We’re here at SXSW Interactive with a day 1 recap (find more info here). Friday’s weather held for us here in Austin with semi-sunny skies, but we’re expecting rainfall off and on all day Saturday. There are masses of people, but the number seems flat from last year — the surge of the crowds is quite evident when you try to get into a club or a lunch hotspot, or some of the Festival sessions at the smaller venue — however it’s not as packed as 2013.
Thursday was all about the state education for us and the role of technology as its transformational agent. The best session of the day was facilitated by John Hagel from the Center for the Edge. His group conducts research on workplace efficiency. His main thesis was how today’s companies are in a war for talent — acquiring the best people so they can stay ahead of the competition — but Hagel presents a “paradox of talent” explaining that once companies acquire talent they fail to effectively develop talent. He went on to explain that most executives speak about acquiring and retaining the best talent, but they speak little about developing said talent once they’re on board. He goes on to say that companies need to apply the principles of design thinking and design methodologies to the workplace environment to help employees connect with each other and innovate faster.
Later in the day, we attended an informative session about MOOCs (massive open online courses) led by Dave Hinger and Jeff Meadows from the University of Lethbridge in Canada. They focused on what the key challenges of MOOCs are and what are some potential solutions. They relied on audience participation to get the conversation going. Most of the room were from Higher Education and there were almost as many opinions as participants. Some consensus included:
— MOOCs are plagues by low completion rates
— How do you effectively assess MOOC students?
— Most MOOCs are boring and have low production value
— MOOCs are not financially viable for institutions
Some in the audience discussed how Georgia Tech is offering a MOOC-based degree in Computer Science for only $6000, which they found to be very disruptive to the traditional university model.
Day 1 ended with us relaxing in the PayPal lounge where there are endless outlets for device charging and free schwag. Today, we’re gonna hit the Oreo Cookies 3D printer where… yes, you can print and EAT your own Oreo cookie!
It seems like streaming services are all the rage lately. Beats just released their app (known mostly for headphones, the company bought MOG, and re-branded it) which gives you unlimited downloads and access across 10 devices for $14.99 a month. Spotify has now removed the limit to the number of songs subscribers on the free plan can access each month, as well. So the services are upping the ante by trying feverishly to differentiate themselves. Beats is adding a human element by bringing curators to the service instead of a computer algorithm to help you discover songs/artists you like. Spotify is stressing its social utilities and focusing on playlists based on your mood.
To carve out market share, the streaming services have offered subscriptions at a ridiculously low price: $9.99 a month on average, or even better discounts if you buy a year’s worth in advance. The paradigm shift for the general public has been moving from “owning” songs to “renting” them. While the streaming services seem to be taking hold, there’s new research that shows they can never be profitable. According to the report, the number of streaming users will balloon to 1.7 billion by 2017, up from 767 million in 2013. Paid subscribers will leap to 125 million, up from 36 million currently. It seems like the labels are the culprits: taking 70% of the profits for themselves in royalties. On top of that, the freemium model that Spotify has adopted is convincing consumers that music is a commodity, and not really worth paying for. And, of course, there’s the controversy with what the artists are actually being paid.
As the services evolve, they’re going to have to figure out a revenue model that allows for scalability. And consumers, at some point, are going to have to pay up.
I was checking into a new book on Champagne on Amazon this afternoon when I noticed a new button – “Add to Collection.” Imagine my surprise when I realized that Amazon is launching their own version of Pinterest.
This makes sense. After all, why have people posting Amazon things on Pinterest when they could be pinning to Amazon directly, sharing with others and shopping right at that moment. One of the annoying things for me about Pinterest is that I don’t always know where to get the things that are pinned. But if it’s pinned on Amazon, I can get it at Amazon. Brilliant.
Basically, the concept is the same as Pinterest. You can create collections, customizing each name and adding as many things as you want. You can browse other people’s collections as well, pinning their finds to your own collections.
Not all products have the “Add to Collection” button yet. But if you click that little “Learn More” link in the dialog, you’ll find you can add a “Collect” button to your browser, allowing you to pin anything on Amazon’s site. Right now, this feature seems to be limited both in scope (you’re confined to Amazon’s site and not the rest of the web) and in release (not all products have the magic button). We’ll see how well it takes off and what Amazon does with the data.
Why does a company that started by selling books continue to disrupt so many industries they’re not first considered to be experts in? Amazon has evolved from being an online bookseller to becoming not only “the world’s marketplace” but one of the world’s largest providers of cloud services — creating an entirely new service offering that just a few years ago didn’t even exist. And, in the meantime, becoming a high-tech company that rivals the ones expected to innovate in this area.
That may be the primary reason Amazon has been able to take-off in new markets. First, its CEO, Jeff Bezos is not concerned with short-term profits. His vision is what more CEOs need to reflect on: “We like to invent and do new things, and I know for sure that long term orientation is essential for invention because you’re going to have a lot of failures along the way.” Too many American companies seek just short-term profit, and don’t focus on more than 3 or 4 quarters. If Kindle, Amazon Web Services and Amazon Prime were required to show profits in their first 3 or 4 quarters, they would have never even gone to market.
True disruption comes from those that jump into a market not worried about cost. They usually go in with the lowest cost and quality offering and build from there. Ultimately, becoming a market leader means that you have to continue to innovate and disrupt, or you become less a disruptor and just a profit-making machine. Consider the fate of Polaroid, Atari, RIM and Digital Equipment Corporation: all were once disruptors in their respective industries. Once they reached the top, they stumbled. They stumbled because they stopped innovating and disrupting. Amazon continues to discover new markets, innovate products and services, and is restless once they begin to make inroads into a new market. Apple and Google are the obvious candidates for finding it difficult to create market breakthroughs while servicing the markets they currently dominate.
Disruption is based on creating new and valuable products and services in an uncertain market. Once a company gets too comfortable in their market, they will eventually find it difficult to innovate and disrupt. The challenge is to foster a culture that values creativity and innovation and offers a process that encourages its people to ask questions, uncover new possibilities, and explore without being driven by profit only. Amazon has shown it’s willing and able to enter any market it thinks it can add value to. And then it works from within and continually innovates and disrupts. Companies like Apple, Google and even Microsoft should never forget what happened to the companies that lost their hunger for innovation. Maybe they should listen to Jeff a little more.
Ikea announced today that they will partner with Marriott to create a new budget “hotel brand” based on their prefabricated furniture model. The hotels won’t include Ikea furniture, but instead will be built based on new construction methods that stress lower-cost materials. Prefabricated hotel rooms will be built in a central location and placed wherever needs arise. This is a similar model to what some retailers are doing with popup stores in areas that swarm with large groups of people for specific events. Kind of like what Apple did at SXSW during its iPad launch — quickly create a popup store to sell items where people are gathered, and then take the store down after the event is over.
Popup hotels could be quickly assembled in areas where events bring large amounts of people together. Even here in Austin right now, it’s virtually impossible to get a hotel room, and if you do, it’s easily $400 a night. Popup hotels could offer some relief to the need for rooms, and will attract a younger, more budget-conscious traveler.
Ikea and Marriott will launch their first popup hotel in Milan this year.