Karan Chadda

Global digital marketing and communications leader

Business

Europe’s technology centre?

Europe’s Technology Centre?

Chancellor George Osborne announced his intention to ensure Britain becomes Europe’s technology centre in his Budget speech. In order to make this a reality he announced support in two areas: Digital Content; and Infrastructure.

Digital Content

The Chancellor announced the corporation tax reliefs from April 2013 for the video games, animation and high-end television industries. These reforms will be subject to consultation and will need to pass state aid rules. The film industry already enjoys reliefs of this kind.

The aim of this tax relief is to try and retain these industries, and the jobs they create, in the UK. It is also hoped that it will encourage inward investment from the likes of Disney into the UK. Last autumn it was reported that animation studios were planning to leave the UK because of preferable tax breaks and subsidies in countries including Ireland and Canada. This move is clearly designed to address that issue and signal to similar creative industries that they are valued.

Infrastructure

On infrastructure, the Chancellor confirmed the selection of Belfast, Birmingham, Bradford, Bristol, Cardiff, Edinburgh, Leeds, Manchester, Newcastle and London to become broadband Super-connected cities. This move is part of a previously announced £100m investment. The Treasury says that this investment will this will deliver ultrafast broadband coverage to 1.7 million households and 200,000 businesses, and high speed wireless broadband for three million residents by 2015.

In terms of mobile networks, rural areas and selected A-roads will see an increase in the quality of coverage. There will also be a government review to decide whether intervention is required to improve mobile coverage for rail passengers.

The UK’s broadband and mobile phone infrastructure isn’t exactly the envy of the world and improving it is essential. As my colleague Charlotte from our Hong Kong office noted recently, we don’t even have wifi on the Tube. The Chancellor also alluded to the fact our network is sub-par when he noted that, “Two years ago Britain had some of the slowest broadband speeds in Europe.”

Verdict?

At first glance, the creative industries can be broadly pleased with the outcome of this budget. The video games developers and animators, in particular, will feel their voice is being heard and the benefits they bring to the UK are being recognised.

On infrastructure, it’s all a little less clear cut. Additional investment is, of course, welcome but until the details are reviewed, it’s hard to judge how significant these announcements are.

The announcements for technology were underpinned with additional announcements about youth training, business loans and development zones. There were also measures supporting scientific and engineering research. It all pointed to the Chancellor wanting to lessen the economy’s reliance on financial services but keep Britain very much as a service-based, intellectual property creating economy.

This post originally appeared on the Huffington Post.

Smart money on smartphones?

 

panasonic eluga

 

With less than a week to go before #mwc12 kicks off, both Fujitsu and Panasonic have played their hand and announced that they’re breaking out of the Japanese smartphone market to conquer Europe. It’s possible that both companies were emboldened by the record quarterly profits announced by Samsung last month, which were driven by its smartphones division, and Cisco’s recent projections that there will be 10bn handsets globally by 2016.

Android-based smartphones are clearly the product category to be in at the moment. HTC’s rise a few years ago and its subsequent decline in the face of Samsung’s dominance shows that, as technological development continues apace and people adapt to new interfaces, no one has really cornered the market just yet.

It’s worth keeping an eye on the margins though. Apple makes a 37.4% operating profit on its iPhone. In comparison, Samsung makes just 11% on its handsets. As volumes grow, it’s reasonable to expect component prices to fall. There is a danger that the companies that only make handsets will rapidly fall down the value chain and see their profits squeezed.

The situation may not be too dissimilar to that currently being witnessed in the market for TVs, where manufacturers are operating on slim margins and many are losing money. Still, that’s no reason not to make money while it’s there and, unlike 3D TVs, smartphone technology looks to be something consumers can’t get enough of at the moment.

IMAGE CREDIT [Panasonic]

This piece was originally posted on Racepoint’s #mwc12 blog

Who’s winning on the sub-continent?

I recently went to Delhi for a few days. On my way back to London, sitting in the departure lounge at Indira Gandhi International, I noticed a phone charging station and it got my attention for one reason.

docking station - delhi

Take a look at it on the left (sorry for the terrible photo – I was working with very harsh light). What do you notice?

What I noticed is that this docking station in the international airport of the capital city of a BRIC nation is sited in a place only accessed by wealthy Indians (i.e. those who can afford to fly) and foreign visitors, and that Blackberry and Nokia are the dominant brands. They’re the brands that take pride of place and have the most docking points.

Now, this is just a snapshot. The trends might favour Samsung and Apple. I don’t know. What I do know that there’s an Indian elite who still use Blackberrys and Nokias and they haven’t fallen out of love with them yet. This means phones like the Lumia (which I saw heavily advertised in Delhi’s upmarket shopping malls) aren’t perceived to belong to old fashioned brands.

For all the talk of Nokia’s decline and turmoil at RIM, I wouldn’t write off the incumbents just yet.

NOTE: this post was also published on Racepoint Group’s #mwc12 blog

Some thoughts on Visa’s repositioning

PR week recently reported that Visa Europe has retained Hill & Knowlton to promote Visa as a technology company to consumers and the business community. This is an interesting move. Traditionally seen as a payments company, why would Visa want to reposition itself?

My initial thoughts run to three possible reasons.

Firstly, I think consumers often perceive Visa to be a financial services company, in particular a credit card provider. The public’s dislike of financial services is obvious and “banker bashing” continues among politicians and commentators. Visa’s reputation might improve if it were to break the association with financial services and make people understand that although Visa processes financial transactions, it doesn’t charge interest or lend money.

My second thought involves mobile payments. Last night, I attended an excellent event called Digital Surrey where PayPal UK’s head of social media, Jon Bishop, spoke about the mobile web. His words on mobile payments in Africa and on NFC particularly struck a chord with me. He pointed out that people are, and will increasingly, use mobile devices to purchase products and services. With this in mind, it is obvious that if Visa is to maintain its dominant position within payments, it will need to convince businesses to use its technology rather than allow other companies to enter into payments (even if Visa still processes the underlying transactions).

Finally, there’s the money. Visa Europe is owned by its members – banks and other payments providers – however, Visa Inc. is a listed company. Perhaps Visa Europe wants to promote itself as a technology company not to reposition itself but rather to increase its profile overall in preparation for it to be floated at some future point.

Switching on competition

The Independent Commission on Banking (ICB) published its final report last week. While much of the reporting focused on ring-fencing and capital ratios, one important part went under-reported: competition.

Politicians and regulators have long seen competition as good for consumers. It is said to drive up standards and drive prices down. However, the retail banking is a very concentrated sector – the ICB report funds that the “largest four banks account for 77% of personal current accounts and 85% of SME current accounts”.

So how can we increase competition?

One answer, according to the ICB, is to make it easier for people to change who they bank with, commonly referred to as switching.

This concept is popular among regulators in a number of sectors, Ofgem, for example, looks at switching rates as one indicator of competitiveness among energy suppliers. It doesn’t require the state to intervene and break up firms, it is easy to measure and it is easy to apply to industries which have large barriers to entry.

However, despite the growth of price comparison websites and national advertising campaigns by energy companies only around half of consumers have switched their energy supplier – and this is during a time of squeezed incomes and double-digit energy price rises.

The Energy Secretary, Chris Huhne, recently told The Times (£) that consumers don’t put enough effort into getting the best deal.

“They do not bother. They frankly spend less time shopping around for a bill that’s on average more than £1,000 a year than they would shop around for a £25 toaster.”

If consumers aren’t changing energy suppliers, there’s little evidence to suggest that they’ll switch between banks. So will encouraging switching really switch on competition?