Last week, Oracle said that it had received approval from the European Commission for its acquisition of Sun.  Afterwards, Sun CEO Jon Schwartz sent a memo to his team containing advice and encouragement. 

Having been through a similar experience (albeit on a much smaller scale), I find he gives perfect advice to those staying on with the merged organization. 

Now many of you know that I came to Sun when a company I helped to found was acquired in 1996. I’ve also led, and been a part of many, many acquisitions at Sun, both large and small. From those experiences, I’ve learned one very clear lesson–the single most important driver of a successful acquisition are the people involved–and how committed they are to the new owner’s mission.

And the most effective mechanism I’ve seen for driving that commitment begins with a simple, but emotionally difficult step. 

Upon change in control, every employee needs to emotionally resign from Sun. Go home, light a candle, and let go of the expectations and assumptions that defined Sun as a workplace. Honor and remember them, but let them go.

…

For those that have roles at Oracle, may you start with a clean slate, ready to take on the myriad opportunities ahead. With the same passion and tenacity for Oracle’s success that you’ve had for Sun’s, and a renewed sense of energy around executing on a far broader mission. There is no doubt in my mind you, and Oracle, will be remarkably successful, beyond the market’s wildest expectations. But it’s important you come to work thinking, “Sun is a brand, Oracle’s my company.” Don’t look for ways to preserve or dwell in “how we used to do things.” Look for ways to help customers, grow the market, and improve Oracle’s performance. 

Sun is a brand, Oracle is your company.

I had the good fortune to attend a two day session with Jack Welch several years ago.  He put it more simply saying “they like buy-in over brains.”

Say goodbye to your old company.  It doesn’t exist.  Embrace the new one, understand the way things are done and do everything you can to help your new employer.   Any new company you join will do things differently than your old company.  Don’t dig in your heels simply because your new employer happened to acquire your old one. 

If you can’t do this, you need to move on yourself before that decision is made for you.

The U.S. Census Bureau announced last week that advance estimates of U.S. retail and food services sales for November, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $352.1 billion, an increase of 1.3 percent from the previous month and 1.9 percent above November 2008.

Good news that we are finally showing positive year over year comps. Here’s a graph of monthly data going back to 1993.

Although, when you look at the adjusted totals through November of 2008, we are still down 7% year over year.  Total retail sales are below 2007 and 2006 levels as well.  We are just 1.4% above 2005 levels to this point in the year.

So, it looks like we are pulling back from the abyss, but we still have a ways to go to get back to the levels of 2006, 2007 and even 2008.

Retailers must differentiate to take market share and grow.  For many retail segments, the customer experience will be what separates the winners from the losers.

Jack Dorsey on CNBC talking about Square.

In my previous blog post, I talked about how mobile will affect retail. One of my 6 implications for retail was the need to prepare for the coming of consumer devices, like the iPhone, to the enterprise.

“4. Ready or not, devices like the iPhone are coming to the retail enterprise. People are using them in their daily lives and will see the value of using them at work. Security and other concerns need to be addressed, but departments and business units will push retail CIO’s to incorporate these tools sooner rather than later.”

Square is a good example of what I mean.  Square is a new company led by Twitter co-founder Jack Dorsey.  I’m not sure if Square is the next big thing; there is of course some skepticism out there.   I do believe that over time, companies like Square will fundamentally change the landscape for payment and mobile device providers in the retail and restaurant space.

According to Eliot Van Buskirk’s article on the Wired website, the Square business model looks like merchant banking and additional, related services like loyalty and e-receipts for the low end of the market – single store operators and individuals selling via Craigslist.  Square will not put a dent in Verifone’s business soon.  Square’s power is in demonstrating how to take a consumer device and use it to make payment services and mobile retail applications accessible at a price point that is 80% lower than current solutions.

Impact on the Customer Experience

Square has the potential to enable significant improvements in the customer experience for both retailers and restaurant companies.   With something like Square, retailers and restaurant operators can facilitate an improved customer experience at a much lower price point.  For example, by allowing payment at the table, the payment process at a restaurant is easier and faster (valuable to both the customer and the restaurateur).

No Shortage of Challenges

There are plenty of issues, not the least of which are potential hacking of the device to steal credit card information, general security of the consumer device in a wireless environment, remote administration concerns and the lack of protection against viruses and other malevolent software.

Conclusion

Who knows if Square will be the winner, but the team and the funding behind it represent the opening shot in a battle with incumbents which will spur innovation to the benefit of retailers, restaurant companies and the customer experience.

This is part two of a blog post regarding Mary Meeker’s 2009 Web 2.0 presentation and implications for retailers.  For me, there are six key takeaways:

1. Your customers will increasingly carry massive computing power and, via the cloud, access to any information and services they want.  You need to make them value yours vs. some third party price comparison site.   Build and deploy valuable applications that support the customer through the buying cycle from search, to store, to purchase.
2. Customers will expect Wi-Fi service at every retail location.  I know there are issues.  Provide it anyway.
3. Location, location, location.  Not yours; your customers.  Knowing the customers location will enable entirely new ways of communicating and fostering a relationship with them.   Be careful.   You need to offer value for this information.   If you use this information to spam them, the opportunity for conversation will be lost for a very long time.
4. Ready or not, devices like the iPhone are coming to the retail enterprise.  People are using them in their daily lives and will see the value of using them at work.  Security and other concerns need to be addressed, but departments and business units will push retail CIO’s to incorporate these tools sooner rather than later.
5. The information kiosk is dead.  The customer is carrying the next generation kiosk with them.  Make this part of your mobile commerce strategy.
6. As in Japan, mobile commerce will represent the fastest growing channel for multi-channel retailers.  I know; we’ve been talking about mobile commerce for a decade.  The iPhone changed everything.  If you don’t have a mobile commerce strategy.  You need to develop one – now.

Last month, I wrote a post summarizing Mary Meeker’s recent presentation at Web 2.0.   I was recently thinking more about the implications to retailers.  As a recap, below are some key facts and comments by Meeker.

From the wireless arena:

• GPS – 421MM GPS Chips were sold in 2008(e) representing 57% annual growth.  Cell phones and PDAs were 60% of shipments.
• 3G – 490MM global users.  Grew at a 45% annual rate in Q2 09.  3G users are 12% of the mobile user population forecasted to grow to 44% by 2013.
• Wi-Fi – 319MM chipsets were sold in 2008E.
• AT&T’s mobile data traffic is up 50X in the past three years – a 4,932% increase!
• Wi-Fi is still growing considerably.  There are currently 35MM hotspots.  Interestingly, 42% of iPhone usage happens on Wi-Fi networks.
• Mary predicts 3G usage will hit an inflection point in 2010 (>20% usage).
• Mary believes that location-based services are key to the mobile internet ’secret sauce’.

Facebook and Apple are driving independent but overlapping innovations in social networking and mobile platforms:

• Facebook has 390MM users representing 153% annual growth.  There are 350,000 apps, and 500MM downloads.  People are spending 6B minutes on Facebook each day!  YouTube and Twitter are also significant and growing.
• Apple iPhone/iPod Touch has 57MM users, representing 166% annual growth, 100K apps and 2B downloads.
• Apple unshackled mobile developers from Carrier “walled gardens”.  The iPhone/iTouch represent the fastest hardware user growth in consumer technology history.

Japan is leading the way in the mobile space.  If you look at the 2008 world-wide mobile internet revenue mix, it resembles Japan in 2000.  If you look at Japan today as a proxy for where the rest of the world is headed, you see slight growth in mobile advertising revenue, but greater market share growth in mobile paid services (travel booking, mobile banking) and mobile online commerce (retail sales of physical goods and digital goods such as ringtones, wallpaper) and a lower percentage of revenue coming from mobile data access.   In Japan, mobile is currently running around 18% of total eCommerce revenue.

So, what does this mean for retailers?  Stay tuned for the next post on Wednesday…

According to a report today on AppleInsider, it appears that Apple has created its own iPod based point-of-sale software and hardware.  The hardware appears hardened and designed for retail.  It also appears this device could be sold for significantly less than traditional handheld retail devices.  I realize ‘less expensive’ is not the typical pricing model for Apple, but if they could make this device available more as an enhanced iPod, they could have tens of thousands of these in use at retail and restaurant chains in two years.  I realize also that this is chump change and doesn’t drive other revenue streams directly (like iTunes), however this gets them into the retail stores – a space I would argue is largely dominated by Microsoft – and if leveraged correctly by Apple, could open the retail solutions marketplace to them over the next decade.

On the software side, there are still challenges because of the more closed nature of the app store, but this is certainly interesting if Apple decides to market the hardened device outside its own retail stores.

Lots of conjecture here, but this is worth watching.  For more info, see the full article by Gary Allen of ifoAppleStore for AppleInsider.

I was reading a blog post by John Sviokla on the Harvard Business website asking, “How Will Augmented Reality Affect Your Business?”  Since I’d been spending some time thinking about the specific applications to retail, I thought I’d take a shot at answering that question for the retail space.

In this post, I will show some general examples, some retail specific ones, and then talk about what I think this means for retail.

For those of you who are not familiar with the concept, the basic idea behind augmented reality is to visually merge virtual objects with real objects.  The most common example is the first-down marker you see on televised football games.  To get the juices flowing, below are some examples which have fueled my imagination with regards to the topic.

A marketing campaign done by Nike in Japan (warning – the audio is terrible).

A game created by Georgia Tech Augmented Environments Lab and the Savannah College of Art and Design (SCAD-Atlanta):

An industrial/operations example from BMW:

Here are some more retail-specific marketing examples:

• Best Buy
• Wal-Mart
• IKEA

And an example from Zugara:

Most of the above scenarios are enabled by a ‘tag’ – a visual symbol that starts the visualization.  Here is a different example from a company called Layar which instead uses GPS and compass orientation to display virtual information over the live video feed from your camera.

I think the mobile aspect, adding the context of not only location but also the specific customer using the application, is significant.   Using an AR shelf tag, one application might be to display different promotional offers to different customers based on their loyalty status or even time of day.

Thanks to Keith McGreggor, I had the good fortune recently to meet with Blair McIntyre, who heads up the Augmented Environments Lab at Georgia Tech.  Brilliant guy.  I appreciate his taking time to meet with me.  While he pointed out that there are still limitations (camera quality, iPhone API issues), I’m convinced that we are at the front of a convergence between the mobile web and the real world.

The retail business against the current economic backdrop is about value, differentiation and growth by seizing market share.  Augmented reality technology has the potential to transform the customer experience in fundamental ways that separate the winners from the losers.  I also believe that while AR will be used first in marketing and customer facing applications, there are significant operational applications as well.

We are just starting up the hype curve now and it will be several years before we see the trough of despair and mainstream adoption, but depending in the overall value proposition of the retailer, AR technologies have the potential to change the game.

Startup Riot is a great Atlanta startup event created by Sanjay Parekh where 50 startups present 4 slides each in 3 minutes.  The event opened for applications this week.  You can get the full details here.   Sanjay is a force in the Atlanta startup community and has created something terrific with Startup Riot – one of the more significant events on the Atlanta startup calendar.  See you there.

I just read a blog post by Fabien Tiburce, CEO of Compliantia entitled Usability and Retail Systems.  He makes some good points:

1. If the system is not easy to use, people won’t use it (at least voluntarily).
2. Developers are not generally usability experts and neither by default are graphic artists.  As Fabien states, “making something attractive visually has very little to do with making it function well.”
3. Prototype and test alternatives.
4. If at all possible, “eat your own dog food.”

Usability is critical in any application.  It’s critical for user acceptance and hence, achieving any benefits expected from the system.  If usability is poor enough, I even seen users go out of their way to attempt to have the application removed.

Fabien also states that he has team members critique each other’s work.  I think this is a good start, but you really need to have someone skilled at usability on the deployment platform(s) to determine how to act on the critique.  Designing for usability requires, to some degree, specialized knowledge of the capabilities and usability standards for the target platform.  Steve Krug’s book, “Don’t Make Me Think,” is a great example of this type of thinking for the web.

I think the best advice Fabien provides is this: “If you want to be humbled, watch your software being used by someone who has never used it before and who has no vested interest in its success. “  I refer to this in a previous blog post.  It’s amazing to me how few software companies do this well.  Any software company that does this one thing well (and acts on the result) will be ahead of the competition.  Great usability can be a sustainable competitive advantage –look at Apple.