Market sizing, product strategy … dealing with a shrinking 2D printing market..

The slide-deck in this post is a blast from the past! 

A few months before I started my internship with Xerox, I thought of creating a nice little slide deck – in an attempt to articulate a new proposition.

It is public knowledge that the print industry is shrinking (2D printing – to be more accurate) and Xerox has been major player in this industry catering specifically to the enterprise customer segment.

I’ve attempted to do two things in this deck:

1. Proposed an alteration to the product strategy (printers specifically) enabling value added benefits for the enterprise customer and the end user – the office guy!

2. Attempted to size a new market – reaching end users through enterprise customer segment – to generate printer sales and (more importantly) raise annual ‘supplies revenues’. Needless to say, it is based on certain exemplary figures.

Note: As I said, this is a blast from the past and is purely made for personal interests – trying to gauge and hone my skills in the process!

Yahoo continues its acquisition spree – a bid for Hulu this time!

Yahoo continues its acquisition spree – this time it has bid for

Hulu brings along a lot of content along with demographic data to complement the Tumblr acquisition. Yahoo competes with media giants and private equity firms for this bid! The ‘range’ of the bid indicates its desperation – clearly it does not want to repeat the Youtube bidding scenario.

It might seem like Yahoo is trying to fill the Youtube gap in its portfolio, Hulu has its differences when compared to Youtube. Hopefully Yahoo doesn’t try to replicate Google’s Youtube strategy with Hulu – it deserves a integration & monetizing strategy of its own.

Some more details at Business Review Weekly & Silicon Angle

Yahoo acquires Tumblr – a move towards competitive parity?

Much has been written about the recent announcement of Yahoo’s decision to acquire Tumblr. Here are my two cents in a more than two lines.

As with any acquisition, the key question has always been – will it add value? One of the best ways to look at value addition in an M&A is synergies among the merging firms in the value-chain.

The Internet Value Chain

For the value chain, I decided to refer to a different perspective – The Internet Value Chain (from the ‘Internet value chain economics‘ proposed by Mark Page & Christophe Firth from ATKearney back in 2010). I did this more so because Yahoo and Tumblr are primarily internet-companies – with lots of online-properties and services!

The Internet-Value-Chain talks about the path travelled by “data” and the value added to it at various junctures – from origination to consumption!

The figure below indicates that Yahoo (depicted by “Y”) is present in multiple stages of the value-chain – content generation, online services and enabling technology services – a common occurrence in this value-chain and in this industry.

Yahoo & Tumblr - A place on the Internet value Chain
Yahoo & Tumblr – A place on the Internet value Chain

Tumblr, on the other hand, is primarily a part of the “User Generated Content” box of Content Rights and the User Interface-Applications! It goes to show that Yahoo’s interest in Tumblr is primarily in the user-base and audience of Tumblr and in reusing its mobile-app development capabilities. In the recent past, Tumblr has added advertising to monetize its content base – this is still in a nascent phase.

Tumblr’s revenue sources pre-acquisition are the advertising clicks, premium blog themes and premium blogger accounts (say those hosted by companies looking for greater visibility). Yahoo also relies heavily on advertising revenues – driven by display ads on its online properties and those driven by its search collaboration with Microsoft (an alliance reportedly not doing too well).

What is Yahoo’s strategic interest in Tumblr?

Why is Yahoo interested in Tumblr? Yahoo is faced with two issues with respect to its service (online properties and ad-revenues):

Firstly, insufficient traction on handheld devices – creating difficulty in reaching Gen X and Gen Y users

Yahoo’s latest acquisitions indicate an attempt to bridge the gap in the ‘App Store’ eco-system.  Can Tumblr assist here? 
Tumblr’s mobile app is rated higher than any of Yahoo’s apps on the iPhone (An almost similar situation in the Android platform). Yahoo itself has been revamping several of its mobile apps to gain traction here.

Secondly, its user demographics – An aging client base alienating advertisers

Yahoo’s current demographics suggest about 50% of its traffic comes from audience < 35 yrs. In case of Tumblr the same segment comprises 72% of the total traffic. If time was to freeze and users were to remain completely loyal to the platforms, Yahoo can pull up the 50% figure up to 58%!  (Referred from here & here).

Looking to bridge these gaps, Yahoo will have to work around several challenges with this acquisition.

The integration challenges ahead!

While Yahoo will hope to exploit these synergies steam through; there are more challenges ahead with respect to the strategy, product integration and economic value extraction.

Although Tumblr’s mobile app is an advantage, it is ranked much lower than that of the likes of Facebook, Instagram & Twitter. On handheld devices – the merger will help improve the situation – raise it closer to competitive parity – but will not win it the game!

On the demographic front too, the hope to raise share of the young audience to 58% – rests on a big assumption of user loyalty. I have attempted to plot the relationship between the percentage of young users (< 35 years of age) leaving Tumblr’s platform and the resulting impact on Yahoo’s users resultant demographic mix (depicted below)

Impact of Tumblr users leaving...
Impact of Tumblr users leaving. What’s the threshold?

While Yahoo deals with the user base and mobile traction challenges, yet another front to address is the quality of content on Tumblr. Reportedly, much of Tumblr’s content has been said to be ‘objectionable’. 22% of the referrals to Tumblr come from porn sites which puts in doubt its attractiveness as an advertising platform.

In light of the recent introduction of advertising to monetize Tumblr’s platform, it is noteworthy that users have been happy with non-intrusive advertising. Integrating with Yahoo and starting a display-advertisement model like on other online Yahoo properties could potentially see users rushing out of the door – bringing Yahoo back to the demographics problem.

Tumblr’s themes will bring insignificant share of revenues and advertising revenues will meet a steep curve (ads prices on mobiles are cheaper than on desktops). Are the ad-revenues from premium bloggers enough to sustain valuations?

Coming down to the moolah! Tumblr reportedly spent $13 million in operations in 2012 while its ad-revenues were about $25 million. This is an unfavorable ratio accompanied by an unknown source of confidence in the projected $100 million revenues for 2013.

From Yahoo’s perspective, where’s the money coming from? Financial reports suggest a free cash flow reserve of $150 million – and reports say that Yahoo will mostly pay in cash for this $1.1 billion acquisition. There are indications of cash infusion from a stake sale of Alibaba which may be used to fund the Tumblr acquisition.

The question remains – in light of the strategic challenges involved and the best-possible value extraction toward competitive parity – is it the best use of this cash?

Business Model Canvas – validating a reading –

I decided to pull out some  presentations I had created out of interest, and starting from this, I shall put these on to the blog here. 

The following content is an analysis of the business model of a company named DxOLabs. My interest in photography drew me to this company initially.

(A quick background: They’re into creating Photography editing/workflow software, providing imaging hardware solutions for the mobile world and bench-marking photography equipment under lab-conditions –

The synthesis in this presentation is drawn out of extremely limited public information and is based more on assumptions. As the title suggests, I have used the ‘Business Model Canvas’ by Osterwalder to represent the current & proposed business model. I have gone ahead and dared to make a couple of suggestions about proposed changes to their business model in order to exploit two new market opportunities. Feel free to challenge these.

p.s: Recent development about Adobe moving from software sale to software subscriptions was a delightful news to me. Not that I use the software myself, but that my belief about changing revenue models and (possibly) usage model (SaaS based) has been reaffirmed.