The Hobbit, the kiwis, & the internet

I saw the movie The Hobbit over the weekend and couldn’t help but think of Sherlock. I cannot wait for the third season to begin next year. Martin Freeman does an outstanding job as Bilbo Baggins. Howard Shore has scored an amazing piece for the movie. My brain then wandered to Fonterra and Zespri, two special organizations from down under, not Oz but Nz. The visuals of New Zealand in the movie were breathtaking. It makes you feel desperate to visit!

Fonterra is the world’s fourth largest dairy company with revenues of about $16 billion. 25% of all exports from NZ are dairy products. Cows literally drive the economy today. And 90% of this market is Fonterra’s. Also, interesting to note that 20% of these dairy exports go to, you guessed it, China. Recently, the firm allowed non-farm investors to buy-in.

NZ is not the leader in producing kiwifruits! It takes bronze with a 30% share. Italy and Chile take gold and silver respectively. Quite a while back (2000s), to combat dilution of the kiwifruit brand, NZ local growers formed an alliance Zespri to market the fruits. Zespri is a monopsony i.e. it is the only buyer of kiwifruit for export outside Australasia from NZ. It means many sellers – one buyer versus, many buyers – one seller as in a monopoly.

It will be interesting to see how things pan out in the coming years for these two jewels from NZ. The other one is sheep, which number seven times the number of people!

On a complete tangent, some VCs have recently been talking about a disruptive last-second economy unfolding as we speak. I want to yak about some infra issues that might abet the growth of this ‘last-second’ economy. I work in the telecom industry and all views here are personal and not those of my employer.

There is an explosion in the number of apps that compete for your last-second thoughts. But, the fundamental infra driver for this app economy is the wonderful platform called the internet. How much innovation is happening in this space? The incumbents (cord guys) are busy pursuing cost cutting and BAU and have pruned all R&D. The business of providing triple-play solutions i.e. data, voice, & cable is dying slowly but surely.

With the advent of services like Netflix, Hulu et al and more recently startups like Aereo the # of cord cutters is increasing exponentially, eliminating the need for klutzy cable packages. Mobile took care of the fixed landlines alright. That leaves data. The primary driver of business for the incumbents, check that, almost primary. Some are exploring extension plays like home-security.

It might not be long before data cross-subsidizes the other two components of the cable company promise. So this brings us to data. A play where the incumbents have not really been shaken, until now that is. With the influx of Verizon, ATT, and Google (crazy?!) the data business is expanding horizons. The 800 pound gorillas are now battling the cord data service providers as well as fighting the wireless giants.

Incidentally, I have enough anecdotal evidence to believe that the 4G LTE enabled smartphone/tablet has faster if not as fast a webpage load time vis-à-vis home connections.

More on this tomorrow.

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