Category: Managing Technology

Mobile Payments: Not a Game Changer Yet?

Posted on February 14, 2012

In March, PayPal will enable its users to pay through their mobile phones, tablets or iPads at 2,000 Home Depot stores across the U.S., and by the end of the year at 20 other national retailers. Mobile payments are rapidly gaining popularity, but large scale adoption will depend on consumer perceptions of security and the pricing of such services, according to Wharton faculty.

A subsidiary of online shopping portal eBay, PayPal last year exceeded expectations with $4 billion in mobile payments volume, and the company predicts that figure will reach $7 billion in 2012, company spokesperson Anuj Nayar told Knowledge@Wharton Today. Last November, mobile payments were 538% higher on Black Friday than on the same day in 2010, according to PayPal. The firm’s latest encouragement comes from a pilot program it launched in January at 51 Home Depot stores, mostly in the San Francisco Bay area.

Mobile payments are a small fraction of the net payments of $118 billion that PayPal put through in 2011. Even so, Shawndra Hill, a Wharton professor of operations and information management, finds PayPal’s mobile initiative “exciting,” although she doesn’t think it is “a game changer just yet.” Before wide scale adoption occurs among consumers, “mobile solutions need to prove that they are as secure as paying with credit cards or cash,” she says. Also, consumers will need to trust the brands offering these services, just as “they have had a long time to learn to trust credit cards.” Further, mobile payment options need to be more convenient and possibly cheaper than other avenues, Hill adds.

According to Wharton marketing professor Barbara Kahn, pricing of mobile payments will determine their popularity, especially when conventional credit cards also move to mobile formats. “The issue from the consumer point of view will be which form of mobile payment to use, just like we now decide which type of card to use,” she says. “Right now, the end user [usually] pays list price for the item regardless of what kind of card is used; sometimes there is a cash discount, or in some countries a fee for using a credit card. I would imagine all of these pricing issues are on the table now.”

Hill suggests that mobile payment processors could expand their market opportunity by offering lower transaction fees than credit cards. Also, the requisite infrastructure and standards for money transfers have to keep pace, she notes.

PayPal’s mobile payments option is part of its recently launched PayPal Wallet, which includes a card that allows offline payments at stores. With that, “consumers will choose if they want to swipe a card, use an app or tap their phone,” says Nayar. Others in the mobile payments space include Google Wallet, which stores customer credit card information on smartphones, and so-called NFC devices that can be used for electronic payments. (The Near Field Communications Forum is a group of companies — including Nokia, Sony, Samsung and Microsoft, among others — that is developing mechanisms for payments and other services across devices.)

Mobile payments are just one of many new options consumers will see this year, according to Scott Dunlap, PayPal’s vice president of emerging opportunities. “In 2012, we will see a rise in virtual currencies and the ability to use them to pay for ‘real’ goods,” he wrote recently in the online magazine Gigaom.com. “Imagine paying for groceries at Safeway with Facebook credits or using extra frequent flyer miles for that cup of coffee at Starbucks.”

Featured Professors: ,
Also posted in Knowledge@Wharton Today | 1 Comment

Happy Birds: Will Flying Robots bring You Personalized Air Mail Soon?

Posted on February 9, 2012

Like a mother bird bringing food to a chick, imagine tiny, flying robots delivering personalized air mail. The video below of the miniature flying devices – called nano quadrotors – offers some idea of the potential.

The video, made by the GRASP Laboratory at the University of Pennsylvania, shows researchers testing the small flying robots, and the results of this basic research could help improve human systems, such as air traffic control. Another idea for this technology is to use “small aircraft that can carry personalized payloads — drugs, biomedical products — to rural and undeveloped neighborhoods…,” says, principal investigator Vijay Kumar, a professor of mechanical engineering and computer information science at Penn.

The research group is drawing lessons in movement from flocks of birds, swarming insects and schools of fish, which might also help uncover patterns useful for crowd studies —  the design of “exits and hallways to ensure speedy evacuation in an emergency,” Kumar says.

Compared with, say, drones, which are large, pilotless aircraft, each of which requires a dedicated ground crew of five to 10 people, Kumar’s group is developing tiny, “highly maneuverable flying machines inspired by nature. They are autonomous and fly in groups. Only one person is needed to command large groups….” Many vehicles can be deployed in a swarm “to carry out a simple task — in this case, to form 3-D patterns — and to respond as a group to high-level commands — without a designated leader,” Kumar says. The innovations achieved have led to “new algorithms, novel vehicles, and a new paradigm.”

Kumar worked on the GRASP project with Alex Kushleyev, who holds a Master’s degree in electrical and systems engineering from Penn, and Daniel Mellinger, who will complete his Ph. D. in mechanical engineering and applied mechanics this spring. Penn’s GRASP Laboratory — the General Robotics, Automation, Sensing and Perception Laboratory — integrates computer science, electrical engineering and mechanical engineering.

Already some of the lessons learned are moving from the lab to the workbench. Mellinger and Kushleyev have created a spinoff from the GRASP Laboratory – KMel Robotics — which develops robotic platforms for use in search and rescue, environmental monitoring and education.

 

 

Featured Professors:
Also posted in Innovation and Entrepreneurship, Knowledge@Wharton Today | Leave a comment

How Arab American Tech Entrepreneurs Can Help Arab Spring Countries

Posted on February 7, 2012

Arab-American technology entrepreneurs have a special role to play in helping Arab Spring nations find their way back to stability and development, according to David Hamod, CEO of the National U.S.-Arab Chamber of Commerce.

Addressing an audience at the Plug and Play Tech Center, a well-known Silicon Valley incubator run by Iranian-born Saeed Amidi, Hamod said such members of the Arab Diaspora could provide the experience and skills needed to jump-start innovation in Arab economies. “For the Arab world to make the transition from hydrocarbon-based economies to knowledge-based economies, the next big thing, in a sense, is innovation,” Hamod noted. “Innovation, hand-in-hand with entrepreneurship, will create those productive jobs that are so vital to growth in the Arab world.

“There is a special role to be played in this process by Diaspora Arabs, who have made it in Silicon Valley, who have learned the lessons of Silicon Valley and who are uniquely situated to share those lessons with the Arab world,” he added.

Hamod spoke at a global forum examining ways to harness the economic potential of the Middle East and North Africa (MENA) region in the aftermath of the Arab Spring revolution. At a time of uncertainty as well as promise, Arab-Americans are looking inward to discover their role in helping usher in democracy and economic stability in their traditional homelands. He told forum attendees that technology alone is only part of the equation. “If the Arab Spring at its heart is about dignity, respect, having a voice, reducing economic disparities and being able to put bread on the table for one’s family, then there’s no time to lose in promoting innovation through entrepreneurial ecosystems,” he said.

Throughout the day, some of Silicon Valley’s leading Arab-American technologists reiterated Hamod’s applause-inducing speech by creating an atmosphere that resembled a high school pep rally. There were discussions about cultivating the start-up ecosystem in the Gulf region and perhaps most important, getting access to venture capital. It is that final hurdle that deserves a watchful eye in the coming months as the grassroots revolutions turn to the formation of new governance, observers said. Political resolution might encourage the citizenry to return its attention to the daily duty of work. Hamod predicted that there will be no return to the status quo, but where that leads the region is anyone’s guess.

The forum was held on Martin Luther King Jr. Day, and Hamod found a parallel between King’s fight for freedom in the 1960s and the protests in the Arab world that have broken the stranglehold of entrenched regimes. He quoted from a portion of King’s famous 1957 speech delivered at the Prayer Pilgrimage for Freedom in Washington D.C.: “Sometimes it gets hard, but it is always difficult to get out of Egypt. The Red Sea always stands before you in discouraging dimensions. And even after you cross the Red Sea, you have to move through a wilderness with prodigious hilltops of evil, gigantic mountains of opposition. But I say to you, keep moving. Let nothing slow you up. Move on with dignity and honor and respectability.”

King’s speech was meant for an African-American constituency. But it sounds less ethereal to modern Arabs, especially those who risked their lives in Tahrir Square protests one year ago, and for those who continue to grapple with how to move forward after creating unprecedented change.

See also:

From Iran to Silicon Valley, a Serial Entrepreneur Leaves His Mark

Aramex’s Fadi Ghandour: Unrest Demonstrates Why It Is Important for Arab Entrepreneurs to Build New Ventures

Also posted in Innovation and Entrepreneurship | Tagged , , , | Leave a comment

Sifting Through the Ashes: The Kindle Fire and Customer Centricity

Posted on February 3, 2012

The following opinion piece was written by Wharton marketing professor Peter Fader.

In the wake of Amazon’s disappointing Q4 results, the Kindle Fire has ignited a veritable firestorm of debate. 

Lackluster reviews and suspicions that the tablet device is being sold below cost have led analysts to anxiously eye the company’s dwindling cash reserves.  But amidst the heated debates about functionality and pricing, one concern has received relatively little attention: Should Amazon be competing in the tablet market in the first place?

From my perspective, the Kindle Fire represents a dispiriting move away from Amazon’s historical focus on customer centricity.  In my book Wharton Executive Education Customer Centricity Essentials: What It Is, What It Isn’t, and Why It Matters, I argue that a customer-centric strategy aligns a company’s development and delivery of its products and services around the needs of a select set of customers in order to maximize their long-term financial value to the firm. 

This emphasis on a “select set” of customers is crucial.  Customer-centric firms never talk about “the customer” — because there is no average customer.  These firms recognize that there is a diverse ecosystem of consumers out there of all colors, shapes, sizes — and, most importantly, different lifetime values to the firm.  Customer-centric firms celebrate the heterogeneity of their customer bases and focus their efforts on those subsets that are likely to provide the greatest bang for the buck over the long term.

In many ways, Amazon has set the standard for customer-centric activities.  The company maintains detailed customer-level data, which it uses to tailor its marketing communications and make customized product recommendations.  When I ask my Wharton MBA students to name companies that are truly customer-centric, Amazon is always near the top of the list.

And for the original Kindle Reader, this “select set” of focal customers was clearly defined.  Back in 2010, Jeff Bezos went on record saying that the Kindle was for “serious readers.”  He elaborated by pointing out that “90% of households are not serious reading households.”

By focusing squarely on serious readers, the Kindle carved out a tremendously valuable market niche.  Its simple interface and innovative screen technology provided a top-notch reading experience for those who still care to read books.  It was a strategy focusing on creating delight for a particularly profitable customer segment.  The many other “non-serious readers” who also bought it were just icing on the cake.  I often pointed to this specific example as a great case study of genuine customer centricity in action.

Yet here we are today, watching Amazon dismantle this wonderful exemplar.  It’s understandable that Amazon wanted to leverage the success of its Kindle to gain a toehold with the broader market.  Understandable — but deeply misguided.  By trying to make hay from the current tablet frenzy, Amazon has strayed from its customer-centric roots towards a more conventional product-centric mindset.  The question they seem to be asking themselves now is, what can we make — and who can we sell it to?

The problem in this case isn’t a lack of demand for the product. Indeed, even as profits sagged and Amazon burned through its cash, the company sold an estimated six million Kindle Fires in the fourth quarter alone.  So what’s wrong with this strategy?

First, it consumes scarce resources and valuable management attention.  While Amazon executives are busy fixing glitches in the Kindle Fire, they could have been focusing on how to acquire profitable new “serious readers,” retain the ones they already have within the Kindle franchise and use the Kindle platform to extract the maximum value from existing customers through cross-selling, upselling and other customer development activities.

Second, by branding the Fire under the Kindle umbrella, Amazon risks confusing and alienating its focal customers.  Now that the premier product in the Kindle line no longer offers the unique reading experience that was associated with its original e-reader, the entire value proposition of the Kindle franchise isn’t so clear any more.  Amazon should have used a distinctly different name for the Fire so that serious readers would still proudly use their Kindles with the knowledge that they were still held in special regard by the firm.

So what can Amazon do to right this mess?  The script seems to dictate that sooner or later, the Kindle Fire will be yanked from the market once it proves to be too much of a drag on Amazon’s earnings and resources.  At that point, Jeff Bezos should focus on developing an enhanced version of the original Kindle and reassure its most valuable customers that Amazon is continuing to develop new devices and services with them in mind.  In other words, Amazon should scrap the Fire and hold on to the glowing embers: that focal core of deeply profitable customers who represent the firm’s ongoing source of competitive advantage.

Featured Professors:
Also posted in Knowledge@Wharton Today, Marketing | 8 Comments

Saving Lives through the Power of the Crowd

Posted on January 26, 2012

When someone goes into cardiac arrest, a number of different factors figure into his or her chances of staying alive. Doctors call it the chain of survival. Along with dialing 911 and administering CPR, an important link in that sequence is the use of an automated external defibrillator or AED, which restores the patient’s heart to a normal rhythm.

AEDs are easy to use — even children can be taught to operate one. But they are often hard to find. Unlike other medical devices such as pacemakers or artificial joints, there is no method for tracking where AEDs are located and when they are used. In many cases, a business may have an AED, but patrons and employees might be unaware of it, or of where it is located.

A new effort being launched by researchers from the University of Pennsylvania aims to tap into the power of crowd sourcing to create a mobile app linking the locations of all the public AEDs in Philadelphia to a person’s GPS coordinates. At the same time, they are studying the most effective ways to employ crowd sourcing as a means of furthering research.

“Our challenge as researchers is how do we improve people’s chances, or give them the opportunity to survive cardiac arrest, by improving access to these devices,” says Raina Merchant, a professor of emergency medicine at Penn’s Perelman School of Medicine. “To do that, you really have to know where they are. One approach for finding them is to hire a team of research assistants to go door to door and look and build a map. But that takes a lot of time, and the information becomes very static.”

That method can also become very expensive, notes Wharton operations and information management professor Shawndra Hill. “Basically, we’re talking about the idea of divide and conquer to the nth degree, where ‘n’ is the number of people willing to participate,” she says. “Oftentimes, people are willing to participate … at a lower cost than it would cost the researchers to participate themselves. You also get scale because so many more people are participating. And if you incentivize people correctly, you can do things faster just because there are more people.” She points to Amazon Mechanical Turk, a division of Amazon Web Services, as an example of this. The site recruits people to complete simple tasks, such as writing product descriptions or labeling documents, for relatively low fees.

Dubbed the MyHeartMap Challenge, the Penn contest is scheduled to launch January 31 and run until March 13. Contest participants will use a free app that can be installed on their mobile phones to take pictures of AED devices in public places in Philadelphia. They then send the pictures to the Penn research team through the app or via the project’s web site. Eventually, the researchers would like to expand the project to create a nationwide, crowd sourced AED registry. “In today’s networked society, it makes a lot more sense to actually use social media and social networking to collect this data, and engage the public as citizen scientists,” Merchant notes. “We thought we could probably get much better data by, for example, having people who work at a Starbucks or who are headed into the coffee shop, or the place where they work, take a picture [of the AEDs that they see]. It raises their situational awareness about their environment, and it helps us build a map so that somebody else could use that information.”

If a sufficient number of unique AEDs are identified, the person or team that finds the most devices during the MyHeartMap Challenge will be awarded $10,000. Organizers have also singled out several pre-identified “golden ticket” AEDs around the city that will net $50 for the first person to send in pictures of them. Participants are encouraged to leverage their social networks to help in the challenge, meaning the winner could turn out not to be the person who physically hits the streets to find AEDs, but the one who designs the most creative way to motivate friends and other contacts to do so. “At least one international team from outside Philadelphia is putting together a pretty sophisticated method for locating AEDs,” Merchant says. “We’re hoping a lot of different teams from across the U.S. and outside the U.S. want to [participate.]”

Structuring the contest and choosing the reward was a key part of the project: Not only do the researchers want to interest enough individuals and teams to create a comprehensive map, but they also want to find out what types of rewards incentivize crowd sourcing participants to deliver the most — and the most accurate — data. “Crowd sourcing is increasingly being used in public health, in disasters and emergency preparedness and in planning large events, with people quickly submitting information about what’s happening in those contexts,” Merchant notes. “But we need more data on how we validate the information that we get from the crowd, and how we understand what crowds are best able to answer and when that information is actually accurate.”

The Philadelphia project is meant to be a pilot that would later be expanded to other cities and other parts of the country. Organizers plan to use what they learn from the first MyHeartMap Challenge to design future contests. “We’re excited about the competition for two reasons,” Hill says. “To learn about crowd sourcing and because this particular application has the potential to provide information that could save lives.”

To learn more about the MyHeartMap Challenge, visit the project’s website: http://www.myheartmap.org.

Featured Professors: ,
Also posted in Knowledge@Wharton Today | Tagged , , | 2 Comments

Can New Leadership Get RIM Back in Motion?

Posted on January 24, 2012

Two isn’t always better than one. At least that’s the line of thinking that Research in Motion (RIM) demonstrated on Sunday, when the Canadian company announced that it was replacing its co-chief executive officers — Jim Balsillie and Mike Lazaridis — with one CEO. Thorsten Heins, who has been at RIM since 2007 and was most recently a co-chief operating officer, will take on the new role.

RIM has lost significant ground in the mobile sector since the launch of Apple’s iPhone and Google’s Android-based devices. According to The Wall Street Journal, in addition to service outages and ongoing product delays, the company’s share of the smartphone market in the U.S. has fallen below 10%.

Balsillie and Lazaridis defended their joint-CEO leadership structure in the midst of the company’s well-publicized difficulties, arguing that replacing them at a critical time would only derail a turnaround. But some analysts have questioned the arrangement. In a recent Knowledge@Wharton article, Wharton management professor Lawrence Hrebiniak notes that having two CEOs could turn out to be a handicap in the long run, because it potentially muddles decision making. “When things are going well, none of this is questioned,” he adds. “When RIM was dominant, it could have had five CEOs and been fine.”

According to the Journal, Heins has a reputation for managing execution and has been training for his new role for some time. But the real issue for RIM, according to Wharton management professor Daniel A. Levinthal, is not the person — or persons — at the helm at the company, but rather where the entire ship is headed. “RIM, in my view, needs a new strategy,” he says. “The shift in leadership may help precipitate that, but a new person executing the existing strategy will continue to be disastrous.”

Heins, however, indicated during a Monday conference call with analysts that he doesn’t see the need for any “drastic” changes in strategy — instead placing an emphasis on “process discipline” and “scaling the company further.” He also said that he wouldn’t consider splitting up RIM into separate businesses. “We are strong because we have an integrated solution. We are vertical. We have our network. We have our services. We have our enterprise service out there with more than 250,000 enterprises connected to it. And we have fantastic devices and a fantastic ecosystem that we’re building. I want to build on that. ”

But if a strategy overhaul is really what’s required, what would Levinthal recommend to RIM? “My suggestion is to stop thinking of yourself as a device company — and certainly don’t bother thinking of yourself as a consumer product company.” RIM already has “a killer app,” he points out — the company’s secure email and instant messaging communication. “Let [those services] be device independent and run on Google’s Android [platform] or the iPhone. Communication would still flow through the RIM private network, and corporations will pay the ‘toll’ for that.” Doing so, he adds, would save RIM “a fortune developing and marketing devices that people increasingly don’t want to buy, and preserve [the company's] revenue flow.”

Featured Professors: ,
Also posted in Knowledge@Wharton Today | Leave a comment

Facebook Shunners: Is Resistance Futile?

Posted on January 12, 2012

Shortly before Christmas, The New York Times became the latest media outlet to write about “Facebook resisters” — people who have never set up an account with the increasingly ubiquitous social network or those who started a profile, but later shut it down after they grew dissatisfied with the site.

As Facebook, its competitors and partner companies amp up the social aspects of their sites, and encourage consumers to share more of their activities and preferences online, it’s natural that some people are growing uncomfortable with the amount of information about their lives that is becoming publicly available, Wharton legal studies and business ethics professor Andrea Matwyshyn says. But that heightened level of sharing also makes it that much harder for consumers to completely break away from sites like Facebook, she notes, because they have become inextricably linked with how people live and work.

“There’s a growing concern among people about losing control of their own information, in particular the prospect of employers using social media as a filtering device” for prospective applicants, Matwyshyn says. She knows several law and MBA students who have opted to shut down their Facebook accounts because they were concerned about the reach of the information they were posting. “Depending on your privacy settings and the privacy settings your friends have on their own Facebook pages, you’re not just governed by your own conduct, but by the conduct of every one of your friends to the extent that they share data with third-party applications.”

Situations like this are also causing users to set up multiple personalities on Facebook, with one account for private use and another to use professionally. But bifurcated profiles and the use of pseudonyms creates other complications, Matwyshyn says, because they raise further questions about what is considered fair and legal conduct on social networking sites. “Third parties watching our conduct, or friends giving access to our information to third party vendors, are very messy spaces that will continue to flourish as the social reader phenomenon continues to expand,” she notes. “There’s a push toward having all of us increase the sharing of our information; to avoid sharing information, you have to adopt an increasingly aggressive, defensive posture.”

But given how pervasive Facebook has become, is it really possible to be truly disconnected? “The joy and pain of Facebook is that once you begin participating in the community, disconnecting means, in essence, that you lose a major source of information about people,” Matwyshyn notes. And social networking has also become an important aspect of the way many people do their jobs. “It may not be integral to the career prospects of an art framer, but for someone like me who works in a research field related to technology, it would not be possible for me to opt out of Facebook,” she points out.  “In fact, it would be, in my opinion, almost a credibility-diminishing choice.”

Featured Professors:
Also posted in Law and Public Policy | Tagged , , | 4 Comments

The Race for the Digital Dashboard Is On

Posted on January 10, 2012

Is it legal to Facebook while you drive? That might soon be a relevant question if the automakers that showed up to the Consumer Electronics Show (CES) taking place today in Las Vegas have their say.

Auto manufacturers including Mercedes Benz USA, which is making its first ever appearance at the CES, and Ford, which is showcasing 20 models, are taking up an increasing amount of floor space in order to draw attention to their latest high-tech innovations. According to Smithsonian.com, “CES is turning into a mini-auto show.”

As Smithsonian.com notes, the CES has, over the years, given consumers their first glimpses of electronic-gadget hits like camcorders, DVRs and high-definition televisions. But anyone surprised by the presence of cars, or even technologically advanced refrigerators, at this year’s show probably shouldn’t be. “The definition of ‘consumer electronics’ is expanding,” says Kendall Whitehouse, director of new media at Wharton. “It no longer includes just consumer-focused software on computers and mobile devices. Many other products — from televisions to automobiles — are offering ‘smart’ functionality by integrating increasingly sophisticated computing technology. Some of the recent work in ‘natural’ user interfaces — from Microsoft’s Xbox Kinect to Apple’s Siri — opens up the possibility of new ways of interacting with a wide range of more conventional products and services.”

Mercedes Benz, for example, is introducing its mbrace2 system — “the next generation of telematics innovation that gives drivers top-of-the-line features related to safety, infotainment, personal assistance and vehicle care,” according to the company. The system is smartphone compatible and essentially creates a vehicle that is Internet connected, enabling drivers to search Google, ask for directions, perform engine diagnostics and, yes, access Facebook.

“Cars are getting increasingly computerized, no doubt, [with] up to 70 or so computerized systems at work at all times,” says Wharton management professor Lawrence G. Hrebiniak. “Cars park themselves, stop themselves, regulate temperature, control braking and car sway, find pizzerias in obscure neighborhoods, connect to the Internet, etc. High-tech consumers love the high-tech gadgets and services, so car companies must be tech-forward and advertise their wares on TV and in consumer electronics shows to increase their geek appeal.”

However, there is a downside to the technology boom, he notes. “Cars are getting more complex to understand and repair — no more simple adjustments to a carburetor screw by mechanics but, rather, repairs of Xs and Os by computer technicians.” And too much complexity can create other problems. “I know a person whose car engine would shut down for no reason, making driving on a busy highway a bit scary. It took many hours of costly computer analysis to learn why some chip was sending bad information to the fuel pump.”

These and other stories make Steven King’s concept behind the novel Christine — about a possessed automobile — “seem not so far-fetched after all,” Hrebiniak says. There is also a “looming” potential for cyber attacks, he adds, “as evil doers negate brakes, compromise steering, stall cars they wish to loot and otherwise infiltrate cars’ computers for their own ends. Homeland Security says that this is indeed a scary possibility.”

In that context, a Facebook status update accomplished while sitting at a traffic light seems fairly harmless. Hrebiniak jokes: “Does anyone know of an old four-barrel carburetor I might buy for a very old Porsche or Chevy?”

Featured Professors:
Also posted in Knowledge@Wharton Today | 1 Comment