The Innovation Index closed at 72.21 on January 10, 2007, up 2.26 points from the closing price of 69.38 on December 29, 2006.
Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world
Weekly Review
Apple (NASDAQ: AAPL), Yahoo! (NASDAQ: YHOO) and Dell (NASDAQ: DELL) are leading the top 20 Innovators of The Innovation Index in 2007. Apple went up 14% on iPhone and the new innovations announced at MacWorld yesterday. Although iPhone was the biggest Apple announcement that some say is the best since the introduction of Mac (and iPod), Apple also introduced AppleTV, a device that will let users stream movies, music, photos, podcasts and TV shows to their home entertainment systems. Could this eat into TiVO's business? Or would this make a whole new market for Apple? Apple also announced expansion of iTunes store with movies from Paramount films, in addition to titles from Disney. What were the top ten innovations in iPhone? Find out more in Apple Rising.
Although Apple has been the story this week, Yahoo! has gained 12% slowly but surely during the last week. First, Yahoo! announced partnership with Dash Navigation to enable Yahoo! local search inside Dash. This week, Yahoo! acquired Mybloglog.com, a community site for bloggers and social networking. Finally, Yahoo! introduced Yahoo! Go for Mobile 2.0 which is supposed to redefine mobile searching. Yahoo! search engine will provide one answer to a search query on a mobile phone. The biggest hassle of searching online on a mobile phone was browsing through the list of all possible answers, and scrolling up and down. By the time you find something, the whole searching experience becomes a drag. Now, Yahoo! has an answer. With Yahoo! OneSearch, mobile users get instant answers - one answer to their search query. Yahoo! announced partnerships with Nokia, Motorola, Samsung Electronics and Research In Motion (NASDAQ: RIMM) - all makers of wireless phones who will integrate Yahoo! Go for Mobile 2.0 on their phones. Yahoo! expects that tens of millions of phones will integrate the new search this year. And users can even download Yahoo! Go for Mobile 2.0 and OneSearch directly. Can Yahoo! become the search engine for wireless? In Apple's iPhone announcement, Yahoo! Mail was listed as the supported email application on the iPhone. Yahoo! is strategically partnering and placing its bets as the market for wireless search and email grows.
Dell is already up 9% for the week and the year. Dell introduced new XPS 710 H2C Gaming System, 27- and 22-Inch Widescreen Flat-Panel Monitors, and a Home Media Suite this week. Dell has made a serious machine for gamers beginning at $5,499. How serious is this machine? "The Intel quad-core processor is factory overclocked for extreme gaming and video editing, and backed by specialized XPS technicians." This XPS is not for the faint of heart. The system is packed with "cooling innovation." "Dell’s H2C cooling system is a custom two-stage process. First, a liquid-to-air heat exchanger that works like a car’s radiator removes most of the heat from the processor. Then, a fluid chiller removes more heat with ceramic-based thermoelectric cooling (TEC) modules like those used in space shuttles to transfer heat from the sunny side to the cold, dark side in space. Sensor controls help prevent the formation of frost or condensation by helping to keep the processor slightly above ambient room temperature." If you are a serious gamer, Dell has a machine for you. Dell also introduced two cool new monitors including a stylish 27-inch monitor with Dell TrueColor technology that provides "92 percent color gamut coverage of the NTSC color space to gamers, photographers and digital media “prosumers” thereby enabling highly vibrant and vivid images such as deeper reds and crisper blues." Asking price: $1,399. Finally, there is a lot of buzz around home media and home entertainment. Dell has an answer in the form of a suite. The Home Media Suite is a first that bundles together: XPS 410 core 2 duo, 2GB memory, 1 terabatye RAID disk array, DVD/RW, Loaded with Windows Vista when available, Creative Precision Monitor speakers, Full suite of entertainment software, Creative Live! Voice webcam, 27-inch flat panel monitor, Dell Photo All in One 966 printer, Linksys 802.11 draft N band router, Linksys powerline AV bridge and Digital cable tuner for premium HD TV. Would consumers buy the Home Media Suite? How would Dell make this a must have in the family or entertainment room? Michael Dell, Chairman of Dell Inc, also challenged the entire PC industry to go green at the Consumer Electronics Show in Las Vegas.
Google (NASDAQ: GOOG), Intel (NYSE: INTC), and Research In Motion (NASDAQ: RIMM) are all tied at 6% gains. Google was ranked as the best place to work in the latest Fortune's 100 best places to work. Of course, after the announcement, Google's job site was inundated with tens of thousands of applications (my thought). Google is also innovating: "Samsung will ship phones with a range of Google services preloaded including one-click access to a search box, Web mail , and maps." Apple also announced Google Maps integration on the iPhone. Google and Earthlink got the go ahead to create San Francisco's first Wi-Fi network throughout the city. Google is also going all out on the wireless strategy. Now it's up to the consumers to begin using Google apps on various wireless devices.
Intel introduced a new quad-processor chip for PC which literally could boost PC performance beyond anything that we know of today. For instance, a user could be streaming video, editing multimedia, watching sports updates, and even keeping an eye on home security webcams - all in real-time. Perhaps the four-brain strategy will payoff for Intel in home entertainment and beyond, and give it a good shot against AMD who is also rolling out home theater and entertainment hubs based on its processors.
Among all the news of Apple's new iPhone, Research In Motion could do no worse. Research In Motion rebounded after about a 8% drop yesterday, and is still up 6% for the year. Two signficant innovations were announced last week: 1. Push to Talk technology powered by Kodiak Networks and offered on Cingular Wireless 2. Yahoo! Go Mobile partnership. Research In Motion knows a thing or two about the needs of the business users.
Cisco Systems (NASDAQ: CSCO) and Southwest Airlines (NYSE: LUV) are also posting solid gains of 5% each for the year. Cisco began the year with a major acquisition of IronPort Systems, Inc. for $830 million in cash and stocks, its fifth largest acquisition to date. IronPort gives Cisco a real play in e-mail and web security. IronPort has revenues of about $100 million a year; Cisco's distribution channels and integration of IronPort's products into security portfolio would possibly double the revenue rate within the first year and could give Cisco a $200 million jump in revenue post merger. Cisco also announced entry into Home Web Services. CEO John Chambers has an ambitious vision to bring Cisco within the home, cars and mobile devices within three years. Importantly, Cisco is making an all out consumer play. Cisco has limited experience on dealing with the consumer market; except for Linksys, and recent acquisition of Scientific Atlanta. Can Cisco enable the home? It remains to be seen.
Southwest Airlines is flying high with innovations. Southwest expects Denver (DIA) to be a major contributor to profits in 2007 (DIA exceeded all expectations in 2006). Southwest is adding a fifth gate in 2007, and will have capacity to add 17 additional flights. Not only has Southwest benefited from DIA, the overall traffic at DIA has gone up since Southwest began operations, and other airlines are also seeing growth. Southwest also experimented with business model, increasing the fares slightly by $2 to $3 each way based on distance on all flights. This should help Southwest with a slight increase in revenue.
Hewlett Packard (NYSE: HPQ), Wal-Mart Stores (NYSE: WMT), Target (NYSE: TGT) and IBM (NYSE: IBM) are respectively up 2% for the year. Finally, General Electric (NYSE: GE) is up 1% for the year. HP has renewed the partnership with Microsoft for business customers, and also in partnership with Microsoft announced a powerful MediaSmart Home Server that will be "powered by a 1.8-GHz 64-bit Sempron processor from Advanced Micro Devices (AMD), and includes four hard drive bays and four USB ports for printer or external storage connections, in a box about 10 inches high by 5.5 wide by 9 deep." But perhaps the biggest announcement from HP was the introduction of a PC and laptop without a mouse - using touchscreen technology and powered by Vista. HP has made this affordable at $1,299 and $1,799 for the PC and laptop respectively.
Wal-Mart is making a business model change for its employees who will be scheduled based on demand inside the stores: more customers, more employees; less customers, less employees. Wal-Mart also is receptive to minimum wage increases for the associates. In a move to create a better brand and image, Wal-Mart also launched a national ad campaign highlighting values, healthcares, savings and philanthropy.
Target same store sales were up 4.1 percent in December based on growth in health care and electronics merchandise. Target is expecting similar returns in January, 2007.
IBM shares were trading at three-year highs. IBM is rolling out RFID data repository, expanding System z Mainframes, introducing PLM into SMB markets in a partnership with UGS, has just named a new chief in China, and launced e-commerce push into virtual world (literally) along with Sears. "The Sears Virtual Home combines the best of virtual worlds and 3-D environments so customers can experience Sears' products in a way that is closer to real life," says Paul Miller, senior vice president of direct commerce with Sears Holdings. "Sears.com already provides innovative design functionality and consistency, and this work with IBM in a virtual world is a logical extension of those initiatives."
General Electric (GE) is on a buying spree in 2007. GE is acquiring Vetco Gray for $1.9 billion - an oilfield equipment maker. GE wants to cash in on the energy boom and believes Vetco Gray is exactly what the doctor ordered. GE is also buying Microwave Data Systems, an industrial wireless company. Is GE buying short-term revenues in 2007, or creating a longer-term revenue machine aligned with company's growth strategy and vision? GE did well in 2006, gaining 9% in stock value, acquiring many adjacent and complementary businesses, and merging these companies. Can GE repeat or exceed this performance in 2007?
Proctor and Gamble (P&G) (NYSE: PG) and 3M Company (NYSE: MMM) are unchanged for the year. P&G announced a strategic investment in MDVIP, a patient healthcare program committed to setting the gold standard of primary care in the U.S built on the values of providing exceptional care through exceptional physicians creating exceptional results. P&G is also expanding the Gillette operations in Boston, and invest an additional $35 million to $50 million towards the expansion. Women are major customers of P&G products; P&G just launched a new online community for women in partnership with Yahoo!: capessa.yahoo.com. The new community will provide a place where women can share inspirational stories, as well as practical tips and information relevant to the various aspects of their lives. P&G has plans to leverage the online community to "learn more about the interests and product needs of women." Capessa also gives P&G education of the online world, and ways to create better relationships with the customers and even make P&G more relevant. P&G also hiked some coffee prices by 4% to 5% in an effort to alleviate the higher costs of green coffee production. P&G was up 13% in 2006.
3M announced successful pilot at the Mayo Clinic with its innovative radio frequency identification (RFID) technology for patient tissue samples during endoscopy procedures. "Utilizing 3M Track and Trace Technology, the RFID system enhances the clinic's ability to manage specimen and tissue samples from the collection stage to the pathology laboratory." 3M's CEO, George Buckley, has identified RFID as a key growth vehicle. In a similar initiative, 3M Track and Trace Technology is used for more than 150,000 service personnel at the U.S. Army's Fort Hood installation using radio frequency identification (RFID) technology, a rollout that began in July, '06.
Microsoft (NASDAQ: MSFT), Starbucks (NASDAQ: SBUX), eBay (NASDAQ: EBAY), America Movile (NYSE: AMX), and Amazon.com (NASDAQ: AMZN) are down for the year. Microsoft has renewed the partnership with HP for business customers, and also in partnership with HP announced Microsoft Home Server powering the MediaSmart Home Servers. Microsoft wants a piece of the home market and is focused on providing a secured software server based on Windows Server 2003. Microsoft and Ford announced a strategic partnership wherein Ford cars will include "a new entertainment and communication system running on software from Microsoft that aims to bring the connectivity of a computer to the car." Microsoft's "Sync" system will allow drivers to make hands-free phone calls, even listen to music on digital media players, including Apple Computer's iPod, and the best part is the cell phone text messages that can be animated with voice.
Starbucks wants to ensure that you stay healthy as you consume all the snacks and brownies at their stores; it will eliminate trans fats all together in half of its stores this week, and all the stores by the end of the year. No more worries as you consume the pastries at Starbucks.
eBay is buying into innovation as well. eBay just announced plans to buy online sports ticketer StubHub for $310 million. What does eBay get through this transaction? $400 million in gross ticket sales which should look good on eBay's revenue card at the end of the year. eBay's ticket business was languishing on large account due to StubHub. Now, eBay can perhaps use StubHub's brand name, loyal customers, and fan base to expand it into a $1 billion operation. "StubHub has been extremely successful in the online tickets segment, and it's a perfect complement to eBay's tickets business," Bill Cobb, president, eBay North America Marketplaces, said in a statement announcing the deal.
In perhaps a small setback, America Movile will not be able to land in Venezuela. America Movil, owned by Mexican billionaire Carlos Slim, had wanted to buy a major stake in CANTV, but Venezuela President Hugo Chavez said Monday he will nationalize the firm.
Amazon has been busy in 2007 launching a new shoe and handbag store with its own domain, Endless.com. "The new Web site will carry over 250 brands for women and men, from Donald J Pliner and Enzo Angiolini to Reebok and Columbia Sportswear." Amazon is now venturing into creating new brand online stores. Would this innovative strategy succeed? We will check back in 2008. And Amazon still has plans to push its Askville.com service, even after Google dropped out of its own Answers service. Perhaps Amazon sees an opportunity here, now that Google is out. But Yahoo! is still the leader. Was Google smart to get out?
The Innovation Index Annual Report
I am planning to post an annual report of the top 20 Innovators of The Innovation Index on January 15, 2007. The report will include insights gained from the top 20 Innovators, top Innovations introduced during 2006, lessons learned, 2007 projections, and observations on Disruptors challenging the top 20 Innovators.
About The Innovation Index
The Innovation Index introduced in December, 2006 is a weighted stock price index of the top 20 Innovators in North America. America Movile and Yahoo! were added to The Innovation Index at the end of 2006.
The alphabetical list of the top 20 Innovators of The Innovation Index along with their stock ticker symbols are presented below:
3M Company - (NYSE: MMM)
Amazon.com, Inc. - (NASDAQ: AMZN)
America Movile - (NYSE: AMX)
Apple Inc. - (NASDAQ: AAPL)
Cisco Systems, Inc. - (NASDAQ: CSCO)
Dell Inc. - (NASDAQ: DELL)
eBay Inc. - (NASDAQ: EBAY)
General Electric Co. - (NYSE: GE)
Google Inc. - (NASDAQ: GOOG)
Hewlett-Packard Co. - (NYSE: HPQ)
Intel Corporation - (NYSE: INTC)
International Business Machines Corp. - (NYSE: IBM)
Microsoft Corporation - (NASDAQ: MSFT)
Research In Motion Limited - (NASDAQ: RIMM)
Southwest Airlines Co. - (NYSE: LUV)
Starbucks Corporation - (NASDAQ: SBUX)
Target Corp. - (NYSE: TGT)
The Proctor & Gamble Company - (NYSE: PG)
Wal-Mart Stores, Inc. - (NYSE: WMT)
Yahoo! Inc. - (NASDAQ: YHOO)
The Innovation Index will analyze the positions and standings of the top 20 Innovators at the end of each year. For 2007, there will be no further changes in The Innovation Index.
Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world
References:
Reuters, Google Finance, Motley Fool and online news sources
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