Do Reliance Industries & Apple Computers fall in the same league? No, really give me an answer right now.
When I think of Apple my mind says – rather jumps out with – the word iPhone, a globally recognized smartphone with tonnes of super-features, the iPad an internationally appreciated touch-screen based electronic book, iMac, iPod, MacBook Air and the list could go on … blah blah blah. Apple is a brand which is iconic in nature, brilliantly packaged and has been built over years by a relentless team of crazily foresighted engineers. (I mean all the guys including Steve Jobs).
Now when I think of Reliance, fortunately or unfortunately there is no such tintinnabulation. Does anyone except the BSE/NSE stock market enthusiasts feel ‘cool’ by saying that they own a reliance product? If you disagree, please do enlighten us with a name of just one electronic device that has been built by Reliance, and that if not worshiped, is at least bought over its competition simply for pure awesomeness? The answer is none.
NotionInk Smart Tablet
Wait a second, but that’s not the point. Reliance is a respectable business in many other ways. They have a really strong presence in retail, have one of the largest communication network, and a robust sales & distribution model spread out all over India. They have a very healthy balance sheet as well. And organically speaking, Reliance too has been built over years by yet another type of relentless team but with a different flavor, different culture and under a different set of circumstances altogether. As a result the genes of Reliance are completely different from that of Apple.
So now can Adam – by Notion Ink, position stronger against Apple by getting acquired/invested upon by a company like Reliance? Leave the business reasons aside, i.e. RIL has re-entered the telecom business and acquired majority stake in Infotel for 3G services and a 3G tablet will serve as the core consumption point, after mobile. As far as Notion Ink is concerned, they get money + access to retail distribution points. But is that all to M&A?
Why do I smell trouble – if not absolute dumbness – upon reading a rather half-baked speculative article saying that Reliance is gonna buy into Notion Ink – The makers of Adam? Quoting The Hindu
“It is learnt that the talks, which could even lead to RIL picking up a majority stake in Notion Ink, are centered on the Adam tablet, which is scheduled for a worldwide launch later this year.
RIL’s interest could have been triggered by the fact that the Adam has been touted as an “Apple iPad killer” in many quarters. The product has been generating enormous buzz on tech Web sites and gadget blogs since an early prototype was put up for demonstration at consumer tech trade shows earlier this year”.
Of course Reliance did confirm to them that they “do not comment on speculation as a matter of company policy“. What else could they have said anyway? No company would ever come up and say “Hey, hey listen, I am gonna anonymously confirm to you that we are buying XYZ percentage of equity in a high-tech emerging business of e-books that we don’t even half understand today”? That would at most be really comic than a worthwhile business news!
And look at what we’ve got here: do we remember the line – the much touted apple killer line – we caught in the last post detailing how Indian media cooks up in perpetuity? And then now the same lines become the basis of another speculative article in a more juicy style?
Let’s for a second, assume that Reliance is certainly interested to buy equity into Notion Ink. How much would it matter to the Adam tthen? For Notion Ink, selling equity to Reliance or for that matter to any large enterprise (Except Adobe) would mean probably nothing to their core values of innovation and urge to compete in the international market. Beyond Adam getting exposure to the Indian market, and Reliance getting yet another opportunity to monetize their local S&D infrastructure there is hardly any incentive towards such a gelation. Especially, if one talks about pitching Adam against the iPad or simply internationally.
On the other hand, chances are more of destroying the nimble vision of the smaller and younger organization should the elephant and the ant coalesce. Large corporates do NOT understand startup culture or creativity. It’s true, go search any case study. Zillions of examples from India to Silicon Valley exist that have revealed the damage done to stock value & vision arising out of a M&A’s with size, gene & vision mis-match. In fact both the entities have lost value, whether its the startup or the biggie when the M&A lacked merit or reason.
In NI’s instance a more valid and realistic reason could be that western markets are saturating with iPad, Nook & Kindle. And therefore, Adam needs to focus in the domestic/Asian market more seriously. But for that, perhaps partnerships with S&D intensive companies like Reliance, Shoppers Stop or Lifestyle would do them good. This however is something that only, Notion Ink guys can decide upon, but certainly it’s not a reason to sell equity to anyone. Having raised suitable funding recently indicates not much desperation to coalesce either, as claimed by The Hindu and many other journos. Besides there are hundreds & thousands of fans of electronic products in the western markets who might buy into Adam with or without Kindle/iPad in their pockets. Don’t you think its time not to lose focus, or take the foot off the gas?
Of course the tought question is: should an entrepreneur pick up the bone thrown at him early on by a large corporate or not?
And at the basic level: Does business reporting mean this level of naivety? Or I am wrong personally to be posting a post this way? Directions please.
people either are very price-sensitive or want to be sure that their investment pays off in the form of “coolness” and “acceptance” within their circles. if notion ink/reliance can pull of a reasonably priced tablet (sub $200) that runs android (and android apps), they have a chance. reliance getting involved is actually a smart idea as the backing is necessary to muscle up against the powers at apple. power to the notion ink crew!
“Reliance + Adam has a chance to beat Apple”. Really? Can you elaborate this further?
Coz last when I read elsewhere, Apple’s quarterly results kicked ass of Google + Microsoft taken together.
Not sure where you read it, but this is incorrect. Most important metric in these results is profit, and Microsoft’s latest profits are more than double of what Apple has. Microsoft has more revenue too (slight when compared to profit). So, no Apple did not kick ass.
Oh I meant in the colloquial sense.
That’s because MS has enterprise revenue. They sell OSes and accessories and consulting to their well-captured Enterprise & Government market only. That doesn’t compare properly with Adam-Apple situation which is more of a consumer electronics end. In which, again Reliance fits only as a distributor, not the businessman.
- Arvind
Adam would beat ipad if its features are good. This has nothing to do if Apple is bigger that Notion Ink.
Apple and Microsofts may be big companies, but that has nothing to do to sell a product. Take for example the Zune which could not even compare to ipod sales. Now I wouldnt say that is because Apple’s revenues/profit are higher. It is purely because ipod was better at features and quality.
Exactly. That means NI need NOT sell its equity to any lame bugger with suitcases of money. Rather they focus on their product. IMHO
- Arvind
$200 is not reasonable, its insane. The cost alone for the pixelQi screen runs in the $100s, let alone everything else. Their base model is supposed to be ~$325 and you can’t expect anything lower than that.
sir, writing for the web doesnt mean, you can shoot down english graammer.
a contender hasn’t really emerged that has the ability to make nimble decisions against apple. if notion ink preserves their ability to make nimble decisions with the support of reliance, it could mean big things.
i’d love to see adams on the shelves of best buy here in the US and people appreciating the form factor and the apps that it could potentially run. instead, we’re seeing mediocre attempts by other companies at half-assed android tablets (with the exception being dell with the streak).
I disagree for a certain reason that comparing Apple and NI is too much to get into.
That’s the hype NI has created and few tech journos have flamed it.
The challenge for NI is what happens when the product is out? How can they sell, after having built the iPad killer?
Reliance provides that muscle – though I am not sure taking money from them will impact the product roadmap/vision of the company.
There was a recent debate between Fred Wilson of Union Square Ventures and Ben Horowitz of Andreesen Horowitz about the lean and fat startup:
http://voices.allthingsd.com/20100317/the-case-for-the-fat-startup/
Notion Ink could go down the path of raising tons of money – this would require a VC to want to go up against Apple (few would stomach that kind of risk). Instead, Reliance could jump in and provide the same backing that going fat would provide with startup raising lots of money.
It’s hard being a hardware company I presume and the hand-holding is necessary.
@Niyogi & @Ashish I resonate with the sentiment that Reliance could provide the muscle for sales, through sales partnerships or even an exclusive sales partnership for India.
But that does not bring us home to the idea of letting out equity from NI to any of the juggernauts, IMHO. Sales partnership is an excellent way forward, and that is what JooJoo, FusionGarage did in Malaysia by partnering with CSL Group. In my opinion sales is a totally diferent topic from letting out equity, and its relevant for NI to hold on to their stock at this stage.
First thing is the product is not launched and directly comparing it with ipad is difficult. Yes the tech reviews say so, however does it have the same consumer delight as ipad will depend when the end users will use it. Once Guruji promoted itself as a google killer, is it somewhere near?
Yes, There are various cases where the biggies and startups dont go hand in hand, however VCs are in no business but they judge the business, invest and make profitable exit. So if notion ink negotiates well with RIL and use it as for funding , I feel it will be killer.
The most important point, though India is a large market it lacks early adapters, How many ipads are sold in India? I dont know the numbers however I am sure it’s not great. So it’s important for Notion ink to go to markets where there is wider acceptance for the product and RIL can help them to do so
Regards
Mahesh
Let us not float too much in the air … Adam+Reliance can really make a kill but not to the extent of saying Apple.
BTW anyone here has actually seen the Adam ?
IT is good to have the head in the sky…but your foot should be firmly on the ground.
apple or no apple , if true , this is certainly a cue to an emerging trend !
further , every startup aspires to be big at some point , an interest of this nature , as shown by reliance ind. , will facilitate a lot more people taking a plunge and realize their dream .
You mean the move to have a sales partnership with RIL or be sold to them on front of equity…?
- Arvind
In a new market, it comes down to creating demand and matching it with distribution. Reliance may be able to manage both and sucker people to subscribe to its broadband wireless service, and somehow also make a cut in the sales of android apps. In the the longer term i.e. as the category matures, it comes down to the balance between user experience (emotional values) Vs price. In my view Apple is still king at all levels (of user experience) in this equation.
Unless Notion Ink offers a new/ novel/ better way of consuming the internet (since the hardware must be similar to so many others), in the longer term, it cannot do much for RIL. RIL could of course simply be looking at becoming the next Micromax in India, and having a 35man R&D team to do android phones and tablets might make strategic sense for them.
You are absolutely right.
So now it depends on whom them pucker up with and get into the Indian market. But if they are shelling out equity to Reliance or XYZ, then I am afraid its a yuckier than imaginable situation.
Arvind
This is a welcome move and in the interest of Indian consumers. This move of RIL will ensure the release of Adam fast before competition makes it a mere me too product. Whether Apple Ipad is better or not, if Adam is just good, it will score in Indian market on price front.
While the portable reader marketplace is getting red hot with Kindle, iPad and the Nook, each will occupy their own niche and attempts for their market share. In whatever it takes in terms of price wars and better features, consumers are the one who will be happy.
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Notion Ink’s in house market Genesis details leaked out – http://techicloud.blogspot.com/2010/12/notion-inks-in-house-market-genesis.html
Reliance is a cheat company. Anyone who has done business with them knows this. They are only in exploitation of the situation. I would suggest NI to keep distance from these cheats as they will definitely would like to impose things on you.