this appeared in the new indian express on jan 29th at http://www.expressbuzz.com/edition/print.aspx?artid=MokmhqVUKlM=

under the headline “one can only hope obama 2.0 will be better”

Under pressure, Obama changes course

Rajeev Srinivasan

It is telling when Apple CEO Steve Jobs upstages the US President. That’s exactly what happened on January 27th, when the announcement of Apple’s new  iPad got more attention than Barack Obama’s state-of-the-union address, which is a combination of self-report card and road-map for the future. Ironically, Obama talked mostly about jobs (the other kind), as unemployment persists.

Overhanging Obama’s speech was the electoral shock from Massachusetts: the late Edward Kennedy’s US Senate seat was captured by a center-right Republican. That too, in solidly Democratic Massachusetts, where left-liberal icon Kennedy had held the seat for 46 years.

Suddenly, Obama’s domestic agenda, and its kingpin, health care, are in trouble.

It is hard to believe, after the euphoria of 2008, that Obama’s place in history may well depend on a single vote in the US Senate. But it does: the 60-40 super-majority that allowed Obama to bulldoze legislation through is gone, and he needs detente with the opposition Republicans.

That in itself is a failure: Obama had promised change and a bipartisan consensus, and his party still dominates both houses of parliament; yet, he was unable to push Obamacare through, and is backpedaling furiously. The speech was mostly about the economy, banks, and jobs. “Jobs must be our No. 1 focus”, quoth he. Foreign policy – with two ongoing wars and a rampaging China – was  ignored.

A Pew Research Center poll dated January 25th on the public’s priorities suggested that the economy, jobs and terrorism are top of mind; healthcare coming much lower. It appears that Obama erred in focusing too much on the worthy, but apparently not seen as urgent, matter of health insurance. Similarly, energy security and global warming have taken a back seat in people’s minds, which are occupied by economic fear. Not surprisingly, the poll accurately foreshadowed the tone of the state-of-the-union address.

To be fair, Obama has not done all that badly, but expectations were so inflated that there was bound to be a let-down, especially among those afflicted by a “Messiah Syndrome”. His all-important approval ratings fell below 50% in January, according to Gallup, a rapid decline in public support.

Obama did inherit large problems: two wars, and the global financial meltdown. It is true that another Great Depression was fended off (although the credit should go to the Federal Reserve), there has been movement towards containing health-care costs, and Iraq (but not Afghanistan) seems to be stabilizing. Obama has presented a kinder, gentler America, whose brand equity has improved.

Obama’s deliberate, Olympian style suggests – perhaps unfairly — paralysis by analysis. The dithering over Afghan policy for eight months, and the plan to “surge, bribe, declare victory and run like hell”, have hurt India’s interests. An Obama, desperate to pull out of Afghanistan, is leaning on India to cave in on Kashmir, in order to appease Pakistan.

It appears that Obama has allowed his agenda to be hijacked by several factors: an exaggerated internationalism, a certain hubris, a permanent campaign mode, and an unwillingness to rein in ideologues.

Internationalism is good in theory, but not at the expense of domestic agendas. Obama may have overdone the reaching-out bit. He spent more time abroad than any other US president. Unfortunately, Obama chose to alienate America’s friends and appease its foes. India was shown that it did not matter, but Obama was the picture of charm with China, militant West Asians, and Iran: predictably, he got little in return. He reached out to the Islamic faith in his Cairo and Ankara speeches, but this was construed as weakness, and Al Qaeda/Taliban are rampant. The Chinese disdain him: they humiliated him in Copenhagen.

Second, Obama seems to believe his own propaganda. Remember the Nobel peace prize, which, surely, Obama knows he doesn’t deserve, at least not yet? For him to accept it anyway came across as grasping and vain.

Obama also seems to have some trouble switching from campaigning – where he can make promises – to governing – where he has to deliver. Some of his actions seem predicated on PR: the time-table for the pullout of troops from Afghanistan is meant to give him a boost in the 2010 and 2012 elections.

Finally, Obama is not reining in his more rabid supporters. Some of them believe that there was a permanent shift to the left in 2008. No; especially as a result of tough economic times, there has been a shift to the right.

If Obama is able to curb his vanity, his internationalism, and the more extreme of his supporters, and, the economy improves he may well rebound. As of now, he has been forced to reboot. We can only hope Obama 2.0 will fare better.

Rajeev Srinivasan is a management consultant.

800 words, 28th January 2010

a version of this appeared in DNA at http://www.dnaindia.com/opinion/comment_one-year-on-obama-magic-is-receding_1338909 on jan 25th

Obama Agonistes: totting up the wins and losses of year one

Rajeev Srinivasan considers what Obama has wrought

The irony was breathtaking: exactly a year to the day after US President Barack Obama’s triumphant, all-conquering inaugural in January 2009, the hotly-contested race for the late Edward Kennedy’s US Senate seat in Massachusetts went to the Republicans in a stunning upset. All at once, Obama’s domestic agenda seems in jeopardy, because its crown jewel, comprehensive health care, may well suffer an ignominious defeat.

As the poet Asan said, “sri bhu-vil asthira, a-samshayam” (glory is ephemeral on earth, surely). It is hard to believe, after the euphoria of 2008 when the Democratic Party swept into office in a landslide, that Obama’s place in history may well be dependent on a single vote in the US Senate. But it is: the 60-40 filibuster-proof majority is gone, and Obamacare may not survive in anything close to its current, left-leaning form, with government being insurer of last resort.

It is not the case that Obama has done all that badly, but the expectations about him were so inflated that there was bound to be a let-down and a backlash, especially among the ideologically extreme of his supporters who were caught in a “Messiah Syndrome” (alas, so familiar to those in India with its modern penchant for hero-worship). They expected Obama to deliver the humanly impossible.

Therefore, even if Obama were Superman, there would have been a sense of disappointment. On the other hand, his predecessor George W. Bush was so despised by large sections of the populace that one would have thought Obama would look good in comparison whatever he did, or didn’t. Apparently there are limits to that particular carte blanche: Americans are in no mood to forgive.

An editorial in the Wall Street Journal (“The Message of Massachusetts”, January 19th) says, “An anxious country was looking for leadership amid a recession, and Democrats had huge majorities… Twelve months later, Mr. Obama’s approval rating has fallen further and faster than any recent President’s, Congress is despised, the public mood has shifted sharply to the right on the role of government…” The ratings fell below 50% in January, according to Gallup.

In all fairness to Obama, there were also the gigantic problems he inherited: two wars, and the global financial meltdown. And it is true that under him, the Great Depression was fended off (although the credit – and the blame for earlier hamhandedness – should really go to the Federal Reserve), there has been positive movement towards containing rampant health-care costs, and the war in Iraq (though not the one in Afghanistan) seems to be stabilizing as well.

It is also true that Obama has presented a kindler, gentler America to the rest of the world, especially Europe, which resented the cowboy tactics of George W. Bush. There is an undercurrent of goodwill for him, although it is not entirely clear how much of this is from the novelty factor (he’s black!) and a sort of reverse racism based on self-flagellating guilt (as exhibited by Australians over the black cricketer Andrew Symmonds). In any case, the perception of America, and its brand image,have probably improved, in Europe and parts of Asia.

On the other hand, the American public – used to instant gratification – expected Obama to wave a magic wand and make their problems go away. That has not happened, as unemployment remains stubbornly high, and people have been forced to tighten their belts. Obama’s deliberate, Olympian style suggests – perhaps unfairly — paralysis by analysis (comparing this to India it was that cerebral practitioner of what seemed masterly inactivity, PV Narasimha Rao, who took the decisive and radical steps in 1991 to rejuvenate the economy).

It appears that Obama has allowed his agenda to be hijacked by several factors: an exaggerated internationalism, a certain hubris bordering on megalomania, a permanent campaign mode, and an unwillingness to rein in the ideologues in his own party.

Internationalism is good in theory, and so is attempting to build coalitions, but not at the expense of domestic agendas. This was the bitter lesson India learned from the experiences of the very internationalist Jawaharlal Nehru. Obama, appears to want to be president of the world. In fact, he may well be more popular in Europe than in America, given his plunging approval ratings at home.

While internationalism plays well to the liberal classes, it appears that Obama may have overdone the reaching-out bit. The Economist reports (”Around the world in 42 days”, January 19th) that “[Obama] has spent much more time overseas than his predecessors. Mr. Obama has been abroad twice as long as George Bush Jr. managed in his first 12 months as president”. He spent 42 days abroad and visited 22 countries, a far cry from Ronald Reagan (9, 2), George Bush Sr. (31, 15), John Kennedy (12, 6), Franklin Delano Roosevelt (0, 0).

Unfortunately, Obama also seemed to concentrate on alienating America’s friends and appeasing its foes (a familiar trap, as the NDA government demonstrated in India). Obama spent much effort in going more than half-way with China, militant West Asians, and Iran. But he got little in return for his pains. He reached out to those of the Islamic faith in his Cairo and Ankara speeches, but they seemed to view that as an admission of weakness, and Al Qaeda/Taliban have redoubled their efforts to hurt American interests.

In particular, his internationalism and kow-towing have caused the Chinese to disdain him and believe their own rhetoric about the G2: they embarrassed him at Copenhagen, treating him like a minor feudatory at some Chinese imperial court. It is ironic that China has been the beneficiary of excessive coddling by both Nehru and Obama, when a little more iron in the velvet glove would have been just the ticket.

Unfortunately, Obama seems to have let his courtiers’ accolades go to his head. He acts as though he believes that just on his say-so, the lamb will lie down with the lion, or something like that. The worst example of this was the acceptance of the Nobel peace prize, which, surely, Obama knows in his heart of hearts that he doesn’t deserve, at least not yet? For him to accept anyway came across as grasping and vain – and surely, the message is that flattery will work with him.

Obama also seems to have some trouble making the switch from campaigning – where he can promise all sorts of goodies – to governing – where has to deliver. Some of his actions seem predicated on how they will play to the crowd: for instance, his time-table for the pullout of troops in Afghanistan appears to be intended to give him maximum positive coverage in the 2010 mid-term elections, and thereafter in his expected 2012 re-election campaign.

Finally, Obama has not been willing or able to rein in his more rabid supporters. Some of them bought the snake-oil that there had been a permanent shift to the left in 2008. Not so; especially as a result of tough economic times, there has been a shift to the right, and Republicans are feeling their oats. Now that they have Ted Kennedy’s seat, they are taking aim at other leftists: for instance, Barbara Boxer in California, up for re-election in 2010, is facing a strong challenge from Carly Fiorina, a former CEO of Hewlett-Packard.

If Obama is able to curb his vanity, his internationalism, and the more extreme of his supporters, and, big if – the economy does improve in the next few months – he may well rebound. As of now, Americans are hurting: they do not see in their wallets the value of the huge bailouts of banks and car companies, and they are getting increasingly worried about terrorism coming back to their homeland.

Overall, Obama’s first year in office rates only a B for effort, and a C- for results.

Comments welcome at https://rajeev2007.wordpress.com

1300 words, 21st Jan 2010

this was published by DNA at http://www.dnaindia.com/money/comment_ipad-may-change-rules-of-the-media-game_1344723 on feb 8th

The iPad may change the rules of the media game

Rajeev Srinivasan

In the breathless commentary on Apple’s iPad – both for and against  – there were several things that were not given due attention. Yes, it is a gorgeously large iPod Touch, that is, a big iPhone without the phone function. No, it is not clear which market segment will consider it a must-have gadget. But there is much more.

Apple clearly produces what Steve Jobs calls “insanely great” products, but the industry joke is that the uber-charismatic Jobs possesses a “reality-distortion field”, so that if you get within a few feet of him, you fall under his spell. Maybe the adoring media are suffering from that effect.

Intriguingly, Apple started succeeding only when it moved away from product innovation and into business model innovation. Despite cool and elegant products starting from the Apple I and the Macintosh, it kept losing ground to arch-foe Microsoft, which realized that the operating system was a distribution channel.

Since Windows runs on 2 billion computers, Microsoft pushed other products through the channel – Internet Explorer, the lucrative Office franchise, and hundreds of thousands of third-party products. Apple could not deliver this large audience – size matters – and software makers built products only for Windows. This became a vicious cycle, and Macs became niche products.

With the iPod, Apple turned this game on its head using iTunes. That was the real breakthrough, not the iPod itself: business model, not product innovation. With iTunes, Apple was distributing third-party products, including music, movies, and podcasts. The operating system, eg. Windows, became irrelevant.

ITunes is the third most ubiquitous software product around, after Windows  and Adobe’s Acrobat. Result? Apple has become the world’s biggest music distributor. Incidentally, they sold a lot of iPods too, which of course was their goal. For the end-user, it suddenly became easy to pick up music that was legal and inexpensive, and so they did, abandoning illegal downloads.

Similarly, with the iPhone, it is not the touch-screen or other eye-candy that  made the product successful, but the App Store: an easy-to-use distribution channel for third-party applications. It was not a new concept. In the smartphone/PDA space itself, there was a Palm Store as long ago as 2000, with a few thousand applications. However, Apple was the first to enjoy the network effects and has 140,000 applications now.

Apple wants to apply these lessons to the media market. Books alone count for $24 billion a year, three times as big as the music industry. Add to this struggling newspapers and magazines, savaged by classified ads and other ad spending migrating online. If Apple can help newspapers charge small amounts for content, it may revive big-name publishers now threatened with extinction.

On the other hand, Amazon’s Kindle e-book reader is directly threatened by the iPad. The other vulnerable product is the netbook family. Add a docking station with a keyboard, and the iPad is a web-surfing desktop, or a cheap Mac. Its display as large as a netbook’s – around 10 inches. Apple previously dismissed netbooks, saying it was impossible to build a decent one for $500.

Indeed, that is the first big surprise with the iPad – the $499 entry price point, unusual for Apple’s premium image. Surprise number two – the chip is Apple-owned, a result of its purchase of PA Semiconductor some time ago. Apple has for the first time become a vertically integrated manufacturer, making everything from chip to OS to browser to applications.

And surprise number three – there is no subsidy from the telecom carriers for the 3G models: there is no contract with AT&T (with those early termination penalties consumers detest), and you can just buy a monthly $30 unlimited data plan with no strings attached.

Thus Apple is trying out another first: a device that it controls fully in terms of major components, and even the demand chain, and which it is willing to subsidize until it reaches volume – surely at $499, it is losing money. This means the product is really important to Apple.

This is not to say that Apple has not placed some wrong bets in the past: an example was the Newton tablet, too early to market. But a successful bet was in Apple’s early days, when it subsidized Canon’s laser printers and created the whole industry of desktop publishing.

It would be poetic justice if Apple rides in like a white knight and rescues the publishing industry. The iPad may well be the calculated risk that allows Apple to disrupt one more industry, as it has done with music and telecom already. There are downsides – publishers may discover they don’t like ceding too much power to Apple. And as far as consumers are concerned, especially those in developing countries, they may find themselves priced out of a lot of currently free content.

Rajeev Srinivasan is a management consultant focusing on innovation

825 words, January 29th, 2010