Small Business Labs

Smartphones Increasing Small Business Transparency

Lots of good information on mobile computing in comScore's 2012 Mobile Future in Focus report (free, registration required).  

One thing that really jumped out at me is the impact of smartphones on small business transparency.  

According to the report, the use of smartphones continues to rapidly expand and consumers are increasingly using their phones as part of their retail purchase process.  Key data:

• Nearly 42 percent of all U.S. mobile subscribers use smartphones
• More than half of the U.S. smartphone population used their phone to perform retail research while inside a store in 2011

Smartphones are rapidly increasing the transparency of retail transactions.  They provide consumers real-time price data as well as detailed information on products (ingredients, where they're made, etc.).

I think the impact of increasing transparency is underestimated.   Business models built around a lack of transparency are common in the small business sector.  Companies counting on a lack of transparency will need to re-think how they do business.  

The other interesting data point is how quickly tablets are moving to the mainstream.  comScore says 15% of all mobile users also have tablets.  

Updating Our Kindle Fire Review - We're Still Positive

A few weeks ago we posted our First Look review of the Kindle Fire.  In it we explained that despite some obvious UI and design flaws, we still found the Fire to be a useful addition to our computing toolbox.

A few days after we released our review, usability guru Jacob Nielsen released a scathing review.  His conclusion - Amazon's Kindle Fire offers a disappointingly poor user experience.  This caused a bit of stir on the Internet as Kindle supporters and naysayers duked it out.

I read Nielsen's review and found it accurate.  As we pointed out in our First Look, the UI and overall design are flawed.  I've experienced most of the problems Nielsen identifies - especially accidental activation.

I also follow his advice to use mobile sites whenever possible.  These make the Kindle user experience much, much better.  I also think it makes the mobile experience much better than my iPhone.

But despite all the issues with the Kindle, my usage continues to increase.  It's now my preferred electronic way to read magazines, books and newspapers (I really like the Fire version of the Wall Street Journal).  And it continues to grow on me as a mobile device.

As I said in my First Look review, I've been surprised how much I like the 7" form factor.  I thought it would be too small to be useful, but I really prefer it to using my iPhone for mobile computing.  It may be my age (and/or the age of my eyes), but my iPhone is simply too small for me.

So despite the flaws, my Kindle Fire will continues to be a productive addition to my computing family.  

For those considering the Fire, I suggest playing with one prior to buying.  Make sure you try it using standard websites as well as mobile websites.  The usability flaws are real, so if you can't easily adjust to them - or the 7 inch form factor - you should consider other options.

First Look - The Amazon Kindle Fire

I've had the Amazon Kindle Fire long enough for a first look review.  Despite a sometimes confusing user interface and a few other problems (for example, it's hard to plug in), I like it and already use it more than my iPad (which I also like).  

My favorite features are the 7 inch screen form factor and the way it's optimized to work with Amazon's content and shopping services.  I also like the price ($200) and free access to movies and TV shows for Amazon Prime customers.  

I thought the 7 inch form factor would be too small.  But it fits nicely in my book bag and I'm already traveling with it.  When I travel I also carry an 11 inch MacBook Air and an iPhone.  I feel a bit geeky carrying 3 computing devices, but each plays a role.  

The MacBook Air let's me do real work while traveling.  It supports almost all the applications I use, has an excellent keyboard, yet is small and light enough to easily carry.  

I use my iPhone's for text messaging, quick and simple Internet access and a range of location-based applications.  The screen size and keyboard make it impractical for me to do real work on it.

I'm finding that the Fire fills a niche in-between.  It's a much better mobile computing experience than the iPhone, but small enough to use on the move and in airplanes.  I also use in meetings instead of pulling out my notebook.  

The Fire also reduces the weight and size of my airplane carry-on bag because I use it for books.  

Like the iPad, the Kindle Fire doesn't replace my notebook or any of my existing computing devices. It's also not targeted at mobile business users and doesn't have some features mobile users might want or need (wireless modem support, a camera, etc.).  

The Kindle Fire also suffers in many ways when compared to the iPad.  The user experience is not as good, the product design is not as elegant, and the feature set is smaller.  It also doesn't have the array of business oriented applications the iPad has.  

But if you travel and like to quickly and easily view a wide range of content while on the go, the Kindle Fire is hard to beat - especially at $200.

We'll update this review after we have more experience with the Fire in business settings.  

Gartner's Top 10 Strategic Technologies for 2012

Gosh, is it already time for 2012 top 10 prediction lists?  I guess so since Gartner recently released their list of the top 10 technologies and trends they think will be strategic for most organizations in 2012.

Gartner's top 10 are:

1.  Tablets:  No great shock here, tablet sales are booming.

2.  Mobile-Centric Applications and Interfaces:  Good quote on why this is important - "The user interface (IU) paradigm in place for more than 20 years is changing. UIs with windows, icons, menus, and pointers will be replaced by mobile-centric interfaces emphasizing touch, gesture, search, voice and video."

3. Contextual and Social Experience:  Fancy name for computers and programs being aware of the user's context and using that information to improve the experience or results.  Local search is an example.  The program knows your location and uses that information to improve search results.

4.  Internet of Things:  Describes a connected world where most man-made things have sensors or some form of a computer chip and are connected to the Internet.  This trend's been on everyone's list for at least the last decade - maybe this year will be the year.

5.  App Stores and Marketplaces - Where you buy your mobile-centric applications to use with your smartphones and tablets.

6.  Next-Generation Analytics:  Another good paragraph from Gartner: "In 2011 and 2012, analytics will increasingly focus on decisions and collaboration. The new step is to provide simulation, prediction, optimization and other analytics, not simply information, to empower even more decision flexibility at the time and place of every business process action."

7.  Big Data:  To do next-generation analytics, you need a lot of data.

8.  In-Memory Computing:  This mostly refers to the growth of flash memory, which is solid state and much faster than traditional hard drives.  Flash memory is why so many people love the MacBook Air. 

9.  Extreme Low Energy Servers:  A good idea given how much energy servers use.

10.  Cloud Computing: Continues to mature and spread.

All of these trends are interesting and it's hard to argue with any of them. 

We've just started a research project on how the combination of Cloud Computing, Big Data and Next-Generation Analytics will impact small businesses and consumers.  It's good to see they all made Gartner's list. 

Google Wallet Shows the Future of Mobile Payments

Google Wallet is a software product designed to replace the physical credit cards most of us carry around and use to pay for things.  It's a version 1.0 product, which means it's limited and not that useful - at least yet. 

But Google Wallet shows us the future of mobile payments - and that future is just a couple of years away.

Currently Google Wallet, which requires a special NFC chip, is only supported by 1 phone (Sprint's Nexus S) and 1 credit card (Citibank MasterCard).  So if you don't have both, you're out of luck. 

But this will quickly change as more phones and credit cards add Google Wallet support.  Helping this to happen is Google's partners. 

MasterCard is leading the charge on the merchant side.  They've installed over 150,000 Google Wallet enabled payment terminals across the U.S.  The picture shows Google Wallet in action with a MasterCard payments terminal. 

You can also safely assume most new Motorola smartphones will support Google Wallet (for those living in a cave, Google is in the process of acquiring Motorola).  We also expect other phone companies and Google Wallet competitors to add NFC support (click here for a description of NFC and mobile payments). 

Google Wallet opens up lots of interesting possibilities for retailers.  It quickly will become the place consumers store digital coupons and loyalty cards.  It will also enable location-based services of all kinds and be the system used to deliver the growing arrays of "daily deals." 

It's another step on the path to a world where the smartphone is our "remote control for life."

It's time for small businesses to start to better understand and plan for the world of mobile payments.  Yes, it will still be a couple of years before it's common for consumers have NFC/Google Wallet enabled phones.  But 2012 will see a lot of early adopters - Gen Yers and techies in particular - buy phones with these capabilities. 

Should You Hire People With Graduate Degrees for Your Startup?

Penelope Trunk's Why Startups Shouldn't Hire People with Graduate Degrees is a fun read.  It's obviously meant to be controversial and get others talking and writing about it (and in my case, it worked).

We at Smallbizlabs are quite jealous of articles like this.  Because a key part of our job is data analysis, we don't get to be quite as uncluttered by facts as others. 

Trunk argues that anyone with a graduate degree should not be hired by a startup.  Actually, I think her intent is that they shouldn't be hired by anyone.  Here's the opening from the article:

"It’s likely that if a person attended graduate school, he will have a hard time translating his strengths into strong workplace performance — especially at startups."

She seems to think all graduate degrees are bad, but in particular picks on people with advanced degrees in the humanities, business and law. 

A wide range of research on startups shows her premise to be wrong. 

According to the Kauffman Foundation's Anatomy of an Entrepreneur, 47% of high growth startup founders (CEO's and their teams) have graduate degrees with 14% having MBAs. 

More recently, LinkedIn's Sequencing the Startup DNA discusses the business schools (mostly MBA programs) that are over-represented among startup entrepreneurs.

I could list a lot more studies and data, but I think it's pretty obvious the data doesn't support Trunk's position.  But many myths fly in the face of facts.   

Having said that, I agree that you have to be careful when hiring folks with advanced degrees for your startup - you have to be careful hiring anyone for a startup. 

But totally dismissing a talented, high potential labor pool based on myth is just silly. 

Niche Online Retailers Thriving; Hurting Traditional Retail

Knowledge@Wharton's Many-stop Shopping? How Niche Retailers Are Thriving on Internet 2.0 covers the growth of online niche retailers.  Key quote:

"A decade after pets.com and a string of other early Internet specialty retailers collapsed, a new wave of start-ups -- enabled by the power of cloud computing, advanced delivery systems and deep social relationships with customers -- is shaping e-commerce."

The main driver is the growing number of people who are comfortable making online purchases.  According to the article, which sources eMarketer:

87.5% of U.S. Internet users over age 14, or 178.5 million people, will browse or research products online this year. Of that group, 83% will make an Internet purchase in 2011.

One quote I found very interesting is on niche companies understanding they are speciality firms, and what happens when they try to compete head on with larger retailers:

"Unfortunately, too many small brands don't view themselves as a specialty," Fader points out. "They think they can compete with the big guys." As a result, the company spends too much on broad-based advertising and other attempts to drive scale. Ultimately, Fader says, they "get crushed.... If you admit that you are a small brand, go after the specialty angle and say, 'People will buy us only occasionally" -- and you keep costs down and keep the message focused -- then you can be okay."

One not so good impact of the success of online retailers is the impact they are having on traditional retailers and local governments that look to sales taxes to support their communities. 

The Wall Street Journal's Failed Malls Leave Cities in the Lurch covers the growing problem of declining sales tax revenue due to falling sales by traditional retailers.  Key quote:

"That has city leaders from Texas to California waking up to the likelihood their sales-tax decline isn't just a result of the bad economy. Instead, it is problem that will persist after a recovery, as demand for retail complexes is whittled by online shopping and the waning popularity of the big-box store selling everything from groceries to electronics."

According to the Department of Commerce, U.S. online e-commerce sales totaled $165.4 billion in 2010.  But this is still only 4.2% of total U.S. retail sales. 

As online sales continue to grow, the impact on traditional retailers and sales tax revenue will also grow. 

ComScore's 2010 State of the Web

Market researcher ComScore recently released their 2010 U.S. Digital Review of the Year.  It is full of interesting data and insights on the Internet and social media usage.  The report is easy to read and free, so I urge you to get a copy if the topic interests you. 

The report has too much information for a summary, but a couple of items jumped out at me:

1.  Ecommerce recovered from the Great Recession in 2010 and posted a 9% increase overall to $227.6 billion.  The holiday season was even stronger, posting a 12% gain. 

2.  Facebook continues to take over the web.  Facebook now accounts for 12.3 percent of time
spent online in the U.S., compared to 7.2 percent a year ago.  It also accounts for 10% of all pageviews. 

We often ask clients what their Facebook strategy is.  It amazes us how the often the answer is they don't have one. 

Our Facebook advice to small businesses remains the same.  You don't have to be on Facebook.  But you do need to understand Facebook well enough to make an informed decision about whether or not to use ti. 

BTW, we've found most small businesses that evaluate Facebook as a business tool end up using it.   

Tablet Sales Forecasted to Explode

Marketing Charts (great site) reports that Juniper Research is forecasting tablet sales to reach 81 million in 2015. 

Sales in North America and Europe are expected to quadruple over this time frame.  Tablet sales in Asia - currently negligible - are also expected to grow rapidly.

To put this into perspective, about 300 million PCs and 175 million Smartphones were sold globally in 2009. 

The iPad is, of course, the most successful tablet so far.  Apple sold 4.2 million last quarter alone, and one Wall Street analyst is forecasting Apple will sell 28 million iPads next year. 

The success of the iPad is leading to pretty much everyone who makes PCs and/or Smartphones to enter this market.  Apple will soon have a lot of competition.

1 in 8 Consumers Forecasted to Cut or Eliminate Cable TV in 2010

According to CNN/Money, the research firm Yankee Group is forecasting that 1 in 8 consumers will reduce or eliminate their cable or satellite subscriptions this year. 

The main driver for this shift is price.  Key quote from the article:

"The biggest reason why customers will cut the cord, according to the study, is the growing cost of pay-TV service. Cable and satellite viewers pay an average of $71 per month, and they receive an annual price hike of 5%, according to research firm Centris."

The other drivers are, of course, the expansion of broadband and the growing availability of video content on the web.  In March, for example, Nielsen reported that more than 9 billion video streams were viewed in the U.S.  

Despite the shift away from cable/satellite services, it does not yet appear that American's love affair with TV has ended.  Nielsen also recently reported that the average U.S. home has 2.93 TV sets, up from 2.86 in 2009.  The average TV owning home has 2.5 residents, so the average U.S. home has more TVs than residents.