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Sunday / March 26.

Have Breakfast or be Breakfast

By Rahul Sathyajit

Who sells the maximum number of cameras in India?

Your guess is likely to be Sony, Canon or Nikon. The answer is: none of the above. The winner is Nokia whose main line of business in India is not cameras but cell phones. The reason being that cameras within cell phones are outselling standalone cameras. Now, what prevents the cell phone from replacing the camera outright? Nothing at all. One can only hope that the Sonys and Canons out there are taking note.

“What did Apple do to Sony, and Sony to Kodak?”

Sony defined its market as an audio-based one (music from the Walkman). They never expected an IT company like Apple to encroach into their audio domain. Come to think of it, is it really surprising? Apple as a computer maker has both audio and video capabilities. So what made Sony think they won’t compete on pure audio? So as Kodak defines its business as film cameras, Sony defines its businesses as “digital.”

For digital cameras, the two markets perfectly meshed. Kodak was torn between going digital and sacrificing money on camera film or staying with films and getting left behind in digital technology. Left undecided it lost in both. It had to. It did not ask the question, “Who is my competitor for tomorrow?” The same was true for IBM whose mainframe revenue prevented it from seeing the PC. The same was true of Bill Gates who declared that “Internet is a fad!” and then turned around to bundle the browser with Windows to bury Netscape. The point is not to know who the present competitor is. Today’s competitor is obvious. Tomorrow’s is not.

Hiding behind all these wars is a gem of a question – “Who is my competitor?”

In 2008, who was the toughest competitor to British Airways in India? Singapore airlines? Better still, Indian airlines? Maybe, but there are better answers. There are competitors that can hurt all these airlines and others not mentioned. The answer is videoconferencing and telepresence services of HP and Cisco. Travel dropped due to recession. Senior IT executives in India and abroad were compelled by their headquarters to use videoconferencing to shrink travel budget.

So much so, that the mad scramble for American visas from Indian techies was nowhere in sight in 2008. (India has a quota of something like 65,000 visas to the U.S. They were going a-begging. Blame it on recession!). So far so good. But to think that the airlines will be back in business post-recession is something I would not bet on. In the short term, yes. In the long term, a resounding no. Remember, if there is one place where Newton’s law of gravity is applicable (besides physics), it is in electronic hardware. Between 1977 and 1991 the prices of the now dead VCR (parent of Blue-Ray disc player) crashed to one-third of its original level in India. PC’s price dropped from hundreds of thousands of rupees to tens of thousands. If this trend repeats then tele-presence prices will also crash. Imagine the fate of the airlines then. As it is not many are making money. Then it will surely be RIP!

India has two passions. Films and cricket. The two markets were distinctly different. So were the icons. The cricket gods were Sachin and Sehwag. The film gods were the Khans (Aamir Khan, Shah Rukh Khan, and the other Khans who followed suit). That was, when cricket was fundamentally Test Cricket or at best 50 over cricket. Then came IPL and the two markets collapsed into one. IPL brought cricket down to 20 overs. Suddenly, a cricket match was reduced to the length of a 3 hour movie. Cricket became film’s competitor. On the eve of IPL matches movie halls ran empty. Desperate multiplex owners requisitioned the rights for screening IPL matches at movie halls to hang on to the audience. If IPL were to become the mainstay of cricket, as it is likely to be, films have to sequence their releases so as not clash with IPL matches. As far as the audience is concerned, both are what in India is called a 3 hour “tamasha” (entertainment). Cricket season might push films out of the market.

Look at the products that vanished from India in the last 20 years. When did you last see a black and white movie? When did you last use a fountain pen? When did you last type on a typewriter? The answer for all the above is “I don’t remember!” For some time there was a mild substitute for the typewriter called electronic typewriter that had limited memory. Then came the computer and mowed them all. Today most technologically challenged guys like me use the computer as an upgraded typewriter. Typewriters per se are nowhere to be seen.

One last illustration. 20 years ago, what were Indians using to wake them up in the morning? The answer is: an “alarm clock.” The alarm clock was a monster made of mechanical springs. It had to be physically keyed every day to keep it running. It made so much noise by way of alarm, that it woke you up and the rest of the colony. Then came quartz clocks which were sleeker. They were much gentler though still quaintly called “alarms.” What do we use today for waking up in the morning? Cell phones! An entire industry of clocks disappeared without warning, thanks to cell phones. Big watch companies like Titan were the losers. You never know in which bush your competitor is hiding!

The future is scary! The owner of an IT company once said something interesting about the animal called competition. He said “Have breakfast …or…. be breakfast”! That sums it up rather neatly.

Success is not something to wait for; it is something to work for…!

Edited by Madhavi Roy, Senior Editor, The Indian Economist