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Not tech, but social and business revolution under way

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Former Microsoft number 3 and ex-head of VMWare, Paul Maritz shared his journey and insights with South Africans at the recent MyWorld of Tomorrow conference

Veteran industry executive Paul Maritz opened the recent My World Of Tomorrow  technology expo and conference with a technology vision of businesses that is not about the technology itself.

In his keynote address at the Sandton Convention Centre, he said that we were experiencing not a technology revolution, but a social and business revolution.

Maritz currently heads Pivotal, a landmark company created through the combined forces of GE, EMC and VMWare. It was born for a new purpose: to create the next generation of operating systems that will power our future. Those platforms are vital, as Martiz set about to explain.

He first illuminated his own journey: as a fresh-faced varsity graduate from South Africa, Maritz left for the US to engage with the new world of PCs. It was the start of the Eighties and mainframe computers were being replaced by new maverick innovations from companies such as Intel. Maritz wanted in, kick starting a career that took him through giants such as Intel and Microsoft – where he was number three behind Bill Gates and Steve Ballmer. He would later move to EMC, soon heading up VMWare, then Pivotal.

This gave Maritz a good sense of history and a clear vision of where we are going. He looked at how the Eighties and Nineties were spent creating digital equivalents for paper-based processes, leading to the development of applications such as Microsoft Office. But now it is time for the next step:

“Those applications are not going away – they are going to stay with us for a long time to come. But they are no longer where differential value is coming from. Those are not where the new business models are being driven out of. We’re moving into an era where we are now starting to tackle things that you cannot imagine in a paper-based world. There is no paper-based equivalent to Google and Facebook. We’ve had to evolve structures and architectures to allow us to tackle those kind of use cases.”

To illustrate his point, Maritz looked back at mainframes. The cost to generate enough computing power to track a computer mouse was huge. Then the desktop-style PCs we are familiar with arrived, bringing that kind of power spend to virtually zero and thus ushering in the era of graphic user interfaces.

Yet the client/server PC world has its own limitations: the power available is still dictated by the capacity of an individual machine. So if something required ten machines to do its job, it would be an expensive and rare practice: Maritz called it avant-garde development.

The world needed a new way to evolve technology – especially if it expected to match the consumer-driven revolution pegged by smart devices and connectivity.

“Google is actually the pioneer here. In 1998, when they set out to index the entire world’s information, they already knew that the index would be petabytes in size. If you had gone to your favourite database vendor in 1998 and buy a petabyte of capacity – even if they could have supplied it to you at the then-going prices of $1 million per terabyte – it would have cost you $10 billion. For Google that was just a non-starter, so they had to go a different route. They had to tackle their problem by ganging together lots and lots of very cheap machines.”

Google’s thriftiness sparked the new technology platforms that are increasingly driving our world today, creating new use cases and opportunities for business. By combining many machines, the power of technology has become a commodity. Like the leap to graphic interfaces, now we can tackle big data, contextual behaviour and more. One example is General Electric, a century-old company that has become the standard bearer for transforming to the new digital epoch. GE’s aircraft engines famously generate terabytes of data over one single transatlantic flight, prompting the company to wonder what value lies in all of that data. This in turn brought new opportunities, which is why GE invested in Pivotal: it wants the next generation of technology to fuel its newfound ambitions.

Ultimately all that brought Maritz’s main point to book: what we are experiencing is not a technology revolution. It is a social and business revolution, exemplified by among other things how companies reach audiences.

“A lot of businesses used to operate on the principle of spending huge amounts of money on broad, horizontal media-based advertising to drive the masses to them. Now instead innovative companies spend their money on building compelling, useful ways of engaging with their customers in realtime. They rather spend their time and money into building useful apps that gives information and service in context to the user.”

The maverick automobile maker Tesla counts as one – it uses applications and in-car software to extend the experience well beyond simply owning a vehicle. Uber, the favourite example of this revolution, also uses apps and analytics to improve customer engagement. If you ever pondered why a food retailer wants you to swipe its shopper card, that’s towards gathering trends for improved service. All of that is being run on what Maritz called the third platform: the world of cheap, powerful parallel computer systems.

But to access this new world requires companies to shift their mindsets. Technology is becoming inseparable from business, at least if that business hopes to keep engaging the new consumer.

“One of the big changes many companies have a lot of problems with is to realise this is not an IT problem. This is a business problem. Google has an IT department, but they make sure every machine has an IP address and that’s about it. Everyone else in Google doesn’t think of themselves as IT people. They think of themselves as part of the product department. They build products. The business and technology people sit as equals around the table.”

Maritz rounded his point with a call to action for companies: “Find partners who want to do this with you as opposed to doing it for you. It will not help you if they do it all for you. At the end of the day this capability is going to be your differentiator for finding value. You can’t outsource that. If a partner says ‘No problem, just write me a cheque’, that’s a big red flag. Don’t go there.”

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Online retail gets real

After decades of experience in selling online, retailers still seek out the secret of reaching the digital consumer, writes ARTHUR GOLDSTUCK.

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It’s been 23 years since the first pizza and the first bunch of flowers was sold online. One would think, after all this time, that retailers would know exactly what works, and exactly how the digital consumer thinks.

Yet, in shopping-mad South Africa, only 4% of adults regularly shop online. One could blame high data costs, low levels of tech-savviness, or lack of trust. However, that doesn’t explain why a population where more than a quarter of people have a debit or credit card and almost 40% of people use the Internet is staying away.

The new Online Retail in South Africa 2019 study, conducted by World Wide Worx with the support of Visa and Platinum Seed, reveals that growth is in fact healthy, but is still coming off a low base. This year, the total sale of retail products online is expected to pass the R14-billion mark, making up 1.4% of total retail.

This figure represents 25% growth over 2017, and comes after the same rate of growth was seen in 2017. At this rate, it is clear that online retail is going mainstream, driven by aggressive marketing, and new shopping channels like mobile shopping. 

But it is equally clear that not all retailers are getting it right. According to the study, the unwillingness of business to reinvest revenue in developing their online presence is one of the main barriers to long-term success. Only one in five companies surveyed invested more than 20% of their online turnover back into their online store. Over half invested less than 10% back.

On the surface, the industry looks healthy, as a surprisingly high 71% of online retailers surveyed say they are profitable. But this brings to mind the early days of Amazon.com, in 1996, when founder Jeff Bezos was asked when it would become profitable.

He declared that it would not be profitable for at least another five years. And if it did, he said, it would be in big trouble. He meant that it was so important for long-term sustainability that Amazon reinvest all its revenues in customer systems, that it could not afford to look for short-term profits.

According to the South African study, the single most critical factor in the success of online retail activities is customer service. A vast majority, 98% of respondents, regarded it as important. This positions customer service as the very heart of online retail. For Amazon, investment back into systems that would streamline customer service became the key to the world’s digital wallets.

In South Africa online still make up a small proportion of overall retail, but for the first time we see the promise of a broader range of businesses in terms of category, size, turnover and employee numbers. This is a sign that our local market is beginning to mature. 

Clothing and apparel is the fastest growing sector, but is also the sector with the highest turnover of businesses. It illustrates the dangers of a low barrier to entry: the survival rate of online stores in this sector is probably directly opposite to the ease of setting up an online apparel store.

A fast-growing category that was fairly low on the agenda in the past, alcohol, tobacco and vaping, has benefited from the increased online supply of vapes, juices and accessories. It also suggests that smoking bans, and the change in the legal status of marijuana during the survey, may have boosted demand. 

In the coming weeks, we can expect online retail to fall under the spotlight as never before. Black Friday, a shopping tradition imported “wholesale” from the United States, is expected to become the biggest online shopping day of the year in South Africa, as it is in the USA.

Initially, it was just a gimmick in South Africa, attempting to cash in on what was a purely American tradition of insane sales on the Friday after Thanksgiving Day, which occurs on the third Thursday of November every year. It is followed by Cyber Monday, making the entire weekend one of major promotions and great bargains.

It has grown every year in South Africa since its first introduction about six years ago, and last year it broke into the mainstream, with numerous high profile retailers embracing it, and many consumers experiencing it for the first time. 

It is now positioned as the prime bargain day of the year for consumers, and many wait in anticipation for it, as they do in the USA. Along with Cyber Monday, it provides an excuse for retailers to go all out in their marketing, and for consumers to storm the display shelves or web pages. South African shoppers, clearly, are easily enticed by bargains.

Word of mouth around Black Friday has also grown massively in the past two years, driven by both media and shoppers who have found ridiculous bargains. As news spreads that the most ridiculous of the bargains are to be had online, even those who were reticent of digital shopping will be tempted to convert.

The Online Retail in SA 2019 report has shown over the years that, as people become more experienced in using the Internet, their propensity to shop online increases. This is part of the World Wide Worx model known as the Digital Participation Curve. The key missing factor in the Curve is that most retailers do not know how to convert that propensity into actual online shopping behaviour. Black Friday will be one of the keys to conversion.

Carry on reading to find out about the online retailers of the year.

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Reliable satellite Internet?

MzansiSat, a satellite-Internet business, aims to beam Internet connections to places in South Africa which don’t have access to cabled and mobile network infrastructure, writes BRYAN TURNER.

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Stellenbosch-based MzansiSat promises to provide cheap wholesale Internet to Internet Service Providers for as little as R25 per Gigabyte. Providers who offer more expensive Internet services could benefit greatly from partnering with MzansiSat, says the company. 

“Using MzansiSat, we hope that we can carry over cost-savings benefits to the consumer,” says Victor Stephanopoli, MzansiSat chief operating officer.

The company, which has been spun off from StellSat, has been looking to increase its investor portfolio while it waits for spectrum approval. The additional investment will allow MzansiSat’s satellite to operate in more regions across Africa.

The MzansiSat satellite is being built by Thales Alenia Space, a French company which is also acting as technical partner to MzansiSat. In addition to building the satellite, Thales Alenia Space will also be assisting MzansiSat in coordinating the launch. The company intends to launch the satellite into the 56°E orbital slot in a geostationary orbit, which enables communication almost anywhere in Africa. The launch is expected to happen in 2022. 

The satellite will have 76 transponders, 48 of which will be Ku-band and 28 C-band. Ku-band is all about high-speed performance, while C-band deals with weather-resistance. The design intention is for customers of MzansiSat to choose between very cheap, reliable data and very fast, power-efficient data. 

C-band is an older technology, which makes bandwidth cheaper and almost never affected by rain but requires bigger dishes and slower bandwidth compared to Ku-band connections. On the other hand, Ku-band is faster, experiences less microwave interference, and requires less power to run – but is less reliable with bad weather conditions.

MzansiSat’s potential military applications are significant, due to the nature of the military being mobile and possibly in remote areas without connectivity.  Connectivity everywhere would be potentially be life-saving.

Consumers in remote areas will benefit, even though satellite is higher in latency than fibre and LTE connections. While this level of latency is high (a fifth of a second in theory), satellite connections are still adequate for browsing the Internet and watching online content. 

The Internet of Things (IoT) may see the benefits of satellite Internet before consumers do. The applications of IoT in agriculture are vast, from hydration sensors to soil nutrient testers, and can be realised with an Internet connection which is available in a remote area.

Stephanopoli says that e-learning in remote areas can also benefit from MzansiSat’s presence, as many school resources are becoming readily available online. 

“Through our network, the learning experience can be beamed into classrooms across the country to substitute or complement local resources within the South African schooling system.”

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