vicodin
December 20, 2011
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Intersections cause collisions, but also opportunities.
A basic marketing strategy is practice to find the intersection of what customers want to achieve (expected outcomes) and where the market is not providing that solution. Alternately, one can look for places where different technologies can, for the first time, be combined and create previously unavailable value.
Smart phones are now ready to facilitate SoLoMo.
 The three raging factors in markets and marketing today are SOcial, LOcation-based apps and MObile. The real-time enabled combination of these three may well be the next major moment in consumer technology and marketing. The ability to reach people in tight geographical clusters, who are sharing an experience or looking for one, will be an exciting market in which to pitch.
Social is about sharing. As witnessed by Facebook posts, it is the moment in which the user has the impetus to share that is important. What one is thinking, feeling and experiencing is what they wish to share. To a limited degree Facebook and Twitter enable such sharing since you can Tweet and post from your handsets. But it lacks location services that enable bridging the people in or near a location (after all, why not share what you and another 25,000 people at the Rolling Stones concert are experiencing).
The other weakness is the asynchronous nature of current social media. Most people open Facebook during lunch or after a day’s work. Some folks browse Twitter weekly (which rather defeats the purpose). Real-time enablement of interaction between near-by individuals, especially when it pulls people in from slightly larger distances (say drawing people into a hot night club from the competing bars on that block) creates new interaction potential (mostly pleasant).
More interesting yet to marketers might be the ability to pool information about people clustered geographically. Merging big data pools of demographic and psychographic information, combined with location identification of individuals could provide real-time promotional opportunities (which will take a real-time arbitrage so the demo/psychographics enable the right advertisers). What if in real-time a common profile of a particular Rolling Stones concert attendee was a 70 year old man (this time is coming) that prefers bourbon? No bother selling ads space to Dr. Pepper.
Like social media a few years ago, this is a largely undefined area for experimentation. On the marketing end, the ability to create highly local participation, or to market to people sharing a location at the same instant, offers the marketer some unique targeting opportunities.
Which means Google (local, Android, Plus, ad trafficking) has all the necessary tools to make this happen now.
August 23, 2011
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I would not want to be an HP employee this week. Well, actually I have not wanted to be one since Bill and Dave went to the big database in the sky.
 Last week, in rapid fire, HP said they will likely get out of the PC/laptop business (either through an Agilent-like spinoff or outright sale), killed their newborn webOS phone and slab business, and bought a relatively obscure software company for a huge premium. Their stock dropped about 30% and HP aficionados are still staring, jaws agape, in disbelief.
Change is the only thing of permanence, and that applies doubly in the high tech business. Tech companies are the most agile known, and many have completely reinvented themselves when faced with undeniable market shifts. Others change because better opportunities exist. HP’s newest CEO, Leo the Lively, knows that software companies make significant margins (Oracle has an overall margin of 30%) on peddling well organized electrons. Leo wants HP to change in that direction. Reportedly, HP’s PC business has profit margins of 7%, though their volume through retail channels makes them the #1 vendor. Though HP’s PC volume and revenues were impressive, sales of consumer PCs and laptops have been plunging (around 23%) and the profit HP earns from PCs and laptops would soon enough be unworthy of staying in that business. So like IBM before them, they seek to exit the soon-to-be unprofitable.
They’ll continue gigging consumers for overpriced ink cartridges, which appears to be a damned (and) good business.
Oddly, they are also scrapping their webOS product line, dumping Touchpads and “Palm” phones. Though they never received respect or respectable reviews, the main catalyst for declining consumer PC sales are slabs and smart phones. HP is wisely shuttering the declining PC business, but have simultaneously aborted their newborn in the one consumer market that has growth potential. Combined, it makes Leo look like a consumer luddite, lacking desire to peddle products to the proletariat.
Which likely makes Steve Jobs smile. He knows how to market to mobs.
Change for change sake is a rarified form of idiocy. I don’t accuse Leo of blindly altering HP’s fabric, but the timing and lack of commitment to product lines makes Apotheker look like a banana republic dictator, changing rules, laws and strategy at personal whim as opposed to long range product planning and revision. Given that HP’s Touchpad was introduced a mere 53 days ago, it was never given a complete chance in the market – no version 1.1, no second generation, nada. It is bizarre for a first entry into a relatively untapped market to be a sacrificial lamb on the altar of ambition.
Today’s market strategy lesson is a two-fer. First, any strategy should not be implemented in ways that cause people inside and outside of your company to lose faith. Stockholders bailed and HP employees, on a private discussion forum, are confused and a bit ashamed. It is better to build your new strategy and have it well-anchored before you jettison the old one. Secondly, it is bad policy to display executive knee-biting as part of the transformation process. For HP execs to bravely proclaim that killing off a seven week old product line based on a $1.2B investment (the Palm acquisition) was wise is unwise. To do so while paying an 80% premium for a software company that is not destined to become a center post of a software strategy simply begs for Leo to don a clown nose.
Change has to have a purpose and a plan. You may not be able to disclose the plan, but causing investors and employees to doubt you have one while hacking away parts of the current strategy is like a politician saying “Trust me, I’m with the government.” It lacks faith-building substance.
April 28, 2011
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Cheap tables are a’plenty.
Being a reformed gizmo glutton, I still receive a number of consumer electronics communiqués … hourly. Most are for products I have no intention of buying, especially television sets that could cover my living room wall and still provide nothing considered entertaining. Yet an occasional marketing lesson appears between engorged LED boob boxes and pocket cameras with more pixel resolution than the televisions.
Today it was cheap tablet computers, or what I prefer to call slabs.
 Below those afore mentioned money wasters were a selection of slabs ranging from $129 to $320, and available with seven to ten inch screens. This price range is a fair bit below the lowest end of the iPad 2 product line and the poorly marketed Xoom. These slabs were not insufficient, sporting the same base memory, Wi-Fi and all the functionality of last year’s Android OS. For customers lacking coolness and not in search of the same, an inexpensive alternative to image-enhancing technology will do quite well.
This is Darwinistic market segmentation in action.
Marketers need to segment, either to find a niche which they can dominate or to find the most efficient path to dominating an entire market. Sometimes markets start to segment themselves. In this example, vendors were apparently slashing prices on last year’s model of Android pads in order to prepare for the newer and more capable edition of Android. By doing so they accelerated mass adoption of a newish technology.
In all consumer markets and most B2B ones as well, there are strata for price and functionality combinations. A company that dominates an entire market does so by altering their offering to meet the mix appropriate to each segment. No single vendor can do that, which is why Apple prefers to create consumer techno-lust, charge higher prices and make fatter margins. Google is taking the opposite approach and providing the foundation for 1,000 other companies to fill every market segment imaginable … including the low end.
This strategy leads to ubiquity, which leads to mass familiarity, which leads to becoming the de facto choice.
Given choices, market segments will begin to define themselves. Proactive marketers can define and conquer segments, but doing so is a long process, expensive and invites competition. Facilitating other companies to identify and exploit segments is much simpler, vastly less expensive, and rapidly achieves the goal of market domination.
March 29, 2011
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Microsoft has lost it’s marketing mojo.
Perhaps I should not base this analysis so heavily on their mobile offering, but having just returned from the massive CTIA event and witnessed Gates’ Goombahs slake Microsoft shareholder wealth into oblivion, I’m none too charitable. Sure, Microsoft continues to milk the desktop cow, and the garner some gaming coin by Xboxing, but the world is rushing toward mobile and Microsoft is nowhere to be found.
Literally. Microsoft was so artfully concealed behind the Sybase booth (Sybase for cryin’ out loud) they were all but unlocatable. It did not help that Microsoft’s booth manager squandered precious vertical real estate, apparently choosing a black funeral shroud for their flying buttress. The booth itself was the Japanese/Swedish version of death décor – white and hard, modern, lifeless lines. For an event soaked in the radical, consumer-focused “joy” of being wirelessly wired at all waking hours, Microsoft appeared to be in mourning.
Keep in mind that with the exception of Apple – who deigns to sully their brand via industry participation – CTIA is one of the largest mobile madhouses. Every vendor attends, and one can shop for cell phones, cell towers and antennas, developer software, and faux jewel cases for handsets. Even CNBC, the 24X7 business news network, owned a healthy chunk of show-floor real estate and was broadcasting live. For Microsoft to exhibit and make such a sad showing was not a demonstration of calculated error but an admission that Microsoft has lost the mobile market so badly that even their marketing teams – people normally known for being colorful, loud and pushy – were bland, quiet and subservient.
It was a non-booth, for a non-contender. Even their new-found partner Nokia did not display a Microsoft logo.
This combined with Apple’s absence accelerated Android’s dominance. Walk into any handset booth, and the little green android icon was visible. Talk to handset software vendors and they would say “We support Android, and of course Apple,” as if Apple were an afterthought. There was even a surreal moment when CNBC’s Michelle Caruso-Cabrera was live on air and in the aisle behind her danced a tiny human wearing a rubber Android costume.
Talk about cost-effective product placement.
The marketing lesson, such as it is, falls into near cliché. In any market, you have to lead, follow or fail. Microsoft had the chance to lead and didn’t. They can’t follow because they are a software company and thus compete with Apple and Android. That left them the option of failure.
The stench of failure now haunts both Microsoft mobile employees and Microsoft Mobile 7 (or whatever the Sam Hell it is called this week). When I slid into the Microsoft booth, no human asked to help (unlike at HTC, Samsung, Sony, etc). So I played with Windows on cell phones solo, and was mightily unimpressed. Whereas Apple innovated, and Android echoed Apple innovations without Apple rigidity, Microsoft only phoned it in (much like investors are calling in their sell orders).
February 22, 2011
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Who wants $29B a year?
The ubiquity of cell phones has not gone unnoticed by anybody, even the stodgy old banker down at your local branch (though he merely finds his daughter’s monthly texting charges aggravating). Even the most primitive of modern cell phones is a small computer with wireless data capabilities. With cell phone penetration nearing 80% in the United States, and emerging nations adopting cellular as their first telecommunications infrastructure, soon a cell phone will be owned and operated by every homo sapiens and a few lower order mammals as well (cats will not deign to dial themselves … that’s what they keep humans for).
 Thus, folks who earn a dime from financing a dollar are interested in using any technology to speed payments. In our fast paced modern world, waiting behind someone using an ATM card at Starbucks seems like an incredible waste of time. Hence the rapid move by nearly everyone to engineer Near Field Communication (NFC) payment systems. The credit card companies want to, because they know NFC will eat away at their earnings ($39B between American Express, MasterCard and Visa alone last year). Apple, Google and Nokia want a slice of that too, though instead of the industry standard 2.16%, Apple will likely demand 30% of each transaction.
The math is compelling.
A little more than half of the world’s nearly seven billion people live in industrialized areas, and most have cell phones or are too old/young to enjoy being annoyed at every hour of the day and night. Shortly, 80% of these 3.4 billion industrialized people will have a handset, just like the U.S. Assuming that the average Joe, Jane or Jinjing makes a mere three small transactions each day, and that a single penny was collected for financially facilitating (and expediting) those transactions, there is about $29B to be made by implementing cell phone based payment systems. Much more money is at stake when we get realistic about the number and size of each transaction and the service fee collected for them
That’s not chump change, not even to Eric Schmidt.
Hence every handset and mobile OS maker is racing to engineer, certify and deploy NFC, which allows a payment to be made simply by putting a cell phone near a cash register and authorizing the transaction. No card to swipe, no PIN to enter, no slip to sign, no change to be given back. It is a win-win for everyone involved, which is why each technology and financial business wants first-mover advantage in order to keep everyone else from succeeding.
Which is why Android, again, is an interesting marketing lesson.
Unlike Apple (where the OS, hardware and overlording is supplied by one vendor) or Nokia (where the dismal duo of them and Microsoft are way behind), Android is growing virus-like by design. Google wanted fast, wide and deep Android penetration (fast as in “roll out a new cell phone design tomorrow”, wide as in “every vendor in every country” and deep as in “every possible cell phone price point”). This is why a mobile OS that was unknown two years ago is now out-shipping all others. Hence, Google is best positioned to leverage mass adoption of an operating system (on which they make no money) for services, including payment services.
An oft repeated marketing lesson at Marketing Memos is that ubiquity brings tangent rewards. Google could have cloned the Microsoft model and charged per-instance licenses for Android, and it would have been as popular as toe fungus. Instead, Google worked long, hard and gave away Android in order to make money later, in advertising, in impulse sales and in NFC enabled payments.
Technology exists to achieve something. The computer, OS and word process I use was purchased in order to communicate to you. Android was developed and disseminated in order to earn $29B later.
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