Posts from — September 2007

Facebook has been the most talked about social network in recent times. Be it for the latest Facebook app or the rumors of acquisition, the blogosphere loves talking about Facebook. It is no surprise that LinkedIn, the leader when it comes to business networking, now has a reason to worry after Facebook launched the Career Center back in March. It is not entirely clear about how many people use Facebook for the primary purpose of business networking. But a look at the Alexa graph showing the traffic levels of the three top business network sites: Facebook, LinkedIn and Xing show that while the latter two have more or less stable userbase in the six month period, Facebook has grown exponentially since March. So, it is possible that a lot many people are indeed using Facebook for finding jobs.

Though not entirely attributable to the Facebook phenomenon, LinkedIn’s recent move to allow profile photos certainly looks like an attempt to bridge the gap between Facebook and LinkedIn. A lot of thinking definitely would have gone into it as it was a conscious decision not to allow photo displays in the first place. However, presuming from the Alexa graphs that new users are not coming to LinkedIn and rather moving to Facebook, the question that is to be asked is, ‘What’s in Facebook that is not available in LinkedIn?’

Pricing in LinkedIn
In my opinion, one biggest drawback of LinkedIn has been its exorbitant pricing. The basic membership is indeed free and that is sufficient for the common users. But however trying to monetize every new feature on LinkedIn does not augur well from a user’s point of view. For example, when LinkedIn launched a simple feature to display ‘Who clicked my profile’, the basic user was not shown more than 5 recent visitors. This is not a feature to be monetized. It is better to only display 5 visitors to any user, free or premium, than asking the user to pay $20 a month to view another 5!

Will bridging LI close to FB solve the problem?
As I said before, the move towards allowing users to post pictures need not necessarily be derived from the competiton with Facebook. But it certainly looks an inspiration. But would getting LI close to FB work? I believe this kind of a move shall fail. This is because LinkedIn has earned a reputation for itself by being a very business-like website to find business partners. It is this USP that is still helping LI be the number one recall site when it comes to business networking. Allowing profile pictures will take the sheen out of a person’s achievements and resume and over-emphasize on the appearance.

So, will complaints like ‘I was racially discriminated because of LinkedIn’ or ‘Someone created a fake profile of mine with my photo but false details’ start making news? Yes, definitely possible. LinkedIn needs to realize its strengths. Facebook is not a primary business network. So, the traffic details might not be all realistic about job seekers going the FB way. Xing might try and catch up with LinkedIn given its more affordable pricing and popularity in Europe. These are some things that LinkedIn need to analyze for proper gap-reasoning between itself and its competitors.

When Apple announced yesterday that they are dropping the price of their iPhone 8GB from $599 to $399, you would expect jubilation all around. One thing that had held back many people from purchasing their own iPhone was simply the price and this drop in price was always to be expected and when it really happened, it is in fact a happy news.

Who’s protesting?
But Steve Jobs was in for a rude shock when the blogosphere got abuzz with hate posts vehemently protesting the huge drop in price. The leaders in this campaign are the die-hard Apple loyalists who were one of the firsts to purchase the iPhone when it first hit the market. So naturally when they see the price drop after they have just become proud owners, you would naturally expect disappointed loyalists.

What went wrong?
To put it in the mildest of terms, nothing actually. Apple did nothing wrong in either overpricing it in the initial stages nor bringing down the price at this point. In marketing, this kind of overpricing a new product when it is first launched (and has hardly any competitors) is called Price Skimming. This is a strategy that so many companies have so successfully used to break even quicker while making a quick buck from those who consider purchasing the product early a status symbol. Everything from television, cellphones, internet, everything have used this strategy in their early days.

So why has the iPhone alone had to bear the brunt of the wrath of Apple loyalists? There are two main reasons for the same. The primary reason is that iPhone is a technology product. Technology related blogs are one of the widely popular sites on the internet, and most of these blogs are written by those who purchased iPhones early on. So, Apple can always expect this crowd of technology bloggers to have opposed this price drop.

But the most important decision for this vehement opposition is in the fact that Apple has brought about the price drop so quickly after its introduction. The iPhone was introduced on June 29th of this year to be precise, and paying $200 extra for the same product is something not everybody would prefer.

What Should have Apple Done?
A price drop to gather more user base is always on the cards. But this should be done in a way so that loyalists base does not get offended. The way to achieve this could be by launching iPhone in a newer market, say the Europe or Australia. Since there is a huge demand from people from these countries as well, Apple could have expected to keep up the momentum in sales growing. It is being increasingly speculated that iPhone sales growth is lesser than what Apple claims and that’s exactly the reason for this quick price drop.

This strategy could have helped Apple price-skim the other high demand markets as well. On the other hand, the strategy adopted by Apple shall hit it on two fronts. One, early adopters feel ripped off because Apple ‘fleeced’ them. Two, Apple will have no opportunity for price-skimming at these newer markets since they will have to price their product on par with the new price it is available for in the American market.

The iPhone is scheduled for launch very soon in some of the newer markets. Apple has definitely lost an opportunity to increase profit margins in these newer markets by announcing a price drop in the US.