“Who sells the largest 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 cellphones.
Try this. Who runs the biggest music business in India? The answer is Airtel. By selling caller tunes (that play for 30 seconds) Airtel earns more than music companies do by selling albums.”
Y.L.R. Moorthi, Wall Street Journal India (8 February 2010)
Dr Moorthi of India’s renowned Indian Institute of Management, Bangalore, had some interesting questions to ask recently in WSJ India, as shown in the excerpt.
In a world where mobile phone makers lead the market in cameras, and mobile network providers sell the most music, we have to all stop and pay attention. The rules of competition are being rewritten every day. If you aren’t on top of this, you will soon be somebody’s breakfast. And you won’t even see it coming.
Do you think the likes of Canon and Nikon foresaw, a few years ago, their coming evisceration by the makers of mobile phones? Or those who sold albums in the form of CDs and cassettes foresaw the coming of the iPod and iTunes? No they didn’t. In fact, as Nokia was gloating over becoming a huge camera maker, did it see Apple and Google on the horizon, ready to whack it where it hurts by taking over the profitable smartphone market? Apple, the computer maker, and Google, the search-engine king?
It’s all different now, people. A few years ago you knew your product and knew your competitors. You had simple sources of competitive advantage, and you nurtured them. Life was good. Now, you have no idea where your next competitor is coming from.
This is not true just in America and India – it’s happening here all the time. Who will Kenya Airways’ biggest competitor be in years to come – Virgin? Air Uganda? Or could it be the company that successfully installs affordable videoconferencing technology in the most companies across the region?
Airtel and Nokia and Apple and Google all have one thing in common: a captive customer base. To this base, which trusts their brand and service, they can sell a plethora of things. Apple moved from computer hardware and software to music, telephony, television and media. It is now bigger than Microsoft in market capitalisation. Google is an internet overlord, a software prince, a mapmaker, a book provider.
Look at Kenya’s Safaricom, which announced record revenues and profits recently. So what is its business? Mobile phone calls, right? The people worried by Safaricom are Zain and Orange, right? Wrong. The people losing most sleep are internet service providers, banks, music companies, advertising agencies, media companies and computer sellers. At least I hope they are.
That is why the recent joint venture by Safaricom and Equity Bank to create the first mobile banking product in Kenya was so interesting. The two giants hold in their hands millions of subscribers and clients. Now they have got together and created another revolution in the making. I imagine a lot of CEOs are finding it’s “squeaky bum time” (as Manchester United’s Sir Alex Ferguson puts it), as they fidget in their leather executive seats. What else are these people going to try and sell to their captive markets in the months and years to come? What will stop them? Is it already too late? Was the game already lost when the two behemoths were building their respective customer bases?
Interesting times indeed. As you sit down to plan your competitive strategy, I urge you to throw your preset thoughts and assumptions out of the window. The person and company most likely to take your lunch tomorrow is probably not even visible in your industry today.
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{ 8 comments… read them below or add one }
your article reminds me of piece you wrote sometime back (i think in 2007) about how a company can have a great, painstakingly developed strategy, but the strategy never lasts-it everporates eventually, leaving only the lessons learnt to enable it to move on or restart……i think Safaricom too should be losing sleep over this, just to protect my interests as a shareholder!!
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Jed:
Great point. Not just their current and future ‘victims’, but Safaricom and Equity themselves have to be hyper-vigilant and guard against complacency.
In its heyday, Bill Gates used to warn Microsoft that it was just a few years away from irrelevance. It seems he was right…
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This is a really thought provoking masterpiece. A lot of time, while crafting business strategy, we tend to narrow down our options by focusing on competition from within the industry. It made me fidget too. Thanks a million for the eye opening insight.
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Owino:
Delighted. And keep those eyes trained on the horizon – your next competitor is currently out of sight…
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Sunny, a while back when I was working for one of the local companies you have mentioned above as a middle manager, my bosses diasgreed with me again and again (whether political or something else) when I told them Safaricom is big in any language and we needed to define exactly what we needed of/in this market to survive in the broadband world. I was fired. They woke up the business mind in me. Now, I am their competitor!!! Surely, we are in a new world. You never know for sure who will take your next customer….
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Noah:
And fortune will favour the wide-awake…
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Sunny,
This is a brilliant piece – The ICT world in Kenya will be captured by that company who will reach the neglected masses i.e. the SOHOs and SMEs….think of rural secondary schools in need of ICT infrastructure. Safaricom has the means and the cash to reach the neglected masses and thats how they (Safaricom) will win this war; though the government still has a big role to play in bringing the masses to the global village.
And what is your take on the rigorous fiber ring projects by major firms around the city. Do we risk experiencing a dotcom bubble burst in this country as did happen in the States?
With Regards,
Jack Odunga
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Jack:
I am hopeful that because we are an emerging nation with burgeoning data needs, we will not encounter a bubble just yet. The demand is there, and growing supply will bring prices down.
Though one can never rule out humans’ ability to get predictions wrong…
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