Wednesday, October 04, 2006

Cheating in Monopoly

Just read the news that SPH has acquired the portal, HardwareZone (HWZ) for a cool $7 million. The HWZ conglomerate of web entities is one of those pioneers of Sg cyberspace which translated a simple idea into virtual form very successfully. The idea was to bring Sim Lim Square into cyberspace. Initially through word of mouth coupled with a loyal group of forummers, gamers, techies, HWZ just grew and grew. There is a romantic story embedded somehow in this sale of HWZ to SPH. One of the occasional guests here, Cobalt Paladin and his distinctive avatar, is, if I remember correctly, some supremacy member in the HWZ forums.

HWZ is one of those places in local cyberspace where there is a real community, and a vibrant community as well. Other than the other favourite cyber-ghetto, Sammyboy's Kopitiam, it is not an exaggeration to say HWZ discussion forums' are the most well participated and have the most eyeballs. It makes sense for SPH to wish to corner HWZ. By the acquisition of HWZ, SPH has just leapfrogged its Digital Life capabilities by a few notches. For $7 million, one cannot fault the founders of HWZ; as reported, HWZ was really just a hobby which grew into this highly valuable asset, with a highly valuable community.

Just a few months back, SPH launched STOMP, which was meant to engage the young in cyberspace. Now, they have dealt some relatively small change to acquire HWZ which has a much longer history, ready-made community and captive eyeballs. Some of the HWZ forummers are unsettled; they wonder what will happen to the relatively free-wheeling forums once SPH steps in. The specter of being part of the responsible Bhavani bandwagon, or that cheeky nick, "the 140th" (which has become inextricably associated with the Straits Times), hangs uncomfortably behind this take-over of HWZ. The worry is somewhat misplaced; for $7 million, SPH could have built a HWZ clone and have enough change to build another Softwarezone. Just like STOMP. But they did not do this. So the value of HWZ is really in its community, its ready network of advertisers, its already hyper-links in your 'favourites' tab. The management model of HWZ under SPH will be interesting; especially for the discussion forums which are essentially run by volunteer mods. How will this spirit of voluntarism pan out? Will we see GE rally video clips like those we saw from the HWZ discussion forums? These are questions which cannot be answered yet.

But there is one feeling from this takeover of HWZ. For want of a better word, it is just "sian". This is Singlish lingo for helpless frustration or just apathy. The analogy is probably inaccurate but SPH taking over HWZ is like NTUC buying over Zouk. One cannot help but have this feeling that another medium, another place in cyberspace is lost with this sale of HWZ. If it was Creative which bought HWZ, there would probably be much less of this "sian" feeling. Its like having won the game Monopoly, SPH is now playing the online version, both as banker and player. And there is definitely no player, foreign or local, to stop SPH from buying at its will. Monopoly is depressing. Monopoly faking competition is utterly depressing.

Do you fault the HWZ owners for taking the $7 million? No, you do not. But you can fault an economic system which has created a situation where only SPH can offer $7 million. Or worse, a situation that any other competitor to SPH is MediaCorp, Temasek Holdings, Sembcorp, Singapore Technologies, NTUC or GIC. Imagine that there is a ceiling, an invisible ceiling to your entrepeneurial spirit. And this is not good at all.
Quote of the Day --

"Keep in mind that the ultimate goal is to have the most money and assets at the end of the game ... Win the game by snapping up all of the property on the board, ruining the other players and acquiring more money and assets than anyone else.", How to Play Monopoly
Note : To TOC984, yes you can re-publish any of the articles here. I practice a no rights reserved policy.


Anonymous Anonymous said...

Yes, it is sian. Just like boring boring Chelski.

7:06 PM  
Blogger BL said...


Yes, it's a boring sale, but it is a business transcation. The SPH people want to buy it and the HWZ people want to sell it.

What really surprises me was the price of the sale. HWZ people did not give a high valuation for their sale (since they have a southeast asia market), or they just want to sell it regardless of the price.

In Singapore, the biggest investor and M&A group is the government. It's just a reality.

9:32 PM  
Anonymous ted said...

Well, BK, could you or anyone offer a third party valuation instead?

$7 million bucks out of a hobby divided by 2 guys is probably more than they ever will dream of.

10:14 PM  
Anonymous ted said...

Sorry, I mean BL.

10:15 PM  
Anonymous Anonymous said...

I dun think xb is laying the blame on anybody. From what I read, its more like a lament that in sg the business reality is not very ideal. The point about an invisible ceiling to business enterprise is not very far off the mark i think. cheers!

12:39 AM  
Anonymous tsft said...

The situation is hardly as bad as you put it, Xenoboy, especially when SPH are dire at making the right decisions for internet business. The direction is muddled and the execution horrid.

Newspapers as essential as the Nicholas Sparks collection of love novels aside, their internet ventures are a wild, wild stab into the dark. The awfully Orwellian-sounding Project Eyeball cost a million; flopped. Stomp cost a million, too, although it is some mystery how SPH blew a million dollars making a website that runs mostly on free open source software. It, too, looks destined for abject failure.

Calling it a game of Monopoly gives the implication of there being a minimum of skill and calculation involved, when the reality suggests otherwise. Everybody from the higher rungs of the power ladder to the talentless Straits Times hack seems to regard the internet as a hangout zone for the uncouth hooligans of the world.

It is, but more successful newspaper websites have a more sophisticated opinion. The Guardian (which has a similar print distribution to the Straits Times) charges absolutely zilch for its articles and turned in £1m in profit this year – mostly on internet advertising. That is £1m more than SPH will ever earn for its efforts.

Writing about the grim and morbid is your speciality, Xenoboy, but this is less doom than slapstick and mirth. There are so many ways to blow millions of dollars, but surely SPH have some spectacular ones up their sleeve.

3:59 AM  
Anonymous Anonymous said...

The Guardian and the straits times in the same sentence. Never thought I'd see that. The ST's sales are not audited are they. I wonder why?

what's the news on M. Ravi. We met him recently and he definately didn't look mad. He's far too organised to be mad. he looked afraid.

8:48 AM  
Anonymous bjornlee said...

what a sellout to their community this is.. I wonder if the founders of HWZ spared even a single thought to their community members when they made this sale? I certainly do not see it being communicated anywhere on their immense HWZ forums.

This is somewhat like NewsCorp buying MySpace. Of course the SG$7M makes this a sub-atomic scale of that US$580M buyout. But i will like to see how SPH intends to manage this community whose culture runs totally counter to the culture of SPH as the govt's newsletter. There's a lot to learn as to how NewsCorp's Fox Interactive Media managed the Myspace community and doubled its user base.

And judging from the sad state of STOMP, i will clap my hand in glee when SPH fails yet again with HWZ.

2:16 AM  
Anonymous dan said...

When I first heard about this news, I was initially very sian. I mean, what about the identities of all those who had registered in the forums? What about all the freewheeling talk in the forums?

But I also see another perspective regarding this sale. And if this hunch of mine proves correct, then the original guys behind harewarezone deserve a big pat on the back for pulling one over the bullies.

I think we can all guess that SPH bought hardwarezone for its community and all. They definitely would not buy hardwarezone purely for its IT content and reviews.

So, we all know how communities so easily migrate. Especially web communities. Like how the icq people went to msn, and how the altavista/other search engine users migrated to google.

Like already observed, sph doesn't understand cyberspace very well, as evidenced by their stomp endeavour. And that's already regarding pop/youth culture which they have more experience in thanks to Life!. What about a portal frequented by techies and it geeks and everything in between? Bound to die if they are left to run it.

And with 7 million. Wow. Imagine what the original guys could do with that cash?

I'm thinking, with their own cash, they were already able to come up with something as good as hardwarezone.

With 7 million??

Well, if started the whole project out of passion, and are wholeheartedly engaged with that community, then we should wait in anticipation of a better improved portal. =) One that would surpass hardwarezone, and to which all the existing users can just migrate to happily! Wouldn't the hardwarezone guys and everyone else who's part of that community then have the last laugh?

sph would then be left with a white elephant, an empty void in cyberspace, a web space without a community.

And the rest of us would happily be in another new part of cyberspace which we can call home, and snigger at the bullies who thought they struck jackpot, only to realise they wasted all the money for nothing. =)


Or I could be just too idealistic as usual. Haha.

2:03 PM  
Anonymous klimmer said...

I wonder if the HWZ guys had any proper M&A advisors? Is USD7MM really the par value for their business?

12:23 AM  
Anonymous Anonymous said...

Hi Xenoboy,

Unfortunately, I'm not any supreme member of the HWZ forum. I've trolled the forum but don't think I've an account. It has been that long. Darn! And I thought my Cobalt Paladin nick was unique! :p

Anyway, I've posted my thoughts regarding the sale here. There was also an interesting comment regarding the sale left by an anon user.

1:37 AM  

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