Quickfire: Robbing the Rich, Paying the Poor

It seems credit cards are always in the news for the wrong reasons - so-called rate tarts card hopping to take advantage of 0% balance transfers, insolvent consumers juggling debts from one card to another or irresponsible financial institutions dishing out cards like confetti. However, handled correctly, credit cards can be a tool to turn the table and cream money from financial institutions...twice!

Credit cards typically have an interest-free period of over forty days so as long as the balance is cleared every month, they do not cost anything to use. On the other hand, paying household bills and daily expenses from a bank account continuously decreases the balance and hence the interest earned each month. So, rather than flashing the credit card at every opportunity being financially reckless, it actually makes sense to shift as much expenses as possible to the card and leave the bank balance untouched. That way, maximum interest can be earned on the bank account and zero interest paid on the credit card as long as the balance is cleared at the end of the month.

Given that financial institutions constantly devise new ways of extracting pennies from their customers to boost their multi-billion pound profits, it is about time the spending public went on the offensive and start helping themselves to their institutions' largesse!

Quickfire: MicroPlace

A couple of weeks ago, I had one of my brainwaves (which have been becoming infrequent these days, I might add). I thought about the viability of a P2P finance e-commerce venture; the logic was to create an eBay-like website where ordinary individuals could lend money to each other, with lenders bidding to offer the most favourable interest rates. See, payments could be made and received through services such as PayPal and Google Checkout, and, and, and people could borrow any amount for any length of time, and, and, and they would no longer have to be held to ransome by their banks, and, and, and there would be world peace...

Just as my eyes were lighting up with glee at my newfound goldmine, it crossed my mind that eBay and Google would not be so keen to lend their payment infrastructure to the venture when they could set it up themselves and keep all the profits.

Well, I was right! I just read a BBC News report about MicroPlace, an eBay company that facilitates microfinance investments from everyday investors to the world's working poor. The e-commerce website acts as a broker-dealer linking investors to microfinance organisations across the world, with investments made through PayPal or a regular bank account. eBay are not keeping the profits though; they will be using it to fund their socially beneficial activities. Who says business is all about shareholder value, eh?

I guess my brainwave was not just vapour afterall. Wonder if Google would be willing to play ball...

From Underdogs to Nintendogs

In the high stakes battle for market dominance in the rapidly growing $37.5 billion video games industry, few gave Nintendo a fighting chance against Sony and Microsoft. Back in 2005 when Sony and Microsoft were unveiling the jaw-dropping technical specifications of the PlayStation 3 and the Xbox 360 respectively, Nintendo’s underpowered Wii left analysts and gamers alike scratching their heads. Fast forward to 2007 and according to the latest data from VG Chartz, a video game market research company, the Wii has cornered 42.4% of the global next-generation console market, ahead of the Xbox 360’s 40.5% and the PlayStation 3’s 17.1%. Their lead in the next-generation portable game market is even more dramatic, with the Nintendo DS enjoying 67.8% market share while the Sony PlayStation Portable trails at 32.2%.

The turnaround in Nintendo’s fortunes has not been missed by investors and at the close of market on 25 October 2007, Nintendo had a market capitalisation of Y9,407bn ($82.46bn), making it the third-most valuable company in Japan and dwarfing Sony’s Y5,200bn ($45.35bn) despite being a much smaller company.

The meteoric rise of the company is a lesson in visionary leadership and market innovation. After being consigned to irrelevance in the previous two rounds of the console wars, Satoru Iwata, Nintendo CEO, spearheaded a new strategy of expanding the gaming population. The premise was simple: enable everyone to enjoy games regardless of age, gender or gaming experience. They identified three paradigms that needed to be challenged which laid the foundation for their current success:

1. Video games are entertainment mainly enjoyed by children and young male adults; females and senior citizens hardly play.
2. Nintendo is for kids.
3. Great majority of software is short-lived; long-lived software is hard to make.

Defining a new target market of females and senior citizens was a bold departure from convention, where the smart money had always been on the core market of 18-35 year old males. However, it enabled them to eschew the complex and expensive hardware required by traditional gamers, making the Wii a bargain at $250 compared with $350 for the Xbox 360 ($480 for the Elite version) and $350 for the PlayStation 3 ($500 for the premium version). Similarly, the DS Lite retails for $130 while the PlayStation Portable costs $170. The reduced complexity of Nintendo’s hardware also makes game development easier, quicker and cheaper, giving their software a price advantage over the competition.

While the technical specifications of the hardware are relatively low, they have innovative designs which maximise the user experience. Wii’s groundbreaking controllers, ranging from the Nunchuk to the Balance Board, offer gamers more involving ways of interacting with the virtual world. The dual screen design of the DS similarly makes gameplay more engaging and stimulating.

Rather than rely on lifelike graphics and animation to wow gamers, Nintendo has focused on developing simple yet novel games that have a high replay value and appeal to a wider audience. Games such as Brain Training and Nintendogs on the DS have proven a big hit with senior citizens and young girls respectively, and the Wii Sports titles are extremely addictive for gamers of all ages and genders. Not surprisingly, 51% of Wii gamers and 53% of DS gamers are females, compared with 11% of PlayStation 3 gamers, according to a Financial Times report.

Given the runaway success of the Wii, it is inevitable that Sony and Microsoft will be fighting back. Their first response has been to reduce Nintendo’s price advantage, with both companies releasing lower priced versions of their consoles albeit with less storage capacity. In addition, they are developing a wider range of controllers and other accessories as well as a broader range of games to expand their core market. All three companies are also investing in an online games network to offer their respective customers games download and multiplayer services.

With Sony and Microsoft playing catch up, the challenge is for Nintendo to maintain their innovation momentum in hardware and software design, continually redrawing the landscape of the video games industry. If that is achieved, they are bound to remain the top dog for years to come.

Quickfire: The Non-Dom Dilemma

Alistair Darling's pre-budget report has stopped the music at non-domicile residents' tax party. Those residing - but not domiciled - in the UK for seven years or more are now faced with a flat rate of £30,000 per annum or alternatively, paying the additional tax that is due from their overseas income and capital gains. This could lead to three scenarios:

1. They grit their teeth and show Alistair the money, in which case nothing changes.
2. They decide the new tax regime makes their non-dom status pointless and so move to the UK permanently after considering other cost of living factors. In which case, demand for housing, transport, schools and other infrastructure increases, albeit minimally.
3. They decide the new tax regime makes their non-dom status pointless and so move out of the UK completely after considering other cost of living factors. In which case, firms have to fill the gaps and job opportunities open up for domiciles, albeit minimally.

Given the combination of factors that make the UK an attractive destination, I suspect both non-doms and Mr. Darling will be baring their teeth but only one will be a smile...

Social Technologies – Opportunities and Threats

One of management’s greatest challenges is harnessing the full potential of their workforce to maximise productivity. Given the wealth of skills and knowledge that are possessed by employees, it is expedient to empower each individual and make their resources accessible to the whole organisation. Social technologies such as blogs and wikis provide tools which enable collaboration and information sharing among employees. However their deployment needs to be managed strategically in order to mitigate the associated risks.

The exponential growth in popularity of social networking sites such as MySpace and Blogger is producing a generation of young adults adept at sharing information in a format that is easy to access and understand. As they enter the workforce, businesses can harness their collaboration and communication skills by setting up a blogging system for individuals or teams. Blogs of activities, projects and problem resolutions create a knowledge resource that can be readily accessed in the absence of the employees concerned. Due to their less formal structure, blogs are simpler to set up and maintain than more rigid content management systems and thus employees would be keener to adopt them.

Similarly, the advent of Wikipedia has led to the growth of wikis as a popular tool for collaboration and knowledge sharing. Editable web pages can be updated by employees working jointly on a project or creating a knowledge base such as FAQs. A significant advantage of blogs and wikis is the reduction in the use of emails and file attachments, which can be unwieldy and create duplicate information.

However several IT and management policies need to be instituted before social technologies are deployed. A key challenge is the protection of the confidentiality of sensitive information. Clear policies need to be in place to guide the types of information that can be published on blogs and wikis while different levels of access need to be defined for viewing or editing such information. This also necessitates monitoring to ensure strict compliance with the policies.

There needs to be a robust quality control mechanism in order to maintain a high standard of accuracy and currency of information. While the collaborative use of blogs and wikis increase the likelihood of errors being detected and information kept up-to-date, team leaders or line managers need to take overall responsibility for the sites.

Employees might be less motivated to update the sites if it is perceived as an additional task. Conversely, they might be less efficient in their time management if they have to take time off their core tasks to update the sites. Thus the ideal implementation would be the integration of blogs and wikis into their workflow like other information systems.

The utility of social technologies is in their accessibility; hence careful thought should go into how information is stored as well as how it is retrieved. Blogs and wikis could be deployed in conjunction with enterprise search technologies which would index the information and speed up the retrieval of relevant results by searching for concepts rather than keywords.