Why Tesla Motors Could Be the Most Important Car Company in the World.

Tesla Motors founder Elon Musk- often dubbed 'the
real life Tony Stark'.

One of the hottest new companies to come out of the golden hills of Silicon Valley is not another computer-based company, but, for the first time, a car company. 

Tesla Motors, the brainchild of a founder of PayPal, Space X and numerous other ventures Elon Musk have set out to revolutionise the car industry.

Although it's not overly apparent at the moment, much of the conventional car industry today is broken. Yes, cars are being innovated, crammed with more technology in the shape of screens, cameras and whatnot, and they are becoming more comfortable and so on but fundamental environmental problems still exist (yes, despite the increasing MPGs we are seeing). 

First and most important is the issue of the environmental impact that cars today hold. In 2011 the number of cars worldwide surpassed 1 billion, with newly boosted economies such as China and India in particular seeing huge increases in car usage. And the growth is not expected to stop any time soon; in the same year, the OECD's International Transport Forum claimed we could see up to 2.5 billion cars on the roads by 2050.

Now there are two major environmental issues with such a large number of cars- firstly, the large majority of cars on the road (particularly in newer economic giants such as those in Asia) pollute huge amounts of harmful gases- mixtures of various hydrocarbons, carbon monoxide and dioxide, which all contribute to a polluted air that with it carries increased risk of cardiovascular disease and cancer to humans, poor nutrition for plants and ominously it is a major cause of global warming, which, causing the melting of polar caps, could in future lead to huge natural disasters. 

Cars are certainly dangerous to the environment- according to the US Environmental Protection Agency, transportation (most of which is in the form of cars) contributes 27% of the greenhouse gas emissions in the USA.

Smog, one of the many unpleasant effects of pollution,
shrouds Paris.

Another key issues relies in the scarcity of the resources required to continue our dependency on automobiles. According to the World Bank, for every 1000 citizens of the USA there exists 786 cars in the country- when you consider the large chunk of people unable to drive, this makes for over a car per person, and the 300 million population of the US makes these statistics even worse. The US, while a prominent example, is not alone in this obsession with cars- the UK's figure lay at 516, still a large amount.

So we are so dependent on cars- but the large majority (over 95%) of cars sold in the US are conventional petrol/diesel affairs. Considering this, the seemingly endless growth of car ownership and the fact that BP claimed there to be only 53.3 years of oil left on the earth, it really does seem we can't afford to continue depending on these vehicles because one day in the near future, we will not be able to run them (one can state that, as has often been the case, new oil reserves will be found in the future, but can we really afford to rely on that anymore).

So, back to Tesla. Basically, they want to circumvent all these issues associated with conventional fossil fuel cars. So how do you do that? Make hybrid cars, of course.

But that's not enough; hybrid cars are hybrid, remember- a mixture of petrol/diesel and electric power. They still require these preciously damaging commodities to be used to work, and above a certain speed they still pollute.

The Tesla Model S, Musk's first major entry into the electric
car market.

So Tesla set its sights to popularise the fully electric car, with their first stab at the premium saloon market coming in the very easy on the eye Model S, and a forthcoming more affordable 'Model 3'. The aim is to bring electric cars (which require absolutely no fossil fuels to be inserted, nor burns any harmful gases) into the mainstream, but a certainly interesting move by Tesla has been that, unlike most companies, they seek not to monopolise this new industry by innovating internally and patenting endlessly to block out competitors. 

No, they are, spectacularly, doing quite the opposite: in a bold move earlier this June, Tesla opened up its collection of 249 patents to use by any competitor 'in good faith', something Elon Musk claimed to be part of the 'open source movement' with the intent of sparking genuine market development and competition in the bare area of electric cars.

In normal business terms, this is a ludicrous move- patents, after all, have been the focus of this mega conflict between two technology giants, Apple and Samsung. Conflict over patents cost these sides over a billion dollars- so why are Tesla just letting go of all of them?

It's a textbook example of what economist Umair Haque calls a development of 'market resilience' in his book The New Capitalist Manifesto. Tesla could have kept tight hold of the revolutionary patents they possessed, and with their incredibly 'cool' brand they could have dominated the electric car market for the next decade via their exclusive technologies. But no- Musk and co. opening up these patents has the effect of opening up the market to fair and vibrant competition. Tesla perhaps a year or two ago would have easily been crushed by huge competitors- but now it can stand on its two feet it wants to kick of the stabilisers and compete. 

BMW have already made their entrances into
Tesla's market with their i3 and i8 electric cars.

Opening up the patents shows a desire to see development in the market, and is actually a dangerous move for Tesla. BMW could tomorrow launch a Model S competitor in a fully electric 5-Series- the huge marketing and already existing prestige of the brand could possibly reduce Tesla to just a minor 

player in the market. Mercedes, Audi, Toyota, Ford, all these brands and more could do the same.

This is where the 'Resilience' mentioned by Haque comes into play; Tesla, by opening itself up to market competition, will have to fight to grow, fight via innovation, genuine development of technology, and so will its competitors if they want to grab a share of this growing market. Tesla won't have the security of a cocoon of patents- but neither will they have the temptation of laziness that comes with market security- just ask Microsoft about what complacency brought by monopoly did for them in the noughties (cough, Vista, cough).

Tesla opening up their patents was a bold move indeed, especially by a relatively new entrant into the automotive market. But it is a truly innovative, progressive move that will hopefully boost the automotive industry as a whole, and help us escape from the tyranny of conventional gas-guzzlers by providing a cleaner, affordable and most importantly more sustainable alternative.

It will be a long, hard battle for Musk and Co.- but we wish them the best of luck.

Long live Tesla. 

SOURCES (and recommended reads):

The Capitalist Manifesto by Umair Haque is a real eye opener to the next generation of corporation- the Googles, the Teslas, the Nikes and the Wal-Marts (yes, really, you'll have to read the book to find out why). It's definitely worth a read: http://www.amazon.co.uk/The-New-Capitalist-Manifesto-Disruptively/dp/1422158586

Space X, Elon Musk's latest venture into the stars: http://www.spacex.com/

Number of Cars in the World surpass 1 Billion: http://www.huffingtonpost.ca/2011/08/23/car-population_n_934291.html

We Could See 2.5 Billion Cars on the Road by 2050: http://www.ipsnews.net/news.asp?idnews=55943

Global Warming and Natural Disasters: 

http://www.theguardian.com/environment/2009/sep/06/global-warming-natural-disasters-conference

Transport responsible for 27% of US Greenhouse Gas Emissions: http://auto.howstuffworks.com/air-pollution-from-cars.htm

World Bank Global Car Ownership Stats: http://data.worldbank.org/indicator/IS.VEH.NVEH.P3

BP: Not much Oil left in the world: http://gas2.org/2014/07/03/bp-estimates-world-just-53-3-years-oil-left/

Elon Musk Announcing Release of All Tesla Patents: http://www.teslamotors.com/blog/all-our-patent-are-belong-you 

List of current 2014 Tesla Motors Patents (as of 5/10/14): http://stks.freshpatents.com/Tesla-Motors-Inc-nm1.php

Overview of Apple-Samsung Patent Conflict: http://www.cnet.com/news/apple-v-samsung-patent-trial-recap-how-it-all-turned-out-faq/

Tesla Official Website: http://www.teslamotors.com

BMW Official Website: http://www.bmw.com

iPhone 6, Apple Watch: why today, Apple will the centre of the world's attention.

Tuesday September 9th will be a huge day for the technology industry worldwide.
One of Apple's famous presentations will be made in just a few days, in front of selected journalists and no doubt thousands of online spectators, who will be waiting with bated breath to hear what exactly the largest publicly traded corporation in the world has up its sleeve.

Apple hasn't made any major hardware announcements this year- so what can we expect after all this silence from the technology giant?
Let's explore two rumoured products.


iPhone 6
Perhaps one of Apple's less secret revelations, the iPhone 6 is a shoe-in to be announced on Tuesday. Rumours suggest Apple will not announce one but two models- both of which will sport larger displays, up from the iPhone 5S' 4-inch to 4.7 and 5.5 versions.

The new models are expected to have a new case design also, which, following previous trends, will most probably be thinner than its predecessor (at this rate what will the iPhone 16 be, a sheet of paper??).

Another key rumoured addition will be that of NFC- Near-Field Communication. This technology basically allows devices to communicate with each other within a short distance, but Apple's specific application of this that is expected to create most waves in the tech community is how it could make the iPhone 6 into a 'digital wallet'- allowing you to simply use your phones at a checkout to pay for your shopping, just as you would a credit card.
Commentators expect Apple to pioneer further the digitalisation of commerce- we've already seen online payments grow hugely, and now it could be time for digital real world payments to lift off.

iWatch
A product that has been rumoured for almost forever, but is not quite as certain to be announced as the iPhone 6. The general consensus among the tech community is that Apple may announce the legendary device in Tuesday's event, but hold sales until early 2015.
Despite the fact it has not even been announced yet, the iWatch has gained a huge following. Many expect it to be the product that launches off another technology product category, just as the iPad kicked off the tablet market in 2010, or the iPhone in 2007.
The iWatch is expected to act like a mini phone- relaying emails, messages, notifications and whatnot to your wrist- rumours suggest it may even allow you to view maps and receive navigation.
Apple is also rumoured to set fitness as a key component of the iWatch- with health applications such as Apple's Healthkit and the Nike+ app, and numerous sensors for various bodily measurements, set to be key attractions in the device.

And what's more, we could even see the aforementioned NFC make its way to the iWatch- meaning you could pay for your daily coffee with your watch!

Perhaps you've noted this article to be not quite the usual poponomics article- where is the economics, or business in this? Well, here we come to the juicy bit. Listen up.

The iPhone 6's larger displays? The Samsung Galaxy S5 currently on sale worldwide already has a 5.1 inch display, bigger than the expected 4.7 inch iPhone. The HTC One Max has a whopping 5.9 inch display, larger than the 5.5 iPhone.

NFC on the iPhone? Not a big deal. The Google Nexus 7 had that two years ago, and via Google Wallet you can already perform touch and pay payments.

Heard of this before? Don't blame you...

The iWatch- the first digital watch companion? Wrong again Bob- the past year has been chock full of watch announcements, from Samsung, from Motorola, and various other tech companies. They can relay notifications, they can monitor your heart rate, and they've been out for ages- heck, Samsung has already released two iterations of its Samsung Galaxy Gear.

But if you don't follow tech closely, you may not have heard of Samsung's Gear (which was first announced a year ago), or Motorola's 360 smartwatch, yet you've probably heard of Apple's iWatch, which we don't actually know exists yet. Isn't this weird? Why is this?

There are numerous reasons. Many indeed. A key reason is of course the quality and consistency of Apple's product environment, and the products themselves- but Apple's business strategy also has been hugely successful.

Apple has built for itself a truly iconic brand. An Apple logo, be it on an iPod nano, an iPhone or a 27-inch iMac, carries with it connotations of high quality materials (note how commonly that silver aluminium material is used in Apple products), luxury (take a look at some of Apple's prices) and reliability (most Apple product owners would agree on this one).

A large part of this has been thanks to consistency- a key factor in a business' success, but only if it is done right- of course no company should be creating consistently poor products (*cough*Blackberry*cough*).

Apple has created consistency at every corner of its business. Take a look at the two screenshots from Apple's webpage above, and the event invite at the top of the article. The same font (Helvetica Light I am led to believe) is used consistently, the same white-grey colours, the same minimalist design in general is consistent throughout most of Apple's site.
Of course certain products are given their own display style reflective of the product's character, but in general Apple's design (be it the design of the site, the design of the advertisements or the design of the products themselves) are all cohesive. They are certainly decisively minimalist- Apple doesn't make use of any cheesy patterns or frilly designs, it just selects one or two colours and sticks with it throughout the product. And this is throughout Apple's whole product line.
The Mac line is a particularly good example of such consistency- the distinctive aluminium material used as the outer shell for the devices act as a cohesive for all Macs- it links them all together, it lets you know that an iMac is from the same family as a Mac Mini. Not only is this beneficial from a design standpoint, but it creates a subtle familiarity in product users, one that makes people more comfortable in purchasing a second or third or fourth Mac computer.

Consistency spreads further than just the design of Apple products- Apple's retail stores are among the most valuable in the world, thanks largely to their design. Apple makes use of the same materials for all the tables, the walls to give customers familiarity and comfort in their environment- while still allowing for stores to have their own individual appeal (such as the Regent Street store in London).

Consistency goes into the use of the products, too- Apple is well known for its lack of device software fragmentation (basically most Apple users are always running the same latest software on their devices, as opposed to say Android where people are spread across numerous iterations of the software, or Windows where many people are still running XP), its iCloud service allows people to access photos and videos across all of their devices without having to transfer anything manually, and features of the upcoming Mac OSX computer operating system will allow Mac users to send and receive phone calls and text messages on their computers- provided there is an iPhone connected to the same wifi network.
This feature, named Continuity, is another genius move from Apple. Creating this greater connection between the Mac and iPhone is a very effective way of attracting customers to purchase both- as items that complement each other rather than separate items completely. This could easily sway an iPhone user to purchase a Mac, and vice versa.

Through design, brand and functioning consistency Apple is successfully crafting not just a line of products but more an environment of products, all related and cooperative with one another.

We know this, perhaps unawarely, but this expectation of consistency that many people have come to associate with Apple is perhaps the greatest reason why we are so interested in the rumoured iWatch and the iPhone 6, despite the apparent competence of these products' already existent competitors.

Consistency is key in a business- and clearly for Apple, when combined with quality products, it has paid dividends, big time.

SOURCES (and recommended reads):
apple.com
http://www.techradar.com/reviews/phones/mobile-phones/samsung-galaxy-s5-1226990/review 
http://www.htc.com/uk/smartphones/htc-one-max/
http://techcrunch.com/2014/09/06/apple-iphone-6-event-predictions/
http://www.engadget.com/2014/09/05/what-to-expect-when-youre-expecting-an-iphone-6-or-iwatch/
http://www.cnet.com/how-to/how-nfc-works-and-mobile-payments/

The benefits of privatisation.

In the previous article we went through a brief introduction of privatisation; now let's go onto the benefits of it.

The benefits come under various categories, however a theme runs throughout- that is of efficiency, a key component of business management.

A prominent difference between private and state companies is the (usual) difference in motive. Whereas state companies can have an unclear, difficult-to-measure motivation (usually to 'serve the public'), private companies are generally far more strictly profit-driven; they seek to serve shareholders primarily (who want their pockets to be lined handsomely).
Now there is debate over whether profit is such a good motive for companies (that we'll discuss in the next article), but profit motivation usually drives companies to increase their efficiency.

A common criticism of state-owned enterprise is its tendency to over-employ, often in order to score the ruling political power popularity points when it came to annual employment figures. Another crucial factor in this overemployment was the power of unions- public-owned enterprises were often under strong pressure from labour unions to avoid firing staff, which in many cases was not so helpful in terms of keeping staff in line and also efficiency.

Overemployment is crucial as it leads to increased losses in the form of wages, for employees who the company could, essentially, perform healthily without. Private companies tend to avoid inefficient practices such as overemployment- in fact they look at doing the contrary, to shed costs: and cutting down on staff is often the easiest way to do this.

British Airways, under Lord King's leadership developed from
an oversized, outstretched struggler to a world-class airline.

The privatisation of British Airways was notable for its crackdown on 'unnecessary' employees. Before privatisation, BA were employing almost 60,000 staff; a huge number, especially when compared to close competitor Qantas' 15,000.
However, following privatisation and under the rugged leadership of Lord King, the workforce was reduced to 38,000 in a period of just three years- among these over 50 senior executives, the company was rebranded entirely to a more 'American' style- enlisting help of a San Francisco-based design firm to lead rebadging, and cutting costs wherever possible- in inefficient flight routes, in excess staff members and so on.
These almost ruthless cutdowns paid dividends indeed- in 1987 BA posted after-tax profits of around £166 million, among the highest airline profits globally and certainly one of the highest BA had ever experienced.

Introduction of competition is often heralded as a crucial feature of privatisation. Privatisation often comes with an opening of the market to other private companies as well, a good example being the gas market following the privatisation of British Gas. Competition is often a great thing to have in a market, as it forces companies to innovate and provide what consumers want, in order to maintain and expand their market share (and receive more profits, of course). Competition introduces pressure on businesses; often a good influence from a customer's perspective.
This argument has its pitfalls- but in general competition in a market is necessary for development (think how competition between Apple and Samsung has boosted the rate of development in the technology market, or BMW and Mercedes the car market).


Another feature of privatisation is that it is a a way for a government to quickly raise some cash, to reduce deficits in particular. Between 1979 and 1999, the Treasury raised over £70 billion from asset sales such as that of British Airways, British Gas and other companies that were privatised.
However, this is not such a strong proponent of the pro-privatisation argument as we'll explore in the next article (but I'll give you a hint: *cough* Royal Mail *cough*)

So efficiency is the general theme of the pro-privatisation argument. Privatisation can cut down on the poor decisions driven by political motives rather than efficiency, it can introduce competition into a market by smashing state monopolies and it can be a quick boost to a nation's coffers.

Stick around: next time we'll explore the other side of this argument, and have a look at why privatisation may be in fact quite a bad idea.

SOURCES:
http://www.baserler.com/onur/isletme/Privatization%20of%20British%20Airways-Before%20and%20After.htm

http://news.google.com/newspapers?id=R1YVAAAAIBAJ&sjid=a-QDAAAAIBAJ&pg=4326,3087813&dq=staff+british+airways

https://www.princeton.edu/~achaney/tmve/wiki100k/docs/British_Airways.html

http://www.telegraph.co.uk/finance/personalfinance/investing/shares-and-stock-tips/9989430/Thatchers-legacy-how-has-privatisation-fared.html