RIL to Acquire Majority Stake in Notion Ink? Can Adam Eat The Apple?

Do Reliance Industries & Apple Computers fall in the same league? No, really give me an answer right now.

When I think of Apple my mind says – rather jumps out with – the word iPhone, a globally recognized smartphone with tonnes of super-features, the iPad an internationally appreciated touch-screen based electronic book, iMac, iPod, MacBook Air and the list could go on … blah blah blah. Apple is a brand which is iconic in nature, brilliantly packaged and has been built over years by a relentless team of crazily  foresighted engineers. (I mean all the guys including Steve Jobs).

Now when I think of Reliance, fortunately or unfortunately there is no such tintinnabulation. Does anyone except the BSE/NSE stock market enthusiasts feel ‘cool’ by saying that they own a reliance product? If you disagree, please do enlighten us with a name of just one electronic device that has been built by Reliance, and that if not worshiped, is at least bought over its competition simply for pure awesomeness? The answer is none.

Android based NotionInk Smart Tablet
NotionInk Smart Tablet

Wait a second, but that’s not the point. Reliance is a respectable business in many other ways. They have a really strong presence in retail, have one of the largest communication network, and a robust sales & distribution model spread out all over India. They have a very healthy balance sheet as well. And organically speaking, Reliance too has been built over years by yet another type of relentless team but with a different flavor, different culture and under a different set of circumstances altogether. As a result the genes of Reliance are completely different from that of Apple.

So now can Adam – by Notion Ink, position stronger against Apple by getting acquired/invested upon by a company like Reliance? Leave the business reasons aside, i.e. RIL has re-entered the telecom business and acquired majority stake in Infotel for 3G services and a 3G tablet will serve as the core consumption point, after mobile. As far as Notion Ink is concerned, they get money + access to retail distribution points. But is that all to M&A?

Why do I smell trouble – if not absolute dumbness – upon reading a rather half-baked speculative article saying that Reliance is gonna buy into Notion Ink – The makers of Adam? Quoting The Hindu

It is learnt that the talks, which could even lead to RIL picking up a majority stake in Notion Ink, are centered on the Adam tablet, which is scheduled for a worldwide launch later this year.

RIL’s interest could have been triggered by the fact that the Adam has been touted as an “Apple iPad killer” in many quarters. The product has been generating enormous buzz on tech Web sites and gadget blogs since an early prototype was put up for demonstration at consumer tech trade shows earlier this year”.

Of course Reliance did confirm to them that they “do not comment on speculation as a matter of company policy“. What else could they have said anyway? No company would ever come up and say “Hey, hey listen, I am gonna anonymously confirm to you that we are buying XYZ percentage of equity in a high-tech emerging business of e-books that we don’t even half understand today”? That would at most be really comic than a worthwhile business news!

And look at what we’ve got here: do we remember the line – the much touted apple killer line – we caught in the last post detailing how Indian media cooks up in perpetuity? And then now the same lines become the basis of another speculative article in a more juicy style?

Let’s for a second, assume that Reliance is certainly interested to buy equity into Notion Ink. How much would it matter to the Adam tthen? For Notion Ink, selling equity to Reliance or for that matter to any large enterprise (Except Adobe) would mean probably nothing to their core values of innovation and urge to compete in the international market. Beyond Adam getting exposure to the Indian market, and Reliance getting yet another opportunity to monetize their local S&D infrastructure there is hardly any incentive towards such a gelation. Especially, if one talks about pitching Adam against the iPad or simply internationally.

On the other hand, chances are more of destroying the nimble vision of the smaller and younger organization should the elephant and the ant coalesce. Large corporates do NOT understand startup culture or creativity. It’s true, go search any case study. Zillions of examples from India to Silicon Valley exist that have revealed the damage done to stock value & vision arising out of a M&A’s with size, gene & vision mis-match. In fact both the entities have lost value, whether its the startup or the biggie when the M&A lacked merit or reason.

In NI’s instance a more valid and realistic reason could be that western markets are saturating with iPad, Nook & Kindle. And therefore, Adam needs to focus in the domestic/Asian market more seriously. But for that, perhaps partnerships with S&D intensive companies like Reliance, Shoppers Stop or Lifestyle would do them good. This however is something that only, Notion Ink guys can decide upon, but certainly it’s not a reason to sell equity to anyone. Having raised suitable funding recently indicates not much desperation to coalesce either, as claimed by The Hindu and many other journos. Besides there are hundreds & thousands of fans of electronic products in the western markets who might buy into Adam with or without Kindle/iPad in their pockets. Don’t you think its time not to lose focus, or take the foot off the gas?

Of course the tought question is: should an entrepreneur pick up the bone thrown at him early on by a large corporate or not?

And at the basic level: Does business reporting mean this level of naivety? Or I am wrong personally to be posting a post this way? Directions please.

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