Groupon Rocks – updated

The internet is full of adjacency; in the past five years only Twitter has felt like a disruptive innovation. Facebook is an evolution of a ten year old notion of social broadcast, even internet TV which is still struggling to gain momentum has been around the traps for a lifetime… Groupon is very new, and very disruptive.

The premise of Groupon is that small businesses offer deals to the Groupon audience, the businesses trade a substantial discount against a minimum number of of orders, the offer is “tipped” once enough Groupon members have signed up. The Groupon team get to decide which offer is published in each city as well as adding some colourful narrative to entice the purchasers.

Since launching Groupon has encountered many imitators, but their first mover advantage has meant grabbing scale across tens of US cities, immediate profitability (forecasting $100 EBIT by the end of the CY) and a resulting valuation or $1.2bn. Expect that number to grow as the launch cities grows. Can’t wait for it to hit Sydney.

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In the past month since posting this note I’ve become aware of a healthy stream of Group Buying sites, I’ve listed some below:

An article in Mumbrella suggested that the market opportunity for Group Buying had now been satisfied, I disagree.

In the US Groupon stole such a convincing march on its competitors that it grabbed a large chunk of market share and mindshare before a strong competitor emerged – no leader has emerged here in Australia. Given how fragmented the Group Buying market now is and how intense the competition is (read low margins) there is a real opportunity for a well backed leader to emerge in Oz, a space also exists for a Group Offers aggregation website supported by a large publisher.

It’s also only a matter of time before one of the existing large transactional audience businesses such as ebay or Facebook add Group Offers to their buying platforms (about time Facebook made good use of Facebook Marketplace!).

So good luck to the startups listed here – regardless of what happens next, the clock is ticking, I’d say you have 6 months.

its not about the hardware

Apple have helped changed the conversation, now the rest need to catch up, again.

It’s ironic that Apple have commoditised consumer electronics whilst appearing to do exactly the opposite. During the peak of iPad hype a few weeks back @nickhodge commented that the hardware was not important, that it was all about the aps..  He’s right of course, but I’d go further, it’s about seamless experiences, and how tightly Apple controls those experiences.

Apple is an exceptional manufacturer of Consumer Electronics. They’ve been consistently out-designing every other PC manufacturer for 25 years. They changed the game in ‘98 with the iMAC’s simple coloured plastics and again in ‘01 with the iPOD’s white earbuds.

The iPOD was pivotal, and a key turning point for Apple’s strategy for two main reasons, firstly it became mass market, where Mac had previously occupied a niche category, and secondly it was tied to a service, something considered as incidental by most at launch.

Manufacturers tried in vain to compete with Apple’s player with more storage space, better battery life and improved sound quality, but consumers didn’t care, the iPOD sucked in all three. The white earbuds made the player must-have, but the seismic shift in MP3 players was driven more deeply by the iPOD’s packaging, the industrial design and its seamless integration with iTunes. Apple dominate the space with 80% share of Mobile Music players. 

In 2007 the iPhone landed with the Apstore as the killer service. Again, Apple had changed the conversation, but this time in the rapidly growing Smartphone category. Clearly I’m not a fan of the hardware, and not just because of the MSFT coolaid I’ve consumed over the years. Regardless, Apple now dominate this category with 40% share.

This month the iPAD launches and the service story moves forward again. Newspapers, Magazines and Books are added to Music, Movies and Aps. Like the iPOD and iPhone the device is seriously flawed of course, however just like those devices Apple has changed the conversation, Mobile computing is no longer about the hardware, industrial design is just hygiene, service is key.