Marketing Memos

Advertising is only part of Google’s gain with mobile phones.

Much has been made about Google’s mobile advertising potential in deploying Android, their free Linux-based mobile operating system. Google will indeed make a(nother) boatload money through advertisements on cell phones. But this is only part of the Google strategy. The other components should worry competitors more.

Let’s stipulate a few things in order for the market dynamics to be clear:

• Mobile devices are the prophesized unified communications portal (servers be damned).
• Due to constant availability, mobile devices will become the first option for most people for discovery and use of information.
• Unifying the end user experience while roaming and at the desk creates commitment by the customer/user.

Therein lay the competitive threat from the G-Phone. For years now Google has created end user services (search, maps, photo galleries, office apps, more). The services are generally cost free for the users. These applications have mobile counterparts and most (soon all) are bundled on G-Phones.

In other words, Google built the backend to mobile services before offering mobile phones.

Contrast this with Apple and the occasionally-on Mobile Me. Apple delivered a fancy handset and later added server-side applications that crashed often enough to cause the news media to suspend their Apple Adulation long enough to question if massively scaled server operations were Apple’s forte. Alternately Google has built an empire on centralized services and now is creating the mobile experience to extend it.

Sure, Google gave away mobile apps all along and you can run any of those apps from nearly any mobile handset (thanks to Google testing those apps using the services of another Silicon Strategies Marketing client DeviceAnywhere). But Google prioritizes access to these applications by bundling them onto G-Phones. Since the unit cost to handset makes for G-Phone system is zilch, handset vendors have a great incentive to adopt Android, put G-Phones in the hands of their customers and thus make Google apps the defacto mobile standard.

Slick.

Now here is where things get a bit scary … scary enough that the Federal Trade Commission will eventually investigate. Once enough people adopt Gmail, Google Office, Picasa, etc. for their application of default, Google track almost every moment of your life (turn off the cell phone camera when you and your sweetheart go to bed). Google will have a direct intelligence spread superior to the U.S. government.

Perhaps the CIA will be more interested in Google than the FTC.

Google has executed a classic blocking maneuver that will feed their core advertising business. By making mobile and desktop a contiguous environment they drive a wedge between users and all application competitors. All things being equal, who wouldn’t want to use the same apps in the office and in a restaurant? Microsoft can’t compete because they won’t give away Window’s Mobile to handset makers or port mobile apps to non-Windows handsets. Symbian will not compete as there is no central server backbone for applications.

Slick.

After the markets finish sinking, buy Google. Their mobile advantage will take Google stock even higher.

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Black and white contrasts make for interesting marketing case studies.

I had a chat with Jeremy White, headmaster at CodeWeavers. Jeremy and I met years ago while I was helping push SuSE Linux into the undisputed #2 Linux distro position. Jeremy sold a product that made using the Open Source WINE emulator a livable experience. For the uninitiated, WINE emulates Microsoft Windows OS functions and thus allows Windows applications (Office, Quicken, etc.) to run on Linux.

Jeremy had a hit with Crossover Linux because even technically astute Linux desktop users had trouble configuring and managing WINE. Like way too many Open Source solutions, it was a great idea technically well executed but lovable only to über geeks. CodeWeavers made it lovable by all.

So when I saw that Jeremy had worked the same magic for Mac users I had to ring him up.

From a technology perspective, the markets for Crossover Linux and Crossover Mac are identical. The products run on a UNIX/LINUX operating system, have x86 binaries to make everything work, and launch Windows applications on the native OS. However the separate markets are as different as garden salads and baby back ribs for lunch.

“Some of the Mac customers will buy the product twice because they can’t figure out how to download it the first time,” Jeremy chuckled. The first difference between the markets is technical competency. Linux desktop owners are typically technologists first and users second. Mac owners are users … period (Well, that is not entirely true — some knowledgeable technologists own Macs for a variety of techno-bigotry motivations, mainly of the anti-Microsoft variety).

“On the Linux side, the dot-communist are a problem,” he noted. Within the Linux world — including desktop users — the majority opinion is that if a product isn’t free it isn’t worth using. Despite the fact that Crossover Linux is inexpensive and is a complement to the free WINE stack, some Linux desktop users simply refuse to pony-up the few bucks it takes to buy Crossover.

Perhaps these folks are broke, still being underwater on their stock options.

Mac users are not ashamed to spend money. Given the premium Apple demands for Macs (and iPhones, and iPods, and iEverythingElse) Mac users readily toss lucre at Jeremy. Those profits however are diminished by the extra technical support Mac users need.

The other marketing oddity between Linux and Mac users occurs during promotions. “Post a message on SlashDot and you have reached all the Linux desktop users,” was Jeremy’s claim. But Mac users, despite being heavily wired are more of traditional social creatures when making technology buying decisions. Jeremy and crew spent time at Apple stores showing their product to the resident geniuses and encouraging word of mouth promotions. This dichotomy of stereotypes — the wired Linux nerd and the socializing Mac user — creates interesting branding, PR and promotional challenges for CodeWeavers.

For essentially the same product.

There are several lessons to learn from Jeremy, and all of them are painful:

• Parallel markets exist: Often technology vendors become myopic and do not see a market that is less than a step away. Jeremy saw it and discovered the market was simultaneously larger and more profitable per customer.
• The market is defined by the customer, not the technology: The mechanical difference between Crossover Linux and Mac are small. The difference between Linux and Mac buyers is huge. Though the markets were technically similar, the approach to the customer was starkly different.
• Social promotions are primary: Both the Linux and Mac products were promoted socially. For Linux it was via online social networks where the participants rarely meet face-to-face. For Mac users more personal connections had to be fostered.

I’m hoping Jeremy can make an XP emulator that runs on Vista.

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To avoid partisan potshots, I disclose in advance that I am neither a Republican nor Democrat, nor could I be classified as a liberal or conservative. Thus my following analysis is one purely aimed at examining how brands work in presidential politics.

In other words, don’t bother commenting if the analysis annoys your personal partisan political peccadilloes. This is about marketing and not the mayhem of presidential elections.

Much has been written in the last year about the destruction of the Republican “brand”. A brand — be it for a PC, politician, or even a PC politician — is what the market (voters) think and feel about the product. Yes, politicians and parties are products that can be bought though the price is too high for the average consumer/voter.

Many Republicans felt their party no longer had a brand. Many core Republican/conservative policies appear to have been abandoned by the Bush administration. Translate this into a technology product that had for many years delivered on the core features and functions it promised to provide. Then say that the new release of the product had massive bugs that the vendor did not fix that diminished or eliminated the usefulness of those features. Some GOP members viewed their party as Windows XP users view Vista - failing to faithfully deliver fundamental value.

This is where belief systems enter into marketing. People often believe things about a brand that are not true. But when faced with continuing failure to deliver on a branded value proposition, people quit believing in the brand. In this election cycle we see two brand battles raging. The GOP had lost its brand and is now actively redefining/reclaiming it.

Let’s look at each starting with the Democrats. Obama — like any candidate — needs to keep the trust of all classes of people. He set forth a brand which spoke broadly and elicited an amazing amount of response for a candidate with relatively little history. Bowling badly or making three-point buckets spoke well to the working classes who hold the keys to certain battleground states. But Obama’s “guns and religion” statement while raising funds in a San Francisco “Billionaire Row” mansion shattered that believability and damaged his brand value in those markets. Blue collar and Blue Dog Democrats indicate they may sit out this election based on brand misalignment. His selection of Biden did nothing to help regain those voters.

McCain’s team managed to something that any marketing strategist would love to achieve. They managed to find a brand and value proposition that was broadly popular, that matched the existing brand essence of the candidate, and located a running mate who brought additional authenticity (real or imagined) to the new brand. In other words, GOP marketing strategists scored a trifecta on brand management.

Let’s circle back to the Silicon Strategies Marketing copyrighted definition of a brand: a brand is what the market thinks and feels about your product. McCain had for years developed a reputation as both a maverick and a reformer. In fact the media made so much of this McCain value proposition that it became “knowledge” instead of “belief” among most Americans. The market of voters thus “thought” McCain to be a reformer. Adding Palin to the ticket — exploiting her highly personal “small town, common sense” brand — emotionally reinforced the ticket’s reformer brand. GOP strategist realigned the original “small government” GOP brand to the existing McCain/Palin brands. Then they used this to co-opt Obama’s “change” brand, simultaneously strengthening the GOP brand and weakening the Obama brand.

Polls indicate the plan worked very well.

Obama can only counter this in two ways:

• Try to destroy the McCain brand, which can only be done through negative attacks. This is a bad move because Obama based much of his brand on being a nice guy, rising above “politics as usual”. Going negative would be to destroy his own brand.
• Create a more authentic Obama brand: This is tough because many of the mistakes his campaign made (hijacking the presidential seal, mass rallies in Berlin, the “guns and religion” sound bite) has reduced the public perception that Obama is “authentic”. Even San Francisco’s eccentric former Mayor Willie Brown — a Democrat to the end — thinks “Obama still appears overscripted. Too perfect.“

Here are the basic branding lessons to learn from this year’s election cycle:

1. Be faithful to your brand: The Republican’s learned the hard way that the moment you stop “walking the walk” buyers/voters vanish. The GOP got lucky in finding a new brand that worked in the 11th hour.
2. Do not invent a brand that is not authentic: Obama learned that you cannot talk “small town” in Scranton then disrespect “small town” in San Francisco.
3. Represent your brand at every touch point: You receptionist should reinforce your brand. McCain picked a running mate that reinforced his.

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I just saw the first Microsoft advertisement with Jerry Seinfeld and Bill Gates. My predictions were spot-on. They tried to be funny, futuristic and hip. They failed completely, unless not mentioning Vista is considered a success.

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I recently read an interview with Chunka Mui, a fellow with the interesting job of studying business failure. Mui’s book Billion Dollar Lessons may become the next management “must read”.

His basic premise is that execution is irrelevant if your strategy is not good. Indeed he notes quite accurately:

If you have a plan that’s fatally flawed, perfect execution can get you into more trouble because you dig yourself in deeper and faster.

This explains 99% of the dot-com bust.

My analogy to Mui’s point would be that of driving. If you do not know where you are going, stomping on the accelerator peddle just sends you spiraling off a cliff quickly. This is one of the many reasons we focus on marketing strategy at Silicon Strategies. Marketing is hard work and during execution it can be very expensive. It is worth every company’s time (even start-ups) to invest in marketing up-front and avoid the cliffs.

All that having been said, any smart CEO must accept the fact that sometimes the best thought-out strategy is wrong. Some things are overlooked, some seemingly innocuous assumptions end up being world-class dumb and even market measurements (surveys, et al) can be misleading.

This is where agility during execution is important especially in fast moving technology markets. If measures show that goals are not being met, either the execution is poor or the strategy was wrong. When this happens have a good look at execution and seek obvious failings.

If none are found, take everyone who is emotionally wed to the strategy and lock them in a closet.

Then have everyone else and review all the assumptions and measurements that lead to the strategy and see if anything is (now) obviously incorrect. Absent that, examine the basic demand assumptions and business model. You will have found something wrong with the marketing strategy and can fix it … if you are brave.

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