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Andrew Grove, a co-founder of Intel and the man who coined one of my favorite concepts, the strategic inflection point (SIP), is rallying corporate and government support for electric cars in the US. He realizes that Americans are reluctant to buy an all-electric vehicle, however:

While car makers have been developing plug-ins, Grove says the nation should consider ways of retrofitting the 80 million low-mileage pickups, sport utility vehicles and vans on the road to make them capable of running on both gasoline and electric power.

Giving these vehicles “dual fuel” functions would be similar to changes made in other technologies. DVD players, for example, were often combined with VCR tape players when they were first introduced to help consumers make the transition.

See this Associated Press article titled Ex-Intel head pushes electric cars for more details.

Related articles and pages on billso.com

• Strategic inflection point
• 12 November 2007: I want a better television - but it’s not ready yet
• 7 March 2007: Microsoft vs. Google

A concept developed by Andy Grove to describe the point in time when a company’s competitive environment undergoes a major change that requires a fundamental change in business strategy. See Grove’s 1998 speech at the Academy of Management meeting in San Diego for more details.

I often abbreviate strategic inflection point as SIP.when I’m grading papers or writing on a whiteboard.

Related articles and pages on billso.com

• IS 7010/6700 Technology Strategy
• 1 July 2008: Andy Grove wants more electric cars
• 12 November 2007: I want a better television - but it’s not ready yet
• 7 March 2007: Microsoft vs. Google

From the New York Times and Om Malik: Google and five telecom companies will build a trans-Pacific cable between Tokyo and Los Angeles, to increase bandwidth and reduce costs. The Times reported on the Unity consortium last September, but this new announcement confirms the US$300 million project. GearLog has more information on this topic. I haven’t determined if this new cable will connect with Honolulu.

It’s an important announcement because, as Om notes, this is the first time that Google has publicly confirmed its corporate strategy of building its own international telecom infrastructure through acquisition and investment. Google claims it wants to provide more reliable service to its users, so the company is entering the undersea cable industry not as a competitor but as a customer and complementor of Bharti Airtel, Global Transit, KDDI Corporation, Pacnet and SingTel.

As I mentioned on 7 February 2008 and 31 January 2008, the oceanic cable business can be risky. Google will have priority on the 7.68 terabit connection when it is completed. Adding more bandwidth is an essential part of providing scalable, reliable web services in North America and the Pacific Rim. If Google controls its own network as a source of competitive advantage, will competitors like Yahoo and Microsoft face higher costs to stay in business?

One strategy that telecommunications companies have adopted is bundling, or selling a combination of services at a reduced price. The goal is customer lock-in, a situation in which the buyer is more or less trapped in their purchase. In many cases, lock-in happens when the customer satisfices or compromises to gain value or convenience. Customers might grow dissatisfied over time, but they are unlikely to leave because alternative services are not available, or their perceived switching costs are too high.

A variety of US cable television and telecommunication companies have offered bundling programs. The usual items include television service and broadband Internet.

Companies that offer cable modems usually offer these services through the same “pipe” or connection – the coaxial cable drop found in many homes.

Local exchange carriers (LECs) offer POTS (traditional or “plain old telephone service”), and the final connection to the home is the familiar RJ-11 modular phone jack found in most US homes. Some LECs also offer mobile phone plans in their bundles.

Landline connections may be offered through VoIP or POTS, depending upon the carrier’s technology.

Agonizing over savings

Alina Tugend of the New York Times provided a great example of this decision-making process in her article last week. Customers sometimes obsess over lock-in when their friends brag about how much they saved by switching. Yes, lock-in also works well for insurance companies, too!

In Honolulu, Oceanic Time Warner, Clearwire and Hawaiian Telcom each offer bundles. Oceanic has a standard cable television package that includes cable modem service, long distance calling and VoIP calling plans. Oceanic staff can connect the customer’s RJ-11 telephone jacks to the company’s network, so customers can continue to use their existing landline handsets and equipment.

Clearwire offers broadband Internet service, long distance calling and VoIP telephone numbers through its WiMax network. Customers can hook their landline phone into Clearwire’s modem. The Clearwire service does not require an installation visit, but the coverage areas are somewhat limited. This article at DailyWireless.org has several interesting diagrams of business telephone systems.

Hawaiian Telcom keeps struggling

The HawTel package includes a POTS landline, long distance calling and DSL. HawTel is still working on its IPTV offering, which has been delayed by implementation problems. IPTV would let HawTel offer television service through the same RJ-11 telephone drop used by its landline and DSL offerings.

As a side note, I hated HawTel’s obnoxious “Savers Unite” advertising campaign, and am glad that it has been replaced. Was the tagline a call to action or an insult? It was hard for me to tell. The radio and television ads reinforced a stereotype of the “thrifty local” who clips coupons, hoards travel-size toiletries and wears old clothes to pay the “price of paradise”. Then again, telecom marketing campaigns usually strive for the “common touch”, in an effort to hold the average customer.

Telecom bundles are subject to a host of Federal, state and local regulations. Pricing is often controlled by government agencies and franchise agreements. On 18 August 2007, I discussed HawTel’s naked DSL option, which let consumers order DSL service without a voice landline. HawTel was late to act, as thousands of subscribers adopted mobile phones and dropped their landlines. These customers switched to Oceanic, Clearwire, or other broadband Internet services.

Customer lock-in is difficult to achieve when companies fail to implement their industries’ key success factors well. On 16 November 2006, I discussed HawTel’s billing problems after the company was purchased from Verizon. Mike Ruley never overcame these earlier issues and lost his post as HawTel’s CEO earlier this month, as I mentioned on 5 February 2008.

According to Reuters, Google CEO Eric Schmidt is discussing a possible expansion of his company’s facilities. Malaysia is the most likely location, as that country ranks number one in Google usage in Southeast Asia. The country is also close to Google’s existing offices in Australia, China, Hong Kong, India, Japan, Singapore, South Korea, and Taiwan.