LINE may not be well-known in the US, but it has been exploding in Asia, Middle East and Europe since its launch in 2011. LINE is a messenger app with 300 million users worldwide and its growth is accelerating. The last 100 million users were added in mere 4 months. Some argue that LINE may replace Facebook or Twitter as the most popular social platform. LINE is expected to go public next year with an estimated valuation of over $10bn.

What is LINE?

LINE is somewhat similar to other messaging applications, including WhatsApp, KakaoTalk, or Facebook messenger. LINE allows users to send text, share photos/videos, and make phone calls/video calls to another LINE account(s) for absolutely free.

What’s different is that LINE also has a huge library of “stamps” – a small picture of a character that describes emotion, thoughts, actions, and objects. Stamps act as a way to mimic real human interaction by communicating very subtle points. Some of these stamps are sold for a price (usually $1 for a set of 30 stamps) and LINE shares revenue with its media partners. This has been the major source of revenue ($132M for 2013 Q2) since its launch.

Another difference is that LINE is quickly moving towards platform strategy. The initial version of LINE was only able to handle messaging, but now that LINE is installed in virtually everybody’s smartphone, LINE started to expand its offerings. LINE Mall offers online shopping, LINE Game is consistently topping ITunes rankings, LINE Camera competes against Instagram, and LINE Card is a dominant e-card service in Japan. All these services that be accessed thru LINE application and more and more people are using them.

Birth of LINE and its mobilization strategy

The birth of LINE is somewhat interesting. NAVER Japan, a subsidiary of Korean internet company, was in the midst of developing a photo sharing application when a big earthquake hit Japan in March 11th, 2011. As mobile network was disrupted, people formed lines in front of public phone booth (public phone act as emergency line in Japan and never gets interrupted).  Realizing there is a strong need for efficient and easy communication; the development team switched their focus and started developing messaging application. LINE was launched 3 months after the earthquake.

LINE faced a classic chicken-and-egg problem and tackled to solve the problem in two ways; technical and marketing. LINE has an auto-sync function that allows user’s existing phone book to automatically sync to LINE contact list. Even if I was the only one using LINE, I could still text my friends using LINE (my text would appear as a regular text on their screen). As I don’t have to bother importing phone book to my LINE account, once I started using LINE I had no reason to switch back. Because LINE texting was absolutely free, people quickly switched.

On the marketing front, LINE initially focused on high school girls because they are the ones who often start new trends in Japan. LINE created cute “stamps” that high school girls would love and solicit user feedback very frequently. Once high school girls adopted LINE, it spread to college girls, junior high school girls, boys, 20s, and the rest of the population.  LINE dominated Japanese market in less than a year.

 LINE’s future and competition

 LINE deliberately focused on expansion of its user base and not on monetization strategy. LINE is believed to be already making profit with its stamp and game sales, but the real monetization is expected to come after its IPO. LINE may start selling advertising space like Facebook or open its platform and charge a fee to whoever wants to access its user base.

LINE’s biggest competitors are WeChat (over 1 billion users, mostly in China) and WhatsApp (mostly in the US and Europe). As there is a strong network effect, messaging app is likely to follow the same path of SNS and one or two players will take the dominant positions. Demographic and social trends are in favor of LINE because LINE has a dominant share in Asian markets, where smartphone penetration is expected to skyrocket in the next few years. Whoever comes out as winner will enjoy the similar power as Facebook today.

References:

http://linecorp.com/en/

http://thenextweb.com/apps/2013/08/08/line-corp-brings-in-132m-of-revenue-in-q2-2013-as-its-messaging-app-contributes-76/

http://www.digitaltrends.com/mobile/messaging-appline-and-its-us-efforts/

http://www.cubrid.org/blog/dev-platform/the-story-behind-line-app-development/


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 “One cannot improve human beings, but one can certainly improve systems. And the same flawed human beings with a better system will be able to produce better results”

RS Sharma, UIDAI Director

The Indian UID (Unique Identification) is certainly one of the most ambitious governmental projects ever attempted. Under the supervision of the UIDAI (UID Authority of India) created in 2009, it aims at providing a unique 12-digit identification number to the whole Indian population. Started in September 2010 in a few pilot regions, the UID has now been assigned to more than 200 million people. The code is assigned to each individual through one of the several hundreds purposely-built offices throughout the country, and is linked to a central database that records official document scans (passport, driver license, tax file number, ration card) as well as the biometric information that will later be used for secure identification: iris and fingerprint scansions.

The main goal behind the project is to provide a standardized, unique mean of identification that will be accepted by public and private institutions, in order to promote efficiency, safety and fight the widespread corruption and malpractices that hindered India’s significant development in the last few decades. Public offices and private businesses will receive from their customers a UID number combined with an on-the-spot iris and/or fingerprints scans that will be sent to the centralized government database and matched with the files of the resident, thus enabling the companies to access all the client’s necessary information (public and, if permitted, confidential information). As a result, residents would be spared the hassle of repeatedly providing multiple, identity related, documentary proof each time they wish to access services. Therefore, the UID number will provide easy identity verification and facilitate the provision of public or private services. It is also easily verifiable in an online, cost-effective way once the required inputs are entered into the specifically designed software and high quality scanners.  The most innovative feature of this project, and the basis for its reliability, is the inclusion of biometric parameters that ensure identity authentication. In fact, similar code-based projects have been implemented in many countries (Social Security Number in the US, Medical Card of services in Italy, India’s tax “PAN” card among dozens of others) and have often been successful: however, they always required a secondary mean of identification, and this strongly reduced the amount of procedural simplification they managed to achieve.

The UID, instead, will guarantee immediate identification with a scan and a code input. Given that the biometric characteristics recorded, unlike traditional ID documents, are not falsifiable, the probability of identity fraud is almost completely eliminated and the successful identification rate exceeds 99.9%. Additionally, errors that may occur can be checked and processed manually by the system’s employees, further enhancing the efficiency, reliability and security of the project. Nevertheless, several critics have raised doubts over the safety of the system and the critical consequences of a possible misuse of illegally acquired data. These voices of dissent, often coming from regional politicians, are raised in defense of their vested, non-legitimate interests that would be damaged if the UID system would be successfully implemented in all governmental agencies. The most recent ruling on the subject by India’s Supreme Court, on October 21st 2013, backed the legitimacy of the project and dismissed all the charges of privacy violation. Following this logic, the many critics that the UID project raised so far are a very good indicator of its enormous potential in fighting bribery and depriving corrupt officials of their illegitimate powers.

The UID system can be the source of important advantages to all the actors involved in its use. In order to better illustrate these advantages and what is required from the system to deliver them, it is convenient to separate the actors in two main categories: final users (Indian citizens) and institutions (the Indian Government and its agencies; private firms). The crucial point is that each member of a group needs a sizable number of users in the other group in order to maximize its own utility. The more people use UID, the more businesses will benefit from offering UID-based services; vice-versa, more businesses and government agencies accepting UID as identification directly translates into greater benefits for citizens. This twofold relationship is typical in the field of Information Systems (notable similarities explored in class can be found with the videogame and credit card industries) and is a textbook example of the ‘Network Effect’ model. The most important aspect derived from the application of the model to the UID case is the need for both groups of users to reach a Critical Mass in order for the cross–benefits to outweigh implementation costs. In other words, a sizable amount of users in a group (in theory, a precise number of them) must be using the technology to make it convenient for the other group to start using it too. The UID project managers need to acknowledge the importance of this relationship and promote the service to both groups in order to succeed in their ambitious plan. The group-specific benefits are described below, together with an assessment on the network effect externalities and the steps to be taken to reach the critical mass.

Final Users

Indian citizens that choose to apply for a UID will undoubtedly benefit from the technology in many different areas of their life. Firstly, they will obtain easier and legitimate access to welfare programs such as food distribution, direct transfers, fiscal reliefs, medical assistance and so on (recent studies suggest that 2/3 of the allocated aid resources are lost to bribery and illegal appropriation). In fact, even today only a small fraction of the population is able to establish its identity through traditional documentation. According to many Indian officials and researchers, the inability to prove one’s identity is one of the biggest barriers preventing the poor from accessing services and subsidies. Different service providers would require the demander to undergo a full cycle of identity verification, with many forms and documents to be filled out, leading to a high probability of demand rejection in case of noncompliance with the requirements. These situations constantly proved to be a waste of time and resources for both the organizations as well as the individual demanders. Furthermore, India is a country where corruption dominates large areas of government intervention, therefore the UID can significantly improve the effectiveness of the programs by ensuring that the final beneficiaries will receive what they deserve without having to bribe officials or wait too long.

Secondly, those who possess a UID can improve their interactions with private businesses and employers: easier and reliable alternative forms of payment, job applications, contracts, and so on. An interesting development in this direction is the MicroATM: a portable device that can verify one’s identity through UID code input and iris/fingerprint scan, and then wirelessly (thanks to a cellular SIM card) access the bank account of the user in order to perform safe transactions.

Thirdly, the UID can also greatly improve the quality of medical services.  In case that the patient is incapacitated, a simple iris or fingerprint scan would allow the medical staff to directly access all the vital information of the patient (blood type, allergies, medications and so on), therefore limiting errors, increasing the efficiency of the system and potentially providing a database for all medical facilities (including research centers and universities).

Given the importance of these benefits for the average Indian citizen, together with the relative ease of joining the project (UID registration is free), it does not come as a surprise that in just one year more than 200 Million people have chosen to request their new high-tech identification. However, these initial figures are likely to be over-represented by the lower-income classes, since they benefit the most from UID-based food rations. The project now faces the challenge to appeal to mid- and high-income citizens that are less interested in the ease to access welfare programs: the key to success is to reach the critical mass in the number of private businesses offering UID-based services. As of today this is far from being accomplished, as many firms still find the necessary equipment to be too expensive. The government therefore needs to find new ways to promote UID adoption by private firms.

Institutions

Private and public institutions in India can benefit from the UID mainly in terms of cost savings, increased efficiency, and accuracy of transactions. Moreover, private firms can use UID-based services as a platform for differentiating their offer: consider, for example, mobile phone providers that could include in their plans SMS-based UID services monitoring; travel agents managing visa applications for their customers thanks to the access to the complete set of their customers’ documents; employers being able to track each worker’s activity thanks to daily fingerprint scanning.

In sharp contrast with the group of end users, however, institutions face important costs when deciding to embrace UID in their business: intuitively, the initial expenses to purchase equipment (fingerprint or retina scanners, terminals to access the central UID database); moreover, firms have to deal with ongoing costs related to the management of the new services, such as extra hiring, maintenance costs, and so on. This explains the initial reluctance expressed by private firms and even local public authorities. However, as stated above, the number of institutions using UID is crucial to the success of the technology among citizens: therefore, the government needs to implement further measures to encourage the adoption by firms and state offices. For instance, financing or tax reliefs should be granted to innovative businesses developing cheap connection terminals or biometric readers; public employees should be trained on the technology and motivated to use it; private businesses should receive support for early adoption. This phase is crucial in deciding whether the project will be a universal success or remain confined to those who do not have alternatives (lower income classes); the government needs to address the stated issues, possibly pursuing proactive solutions that can help reaching the critical mass in the near future.

 

 


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Has Facebook become to Powerful for its own Good? Facebook Recently Deleted Page for an Add-on that Benefited Users

Facebook, as a social network and public company, has the right to protect itself and its Users from any Facebook Page that may be detrimental to the User experience or the Company’s Advertisers. While it may be legal for Facebook to allow all content to be posted on its Facebook pages, [1] it is still in Facebook’s best interest to have policies in place to ban content or Pages it deems inappropriate.

According to Facebook’s Statement of Rights and Responsibilities, there are several ways to have a Facebook Page banned by the Social Network. According to one Article, the following are the most common ways to get banned from Facebook:

1) Misrepresenting Oneself, either by using a fake name or creating multiple accounts;

2) Posting Copyright Material, although this rule is often broken and rarely enforced by Facebook;

3) Adding too Many Friends, a common practice for spammers;

4) Posting Obscene Material; and

5) Spamming for Commercial Purposes.

In general, these criteria should be good for both Users and Advertisers (essentially Facebook’s Customers).

So why did Facebook, as a two-sided platform, delete Matt Kruse’s Social Fixer page? While Facebook cited violations of the Statement of Rights and Responsibilities, this rationale was weak. Facebook’s notification read “Your Page was unpublished for violating Facebook’s Terms. Specifically, your Page was flagged for content containing spam.”[2] Social Fixer was not a spammer – Facebook deleted the Social Fixer page on September 12, 2013, at the expense of the User experience, to protect its relationship with Advertisers.

Social Fixer is a browser plug-in that “improves the existing Facebook.com web site.” [3] According to the website, the current features include the ability to filter and tab newsfeeds, to hide read posts, to auto-switch to most recent newsfeed, to add customer styles and themes.

At the time the Page was deleted, Social Fixer caught Facebook’s attention for two specific features that have since been removed from the Social Fixer plug-in. These two are Friend Tracker (ability to view when someone unfriends you) and ad blocking. After numerous blogs and correspondence with Facebook, Kruse eventually compromised, removed these two features, and Facebook allowed him to republish his Page.[4]

According to BuzzFeed, Social Fixer had somewhere between 500,000 and 1 million users and the Facebook page had 14,000 friends and over 300,000 likes. [5] Overnight, Social Fixer’s page was deleted, and Kruse’s personal account was blocked. Facebook has proven that as it becomes larger and more focused on Advertising revenue, it will take steps to maintain its own API (application programming interface, or user interface) and will require third-parties to acquiesce and conform to its ecosystem.

Given that Network Effects are necessary and that more users are more valuable to Advertisers (and thus more profitable for Facebook), diminishing the User experience can only be a bad thing for Facebook. Facebook knows this and does all in its power to grow its User base, but Facebook may have become too arrogant when they deleted the Social Fixer page.

Facebook should be careful not to alienate its User base and should make available to them all opportunities to enhance their experience and user interface. While many Users love Facebook, many see it as almost a necessary evil, a way to stay connected with friends and family, but are non-the-less annoyed with many of the new Facebook features (i.e. Timeline). The Social Network should strongly consider allowing add-ons, and view it as a sort of ‘subsidy’ to one of the user groups in its two-sided platform. Not allowing these types of add-ons exposes Facebook to competition from other potential social websites. If Facebook is not prepared to make the necessary updates to its user interface to make it more user-friendly, allowing on third-party add-ons or plugiins can be a way to enhance the User experience and keep people coming back to Facebook.

Helpful Links:

http://socialfixer.com/blog/

https://www.facebook.com/legal/terms

http://www.buzzfeed.com/charliewarzel/the-end-of-the-power-user

http://www.foxnews.com/scitech/2012/06/11/five-ways-to-get-banned-from-facebook/

Interview with Matt Kruse from Social Fixer:

http://slashdot.org/story/13/10/15/164231/facebook-may-dislike-the-social-fixer-extension-but-many-users-love-it-video


[1] Interpretation of Section 230 of the Communications Decency Act. “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.

[2] http://socialfixer.com/blog/2013/09/12/beware-your-business-is-at-the-mercy-of-facebook-social-fixer-page-deleted-without-explanation/

[3] http://socialfixer.com/

[4] http://socialfixer.com/blog/2013/10/12/facebook-compromises-social-fixer-can-keep-feed-filtering/

[5] http://www.buzzfeed.com/charliewarzel/the-end-of-the-power-user

 


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Blackberry Out(r)age

“Due to the Blackberry outage, millions of users have been forced to check their email on a computer like wild cave savages.”

“Got an iPhone? Turn it into a virtual Blackberry by enabling airplane mode.”

“That’s it, you pushed it too far RIM! I’ll be looking for a new phone tomorrow morning, and that won’t be in the BlackBerry section…”

 These tweets are from yesterday morning, and were clearly NOT tweeted from a Blackberry device.

How could a company that was, not so long ago, praised for its cutting edge technology and the quality of its products, be made fun of, and be raged at this way on the web? RIM, the Canadian company that manufactures Blackberry devices, has had 3 days of service failures this week, starting in their growth markets of Europe, the Middle East and Africa, and spreading to Asia and the Americas. Business people got disconnected from their mobile office, IT departments got flooded with technical requests, youngsters were not able to BBM their best friends… Yet, it all seemed like the chronicle of a death foretold.

RIM pioneered the development of the mobile phone industry in 2002 by designing a phone that was smart, long before they were even called smartphones. Blackberries started to penetrate enterprises, devices got better each year, adding color screens, enhanced web browsing, cameras, media… Soon enough, people had forgotten that blackberries were edible! And then, Steve Jobs decided to take a closer look at that growing market. He believed he could revolutionize the phone industry the same way he revolutionized the computer and music industries. And he did. In a big way. RIM should have gotten worried, but they were confident they would maintain their stronghold on the business segment, which was the most profitable one, and started being complacent and slow to get new products to market. Many professionals now prefer the trendier iPhones to the sturdy company-issued blackberries.

The outage episode couldn’t have happened at a worse moment as RIM has had a difficult year in many respects. In the quarter ended in August 2011, sales and profits were down 10% and more than 50%, respectively, vs. 2010. In Q2 2011, RIM’s share of the smartphone market dropped to 12%, vs. 19% in Q2 2010. RIM has also seen a slow start for their Playbooks tablet, forecast to sell at 3 million copies in the first year. That’s how many iPads Apple sold in a little over 2 months!

Perhaps more importantly, it coincided with the passing away of Steve Jobs and the launch of the iPhone 4S and iOS5, which included some very anticipated features:

  • iCloud  is Apple’s long awaited cloud computing platform. It allows users to store their documents and media files remotely, and access them from any iPhone, iPad or PC. It is not a revolutionary product per se (companies like Dropbox or Amazon have been offering a similar product for a while), but the fact that Apple is technologically  integrated and controls both the hardware and the software allows for many cool features, like instantaneously updating photo libraries on all your devices if you take a picture with your iPhone or your iPad. This will contribute to strengthen the Apple ecosystem, and drive sales of iPhones and iPads.
  •  iMessage is a free service that allows for free instant messaging between iPhones and iPads. The first version, which is included in iOS5, is pretty basic vs. other iPhone applications like WhatsApp Messenger, but it is more stable, and you can count on Apple’s development team to enhance it very shortly. It is Apple’s response to Blackberry Messenger (BBM), which has been one of the strongest contributor to the Blackberry network effect over the past couple of years. This network effect may be on the brink of collapse as users have an additional incentive to migrate to iPhone.
  • Finally, with the launch of the iPhone 4S, Apple is making it cheaper than ever for users to switch, with the price of the iPhone 4 brought down to $99, and the 3GS being offered for free.

So, will this outage episode be the death sentence for RIM, or will it be salutary and push it to reinvent itself?


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