviews-on-FlipKart
[9] "Deep Blue (chess computer) - Wikipedia, the free encyclopedia", https://en.wikipedia.org/wiki/Deep_Blue_(chess_computer)
[10] "Rise of the Robots: Technology and the Threat of a Jobless Future”, by Martin Ford, Jeff Cummings, ISBN 9781480574779, http://www.amazon.com/Rise-Robots-Technology-Threat-Jobless/dp/1480574775
[11] Ibid and "The AI Behind Watson — The Technical Article", http://www.aaai.org/Magazine/Watson/watson.php
[12] "Rise of the Robots: Technology and the Threat of a Jobless Future”
[13] Gregory Piatetsky on Twitter: "The #DeepLearning future of ads: "Inferring Without Interfering with what moves the Customer most" - J. Kobelius http://t.co/zh96DC6DDG" https://twitter.com/kdnuggets/status/610848069672927232
[14] "Gartner: AWS Now Five Times The Size Of Other Cloud Vendors Combined - ReadWrite", http://readwrite.com/2013/08/21/gartner-aws-now-5-times-the-size-of-other-cloud-vendors-combined
[15] Ibid.
[16] "How much bigger is Amazon’s cloud vs. Microsoft and Google?", http://www.networkworld.com/article/2837910/public-cloud/how-much-bigger-is-amazon-s-cloud-vs-microsoft-and-google.html
[17] "A Billion Dollar Sale, And A Few Questions", http://www.dnaindia.com/analysis/standpoint-a-billion-dollar-sale-and-a-few-questions-2047853
[18] "Amazon added 10M new Prime subscribers over the holidays, could make up to $1B in annual revenue | VentureBeat | Business | by Harrison Weber", http://venturebeat.com/2014/12/26/amazon-made-nearly-1b-from-new-prime-subscriptions-over-the-holidays/
[19] See http://www.dnaindia.com/analysis/standpoint-flipkart-vs-amazon-beware-the-whispering-death-2079185
[20] "Amazon likely to bring Web Services to Telangana | Business Standard News", http://www.business-standard.com/article/companies/amazon-likely-to-bring-web-services-to-telangana-115061000659_1.html
[21] "Report: Last Year Google Secretly Acquired Agawi, A Specialist In Streaming Native Mobile Apps | TechCrunch", http://techcrunch.com/2015/06/18/report-last-year-google-secretly-acquired-agawi-a-specialist-in-streaming-native-mobile-apps/
[22] "Start Developing iOS Apps Today: Tutorial: Basics", https://developer.apple.com/library/ios/referencelibrary/GettingStarted/RoadMapiOS/FirstTutorial.html
[23] http://articles.economictimes.indiatimes.com/2015-05-13/news/62124447_1_myntra-sachin-bansal-ceo-mukesh-bansal
[24] "Samsung Tops Indian Tablet Market Share, Followed By Micromax, iBall", http://trak.in/tags/business/2014/11/28/indian-tablet-market-share-growth/
[25] "Flipkart launches an app for Android Wear sporting wearables - Tech2", http://tech.firstpost.com/news-analysis/flipkart-launches-an-app-for-android-wear-sporting-wearables-240070.html
[26] See this for a comparison between Hound and Google Now - "Here’s how Hound beta compares to Google Now (Video) | 9to5Google", http://9to5google.com/2015/06/05/hound-beta-vs-google-now-video/
[27] "After Nine Years of Secret Development, Hound Voice Search App Has a Dazzling Demo | Re/code", http://recode.net/2015/06/02/after-nine-years-of-secret-development-hound-voice-search-app-has-a-dazzling-demo/
[28] "Google Preps Shopping Site to Challenge Amazon - WSJ", http://www.wsj.com/articles/google-preps-shopping-site-to-challenge-amazon-1418673413
[29] "Google Finds Partners To Help It Compete With Amazon - Forbes", http://www.forbes.com/sites/benkepes/2015/04/13/google-finds-partners-to-help-it-compete-with-amazon/



© 2015, Abhinav Agarwal. All rights reserved.

Flipkart and Focus 4 - Beware the Whispering Death

Sun, 2015-06-07 13:43
The fourth part of my series on Flipkart and its apparent loss of Focus and its battle with Amazon appeared in DNA on April 20th, 2015.

Part 4 – Beware the Whispering Death
Monopolies may have the luxury of getting distracted. If you were a Microsoft in the 1990s, you could force computer manufacturers to pay you a MS-DOS royalty for every computer they sold, irrespective of whether the computer had a Microsoft operating system installed on it or not[1]. You dared not go against Microsoft, because if you did, it could snuff you out – “cut off the oxygen supply[2]”, to put it more evocatively. But if you are a monopoly, you do have to keep one eye on the regulator[3], which distracts you. If you are not a monopoly, you have to keep one eye on the competition (despite what Amazon may keep saying to the contrary, that they “just ignore the competition”[4]).



Few companies exist in a competitive vacuum. In Flipkart’s case, the competition is Amazon – make no mistake about it. Yes, there is SnapDeal, eBay India, and even HomeShop18; but the numbers speak for themselves. Flipkart has pulled ahead of the pack. As long as Amazon had not entered the Indian market, Flipkart’s rise was more or less certain, thanks to its sharp focus on expanding its offerings, honing its supply-chain, and successfully raising enough capital to not have to worry about its bottom-line while it furiously expanded. Amazon India made a quiet entry on the fifth of June 2013[5], with two categories – books, Movies & TV shows, but followed up with a very splashy blitz two months later in August (it offered 66% discounts on many books[6] to mark India’s 66 years of Indian independence – I should know, I binge-bought about twenty books!). A little more than a year later, in September 2014, Amazon turned the screws even more when its iconic founder-CEO, Jeff Bezos, visited India. In a very showy display that earned it a ton of free advertising, Bezos wore a sherwani and got himself photographed swinging from an Indian truck[7], met Narendra Modi, the Indian Prime Minister[8], and reiterated Amazon’s commitment and confidence in the Indian market[9] - all this without ever taking Flipkart’s name. It didn’t help Flipkart that on July 30th 2014, Amazon India had announced an additional $2 billion investment in India[10]. It didn’t hurt Amazon either that it timed the press release exactly one day after Flipkart closed $1 billion in funding[11] - this was entirely in Amazon’s way of jiu jitsu-ing its competitors (so much for “ignoring the competition”). Flipkart on its part ran into yet more needless problems with its much-touted “Big Billion” sale that was mercilessly ambushed by competitors[12], and which resulted in its founders having to tender an apology[13] for several glitches its customers faced during the sale. Then there were questions on just how much money it actually made from the event, which I analyzed[14].

Flipkart seemed to be getting distracted.

When facing a charged-up Michael Holding, you cannot afford to let your guard down, even if you are batting on 91. Ask the legendary Sunil Gavaskar[15]. Amazon is the Michael Holding of competitors. Ask Marc Lore, the founder of Jet, “which is planning to launch a sort of online Costco later this spring with 10 million discounted products”[16]. Marc who? He is the co-founder of Quidsi. Quidsi who? Quidsi is (was) the company behind the website Diapers.com, and which was acquired by Amazon. Therein lies a tale.

Diapers.com was the website of Quidsi, a New Jersey start-up founded in 2005 by Marc Lore and Vinit Bharara to solve a very real problem: children running through diapers at a crazy pace, and “dragging screaming children to the store is a well-known parental hassle.” What made selling diapers online unviable for retailers was the cost involved in “shipping big, bulky, low-margin products like jumbo packs of Huggies Snug and Dry to people’s front doors.” Diapers.com solved the problem by using “software to match every order with the smallest possible shipping box, minimizing excess weight and thus reducing the per-order shipping cost.” Within a few years, it grew from zero to over $300 million in annual sales. It was only when VC firms, including Accel Partners, pumped in $50 million that Amazon and Jeff Bezos started to pay attention. Sometime in 2009, Amazon started to drop prices on diapers and other baby products by up to 30 percent. Quidsi (the company behind Diapers.com) lowered prices – as an experiment – only to watch Amazon’s website change prices accordingly. Quidsi fared well under Amazon’s assault, “at least at first.” However, growth slowed. “Investors were reluctant to furnish Quidsi with additional capital, and the company was not yet mature enough for an IPO.” Quidsi and WalMart vice chairman (and head of WalMart.com) Eduardo Castro-Wright spoke, but Quidsi’s asking price of $900 million more than what WalMart was willing to pay. Even as Lore and Bharara travelled to Seattle to meet with Amazon for a possible deal, Amazon launched Amazon Mom – literally while the two were in the air and therefore unreachable by a frantic Quidsi staff! “Quidsi executives took what they knew about shipping rates, factored in Procter and Gamble’s wholesale prices, and calculated that Amazon was on track to lose $100 million over three months in the diapers category alone.” Amazon offered $580 million. WalMart upped its offer to $600 million – this offer was revealed to Amazon, because of the conditions in the preliminary term sheet that required Quidsi “to turn over information about any subsequent offers.” When Amazon executives learned of this offer, “they ratcheted up the pressure even further, threatening the Quidsi founders that “sensei,” being such a furious competitor, would drive diaper prices to zero if they went with Walmart.” Quidsi folded, sold to Amazon, and the deal was announced on November 8, 2010[17]. Marc Lore continued with Amazon for two years after that – most likely the result of a typical retention and no-compete clause in such acquisitions.

The tale of Quidsi is one cautionary tale for any company going head-to-head with Amazon. For more details on the fascinating history of Amazon, I would recommend Brad Stone’s book, “The Everything Store: Jeff Bezos and the Age of Amazon”[18] – from which I have adapted the example of Diapers.com above. You can read another report here[19]. I suspect you may well find some copies of the book lying around in Flipkart’s Bengaluru offices!

In their evolution and growth as an online retailer, Flipkart has adopted and emulated several of Amazon’s successful features. Arguably the most successful innovation from Amazon has been to reduce, or entirely eliminate in some cases, the friction of ordering goods from their website. The pace and extent of innovation is quite breath-taking. A brief overview will help illustrate the point.
Amazon used to charge for every order placed in addition to a handling charge per item (typically 99 cents). In 2002, it launched “Free Super Saver Shipping on qualifying orders over $49” as a test. After seeing the results, it lowered this threshold to $25[20]. For over ten years that price held, till 2013, when it raised this minimum to $35[21]. Not content with this, to lure in that segment of customers who wanted to order even a single item, and have it delivered in two days or less, Amazon launched a new express shipping option – Amazon Prime – where “for a flat membership fee of $79 per year, members get unlimited, express two-day shipping for free, with no minimum purchase requirement.”[22] This proved to be a blockbuster hit for Amazon, and the company piled on goodies to this program – Amazon Instant Video, an “instant streaming of selected movies and TV shows” at no additional cost[23]. That same year it launched “Library Lending for Kindle Books”, which allowed customers to “to borrow Kindle books from over 11,000 local libraries to read on Kindle and free Kindle reading apps”[24], with no due date, and added that to the Prime program, at no extra cost. In 2011 it launched “Subscribe & Save” – that let customers order certain items on a regular basis at a discounted price – basically you had to select the frequency, and the item would be delivered every month/quarter without your having to re-order it. Amazon launched “Kindle Matchbook”, where, “For thousands of qualifying books, your past, present, and future print-edition purchases now allow you to buy the Kindle edition for $2.99 or less.[25]” Similarly, its “AutoRip” program allowed customers to receive free MP3 format versions of CDs they had purchased from Amazon (since 1998)[26], and which was extended to Vinyl Records[27].

If all this was not enough, in 2015 Amazon launched a physical button called Dash Button – on April 1st, no less – that would let customers order an item of their selection with one press of the button. It could be their favourite detergent, dog food, paper towels, diapers – an expanding selection. You could stick that button anywhere – your refrigerator, car dashboard, anywhere. It was indeed so outlandish that many thought it was an April Fool’s gimmick[28].
Amazon has been relentless in eliminating friction between the customer and the buying process on Amazon on the one hand, and on squeezing out its competitors with a relentless, ruthless pressure on the other. It manages to do all this while topping customer satisfaction surveys[29], year after year[30].

Flipkart has certainly not been caught flat-footed. It’s been busy introducing several similar programs. It began with free shipping, then raised the minimum to ?100, then ?200, and eventually ?500. Somewhere in between, it modified that to exclude books fulfilled by WS Retail (which was co-founded by Flipkart founders and which accounts for more than three-fourths of all products sold on Flipkart[31]) from that minimum. In May 2014, it launched Flipkart First, an Amazon Prime-like membership program that entitled customers to free “in-a-day” shipping for an annual fees of ?500[32]. It also tied up with Mumbai’s famed “dabbawalas” to solve the last-mile connectivity problem for deliveries[33].

Flipkart’s foray into digital music however was less than successful. It shuttered its online music store, Flyte, in June 2013, a little over a year after launching it[34]. Some speculated it was unable to compete with free offerings like Saavn, Gaana, etc… and was unable to meet the annual minimum guarantees it had signed up with music labels for[35]. Whether it really needed to pull the plug so soon is debatable – for all purposes it may have signalled weakness to the world. Competitors watch these developments very, very closely. Its e-book business has been around for a little over two years, but is not clear how much traction they have in the market. With the launch of Amazon Kindle in India, Flipkart will see it being squeezed even more. The history of the ebook market is not a happy tale – if you are not Amazon or the customer.

The market for instant-gratification refuses to stand still. Amazon upped the ante by launching Amazon Prime Now in December 2014. Prime program customers were guaranteed one-hour delivery on tens of thousands of items for $7.99 (two-hour delivery was free)[36]. This program was launched in Manhattan, and rapidly expanded to half a dozen cities in the US by April 2015[37]. Closer to home, in India, it launched KiranaNow in March 2015, in Bangalore, promising delivery of groceries and related items in four hours[38].

More than anything else, the online retail world is a race to eliminate friction from the buying process, to accelerate and enable buying decisions – as frequently as possible, and to provide instant gratification through instant delivery (in the case of e-books or streaming music or video) or one-hour deliveries. Flipkart may well be the incumbent and the player to beat in the Indian market, but Amazon brings with it close to two decades of experience – experience of battling it out in conditions that are very similar to the Indian market in several respects. More ominously, for Flipkart, Amazon has won many more battles than it has lost. Distraction can prove to be a fatal attraction and affliction.

[1] This is described in James Wallace’s book, “Overdrive: Bill Gates and the Race to Control Cyberspace”, http://www.amazon.in/gp/product/B00J348MXG/ref=as_li_tl?ie=UTF8&camp=3626&creative=24822&creativeASIN=B00J348MXG&linkCode=as2&tag=abhisblog-21&linkId=XIHAIBIQ3H6L6NMH
[2] "BBC NEWS | Special Report | 1998 | 04/98 | Microsoft | USA versus Microsoft: The first two days", http://news.bbc.co.uk/2/hi/special_report/1998/04/98/microsoft/198390.stm
[3] " Justice to Launch Probe of Microsoft ", http://www.washingtonpost.com/wp-srv/business/longterm/microsoft/stories/1993/launch082193.htm
[4] "We just ignore our competitors, never felt pressure from Alibaba's rise: Jeff Bezos, CEO Amazon ", http://articles.economictimes.indiatimes.com/2014-09-29/news/54437158_1_amazon-india-expectations-competitors
[5] "Amazon Launches In India", http://www.amazon.in/gp/feature.html/ref=amb_link_183716847_70?ie=UTF8&docId=1000728823&pf_rd_m=A1VBAL9TL5WCBF&pf_rd_s=center-4&pf_rd_r=05DGNQKB48Z6RV3KZV1G&pf_rd_t=1401&pf_rd_p=605972407&pf_rd_i=1000834593
[6] https://www.dropbox.com/s/jb9wa2vqu1x0p4x/AmazonIn_2013.png?dl=0
[7] "jeff bezos truck bangalore - Google Search", https://www.google.co.in/search?q=jeff+bezos+truck+bangalore&tbm=isch&tbo=u&source=univ&sa=X&ei=_IszVc3QGc-LuAT5i4CADw&ved=0CB0QsAQ&biw=1600&bih=741
[8] "Amazon chief Jeffrey Bezos calls on Prime Minister Modi - The Times of India", http://timesofindia.indiatimes.com/business/india-business/Amazon-chief-Jeffrey-Bezos-calls-on-Prime-Minister-Modi/articleshow/44229776.cms
[9] "No obstacles to growth in India: Amazon CEO Jeff Bezos", http://www.hindustantimes.com/business-news/no-obstacles-to-growth-in-india-says-amazon-ceo-jeff-bezos/article1-1269464.aspx
[10] "Amazon Announces Additional US $2 Billion Investment in India", http://www.amazon.in/gp/feature.html?ie=UTF8&docId=1000818573
[11] "India's Flipkart Raises $1 Billion in Fresh Funding - WSJ", http://www.wsj.com/articles/indias-flipkart-raises-1-billion-in-fresh-funding-1406641579?mod=LS1
[12] "Ambushed: When Flipkart’s Big Billion Sale turned into a nightmare | Best Media Info, News and Analysis on Indian Advertising, Marketing and Media Industry.", http://www.bestmediainfo.com/2014/10/ambushed-when-flipkarts-big-billion-sale-turned-into-a-nightmare/
[13] "Flipkart’s ‘Big Billion Day Sale’ Prompts Big Apology - India Real Time - WSJ", http://blogs.wsj.com/indiarealtime/2014/10/08/flipkarts-big-billion-day-sale-prompts-big-apology/
[14] "A Billion Dollar Sale, And A Few Questions", http://www.dnaindia.com/analysis/standpoint-a-billion-dollar-sale-and-a-few-questions-2047853
[15] "3rd Test: India v West Indies at Ahmedabad, Nov 12-16, 1983", http://www.espncricinfo.com/ci/engine/match/63352.html
[16] "Why Amazon Refuses to Wear Purple Lanyards in Vegas", http://www.bloomberg.com/news/articles/2015-04-01/why-amazon-refuses-to-wear-purple-lanyards-in-vegas
[17] "Amazon.com to Acquire Diapers.com and Soap.com", http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=1493202
[18] “The Everything Store: Jeff Bezos and the Age of Amazon”, by Brad Ston, http://www.amazon.in/Everything-Store-Brad-Stone/dp/0593070461/tag=abhisblog-21&ref=sr_1_1?ie=UTF8&qid=1429439636&sr=8-1&keywords=the+everything+store#reader_0593070461
[19] "Amazon vs. Jet.com: Marc Lore Aims to Beat Bezos", http://www.bloomberg.com/news/features/2015-01-07/amazon-bought-this-mans-company-now-hes-coming-for-them-correct
[20] "Amazon Media Room: Press Releases", http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=503037
[21] "Amazon Raises Free Shipping Threshold From $25 to $35", http://www.pcmag.com/article2/0,2817,2426202,00.asp
[22] "Amazon Media Room: Press Releases", http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=669786
[23] "Amazon Media Room: Press Releases", http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=1531234
[24] "Amazon Media Room: Press Releases", http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=1552678
[25] "Amazon.com: Kindle MatchBook", https://www.amazon.com/gp/digital/ep-landing-page?ie=UTF8&*Version*=1&*entries*=0
[26] "Introducing “Amazon AutoRip” – Customers Now Receive Free MP3 Versions of CDs Purchased From Amazon – Past, Present and Future", http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=1773251
[27] "Amazon Media Room: Press Releases", http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=1802939
[28] "Amazon launches a product so gimmicky we thought it was an April Fools' joke", http://venturebeat.com/2015/03/31/amazon-launches-a-product-so-gimmicky-we-thought-it-was-an-april-fools-joke/
[29] "Customer Satisfaction Lowest at Wal-Mart, Highest at Nordstrom and Amazon", http://247wallst.com/retail/2015/02/18/customer-satisfaction-lowest-at-wal-mart-highest-at-nordstrom-and-amazon/
[30] "Customers Rank Amazon #1 in Customer Satisfaction", http://www.amazon.com/gp/feature.html?ie=UTF8&docId=1001924291
[31] "Flipkart top seller WS Retail to separate logistics arm Ekart into wholly-owned unit", http://articles.economictimes.indiatimes.com/2015-01-21/news/58306262_1_ekart-ws-retail-logistics-arm
[32] "India's Flipkart Launches Subscription Service for Customers", http://thenextweb.com/in/2014/05/08/indias-flipkart-launching-amazon-prime-like-subscription-service-called-flipkart-first/
[33] "Now Mumbai's famed dabbawalas will deliver your Flipkart buys", http://www.dnaindia.com/money/report-now-mumbai-s-famed-dabbawalas-will-deliver-your-flipkart-buys-2076276
[34] "Flipkart closes Flyte MP3 store a year after launch", http://www.livemint.com/Consumer/TJOoP9he0fq0EG7S8lRXYK/Flipkart-closes-Flyte-MP3-store-a-year-after-launch.html
[35] "Why Flipkart Shut Down Flyte Music - MediaNama", http://www.medianama.com/2013/05/223-why-flipkart-shut-flyte-music/
[36] "Amazon Media Room: Press Releases", http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=2000521
[37] "Amazon again expands 'Prime Now' one-hour delivery service, this time to Austin", http://www.geekwire.com/2015/amazon-again-expands-prime-now-one-hour-delivery-service-this-time-to-austin/

[38] "Now Amazon will deliver from your local kirana store", http://www.dnaindia.com/money/report-now-amazon-will-deliver-from-your-local-kirana-store-2076280


© 2015, Abhinav Agarwal (अभिनव अग्रवाल). All rights reserved.

Flipkart and Focus 3 - There’s Something (Profitable) About Your Privacy

Wed, 2015-05-20 10:45
The third in my series on Flipkart and focus appeared in DNA on April 18th, 2015.



Part III – There’s Something (Profitable) About Your Privacy
Why do so many companies hanker after apps? Smartphone apps, tablet apps, iOS apps, Android apps, app-this, app-that….
Leave aside for a moment the techno-pubescent excitement that accompanies the launch of every new technology (if you are not old enough to remember words like “client-server[1]”, then “soa[2]” will surely sound familiar enough). Every Marketing 101 course drills into its students that acquiring a new customer is way costlier than retain an existing. Loyal customers (leaving aside the pejorative connotation the word “loyal” carries, implying that customers who shop elsewhere for a better deal are of dubious moral character) are what you should aspire to – that keep buying from you for a longer period of time[3] – and which allows you to refocus your marketing and advertising dollars towards the acquisition of newer customers, faster. If you spend less on unnecessary discounts and expensive retention schemes then margins from existing customers are automatically higher.



Customers can stay loyal if you can build a bond of affinity with them. You should aspire to be more like the local kirana owner (only infinitely richer), who in a perfect world knew everything about you – your likes, dislikes, which festivals you celebrated, and therefore which sweets you would buy, when your relatives came over to stay and what their likes were, what exotic food items you wanted, and so on. And who knew your name. Hence the marketer’s love for loyalty programs[4], no matter that customer loyalty is notoriously difficult to guarantee[5].

In the world of online retailing (actually, it applies just as well to any kind of retailing), how do you get to acquire a deep level of intimacy with your customer? Smartphone apps provide this degree of intimacy that desktop / laptop browsers cannot. This is by simple virtue of the fact that the smartphone travels with the user, the user is constantly logged on to the app, and the app knows where you go and where you are. So no wonder that in December 2011, Amazon offered a “brazen[6]” deal to its customers in brick-and-mortar stores to do an “in-store” price-check of items using the Amazon Price Check app[7], and if the same product was available on Amazon, get it at a discount off the store’s price. Though termed “not a very good deal[8]”, it nonetheless angered[9] the Retail Industry Leaders Association, and elsewhere was described as “Evil But It's the Future[10]”. The combination of availability – the app was installed on the smartphone that was with the user – and the integrated capabilities in the device – a camera that fed into a barcode scanner app –made this possible. The appeal of apps is undeniable.

The magical answer is – “app”. Your best-thing-since-sliced-bread app is installed on the customer’s smartphone (or tablet or phablet), is always running (even when it is not supposed to be running), knows everyone in your contacts (from your proctologist to the illegal cricket bookie), can hear what you speak (even your TV can do this now[11]), knows where you are, who you call, what text messages you send and receive, knows what other apps you have installed on your smartphone (presumably so it can see how potentially disloyal you could be), which Wi-Fi networks you connect to, access what photos and videos you have taken (naughty!) and so on and so forth. All this the better to hear you with, the better to see you with, and ultimately the better to eat you (your wallet) with – with due apologies to Little Red Riding Hood[12]. You may want to take a closer look at the permissions your favorite app wants when you install it – like Amazon India[13], eBay[14], Flipkart[15], Freecharge[16], HomeShiop18[17], Jabong[18], MakeMyTrip[19], Myntra[20], SnapDeal[21]. Great minds do seem to think alike, don’t they?

[Technical aside: I covered the red herrings thrown in favour of apps in the first part, but here is some more… You can store more data, more effectively, and process that data better using an app than you can with a plain browser-based approach. True. But not quite. The ever-evolving world of HTML5 (the standard that underpins how information is structured and presented on the web) has progressed to make both these points moot – with offline storage[22] and local SQL database support[23]. Yes, there are arguments to be made about handling large amounts of data offline with browser-based mechanisms, but these are for the most part edge-cases. To be fair, there are some high-profile cases of companies switching to native apps after experimenting with HTML5-based apps (hybrid apps that wrapped a browser-based UI with a native shell), like LinkedIn[24] and Facebook[25]. The appeal of apps therefore is undeniable. But, as I argued earlier, the appeal of apps does not negate the utility of browser-based interfaces.]

What is all this useful for? Your app now knows that you Ram, Shyam, and Laxman in your contacts have birthdays coming up, and it can suggest an appropriate gift for them. Convenient, isn’t it? While driving to work, you can simply tell your app – speak out the commands – to search for the latest perfume that was launched last week and to have it gift wrapped and delivered to your wife. The app already has your credit card details, and it knows your address. Your app knows that you are going on a vacation next week (because it can access your calendar, your SMS-es, and perhaps even your email) to Sikkim; it helpfully suggests a wonderful travel book and some warm clothing that you may need. The imagined benefits are immense.

But, there is a distinctly dark side to apps – as it relates to privacy – that should be a bigger reason of concern for customers and smartphone users alike. Three sets of examples should suffice.
You get a flyer from your favourite brick-and-mortar store, letting you know that you can buy those items that your pregnant daughter will need in the coming weeks. You head over to the store, furious – because your daughter is most certainly not pregnant. Later you find out that she is, and that the store hadn’t made a mistake. It turns out the truth is a little more subtler than that[26], and a little more sedate than what tabloid-ish coverage - with headlines like “How Companies Learn Your Secrets[27]” - made it out to be (the original presentation made at the PAW Conference is also available online[28]).

There are enough real dangers in this world without making it easier to use technology to make it even more unsafe. Considering how unsafe[29] air travel can be for women[30] and even girls[31], one has to question the wisdom of making it even[32] more so[33]. If this does not creep you out, then perhaps the Tinder app – which uses your location and “displays a pile of snapshots of potential dates in a user’s immediate area”[34], to as close as within 100 feet[35] - may give you pause for thought.

Do apps need all the permissions they ask for? No. But, … no! Would they work if they didn’t have all those permissions? 99% of the time, yes – they would work without a problem. For example, an app would need to access your camera if you wanted to scan a barcode to look up a product. The app would need access to your microphone if you wanted to speak out your query rather than type it in the app. What if you don’t particularly care about pointing your camera at the back of books to scan their barcodes, or speaking like Captain Kirk into your phone? Sorry, you are out of luck. You cannot selectively choose to not grant to certain privileges to an app – at least on a device running the Android mobile operating system. In other words, it is a take-it-or-leave-it world, where the app developer is in control. Not you. And wanting to know your location? Even if you are a dating app, it’s still creepy.

But surely app makers will ask you before slurping your very personal, very private information to its servers in the cloud? Yes, of course – you believe that to be true, especially if you are still in kindergarten.

A few weeks before its IPO[36], JustDial’s app was removed from the Google Play Store[37]. It was alleged that the updated version of the JustDial app had “started retrieving and storing the user’s entire phone book, without a warning or disclaimer. [38],[39]” Thereafter, JustDial’s mobile “Terms and Conditions” were updated to include the following line: “You hereby give your express consent to Justdial to access your contact list and/or address book for mobile phone numbers in order to provide and use the Service.[40]

In 2013, US-based social networking app Path was caught as it “secretly copied all its users’ iPhone address books to its private servers.”[41] Action was swift. The FTC investigated and reached a settlement with Path, which required “Path, Inc. to establish a comprehensive privacy program and to obtain independent privacy assessments every other year for the next 20 years. The company also will pay $800,000 to settle charges that it illegally collected personal information from children without their parents’ consent.”[42] In the US, a person’s address book “is protected under the First Amendment[43].” When the controversy erupted, it was also reported that “A person’s contacts are so sensitive that Alec Ross, a senior adviser on innovation to Secretary of State Hillary Rodham Clinton, said the State Department was supporting the development of an application that would act as a “panic button” on a smartphone, enabling people to erase all contacts with one click if they are arrested during a protest[44].” Of course, politics is not without its dose of de-rigueur dose of irony. That dose was delivered in 2015 when it emerged that Hillary Clinton had maintained a private email account even as she was Secretary of State in the Barack Obama presidency and refused to turn over those emails[45].

So what happened to Just Dial for allegedly breaching its users’ privacy? Nothing. No investigation. No fine. No settlement. No admission. No mea-culpa. In short, nothing. It was business as usual.
Apps can be incredibly liberating in eliminating friction in the buying process. But hitching your strategy to an app-only world is needless. It is an expensive choice – from many, many perspectives, and not just monetary. The biggest costs are of making you look immature should you have to reverse direction. As a case-in-point, one can point to the entirely avoidable brouhaha over Flipkart, Airtel, and Net Neutrality[46]. In this battle, no one came smelling like roses, least of all Flipkart, which attracted mostly negative attention[47] from the ill-advised step, notwithstanding post-fact attempts to bolt the stable door[48].

Let me end with an analogy. The trackpad on your laptop is very, very useful. Do you then disable the use of an externally connected mouse?

Disclaimer: views expressed are personal.


[1] "Computerworld - Google Books", https://books.google.co.in/books?id=c2t_-WWE1VAC&pg=PA109&lpg=PA109&dq=client-server+hype&source=bl&ots=SJGHWFM-M5&sig=g6sagoJV_xVSvp22-rgOonfLpNY&hl=en&sa=X&ei=x1ExVb3NKYeumAX2_IGICQ&ved=0CDYQ6AEwBA#v=onepage&q=client-server%20hype&f=false
[2] "SOA: Hype vs. Reality - Datamation", http://www.datamation.com/entdev/article.php/3671061/SOA-Hype-vs-Reality.htm
[3] "How Valuable Are Your Customers? - HBR", https://hbr.org/2014/07/how-valuable-are-your-customers/
[4] "Loyalty programmes: Are points that consumers stockpile juicy enough to keep them coming back? - timesofindia-economictimes", http://articles.economictimes.indiatimes.com/2013-06-30/news/40272286_1_loyalty-programmes-loyalty-card-loyalty-management
[5] "What Loyalty? High-End Customers are First to Flee — HBS Working Knowledge", http://hbswk.hbs.edu/item/6679.html
[6] "Amazon's Price Check App Undercuts Brick-and-Mortar Stores Prices | TIME.com", http://business.time.com/2011/12/08/use-amazons-price-check-app-and-save-15-this-saturday/
[7] "Amazon.com Help: About the Amazon Price Check App", http://www.amazon.com/gp/help/customer/display.html?nodeId=200777320
[8] "Amazon pushing Price Check app with controversial online discounts | The Verge", http://www.theverge.com/2011/12/10/2626703/amazon-price-check-app-competition-discount
[9] "Retail association pissed about Amazon.com's Price Check app - GeekWire", http://www.geekwire.com/2011/retail-association-pissed-amazoncoms-price-check-app/
[10] "Amazon Price Check May Be Evil But It's the Future - Forbes", http://www.forbes.com/sites/erikkain/2011/12/14/amazon-price-check-may-be-evil-but-its-the-future/
[11] "Samsung smart TV issues personal privacy warning - BBC News", http://www.bbc.com/news/technology-31324892
[12] "Little Red Riding Hood - Wikipedia, the free encyclopedia", http://en.wikipedia.org/wiki/Little_Red_Riding_Hood
[13] https://www.dropbox.com/s/63zk6oyt9tqad4p/AmazonIndia_app.png?dl=0
[14] https://www.dropbox.com/s/g4tj1k5d5yfbqex/ebay_app.png?dl=0
[15] https://www.dropbox.com/s/wq0spvgzo9il6rx/Flipkart_app.png?dl=0
[16] https://www.dropbox.com/s/jxvur4g1jqdb03k/freecharge_app.png?dl=0
[17] https://www.dropbox.com/s/7aza8ipjvqhn6m1/HomeShop18_app.png?dl=0
[18] https://www.dropbox.com/s/jgel7ltka5u5ogr/Jabong_app.png?dl=0
[19] https://www.dropbox.com/s/wkqhewbizxpcw7w/MakeMyTrip_app.png?dl=0
[20] https://www.dropbox.com/s/pcp6hoy38pfkiw3/Myntra_app.png?dl=0
[21] https://www.dropbox.com/s/0gngd11rz2fpu3q/snapdeal_app.png?dl=0
[22] "Web Storage", http://dev.w3.org/html5/webstorage/
[23] "Offline Web Applications", http://www.w3.org/TR/offline-webapps/#sql
[24] "Why LinkedIn dumped HTML5 & went native for its mobile apps | VentureBeat | Dev | by J. O'Dell", http://venturebeat.com/2013/04/17/linkedin-mobile-web-breakup/
[25] "Mark Zuckerberg: Our Biggest Mistake Was Betting Too Much On HTML5 | TechCrunch", http://techcrunch.com/2012/09/11/mark-zuckerberg-our-biggest-mistake-with-mobile-was-betting-too-much-on-html5/
[26] "Did Target Really Predict a Teen’s Pregnancy? The Inside Story", http://www.kdnuggets.com/2014/05/target-predict-teen-pregnancy-inside-story.html
[27] "How Companies Learn Your Secrets - NYTimes.com", http://www.nytimes.com/2012/02/19/magazine/shopping-habits.html?_r=0
[28] "Predictive Analytics World Conference: Agenda - October, 2010", http://www.predictiveanalyticsworld.com/dc/2010/agenda.php#day1-8a
[29] "Federal judge upholds verdict that North Bergen man molested woman on flight ‹ Cliffview Pilot", http://cliffviewpilot.com/federal-judge-upholds-verdict-that-north-bergen-man-molested-woman-on-flight/
[30] "Man accused of groping woman on flight to Newark - NY Daily News", http://www.nydailynews.com/new-york/man-accused-groping-woman-flight-newark-article-1.1709952
[31] "Man jailed for molesting girl, 12, on flight to Dubai | The National", http://www.thenational.ae/uae/courts/man-jailed-for-molesting-girl-12-on-flight-to-dubai
[32] "Virgin is Going to Turn Your Flight Into a Creepy Bar You Can't Leave", http://mic.com/articles/37807/virgin-is-going-to-turn-your-flight-into-a-creepy-bar-you-can-t-leave
[33] "KLM Introduces A New Way To Be Creepy On An Airplane - Business Insider", http://www.businessinsider.com/klm-introduces-a-new-way-to-be-creepy-on-an-airplane-2012-2?IR=T
[34] "Tinder Dating App Users Are Playing With Privacy Fire - Forbes", http://www.forbes.com/sites/anthonykosner/2014/02/18/tinder-dating-app-users-are-playing-with-privacy-fire/
[35] "Include Security Blog | As the ROT13 turns….: How I was able to track the location of any Tinder user.", http://blog.includesecurity.com/2014/02/how-i-was-able-to-track-location-of-any.html
[36] http://en.wikipedia.org/wiki/Justdial, accessed April 11, 2015
[37] "Updated: JustDial App Pulled From Google Play Store; Privacy Concerns? - MediaNama", http://www.medianama.com/2012/09/223-justdial-app-pulled-from-google-play-store-privacy-concerns/
[38] "Updated: JustDial App Pulled From Google Play Store; Privacy Concerns? - MediaNama", http://www.medianama.com/2012/09/223-justdial-app-pulled-from-google-play-store-privacy-concerns/
[39] "Bad App Reviews for Justdial JD", http://www.badappreviews.com/apps/147872/justdial-jd-search-anything, accessed April 09, 2015
[40] "Terms Of Use”, http://www.justdial.com/MobileTC, accessed April 09, 2015
[41] "The Path Fiasco Wasn't A Privacy Breach, It Was A Data Ownership Breach - The Cloud to Cloud Backup Blog", http://blog.backupify.com/2012/02/09/the-path-fiasco-wasnt-a-privacy-breach-it-was-a-data-ownership-breach/
[42] "Path Social Networking App Settles FTC Charges it Deceived Consumers and Improperly Collected Personal Information from Users' Mobile Address Books | Federal Trade Commission", https://www.ftc.gov/news-events/press-releases/2013/02/path-social-networking-app-settles-ftc-charges-it-deceived
[43] "Anger for Path Social Network After Privacy Breach - NYTimes.com", http://bits.blogs.nytimes.com/2012/02/12/disruptions-so-many-apologies-so-much-data-mining/?_r=0
[44] Ibid.
[45] "Hillary Clinton deleted 32,000 'private' emails, refuses to turn over server - Washington Times", http://www.washingtontimes.com/news/2015/mar/10/hillary-clinton-deleted-32000-private-emails-refus/
[46] "Flipkart Pulls Out of Airtel Deal Amid Backlash Over Net Neutrality", http://www.ndtv.com/india-news/flipkart-pulls-out-of-airtel-deal-amid-backlash-over-net-neutrality-754829
[47] "Flipkart's stand on net neutrality - The Hindu", http://www.thehindu.com/business/flipkarts-stand-on-net-neutrality/article7106072.ece

[48] "Our Internet is headed in the right direction: Amod Malviya - Livemint", http://www.livemint.com/Companies/1J4CaeGnXvKCbwvWW76J6H/Our-Internet-is-headed-in-the-right-direction-Amod-Malviya.html


© 2015, Abhinav Agarwal (अभिनव अग्रवाल). All rights reserved.

Flipkart and Focus - 2 - Mobile Advertising Numbers Can Be Misleading

Sat, 2015-05-09 10:44
The second part of my series of articles on why I believed Flipkart was at losing focus, at the wrong time, when faced with its most serious competition to date. This one focused on why a fascination with mobile advertising numbers could be very misleading.
It was published in DNA on April 14, 2015.

The Numbers Game Can be Very Misleading
According to the Internet Trends report of 2014, mobile internet advertising spend grew 47% year-on-year in 2013 to reach $12.7 billion, or 11% of the total global internet advertising spend. This mobile ad spend number was about 32 per cent of total mobile app revenues of $38 billion. Clearly mobile ad spend has been growing several times faster than non-mobile ad spend.
Facebook, the world’s largest social network, has been stunningly successful in growing its mobile revenues. So much so that “In the final three months of 2014, Facebook served 65% fewer ads than a year earlier, but the average cost of those ads to advertisers was 335% higher.[i]” As much as $2.5 billion in Facebook’s annual revenues came from these mobile ads – shown on smartphones or tablets. So successful has Facebook been in making money from selling these mobile ads that it “launched its in-app mobile ad network” in 2014[ii] to sell ads within other apps,


Meanwhile, Google has not been standing still. It is by far the largest player on the internet when it comes to online ads with estimated annual mobile ad revenues of $8 billion in 2013[iii], but its presence on the mobile platform has seen some hiccups. Its overall slice of the mobile ad pie has been shrinking, thanks to Facebook’s steroidal growth in the segment, but as an overall number Google’s mobile ad revenues continue to grow. It was estimated that Google and Facebook held a combined 50 per cent share of the global mobile ad revenue market in 2014[iv]. It is however a given that not only will it continue to persevere in that segment, but will sooner or later figure out the right approach to get growth back on track – given that less and less users were spending time on mobile browsers than on apps. For example, Google added deep-links[v] to its mobile search results[vi], so that users could click to be taken directly to a specific page (or its equivalent) in an app if they had that app installed[vii]. It also announced that it would start using “mobile-friendliness as a ranking signal” in its mobile search results[viii]. In yet another effort to boost ads on its app store, Google Play, it announced a pilot program to help app developers build targeted ads for search results on Google Play[ix]. It is expected that these will yields results in the coming quarters. Nor is it the case that everything is negative for Google on the mobile front. YouTube, for example, continued to be a star performer for Google. Google CFO stated that “YouTube’s mobile revenue (in 2014) increased more than 100 percent over[x]

Let’s not forget Twitter. “Mobile advertising revenue was 85% of total advertising revenue[xi]”, or $272 million, in in its third quarter of 2014.
In a somewhat incongruous presence, we also have Indian startup InMobi, with estimated annual revenues of $372 million, and which is also estimated to be the “biggest non-public mobile ad business on the planet.[xii]” Yes, that is very, very impressive and creditable. There are several other start-ups in this space; for example, Kenshoo, whose “CEO Izhar-Prato Says $15 Billion In Annual, Online Sales Revenue Flowing Through Platform[xiii]."

So, the decision to enter the mobile ad business should seem like a non-brainer, right? After all, didn’t Google CEO Eric Schmidt say that Amazon was Google’s biggest competitor in search[xiv]? Also, didn’t Amazon have search ambitions, seeking to start first with replacing Google ads that are served on Amazon’s pages[xv]?

Not quite, one hopes.

Before you gush over the fact that 98% of Facebook’s revenue growth in its latest quarter were accounted for by mobile ads[xvi], also note that Facebook has 745 million users on an average day (that is more than 22 billion visits a month) visiting its site via mobile devices[xvii]. By the by, Facebook crossed one trillion page views in 2011[xviii], so the company does not quite have a burning problem of engagement either on its hands.

Twitter’s numbers were achieved on the back of 181 billion (yes, that is 181 followed by nine zeros) timeline views by its 284 million monthly active users, of which 227 million were mobile users[xix].
Flipkart, by contrast, had “8 million daily visits” to its web sites – I assume desktop, mobile, and app combined – as of December 2014[xx].

Amazon, despite not being known as a search player, is still estimated to have sold $1 billion in search ads in 2014[xxi].

Much has been said and written about Google’s search business; so I will add just one more point here – Google AdWords has more than one million advertisers[xxii].

And if you are a start-up hoping to make it big by either acquiring or getting acquired, do take a minute to ponder on the sobering reality-check in the form of Velti’s meltdown[xxiii].

This is not to pour cold water over Flipkart’s acquisition of Bangalore-based AdIquity[xxiv] (which had raised $15 million from VC firms and was at one point known as Guruji[xxv]), or on Sachin Bansal’s statement, “"I believe it (mobile advertising) can be a big business for us[xxvi]". Far from it. Every company should look aggressively for avenues to disrupt existing business models as well as leverage strengths in one area to prise open a market in another area. That is what every leader aspires to do.

But, if you believe, as a start-up locked in a duel with a company like Amazon that has planted its feet in the Indian market and which is comfortable with having earned less profits in its entire existence than Apple in one quarter[xxvii],[xxviii], with no profits on the horizon (I touched on this in the previous post), VCs that would be getting increasingly worried about their exit strategy (and hopefully profitable exit strategy at that), you have the luxury of entering a market such as mobile ads – on a global level – and where the competition consists of companies like Google, Facebook, and Twitter, then do not be surprised if you are accused of having lost focus.

In the next part I will take a look at why Flipkart may still believe that its app-only drive and mobile ad ambitions could provide synergies.

[i] "Facebook's Mobile Revenue Hits $2.5 Billion as Prices Soar | Digital - Advertising Age", http://adage.com/article/digital/facebook-s-mobile-revenue-hits-2-5-billion-prices-soar/296869/
[ii] "With Ad Network, Facebook Targets Rest of Mobile World | Digital - Advertising Age", http://adage.com/article/digital/ad-network-facebook-targets-rest-mobile-world/292959/
[iii] "Google's 2013 Mobile Search Revs Were Roughly $8 Billion", http://searchengineland.com/googles-2013-mobile-search-revenues-nearly-8-billion-globally-201227
[iv] "Google, Facebook combined for 50% of mobile ad revenues in 2014", http://www.networkworld.com/article/2881132/wireless/google-facebook-combined-for-50-of-mobile-ad-revenues-in-2014.html
[v] "Google To Offer Targeted Mobile App Install Ads In Search And YouTube; Expands App Deep Linking To AdWords | TechCrunch", http://techcrunch.com/2014/04/22/google-to-offer-mobile-app-install-ads-in-search-and-youtube-expands-app-deep-linking-to-adwords/
[vi] "Will Deep Linking Shake Google’s Ad and Search Supremacy?", http://www.cheatsheet.com/technology/will-deep-linking-shake-googles-ad-and-search-supremacy.html/?a=viewall
[vii] "Overview - App Indexing for Google Search — Google Developers", https://developers.google.com/app-indexing/
[viii] "Official Google Webmaster Central Blog: Finding more mobile-friendly search results", http://googlewebmastercentral.blogspot.in/2015/02/finding-more-mobile-friendly-search.html
[ix] "A New Way to Promote Your App on Google Play | Android Developers Blog", http://android-developers.blogspot.in/2015/02/a-new-way-to-promote-your-app-on-google.html
[x] "Google Continues To Miss Revenue Estimates In Fourth Quarter Earnings", http://www.forbes.com/sites/aarontilley/2015/01/29/google-continues-to-miss-revenue-estimates-in-fourth-quarter-earnings/
[xi] "Twitter Reports Third Quarter 2014 Results (NYSE:TWTR)", https://investor.twitterinc.com/releasedetail.cfm?releaseid=878170
[xii] "2. Inmobi: Probably The Biggest Non-Public Mobile Ad Business On The Planet- Business Insider India", http://www.businessinsider.in/RANKED-The-Hottest-Pre-IPO-Adtech-Startups-Of-2014/2-INMOBI-PROBABLY-THE-BIGGEST-NON-PUBLIC-MOBILE-AD-BUSINESS-ON-THE-PLANET/slideshow/34262656.cms
[xiii] "Kenshoo CEO Izhar-Prato Says $15 Billion In Annual, Online Sales Revenue Flowing Through Platform – AdExchanger", http://adexchanger.com/online-advertising/kenshoo/
[xiv] "Google's Eric Schmidt: Our biggest search competitor is Amazon — not Microsoft or Yahoo - GeekWire", http://www.geekwire.com/2014/google-amazon/
[xv] "Amazon to challenge Google in online-ad business - MarketWatch", http://www.marketwatch.com/story/amazon-to-challenge-google-in-online-ad-business-2014-08-24
[xvi] "Chart: Mobile Ads Account for 98% of Facebook's Revenue Growth | Statista", http://www.statista.com/chart/2496/facebook-revenue-by-segment/
[xvii] Ibid.
[xviii] "Facebook is first with 1 trillion page views, according to Google | ZDNet", http://www.zdnet.com/article/facebook-is-first-with-1-trillion-page-views-according-to-google/
[xix] "Twitter Reports Third Quarter 2014 Results (NYSE:TWTR)", https://investor.twitterinc.com/releasedetail.cfm?releaseid=878170
[xx] "Flipkart.com", http://www.flipkart.com/s/press and http://www.entrepreneurindia.com/news/Flipkart-join-hands-with-EPCH-VTPC-and-KASSIA-to-help-small-entrepreneurs-5801/
[xxi] "Amazon to challenge Google in online-ad business - MarketWatch", http://www.marketwatch.com/story/amazon-to-challenge-google-in-online-ad-business-2014-08-24
[xxii] Ibid.
[xxiii] "How Velti, One Of The Largest Mobile Ad Companies On The Planet, Lost $130 Million | Business Insider India", http://www.businessinsider.in/How-Velti-One-Of-The-Largest-Mobile-Ad-Companies-On-The-Planet-Lost-130-Million/articleshow/22238675.cms
[xxiv] "Flipkart eyes more buys to boost mobile advertisement business - The Times of India", http://timesofindia.indiatimes.com/business/india-business/Flipkart-eyes-more-buys-to-boost-mobile-advertisement-business/articleshow/46616114.cms
[xxv] "Flipkart Acquires Mobile Ad Platform, Adiquity » NextBigWhat", http://www.nextbigwhat.com/flipkart-acquires-adiquity-297/
[xxvi] "Flipkart eyes more buys to boost mobile advertisement business - The Times of India", http://timesofindia.indiatimes.com/business/india-business/Flipkart-eyes-more-buys-to-boost-mobile-advertisement-business/articleshow/46616114.cms
[xxvii] "Amazon earnings: How Jeff Bezos gets investors to believe in him.", http://www.slate.com/articles/business/moneybox/2014/01/amazon_earnings_how_jeff_bezos_gets_investors_to_believe_in_him.html
[xxviii] "Rolfe Winkler on Twitter: "Apple's operating cash flow in Q4 -- $33.7 billion. Amazon's since 1994 -- $27.0 billion."", https://twitter.com/rolfewinkler/status/560214596532043776


© 2015, Abhinav Agarwal (अभिनव अग्रवाल). All rights reserved.

Flipkart and Focus - 1 - Losing It?

Wed, 2015-04-22 10:48
This is the first of a series of articles I wrote for DNA in April on why I believed Flipkart (India's largest online retailer and among the most highly valued startups in the world) was at losing focus, at the wrong time, when faced with its most serious competition to date.

"Why Flipkart seems to be losing focus", appeared in DNA on Sunday, April 12, 2015.

Part I
Among all start-ups that have emerged from India in recent and not-so recent times, Flipkart is likely to be at the top of most people’s minds. The list is admittedly weighted heavily in favour of newer companies, given that the Indian start-up ecosystem has only in the last decade or so started to pick up steam. But that is changing, and the list is getting longer and diverse, with such names as Urban Ladder, Zomato, Reel, Druva Software, WebEngage, etc…[1] in just the online segment. But today, in 2015, Flipkart is the big daddy of them; with total equity funding of US $2.5 billion and a valuation of a whopping US$11 billion as of April 2015, it was ranked the seventh most valuable start-up in the world[2] (though that was still a far cry from the $178 billion market cap enjoyed by US online retailer Amazon[3] and $220 billion market cap of Chinese online retailer Alibaba[4]).

Yet Flipkart seems to be in trouble.


Let’s ignore for the time being the fact that it loses much more money than it makes, and that scale does not seem to have lessened the bleeding of money – it’s caught in a situation where the more it sells the more it loses[5],[6]. How much of it is by design – i.e., a result of a decision to focus on scale and top-line, consciously sacrificing the bottom-line in the interim – is up for debate, but that Flipkart is a long way from profitability is undeniable. Let’s ignore this for the time being.

First off, it is no mean feat to start a company out of the proverbial garage and grow it, in less than a decade (since its start in 2007), into a billion dollar start-up[7]. And make it a leader in an industry. And do it in India. Flipkart has managed to do all that, and more. It has established, spectacularly so, that an Indian start-up can make it to the very top in a fiercely-contested space. Flipkart is, for the most part, has been a spectacularly successful start-up by most counts. Let nothing distract from that fact.

So why the hand-wringing? In one word, focus. Flipkart seems to be losing focus. Three reasons stand out in my mind.

First, the ongoing controversy and its decision to shutter its browser-based web site and force customers to use only its mobile app – on smartphones and tablets.
It has already shut down the mobile browser site of Mnytra – the online fashion retailer it acquired in 2014[8]. Navigate to Flipkart’s website on your browser from your smartphone or tablet and you have no choice but to download and install the app. Come May 1st, and Myntra’s website is planned to be shutdown completely![9] Elsewhere, there have been more than a whiff of rumours that Flipkart is contemplating shutting down its website[10]. This seems not only quite unnecessary, but more importantly, indicative of the grandstanding that is coming to mark some of Flipkart’s actions. Shutting down the web site to become an app-only retailer harms the company in tangible, monetary terms, while benefitting it in the currency of zero-value digital media ink.

WhatsApp, the world’s largest instant-messaging application and which started out and since its launch existed as only a mobile app – with more than 700 million users[11] - launched a browser version of its application in January 2015[12]. Facebook, the world’s largest social network, launched a browser version of its mobile app[13], Facebook Messenger. In case you are tempted to argue that Facebook took that step out of some sort of desperate need to boost numbers, keep in mind that Facebook Messenger had 500 million users in March 2015[14], before it launched its browser version of Messenger. Let’s round off with one more example: Flipboard, with more than 100 million users in 2014[15], launched a browser version in Feb 2015[16]. Yet Flipkart wants to shut down its website.

Is it because of technology? Limitations of mobile browsers? Well, yes, if you are still living in 2010. Half a decade is an eternity in Internet years! Small screen sizes were a big reason why apps were preferred a few years ago, where browser chrome (the title bar, address bar, footer, etc…) would eat up a substantial amount of precious screen real-estate. But in today’s world of gigantic 5” and larger screens, with HD or higher resolutions, this is a moot point[17]. Smartphones are becoming faster and more powerful – quad-core processors and multiple gigabytes of memory are more and more commonplace, 3G is gaining increased adoption even in emerging markets as India. With the availability of UI systems like jQuery Mobile and frameworks like PhoneGap that make a web site adapt to different form factors and which provide substantial support for gestural interactions without additional coding, old arguments hold little water. Unless perhaps you are a gaming developer.

Which Flipkart is not.

Another much-touted argument is that in a country like India, most of the online usage is now coming from mobile devices – smartphones and tablets. India has been ahead of the curve – perversely thanks to its anemic and sparse broadband coverage. According to Mary Meeker’s much-watched-read-downloaded “Internet Trends” presentation at the D10 Conference in May 2012, “Mobile Internet Usage Surpassed More Highly Monetized Desktop Internet Usage in May, 2012, in India”[18]. Indicative of this shift is the fact that in 2014 global smartphone sales overtook feature phone sales, for the first time. A little more than a billion phones were sold of each type[19]. Most of India’s billion mobile users will move towards smartphones by 2020. However, there is, and should be, scepticism over numbers – especially that project into the future. A report that estimated the number of Internet users in India at 300 million by Dec 2014 was questioned by NextBigWhat, a “A Global Media Platform For Technology Entrepreneurs”[20].

But with so little revenue coming from the web site, a Flipkart cannot afford to continue to maintain its website. “It just isn’t viable to have three separate platforms” - so goes one argument[21]. But this thinking betrays a lack of understanding of the distinction between a platform and a consumption channel on the one hand and an even poorer understanding of how complex software applications have been architected for many years now (and especially those that live in the cloud). The code, APIs, database, web server, middleware, identity management, authentication, shopping cart, order fulfilment, security – all of these are common whether you are accessing a site through a website or a mobile app or a mobile browser or even via a wearable device. If you prefer techno-alphabet-soup to describe this, you use a SOA-based approach to software design[22]. Developing a new user interface – desktop, mobile, tablet, etc… - becomes an incremental effort rather than a multi-year, multi-million dollar exercise.

Yes, many technology innovations in the world of retailing are happening in a way that is inextricably intertwined with mobile – like mobile payments and hyperlocal retailing for instance. Wal-Mart uses its mobile app to guide customers to and within its stores (using location tracking via GPS[23]). But they are not shutting down their website either.

If you are in the happy situation of having too many customers, and are ok with ceding a third or more of the online retail market to your competition[24], then shutting down an important channel for your sales is a good idea. And no, let’s not have the argument about cars and buggies either[25].

So why is Flipkart so obsessed, to the point of distraction, with the mobile app strategy?
Customer information and its mobile search ambitions for one.

End of Part I

[1] See "80+ Indian startups to work for in 2015", http://yourstory.com/2014/12/top-startups-india-work-job-employee/ , "80+ Indian startups to work for in 2015", http://yourstory.com/2014/12/top-startups-india-work-job-employee/, and "India Top | Startup Ranking", http://www.startupranking.com/top/india for a more exhaustive list.
[2] "The Billion Dollar Startup Club - WSJ.com", http://graphics.wsj.com/billion-dollar-club/ - accessed April 8, 2015.
[3] "Amazon.com, Inc.: NASDAQ:AMZN quotes & news - Google Finance", http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1428639923069&chddm=1173&chls=IntervalBasedLine&q=NASDAQ:AMZN&ntsp=0&ei=sFAnVeC4NpD6uAT5zIHoCg, accessed April 10, 2015
[4] "Alibaba Group Holding Ltd: NYSE:BABA quotes & news - Google Finance", http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1428640100641&chddm=1173&chls=IntervalBasedLine&q=NYSE:BABA&ntsp=0&ei=X1EnVamuCInwuAS5koAo , accessed April 10, 2015
[5] Per http://www.livemint.com/Companies/nEzvGCknQDBY2RgzcVAKdO/Flipkart-India-reports-loss-of-2817-crore.html, for the year ending March 31, 2013, “Revenue soared fivefold to more than Rs.1,180 crore from Rs.204.8 crore in the previous year”, but “expenses jumped more than five times to Rs.1,366 crore from Rs.265.6 crore last year” – clearly, they were not yet at the point where they could reap economies of scale. As an aside, Flipkart’s Mar 2009 FY revenues were approximately 2.5 crore rupees - http://www.sramanamitra.com/2010/10/06/building-indias-amazon-flipkart-ceo-sachin-bansal-part-3/ - and approximately 30 crore rupees for FY 2010 - http://www.sramanamitra.com/2010/10/07/building-indias-amazon-flipkart-ceo-sachin-bansal-part-4/.
[6] "For the year ended 31 March 2014, the losses of all Flipkart India entities amounted to Rs.719.5 crore on revenue of Rs.3,035.8 crore, according to data compiled by Mint from the Registrar of Companies (RoC) and Acra.", http://www.livemint.com/Companies/VXr8oJzNJ4daOYSO5wNETN/Inside-Flipkarts-complex-structure.html This tells us that both expenses and revenues are growing almost in lock-step – economies of scale are still elusive.
[7] "Flipkart claims to have hit a run rate of $1 bn in gross sales", http://www.business-standard.com/article/companies/flipkart-claims-to-have-hit-a-run-rate-of-1-bn-in-gross-sales-114030700029_1.html
[8] "Press Release - Flipkart.com", http://www.flipkart.com/s/press
[9] "Flipkart, Myntra Shut Mobile Websites, Force Visitors To Install Mobile App", http://trak.in/tags/business/2015/03/23/flipkart-myntra-shut-mobile-websites-force-mobile-app-install/
[10] "Flipkart moves towards becoming app-only platform - Livemint", http://www.livemint.com/Industry/J9VeQxowSOlHU8ZMUParUL/Flipkart-moves-towards-becoming-apponly-platform.html
[11] "• WhatsApp: number of monthly active users 2013-2015 | Statistic", http://www.statista.com/statistics/260819/number-of-monthly-active-whatsapp-users/
[12] "WhatsApp Web - WhatsApp Blog", https://blog.whatsapp.com/614/WhatsApp-Web
[13] "Facebook Launches Messenger for Web Browsers | Re/code", http://recode.net/2015/04/08/facebook-launches-messenger-for-web-browsers/
[14] "Facebook new Messenger service reaches 500 million users - BBC News", http://www.bbc.com/news/technology-29999776
[15] "The Inside Story of Flipboard, the App That Makes Digital Content Look Magazine Glossy", http://www.entrepreneur.com/article/234925
[16] "Flipboard Launches a Web Version For Reading Anywhere", http://thenextweb.com/apps/2015/02/10/flipboard-launches-full-web-version-display-feeds-browser/
[17] "The Surprising Winner of the HTML5 Versus Native Apps War | Inside BlackBerry", http://blogs.blackberry.com/2015/01/surprising-winner-of-html5-apps-war/
[18] "KPCB_Internet_Trends_2012_FINAL.pdf", http://kpcbweb2.s3.amazonaws.com/files/58/KPCB_Internet_Trends_2012_FINAL.pdf?1340750868
[19] "Global feature phone and smartphone shipments 2008-2020 | Forecast", http://www.statista.com/statistics/225321/global-feature-phone-and-smartphone-shipment-forecast/
[20] "300 million Internet Users in India By Dec? Grossly Wrong [10+ Questions to IAMAI] » NextBigWhat", http://www.nextbigwhat.com/300-million-india-internet-users-iamai-297/
[21] "Flipkart, Myntra’s app-only move draws mixed reactions - Livemint", http://www.livemint.com/Industry/v6SCQhhl94uriMLM3Qev6N/Flipkart-Myntras-apponly-move-draws-mixed-reactions.html
[22] "The Secret to Amazons Success Internal APIs ·", http://apievangelist.com/2012/01/12/the-secret-to-amazons-success-internal-apis/
[23] "Walmart Mobile - Walmart.com", http://www.walmart.com/cp/Walmart-Mobile-App/1087865
“[24] In 2014, 50 per cent of shopping queries were made through mobile devices, compared to 24 per cent in 2012”, http://www.business-standard.com/article/companies/google-says-indian-e-commerce-market-to-hit-15-bn-by-2016-114112000835_1.html
[25] "Failing Like a Buggy Whip Maker? Better Check Your Simile - NYTimes.com", http://www.nytimes.com/2010/01/10/business/10digi.html?_r=0

© 2015, Abhinav Agarwal (अभिनव अग्रवाल). All rights reserved.

Big changes ahead for India's IT majors

Tue, 2015-02-03 02:22
My article on challenges confronting the Indian IT majors was published in DNA in January 2015.

Here is the complete text of the article - Big changes ahead for India's IT majors:

Hidden among the noise surrounding the big three of the Indian IT industry - TCS, Wipro, and Infosys - was a very interesting sliver of signal that points to possibly big changes on the horizon. Though Cognizant should be counted among these biggies - based on its size and revenues - let's focus on these three for the time being.

Statements made by the respective CEOs of Infosys and Wipro, and the actions of TCS, provide hints on how these companies plan on addressing the coming headwinds that the Indian IT industry faces. Make no mistake. These are strong headwinds that threaten to derail the mostly good fairy tale of the Indian IT industry. Whether it is the challenge of continuing to show growth on top of a large base - each of these companies is close to or has exceeded ten billion dollars in annual revenues; protecting margins when everyone seems to be in a race to the bottom; operating overseas in the face of unremitting resistance to outsourcing; or finding ways to do business in light of the multiple disruptions thrust by cloud computing, big data, and the Internet of Things, they cannot continue in a business-as-usual model any longer.



For nearly two decades the Indian IT industry has grown at a furious pace, but also grown fat in the process, on a staple diet of low-cost business that relied on the undeniable advantage of labour-cost arbitrage. Plainly speaking, people cost a lot overseas, but they cost a lot less in India. The favourable dollar exchange-rate ensured that four, five (or even ten engineers at one point in time) could be hired in India for the cost of one software engineer in the United States. There was no meaningful incentive to either optimize on staffing, or build value-added skills when people could be retained by offering fifteen per cent salary hikes, every year. Those days are fast fading, and while the Indian IT workforce's average age has continued to inch up, the sophistication of the work performed has not kept pace, resulting in companies paying their employees more and more every year for work that is much the same.

TCS, willy nilly, has brought to the front a stark truth facing much of the Indian IT industry - how to cut costs in the face of a downward pressure on most of the work it performs, which has for the most part remained routine and undifferentiated. Based on a remark made by its HR head on "layoffs" and "restructuring" that would take place over the course of 2015, the story snowballed into a raging controversy. It was alleged that TCS was planning on retrenching tens of thousands of employees - mostly senior employees who cost more than college graduates with only a few years of experience. Cursory and level-headed thinking would have revealed that prima-facie any such large layoffs could not be true. But such is the way with rumours - they have long legs. What however remains unchanged is the fact that without more value-based business, an "experienced" workforce is a drag on margins. It's a liability, not an asset. Ignore, for a minute, the absolute worst way in which TCS handled the public relations fiasco arising out of its layoff rumours - something even its CEO, N Chandraskaran, acknowledged. Whether one likes it or not, so-called senior resources at companies that cannot lay claim to skills that are in demand will find themselves under the dark cloud of layoffs. If you prefer, call them "involuntary attrition", "labour cost rationalization", or anything else. The immediate reward of a lowered loaded cost number will override any longer-term damage such a step may involve. If it is a driver for TCS, it will be a driver for Wipro and Infosys.

Infosys, predictably, and as I had written some six months back, is trying to use the innovation route to find its way to both sustained growth and higher margins. Its CEO, Vishal Sikka, certainly has the pedigree to make innovation succeed. His words have unambiguously underlined his intention to pursue, acquire, or fund innovation. Unsurprisingly, there are several challenges to this approach. First, outsourced innovation is open to market risks. If you invest early enough, you will get in at lower valuations, but you will also have to cast a wider net, which requires more time and focus. Invest later, and you pay through your nose by way of sky-high valuations. Second, external innovation breeds resentment internally. It sends the message that the company does not consider its own employees "good enough" to innovate. To counter this perception, Vishal has exhorted Infosys employees "to innovate proactively on every single thing they are working on." This is a smart strategy. It is low cost, low risk, and a big morale booster. However, it also distracts. Employees can easily get distracted by the "cool" factor of doing what they believe is innovative thinking. "20%" may well be a myth in any case. How does a company put a process in place that can evaluate, nurture, and manage innovative ideas coming out of tens of thousands of employees? Clearly, there are issues to be balanced. The key to success, like in most other things, will lie in execution - as Ram Charan has laid out in his excellent book, unsurprisingly titled "Execution".

Lastly, there is Wipro. In an interview, Wipro's CEO, TK Kurien, announced that Wipro would use "subcontracting to drive growth". This seems to have gone largely unnoticed, in the industry. Wipro seems to have realized, on the basis of this statement at least, that it cannot continue to keep sliding down the slipper slope of low-cost undifferentiated work. If the BJP government's vision of developing a hundred cities in India into so-called "Smart Cities", one could well see small software consulting and services firm sprout up all over India, in Tier 2 and even Tier 3 cities. These firms will benefit from the e-infrastructure available as a result of the Smart Cities initiative on the one hand, and find a ready market for their services that requires a low cost model to begin with on the other. This will leave Wipro free to subcontract low-value, undifferentiated work, to smaller companies in smaller cities. A truly virtuous circle. In theory at least. However, even here it would be useful for Wipro to remember the Dell and Asus story. Dell was at one point among the most innovative of computer manufacturers. It kept on giving away more and more of its computer manufacturing business - from motherboard designing, laptop assembly, and so on - to Asus, because it helped Dell keep its margins high while allowing it to focus on what it deemed its core competencies. Soon enough, Asus had learned everything about the computer business, and it launched its own computer brand. The road to commoditization hell is paved with the best intentions of cost-cutting.

While it may appear that these three IT behemoths are pursuing three mutually exclusive strategies, it would be naïve to judge these three strategies as an either-or play. Wach will likely, and hopefully, pursue a mix of these strategies, focusing more on what they decide fits their company best, and resist the temptation to follow each other in a monkey-see-monkey-do race. Will one of the big three Indian IT majors pull ahead of its peers and compete with the IBM, Accenture, and other majors globally? Watch this space.

Junk Viz - When More is Less

Thu, 2015-01-15 04:41
There are examples of junk visualizations, and then there are examples of junk charts that just take your breath away.

The Indian news portal, FirstPost.in, which describes itself as a "trusted guide to the crush of news and ideas around you", published a story titled Shivraj set for massive victory in Madhya Pradesh: Survey | Firstpost, which has this chart (link to the image) - take a minute to study it. Then study it again. It is no optical illusion or card-trick being played here.

The estimated voteshare of the INC (Indian National Congress) party goes up from 37.6 to 44%, and yet the bar goes DOWN! Ditto for the BJP, whose vote share goes up from 32.4% in 2008 to an estimated 33%, and yet the bar goes DOWN!
If you started to think that the bars had somehow been switched, the third group - BSP - is drawn correctly.
And then you have the "OTHERS" - which plots an estimated vote share of 16% at where the 14% mark would fall.

The maker of this chart should be congratulated for getting so many things wrong in one simple bar chart.

(Thanks to Kumar for first sharing this chart with me.)

BI Mobile HD Universal App Released

Thu, 2015-01-15 04:41
A new version (11.1.1.7.0.1879) of the Oracle BI Mobile HD App was released to the Apple iTunes App Store on Wednesday. This release has several new features of note. This updated version also fixes some issues that were reported in the update that went out late last week on the 28th of June.

  • All users are recommended to upgrade to this version of the BI Mobile HD app. There were login issues with the iPad version of the earlier app and orientation issues with the iPhone app. Both issues were noticed almost immediately after the app went live on the App Store and development traced these to a problem with the configuration of the app uploaded to the App Store. 
  • Users will notice that this is app now supports the iPhone (and iPod) device also. Therefore users will see this app on their iPhone when they search for it on the App Store. 
  • There is now a demo server available for use with the BI Mobile HD app. This is available on both the smartphone and tablet versions of the app. This server is available on the Internet, so customers do not need to use any proxy or VPN settings to access this server. A connection to the demo server is pre-configured on the BI Mobile HD app, so you can access the server immediately after installing the app on your device. 
  • This version of the app is supported and certified for use with Oracle BI versions 11.1.1.6.2BP1 (released in July 2012) or higher, including 11.1.1.7.0 (April 2013) and 11.1.1.7.1 
  • If you are using Oracle BI version 11.1.1.5.0 (or any of the bundle patches for 11.1.1.5), you must continue to use the existing Oracle BI Mobile app (the latest version if 11.1.1.5.0.130403) on your iPhone and iPod devices. We do not expect to support Oracle BI versions prior to 11.1.1.6 on the new BI Mobile HD app. 
  • There is a redesigned home page experience on the iPad version of the BI Mobile HD app. 
  • Users can now set their default starting configuration on the iPad version of the app – whether they want to begin with the “Favorites” or "Most Recent" or "Dashboards – from the Settings panel. 
  • A "first-time help" overlay screen is displayed when you launch the app for the first time after installing it. If you need to get back to this screen subsequently, you can do so by selecting the "Show First Time Help" option from the Catalog page. 
  • The iPad version of the app contains a Settings "backstage", an area for you to customize the app and to manage server connection settings. 
  • The minimum iOS version supported on the BI Mobile HD app is iOS 6 and above.

Best wishes!
Abhinav
Bangalore, July 4, 2013

Lying with Charts - Global Warming Graph

Thu, 2015-01-15 04:41
Global warming is a serious yet controversial enough topic without bringing in bad data visualizations practices into it. The Wonkblog on the Washington Post has an article titled, "You can’t deny global warming after seeing this graph". The post reproduces a chart prepared by the World Meteorological Association that plots global temperatures by decade. While the data shows that the last decade, 2001-2010, was the hottest on record, the graph uses a broken Y-axis that begins at 13.4°C instead of starting at zero. The chart does not hide this fact, and you can see that the chart's Y-axis starts at 13.4°C, but the most visually prominent piece in the graph is, well, the graph! And it screams the message that global temperatures are going off the charts - it's time to panic. There is no denying that we as a world need to get serious about investing in alternative and renewable sources of energy like solar, wind, and even nuclear, but this graph is just plain bad.



The data: (from the web page):
Decade    Global temperate in °C
1881-1890 13.68 
1891-1900 13.67
1901-1910 13.59
1911-1920 13.64
1921-1930 13.76
1931-1940 13.89
1941-1950 13.95
1951-1960 13.92
1961-1970 13.93
1971-1980 13.95
1981-1990 14.12
1991-2000 14.26
2001-2010 14.47

How the data appears in a bar graph if plotted with the Y-axis starting at 13.4:

How the data appears in a bar graph if plotted with the Y-axis starting at 0.

For time-series data I think the line graph is much better suited as a data visualization. The same data if plotted as a line graph:
First, with the Y-axis starting at 13.4:

And now with a normal, unbroken Y axis that starts at zero:

When you resort to such gimmickry to buttress your point, it not only hurts your credibility but also harms the cause.

Update: what if we decide to plot the inter-decade differences in temperatures as a percentage difference? Would that make a difference? Perhaps, but here again, the choice of scale you use makes a huge difference in perception.

Using a scale to maximize differences.

Using a scale that ranges from -10% to +10%

Using a scale that ranges from -100% to +100%:

Update: in response to my tweet, Kaiser Fung kindly critiqued my post here.

OBIEE 11.1.1.7.131017 Bundle Patch Now Available

Thu, 2015-01-15 04:41
A new bundle patch for Oracle Business Intelligence became available last week. This is OBIEE Bundle Patch 11.1.1.7.131017, and is available on the following platforms:
  • HP-UX  Itanium
  • IBM AIX on POWER Systems (64-bit)
  • Linux x86
  • Linux x86-64
  • Microsoft Windows (32-bit)
  • Microsoft Windows (64-bit)
  • Oracle Solaris on x86-64 (64-bit)
It is applicable to all customers running OBIEE versions 11.1.1.7.0 and 11.1.1.7.1



Patch 17530796 - OBIEE BUNDLE PATCH 11.1.1.7.131017 (Patch) is comprised of the following patches, which are not available separately:
  1. Patch 16913445 - Patch 11.1.1.7.131017 (1 of 8) Oracle Business Intelligence Installer (BIINST)
  2. Patch 17463314 - Patch 11.1.1.7.131017 (2 of 8) Oracle Business Intelligence Publisher (BIP)
  3. Patch 17300417 - Patch 11.1.1.7.131017 (3 of 8) Enterprise Performance Management Components Installed from BI Installer 11.1.1.7.0 (BIFNDNEPM))
  4. Patch 17463395 - Patch 11.1.1.7.131017 (4 of 8) Oracle Business Intelligence Server (BIS)
  5. Patch 17463376 - Patch 11.1.1.7.131017 (5 of 8) Oracle Business Intelligence Presentation Services (BIPS)
  6. Patch 17300045 - Patch 11.1.1.7.131017 (6 of 8) Oracle Business Intelligence Presentation Services (BIPS)
  7. Patch 16997936 - Patch 11.1.1.7.131017 (7 of 8) Oracle Business Intelligence Presentation Services (BIPS)
  8. Patch 17463403 - Patch 11.1.1.7.131017 (8 of 8) Oracle Business Intelligence Platform Client Installers and MapViewer



You will also notice that the bundle patch is now named in a "YYMMDD" format; i.e. the fifth place now tells you when the patch was released. This calendar date numbering scheme has been initiated with the 11.1.1.7.131017 bundle patch.

As usual, please go through the Readme and other instructions before deciding upon an installation schedule and decision.

Monday moods.
Abhinav,
Bangalore, Oct 28, 2013

Using R to Unlock the Value of Big Data, by Mark Hornick

Thu, 2015-01-15 04:41

Using R to Unlock the Value of Big Data, by Tom Plunkett, Mark HornickThis is a brief (approximately 80 pages) introduction targeted at users with an intermediate-level exposure of R and who want to get a quick look at working with R with Oracle's products. Strictly speaking, this is not an introduction to R, nor is this an R tutorial. It is, very specifically, an introduction to R as it integrates with and relates to the Oracle Database, the Oracle R Distribution, and the Oracle R Connector for Hadoop. The main chapters are "Using Oracle R Enterprise" and "Oracle R Connector for Hadoop", which have sixteen and seventeen examples, respectively, to help you get started.



Oracle provides "Oracle R Enterprise" (ORE), that "overloads R functions that normally operate on data.frames and pushes down their execution to Oracle Database, where transformations and statistical computations are performed on database tables. ORE introduces ore.frame objects that serve as proxies for database tables and views."

Connected with ORE is ROracle, which is "an open source R package now maintained by Oracle." "Oracle R Enterprise uses ROracle for connectivity between R and Oracle Database. ROracle has been re-engineered using the Oracle Call Interface (OCI)"

And finally there is the "Oracle R Connector for Hadoop", which "provides an R interface to a Hadoop cluster, allowing R users to access and manipulate data in Hadoop Distributed File System (HDFS), Oracle Database, and the file system."

So, if you are new to R or need to dive deeper into R, then this is not the book for you. If, however, you need to work with R for big data and enterprise applications, or integrate R with the Oracle Database and/or its Data Mining capabilities, then you should take a look at this book.

Disclosure: I am an Oracle employee and work with its business intelligence product management group. I have reviewed this book in my personal capacity, and this review does not represent Oracle in any way.
ISBN-10: 0071824383
Print ISBN-13: 9780071824385
E-Book ISBN-13: 9780071826273

Buying information:
Amazon: US | UK | CA | IN, Kindle e-book: US | UK | CA | IN, Indie Books, Powell's, Flipkart

Kindle Excerpt:


KindleReader.LoadSample({containerID: 'roraclebook', asin: 'B00DPG5LLO', width: '500', height: '600', assoctag: 'abhinav-20'});


OBIEE 11.1.1.6.12 Bundle Patch Now Available

Thu, 2015-01-15 04:40
Over the weekend, and this does happen to be a long weekend in the US, on account of Labor Day in the US, Bundle Patch 11.1.1.6.12 for Oracle Business Intelligence was released, and is now available for download from the My Oracle Support portal.


This bundle patch is available for "all customers who are using Oracle Business Intelligence Enterprise Edition 11.1.1.6.0, 11.1.1.6.1, 11.1.1.6.2, 11.1.1.6.2 BP1, 11.1.1.6.4, 11.1.1.6.5, 11.1.1.6.6, 11.1.1.6.7, 11.1.1.6.8, 11.1.1.6.9, 11.1.1.6.10 and 11.1.1.6.11." (OBIEE 11g 11.1.1.6.12 is Available for Oracle Business Intelligence Enterprise Edition and Oracle Exalytics (Doc ID 1580502.1))

The constituent patches of this patch set (bundle patch) are:
  • Patch 16986663 - 11.1.1.6.12 (1 of 7) Oracle Business Intelligence Installer (BIINST) 
  • Patch 16986677 - 11.1.1.6.12 (2 of 7) Oracle Real Time Decisions (RTD) 
  • Patch 16986644 - 11.1.1.6.12 (3 of 7) Oracle Business Intelligence Publisher (BIP) 
  • Patch 16986692 - 11.1.1.6.12 (4 of 7) Oracle Business Intelligence ADF Components (BIADFCOMPS) 
  • Patch 16986703 - 11.1.1.6.12 (5 of 7) Enterprise Performance Management Components Installed from BI Installer 11.1.1.6.x (BIFNDNEPM) 
  • Patch 16986558 - 11.1.1.6.12 (6 of 7) Oracle Business Intelligence: (OBIEE) 
  • Patch 16986723 - 11.1.1.6.12 (7 of 7) Oracle Business Intelligence Platform Client Installers and MapViewer

White spaces and Map Views

Thu, 2015-01-15 04:40
When working with Map Views, you can choose to collapse the map formats panel on the left.

When you do that, the panel is hidden, but white space is displayed on either side of the map view, where the panel used to be.

Currently there is no option to remove this white space through a UI setting.

However, if you are brave enough, you can remove this white space by editing the analysis XML, which is available under the "Advanced" tab of your analysis.
For the Map View in question, search for the "" property, and set the "width" value to zero. In this case below, you will see the width is set at 220 pixels. The "display" attribute has a value of "false", which is expected, since we have chosen to hide the formats panel.

So, after you set the value to zero (the number 0), click the "Apply XML" button, and return to you "Results" tab. You should see that the formats panel continues to be hidden, but now the white space is no longer there, and the entire space is being utilized by the map in the Map View.

A word of caution. First, if you edit the Map View and choose to display your map formats panel, the panel will pop back, and if you hide the panel, the white space will return. 
So this  hack is more of a final adjustment to apply to your analysis, when you are done with all the changes you want to make to your map view or map views.


That's it.

As far as hacks go, this is an easy one. It is also, as hacks go, unsupported, so you know the drill - not supported, not guaranteed to work, and you're on your own if you do decide to try it out. So, please, exercise your caution and discretion when applying this hack.

I trust you're enjoying the Oracle OpenWorld conference, currently underway in the beautiful city of San Francisco.

Abhinav,
Bangalore, Sep 25, 2013

Introduction to the BI Mobile App Designer

Thu, 2015-01-15 04:40
Oracle launched a brand new addition to its Business Intelligence Mobile solution - BI Mobile App Designer, which lets you create stunning, interactive mobile apps, literally within minutes. Apps created run on mobile devices running a reasonably modern mobile browser - that can handle HTML5 and jQuery - and are available on both smartphone and tablet form factors.



Here's a short introductory video I recorded (the direct URL):


Creating your first app with the BI Mobile App Designer

Thu, 2015-01-15 04:40
While creating sophisticated mobile apps that provide a rich feature set takes time, expectedly, what is wonderful about the recently launched Oracle Business Intelligence Mobile App Designer is the fact that you can be up and running without requiring a week-long training and a Master's degree in Computer Engineering.

Here's a short video I recorded on creating your first app with the BI Mobile App Designer (the direct URL on YouTube). A note of caution, and an apology of sorts - the audio in last few seconds of the video dramatically jumps up in volume. This is because I recorded these last few seconds later, and used different audio settings. I should have normalized it. I live, and I learn.




In fact, Oracle Partner Rittman Mead have introduced a QuickStart for Oracle BI Mobile App Designer package - "a five-day, fixed-price and fixed-scope engagement" - to help customers "deploy line-of-business mobile BI apps for any device, in five days." (Disclaimer: this is neither an endorsement nor a plug. I am  pointing out the availability of this new service from an Oracle Gold Partner).

Have you checked out all the useful BI sessions at Oracle OpenWorld in San Francisco?

Best!
Abhinav,
Bangalore, Sep 25 2013

BI Mobile HD App 11.1.1.7

Thu, 2015-01-15 04:40
Finally got around to writing my long overdue post on the new BI Mobile HD app. To get on with it, without much ado, not to loiter, and all that... here goes.

The new BI Mobile HD app, version 11.1.1.7.0.2094, can be downloaded from the Apple iTunes App Store (link to app preview page on iTunes).
If you already have the BI Mobile HD app installed on your iOS device, you should get an App Store notification on the availability of an upgrade. Note, that since this version is available only for iOS version 6 (and above), if you are running an older version of iOS, you will not get a notification, and will not be able to download it. If you check the Wikipedia iPhone page (link) you will see that the iPhone 3GS and later devices support iOS 6. As far as the iPad device goes, if you check the Wikipedia page (link), iPad 2 and later devices support iOS 6.



If you search for it from your supported iOS device, you will find it as the second result. The first is also an Oracle BI app - the Oracle Business Intelligence Mobile app, but that is for OBIEE version 11.1.1.5. The BI Mobile HD app is now a Universal app, and is therefore available on both smartphones and tablets. I will follow up with a post on the iPhone version later (yes, I will). Downloading and installing is a straightforward process. Tap to install. The app size is 16.1MB, and once downloaded, takes a few seconds to install.

The single biggest change you will see out of the box once the app launches is the presence of a "demo" server connection. So you can run the app without having to configure a connection. Which is very convenient. Tap to select it and the app will connect to this "OBI Mobile Public Demo Server". This server runs on the Oracle Cloud, and therefore accessible from the public Internet.

The second change is that you have a help screen to, err, help, first-time users get familiar with the interface and controls of the app. While the user interface is simple and intuitive, this screen does a good job of summarizing the different ways you can launch and navigate to the different parts of the app.

Yes, landscape and portrait orientations are well and truly supported, so flip your device this way and then that.

The other point to note is that the panel of menu navigation tabs (check this post on the first iteration of the HD app last year) at the bottom of the app - "Recent", "Favorites", "Dashboards", "Local", and "Search" - have been replaced by a slide-out navigation bar. Also, you can access the "Settings" screen by swiping right.


So, if you do launch the "Settings" screen, you will notice several new things. The first is that you can now choose where in the App to begin when you launch it - in the "Recent" tab, or the "Favorites" tab, etc... The second is that you can also choose how your content preview thumbnails should be displayed. That is, apart from the "List" and "Carousel" options that have existed, a third option - "Grid" - has been added. For what it's worth, I find that the grid layout presents more data - especially if you have the preview thumbnails generated for the content.


The carousel view continues to be useful to see which content you have accessed most recently, placing it front-and-center on your app. The swipe gesture works as before for navigating through the carousel.

Inside your content, you will notice that the Dashboard Page dropdown has been replaced by a touch-enabled flat list. You can tap any page title to switch to that dashboard page, but also swipe left or right to view other pages - if there are more pages than can be displayed at the same time. The current dashboard page is indicated by a blue color for the page and a subtle arrowhead below the page.

Coming back to the Settings screen, it is now easier to select a wallpaper - simply tap and the wallpaper is selected and immediately applied. You can see how the wallpaper looks like from within the Settings screen.
Then there is the option to select which screen you begin on - that I covered above. The option to select the format in which attachments are created when you email content from within the app lets you select three options - no attachment (i.e. only a link is included in the body of the email), HTML, and PDF.
The last row shows you your server connections, the first one being the demo server connection - that you cannot edit, and the remaining are connections you've defined.

 

New functionality introduced in the 11.1.1.7 release, including fixed headers and fixed sized dashboard sections work on the HD app also. So you can use the tap-and-drag gesture to move content within fixed sections, as well as scroll through content for views with fixed headers. Oh, and by the by, the double-tap gesture now works to maximize most views (not sure which it does not maximize for, but works for most of the views).


Another new enhancement (enhancements are by their nature "new", so here's an example of a tautology) introduced in the 11.1.1.7.0 release of OBIEE was support for Map Views as detail views in master-detail linking. This support is not the full-blown detail support that is available for other views, and I will elaborate in a separate post, but basically you can now set up Map Views to listen to master-detail events on a specified channel. So, if you were to tap on the axis label in the bar graph on the left, on say, "USA", then the bar graph on the right and the map view both respond to that event. In the case of the map view, it zooms in and redraws itself based on the bounding rectangle for the USA.
And for Brazil, and so on...

The double-tap to maximize gesture that I talked about - 
 

And this is an example of a Map View with a bubble (proportional symbol) format with a feature theme underlain - the feature theme is based on a metric at the county level, and thus you have more than three thousand color-coded polygons.

A similar example, but this time with an image format with a heatmap format based feature theme. The heatmap format is based on district population figures.
And finally, an example from the Airlines data sample app with airline routes plotted as line formats. The lines in a Map View can be color-coded based on a measure and their size varied on a second measure. This is very much similar to how proportional symbol formats in Map Views have also worked since 2010.
 

And this is an example of such a proportional color-coded line format. You can tap on destination and origin airports to get a popup of the selected metric, and then use the underlying feature-theme based color format for additional context.


Abhinav,
Bangalore, Sep 26 2013

HBR and Junk Charts

Thu, 2015-01-15 04:39
Even the best can get it wrong. Only sometimes though, one hopes.
The venerable Harvard Business Review gets data visualizations horribly wrong. They have a post on Facebook where they contrast the costs of cancer treatment in the US and India.

The cost in the US is $22,000 on average, while in India it is shown as $2,900 (I would dispute this figure, as it looks very low).
The ratios is 7.58:1 (22000÷2900)



If you measure the heights of the two circles shown to represent these costs, the ratio comes out to approximately 7.2:1. It is not completely accurate, but it is still close enough that we can ignore it.

However, when using a bubble or circle to compare two values, we are implicitly using the areas of the circles to base our comparison on.
In case you have forgotten your geometry, the area of a circle is Π×r2 (i.e., pi times the square of the radius). Using this, the ratio of the areas of the two circles is 55:1! Yikes.
Put it another way, HBR is saying that if cancer treatment in the US costs $22,000, then in India it should cost $400. Or, if it costs $2900 in India, it should cost $159,500 in the US. Either way, this is wrong.


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