1080p TVs now available

Tags: HDTV, LCD, Plasma

USA Today has a story on the new Mitsubishi 1080p rear projection TV, claiming it is the first TV available in the US market that actually decodes and displays 1080p signals. Too bad there aren't any of those signals on the air yet. But it does reinforce the claim we made in January that 1080p was the next frontier in HDTV, so it's all good.

Sony's PS3 pricing gamble

Tags: Games, Gaming, Marketing

According to a Gamespot report on material published in the Japanese magazine Toyo Keizai, Sony's upcoming PS3 will cost about US$494 to build, yet Sony plans to offer it for sale in the US next spring at $399. That compares unfavorably with current thinking around the price of the XBox 360, which some analysts expect to launch this year at $299. Sony Computer Entertainment president, Ken Kutaragi, wouldn't confirm the pricing, but had these comments about Sony's pricing strategy that lends credence to the idea that Sony has both confidence and data to back up a premium price:

Whether consumers think a product is expensive or cheap all depends on the balance between its appeal and price," he said. "Our ideal [for the PS3] is for consumers to think to themselves, 'OK, I'll work more hours and buy it.' We want people to feel that they want it, no matter what."

"When Nintendo was selling its 16-bit machine at around 12,500 yen ($114), we sold the first PlayStation at 39,800 yen ($364)," continued Kutaragi. "The press was saying that it was expensive, but it was a huge hit. It's the same thing with the PlayStation Portable from last year. The Game Boy Advance is a same handheld gaming machine, and it costs less than 10 thousand yen ($91). On the other hand, our PSP had cost 25,000 yen ($229). But people lined up overnight to buy it, and it sold out on the day of its launch. It all depends on whether people want it. Of course, I'm confident that the PS3 is a product that people will definitely want."

Kudos to Kutaragi-san for choosing to do real marketing instead of mindless discounting. Our bet is that despite Xbox 360's six-month launch lead, Sony will continue its domination of gaming consoles and games. Why? Three reasons:

1. Compatibility. Sony's PS3 is expected to offer full backward compatibility with PS2 and PS1. Microsoft's XBox 360 is expected to require users to purchase recompiled versions of Xbox games; XBox binaries will not run on XBox 360 without modification (at least according to current data -- Microsoft's statements have been rather delphic on this matter.


2. Game titles.Game consoles are all about what games are available. Sony currently has the largest number of games available for its platforms, all of which will run on PS3. While Microsoft has the Halo and Halo 2 franchises to lead with on XBox 360, it has fewer overall titles and will require developers to reissue old games to run on the new platform.


3. Focus on gaming. There have been claims that Xbox 360 will be a gaming machine, an online gaming platform, and a media console for its Windows Media Center PCs. Sony has an easier story to tell -- its message is that PS3 is a gaming machine, pure and simple. While it will play Blu-Ray HD-DVDs, that's just gravy; Sony's marketing focus on making a great gaming platform will allow it to make engineering tradeoffs -- and there are always tradeoffs with new products -- more easily than Microsoft can.

At the end of the day, the success of both of these platforms will depend a lot on flawless execution by both companies. One major error on Microsoft's part, and it will lose its advantage of launching before Christmas. One major error on Sony's part, and XBox's early introduction could become an insurmountable advantage. We'll just have to wait and see.

Flat panels: not just for young geeks any more

Tags: HDTV, LCD, Plasma

While sitting outside at a popular lunch spot here in Maynard, MA, I overheard a couple of grandmotherly-looking women at the next table chatting up their young male waiter. But what really caused my ears to perk up was when they started discussing the merits and issues of their flat-panel TVs. Know what? They had all the details right. The two women bought a large LCD display because it was able to achieve higher peak brightness, which was a deciding factor in their viewing environment. But they had evaluated plasmas as well and had an excellent grasp of its advantages, including deeper black and richer color definition. The waiter noted that he also had a flat panel LCD display, and the conversation went on from there.

One of the surprises in the early Internet was its rapid and aggressive use by senior citizens. Why? Because they had both the money and time needed to figure out what it was good for and to appreciate its communication power. I believe we are seeing a similar phenomenon in flat-panel TVs. Yes, those 42-inch plasmas make the perfect fashion statement for a 30-something's urban loft. But what TV manufacturers may be missing is the fact that they also fit well into today's active senior lifestyle and aren't out of reach for well-off retirees. At the very least, flat-panel executives need not fear that their products are too technologically sophisticated for the senior market; based upon the conversation I heard today, some seniors are way ahead of where you may think they are.

NPR echoes Blackfriars' thoughts on China buying brands

Tags: Communication, Marketing, Brands, China, Oil

I was surprised and pleased to hear a story last night on All Things Considered that echoed our blog entry of a few days ago. I continue to be amazed that China has a better understanding of US brands than the companies that own them.

Universal McCann predicts advertising slowdown

Tags: Advertising, Marketing

Today's Wall Street Journal notes that advertising spending growth forecast by New York advertising forecaster Universal McCann has been revised downward, from 6.4% to 5.7%. That brings their forecast for advertising this year to $278.9 billion. In case anyone is keeping score, that's within 5% of Blackfriars' slightly lower forecast of $267.4 billion noted in our June report Sizing US Marketing. But lest anyone interpret these numbers as being good news for advertisers, the article notes that most of the impact of this slowdown will be in TV ad dollars for second half of the year, as advertisers shift budgets to the Internet and other more measurable forms of advertising. This article further reinforces lower ad projections Blackfriars has made previously.

Deals on EDTV flat-panels this week

Tags: HDTV, LCD, Plasma

Blackfriars noted previously a force driving some dramatic price movements on flat panel TVs due to new FCC requirements taking effect this Friday, July 1. Some price points this week:

• an ESA 42" plasma EDTV monitor (i.e., without any tuner whatsoever) at Circuit City for $1649 with in-store pickup
.

• an HP 42" EDTV plasma television (i.e., with NTSC tuner, but not an over the air digital tuner) for $1788 at Tweeter.com with free shipping.

Only the latter is affected by the new FCC rules, but both are indicative of the new sub-$2K price point for 42" EDTVs.

Of course, if you are shopping for a flat-panel EDTV, the gold standards in this category are the Panasonic TH-42PD50U TV and the TH42PWD7UY monitor. Both have been available on-line for less than $2K including shipping from a variety of on-line merchants for a month or two.

With all the price declines in flat-panels lately, here's Blackfriars rule-of-thumb for best-in-class pricing for major brand flat-panel monitors and TVs:

• EDTV 42" monitors: about $1500 without shipping.


• EDTV 42" TVs with tuner and speakers: less than $2000 without shipping.


• HDTV 42" monitors : less than $2500K without shipping.


• HDTV 42" TVs with tuner and speaker : less than $3000 without shipping.


• HDTV 50" monitors : less than $3500K without shipping.


• HDTV 50" TVs with tuner and speaker : less than $4000 without shipping.

Now the real question is, when will a major brand decide to break with the pack and start the next round of price cuts. Our bet: expect to see another round of cuts in late August, although I wouldn't expect as dramatic cuts as we've seen to date.

RSS support in Longhorn: no big deal

Tags: Communication, Marketing, Blogs, RSS

The buzz about Really Simple Syndication (RSS) -- a technology that allows people to subscribe to content -- has hit a fever pitch this weekend. The announcement, here noted by the BBC, that Microsoft's Longhorn will support it has spurred a large number of Web and blog articles. Judging by the reaction in various developer blogs, you'd think this was the announcement of peace in our time.

Get a grip everyone. While RSS is a very nice technology, it really isn't that big a deal.

I know this is heresy. And as someone who runs Safari with RSS feed built in, you'd think I would on board. But what I've discovered from looking at a few months of RSS feeds is that their utility is way oversold. Most RSS feeds just provide me with lots more information for me to look at and say, "not interested."

Why the disconnect? Because RSS throws away much of the editorial information that provides clues as to whether you want to read a story or not.

Here's a test. Take a look at the RSS feed data you get from the New York Times or the Washington Post via your RSS reader. Now look at the front page of either of their Web sites. Which one allows you to focus on on what you want to read? The Web site has big and small fonts, pictures, bold headlines, and typography. The RSS feeds provide none of those clues, leaving you to figure it all out from plain text. Great for computers, lousy for people.

Now undoubtedly, someone will note that this is simply a base technology that some wonderful killer application that hasn't been invented yet will exploit to create the next Google. Perhaps. But when I look at it through the lens of The Tyranny Of Too Much -- the fact that we are overloaded every day with too much information, not too little -- I see RSS taking editorial value out of blogs and postings and then propogating that low-value data farther and wider. It's just adding noise to the Internet, not judgment and thought. Having Longhorn support it doesn't mean that this is good, even a year from now.

Meanwhile, I'm looking for more sites that add value through thinking, design, and careful editing, not aggregation. And I predict that by the time Longhorn appears, RSS will be a feature in Internet Explorer, but one that will practically be lost in the noise of a new Windows release. Until it grows more intelligence and more ability for people to exercise editorial judgment, it will just waste people's time.

Apple's "Less is More" design philosophy gets noticed

Tags: Design, Marketing, Apple


One blogger notes that Business Week and the Industrial Design Excellence Awards both took note of Apple's current design prowess and gave them awards for it. Particularly interesting was the comment made about the iPod Shuffle:

"The iPod's Shuffle's simplicity comes from drastically narrowing choices (or making them for us). We get to give up responsibility of having to navigate and choose and with that comes freedom and lightness. Calm".

China, Inc. bids for a new US export: global brands

Tags: Communication, Marketing, Branding, Brand

Today's newspapers (the Los Angeles Times, the New York Times, the Wall Street Journal, to name a few) are abuzz with CNOOC's $18.5 billion bid for US oil company Unocal. China is going shopping for US companies, no question. Last year's purchase of IBM's PC business by Lenovo and Haier's bid for Maytag this week have just laid the groundwork. But why does China want these businesses that US companies have chosen to put on the block?

I believe that China has recognized an undervalued American export: global brands.

Today, despite manufacturing most of the world's low-cost goods, China has no easily recognizable global brands. It has only a few well-known national brands. But rather than trying to start from scratch and build its own brands, China has taken a page from the west and decided to buy its brands from someone else: The US.

And why not? According to research published by Business Week and Interbrand about The Best Global Brands, in 2004, US brands accounted for 71% or $706 billion out of the nearly $1 trillion business value for the top 100 brands. Further, my own company, Blackfriars Communications, notes that US businesses will spend nearly $1.1 trillion on marketing in 2005 , much of which is targeted at building brands. No other country in has built as much value in global brands nor does any other country in the world spend nearly this amount on marketing; the United States is truly THE brand economy.

The deals we've seen so far show that China's businesses understand brand value. The $1.75 billion takeover of IBM's PC business by Lenovo gave it access to the IBM brand, valued by Interbrand and Business Week at nearly $54 billion in 2004. Haier's $1.3 billion bid for Maytag would give it $400 million in brand value for brands like Amana, Jenn-Air, and Magic Chef -- the business itself would cost less than $1 billion. These bids and deals show that even when US companies don't feel they can thrive in specific markets, the brands have real, marketable value.

The US thrived during a manufacturing economy from 1900 through 1980. When Japanese and other Asian tigers took over manufacturing leadership, It thrived again through with a service economy in the 1980s and 1990s. The rise of a brand-hungry China offers the US an opportunity to turn the 9% of GDP it invests in marketing into exportable brands. We just need to recognize that exporting American brands may become a bigger business than Microsoft exporting software -- and require just as much US business expertise and know-how.

Opaque technology names

Tags: Communication, Marketing, Technology

David Pogue, Circuits columnist for the New York Times, has a wonderful article on the user-hostility of technology naming. I won't spoil the article, but he has special disdain for the cell phone carriers who push technology names like CDMA, 1XRTT and EV-DO. Do you know what those stand for?

Ad agencies struggle to prove their return on investment

Tags: Advertising, Marketing

It's a tough world out there. Reuters today notes that advertising executives today are struggling as never before to prove to their clients that their work building brands has real value. Apparently this was the center of a large discussion at the International Advertising Festival in the south of France, which regardless of the discussion, is a location guaranteed to raise the eyebrows of any CFO. The president of the association got Blackfriars award for understatement though:

The search for a workable return on investment formula has instituted a worrying degree of paralysis," said Michael Lee, president of the International Advertising Association. "Everyone is being sensibly hesitant, but what we need is progress, not paralysis."

But June Blocklin, vice-chairman of WPP's Young & Rubicam Brands, gets kudos for accepting the challenge.

"Just because something is tricky to measure doesn't mean it doesn't have value," she said. "Demands for ROI (return on investment) should be present in our business. I certainly think creative should be held accountable."

Added Berlin: "It can't be great advertising if it doesn't have impact on the market. It's not just a question of sitting down and having a great idea."

Looking for brand insights in blogs

Tags: Communication, Marketing

Today's Wall Street Journal has an article on companies like Intelliseek that scan blogs for word-of-mouth about brands. The article does a good job because it doesn't oversell the idea:

"Walter Carl, a professor at Boston's Northeastern University who has studied 'word-of-mouth' communication and marketing, says blog-watching services 'are very useful for quickly getting the lay of the land' in trends and consumer reactions. Still, he says, it isn't clear how closely online comments mimic the 80% of 'word-of-mouth' that still occurs face-to-face.

Not everything bloggers have to say about brands correlates to the real world. Last summer, Umbria, working for a fast-food client, was monitoring Burger King Corp.'s Angus Burger and found it got some bad reviews from bloggers. Some were deriding Burger King's tongue-in-cheek TV ads that called the burger a diet food. Bloggers notwithstanding, the Angus Burger has become a hit."

That's a great point. No one should consider an opinion in a blog to be comparable to real market research or testing. But for a quick real-time sample of what people are saying, they are invaluable.

A new advertising model

Tags: Advertising, Marketing

Chris Thilk has a nice thought about how TV advertising will change in the light of personal video recorders and the decline of the effectiveness of 30-second spots. His idea? A return to an exclusive sponsor for entire shows, just like Kraft Theatre and the golden age of radio.

It's official -- the upfront ad season falls short of 2004

Tags: Advertising, Marketing

According to today's Wall Street Journal, the official tally on TV upfront sales is in. The call: TV upfront sales fell short of last year, the first time that has happened since 2001. The article lays the blame largely on NBC's results.

Dragging down the market was General Electric's NBC, which is expected to suffer about a 30% drop in so-called upfront commitments for the fall prime-time season. NBC, which has completed 95% of its upfront negotiations, expects to secure $1.9 billion to $2 billion in commitments from advertisers, according to a person familiar with the situation. Last year, NBC landed about $2.9 billion of upfront commitments.

Contributing to NBC's upfront decline was its decision to sell only about 75% of its ad inventory in the upfront season, holding back the rest for sale later in the year. Typically it had sold about 80%. Still, even taking this into account, NBC's upfront decline was worse than predicted on Wall Street. It reflects both NBC's slump in ratings in the past season and advertisers rethinking the amount of money they commit to television.

Pitching ideas

Tags: Communication, Marketing

Scott Berkun has a great blog entry on what it takes to pitch an idea to someone. It's a little long, but not a bad encapsulation of a process we teach regularly. I particularly like the concept of producing not only one elevator pitch, but a 5-second, 30-second, and 5-minute pitch. Of course, it references one of our favorite books on influencing people, Robert Cialdini's classic, Influence: The Psychology Of Persuasion.

A visual illustration of the tyranny of too many ads and messages

Tags: Advertising, Tyranny Of Too Much, Marketing

Adfreak has a lovely piece and picture of a Vienna experiential art project that covered up all the advertising on a busy street with yellow fabric. The abundance of lemony-yellow fabric makes quite a visual statement about how much advertising clutter companies have to content with.

Confirmation of the soft upfront TV advertising season

Tags: Advertising, Marketing

MediaPost reports today that as Blackfriars predicted, the upfront TV advertising season is finishing below expectations.

Media agency executives now say the broadcast networks might end as low as $9.0 billion--some $200 million to $300 million less than last year's upfront market. The final broadcast network scorecard: CBS $2.4 billion, ABC $2.1 billion, NBC $1.9 billion, Fox $1.6 billion, the WB $675 million, and UPN $375 million.

Where is the money going? Our data says non-traditional marketing, preferrably measurable media like Internet and email. David Verkin, CEO of media buying giant Carat agreed.

"What's interesting, is my clients budgets aren't down. They're up. TV budgets are down," he said, noting that ad dollars were shifting to other media, especially online, or were being held back as a hedge for a soft TV scatter marketplace during the 2005-06 TV season. "I'll tell you, the budgets from clients are not down, they are up," he said, adding, "Our Internet business is booming."

Apple fastest growing brand in the world

Tags: Apple, Marketing

Brand Republic reports that Apple currently is the fastest growing brand in the world. The same company also noted that Apple is one of the top 10 brands that had the best expansion possibilities. Blackfriars will note that this list contains almost all of the companies we have previously noted for exceptional marketing, including Apple, Google, and Samsung.

Dell cuts HDTV prices

Tags: HDTV, Plasma, Marketing

This is just more evidence of the continuing erosion of flat panel prices. Dell cut its 42-inch plasma to $2,999, its 30-inch LCD to $1,799, and its 26-inch LCD to $1,499. Note that Dell often runs coupon promotions that further lower these prices by 10 to 20 percent.

Michael Dell would be happy to sell Mac OS X systems

Tags: Apple, Microsoft, Dell, Marketing

David Kirkpatrick at Fortune has done some very worthwhile research into where Apple could go with its new Intel-based OS. What he found certainly surprised me:

I emailed Michael Dell, now the company's chairman, and asked if he'd be interested in the Mac OS, assuming that Apple CEO Steve Jobs ever decides to license it to PC companies. (For now, Jobs says he won't.)

"If Apple decides to open the Mac OS to others, we would be happy to offer it to our customers," Dell wrote in an email. It's the first time any PC industry executive has openly shown enthusiasm for selling machines with Apple's software.

Michael is a smart and very talented guy. If he is interested, you can bet a lot of other PC makers would be as well. But the real challenge is the OEM contracts these vendors have with Microsoft -- most of those documents are 1) secret, and 2) have a number of exclusivity clauses in them that preclude PC manufacturers (or at least disincent them) from offering other operating systems. Bill Gates' threat to invoke those contracts made Dell pull back from Linux in the past; I wonder if anything has changed there.

Expect dramatic TV pricing the next two weeks

Tags: HDTV, LCD, Plasma

Mark Schubin, who writes the Monday Memo for DigitalTelevision.com has been noting that TV manufacturers are making a lot of business adjustments as one of the FCC-mandated deadlines for the transition to digital TV approaches on July 1, 2005. The deadline in question is the one where all large-screen TVs -- those with dimensions greater than 36 inches -- must have digital ATSC tuners. Further, 50% of mid-sized TVs -- those with dimensions between 25" and 36" -- must have digital tuners.

You are probably asking yourself, "So what?" Well, there's a small problem. Few manufacturers are actually producing product lines that fit perfectly with the FCC mandate. So what do those manufactures do with all those TVs with analog tuners as the deadline approaches? Like any good business people, they try to sell them any way they can prior to the deadline. And that means slashing prices in many circumstances. So if you have had your eye on one of those fancy flat screen TVs and you don't care about digital tuners because you don't get over-the-air programming, you'll see some dramatic price drops on very nice large-screen TVs during the next two weeks or so.

But there's more than one way to skin a cat, or in this case, meet an FCC mandate. Mark observers in his column:

Manufacturers are continuing to announce tuner-free monitors instead of DTT-reception circuitry to comply with the mandate. Here's a story from This Week in Consumer Electronics (TWICE) about Westinghouse dropping analog tuners to avoid the mandate:
http://tinyurl.com/b29qk

This one is a little different. It's a story from TWICE about Akai offering near identical models at about the same suggested prices with either integrated DTT reception or no tuners. The ones with no tuners will cost retailers less. I wonder which they will promote:
http://tinyurl.com/dctc2

You have to give these guys points for creativity if nothing else.

Will we see a Microsoft xPod?

Tags: Microsoft, Music, Apple, Marketing

Today's Wall Street Journal has a prominent story on Microsoft tapping the leader of its XBox division to take over its music initiative as well. An analyst had a nice sound bite on Microsoft's failure to date in digital music.

As much as Microsoft is claiming that it's giving choice, the customer has chosen," said Michael Gartenberg, an analyst at Jupiter Research. "Offering 150 players doesn't seem to add up to one iPod in the mind of the consumer right now."

Some of the licensees of Microsoft's music technology have complained that Microsoft couldn't explain why consumers should prefer its technology. So not only is the company digging itself into a hole by overwhelming consumers with the tyranny of too many choices in music players and music stores, it isn't marketing its strategy well either.

Of course, the choice of Mr. Bach implies that this might change. He did champion XBox as a single platform instead of an ecosystem play at Microsoft, and has had limited success with that strategy (if one can call losing more than $1 billion to gain the #2 spot in gaming a success). But Apple has a nearly four year head start in building brand and awareness for its iPod. Even if Mr. Bach has a blank check in hand to build this business, it will be a long, uphill battle to overcome an 80% marketshare lead. Unless Mr. Bach can come up with a clear strategy, killer differentiation, amazing products, and great marketing, this will be another billion-dollar expense line for Microsoft with little to show for it.

WSJ.com - Ad Icon P&G Cuts Commitment To TV Commercials

Tags: Advertising, Marketing

The lead story in today's Wall Street Journal continues the drum beat of press noting that large traditional advertisers are becoming dissatisfied with 30-second spots on network TV. It also notes the softness of the upfront ad market for the networks that Blackfriars has previously commented upon.

That has stoked broader concerns over a long-awaited advertising slowdown for the industry. Despite such fears, TV advertising has risen in recent years; in 2004, $22.52 billion was spent on network TV, a 10.7% increase from the year before, while cable-TV spending rose 13.8% in 2004 to $14.25 billion, according to TNS Media Intelligence.

But P&G has been cutting back on traditional TV spending of late. In the first quarter of 2005, the company cut its overall television spending by 8%, to $677.3 million, according to Nielsen Monitor-Plus, a unit of VNU's Nielsen Media Research which tracks advertising spending.

"With Liberty and Niches For All"

Marketing, Tyranny Of Too Much

Today's New York Times has a great article on the typical walk down the toothpaste aisle in your local superstore, illustrating what Blackfriars calls the tyranny of too much. Lest people think this is just a casual problem, one analysis illustrates the peril this holds for marketers:

Is there a name for what I'm experiencing? Of course there is, replies John Quelch, the Harvard Business School consumer marketing guru, who began laughing as soon as he heard the words "toothpaste aisle." He was quick to diagnose "analysis paralysis at the point of sale." Paco Underhill, perhaps our most diligent student of the science of shopping, terms it the "confusion index." And yes, it's growing. As are the fractures among us.

Mr. Quelch offers only one survival strategy: "Walk on by." After all, he says, "It wouldn't happen if we didn't buy it." The manufacturers of toothpaste are not exactly worrying about our tuning out. It's a free market. Furthermore, Mr. Quelch adds, "it's rather difficult to compute all the sales that never happen because of analysis paralysis."

Boeing's marketing strategy: ask customers what they want

Tags: Marketing, Market Research, Advertising

Today's Wall Street Journal has a great article on how Boeing is reviving its business with its new 787 aircraft. This from a company that people were writing off as a laggard behind Airbus. What did Boeing do that was so special? It asked its customers -- and more importantly, its customers bankers who were also involved in the sales -- what they wanted and organized its product and its processes to make sure it could respond quickly. But it didn't get just put a menu of too many options in front of customers; Boeing understood the tyranny of too much and how it might hurt its business. Instead, it gave customers smart choices. The article says it well:

In designing the plane, Boeing did something else new: It listened to more than just its airline customers. The bankers that finance aircraft purchases were pushing for an airplane with only one engine type. It's hard to sell a used airplane with one maker's engine to a carrier that prefers another. The airlines were seeking at least two options.

Boeing compromised. The 787 will come with a choice of General Electric Co. or Rolls-Royce PLC engines. Boeing, however, required that each engine be capable of being swapped for the competition in 24 hours. On a typical plane, that task would take a couple of months and cost more than $1 million.

Inside the plane, power for lighting and in-flight entertainment systems will be built into the floor rather than hard-wired into each seat. Boeing also cut down the number of ways airlines could customize the interiors. This makes it easier for planes to be updated or revamped for new owners.

A great piece of non-traditional marketing

Tags: Marketing, Advertising

Of all things, The Organic Trade Association has one of the best pieces of non-traditional promotion we've seen recently. Those of you who are Star Wars fans will particularly enjoy the exploits of Obi Wan Canolli, Cuke Skywalker. Ham Solo, and Chewbroccoli. It is both campy and memorable. And most importantly, it's impossible to forget who sponsored it, not when you have a villain named Darth Tater. This a great piece of work, executed by a group called FreeRangeStudios.

Apple doesn't have to sell itself to succeed with Intel

Tags: Apple, Intel, Microsoft, Marketing

I was going to write some more thoughtful reflections on the Apple/Intel this morning, but I see that Robert X. Cringlely has beaten me to it. It is a truly inspired article; if you haven't read it, go do so. Robert's assertion: Apple isn't worried about the Osborne Effect killing off their near term sales because Intel will buy Apple to finally get out from under the thumb of Microsoft. Steve Jobs exits his interim CEO role, and resumes as CEO of Pixar/Disney/Sony (you choose which other buyout scenario you most believe).

I have to say, it sounds attractive. But is this the type of outcome you'd expect from an executive who has nurtured a risk-reduction plan for Mac processors for five years? Again, looking at this deal as a marketing strategy provides a little different point of view. Viewed through a marketing and analyst lens, I see a somewhat different future:

• Apple plans to differentiate in new ways compared to its past. Apple made the Intel deal because it has established itself as a design and systems leader, not as the users of the best and fastest chips. People love Apple iPods and Powerbooks (myself included), despite the fact that Apple doesn't make them; Taiwan-based manufacturer Quanta does. Yes, it is nice to have fastest computer in the world bragging rights, just as it is nice to be the car manufacturer that wins the most NASCAR races. But Jobs rightly recognized that this is not the only differentiation that matters, or even the most important one. In exchange, Apple bought never having to write the following sentence in press releases: "Revenues for the quarter were below expectations because of processor supply limitations.



• Apple has more announcements to limit the Osborne Effect. Jobs isn't dumb; he knows about the Osborne effect of announced products killing sales of current ones. So I believe that Jobs has more announcements waiting in the wings that will help keep current sales aloft prior to the arrival of Intel Macs in 2006 (and has said as much in interviews).
  


• Probable new short-term products are processor-agnostic. I'd bet on two specific product areas that have nothing to do with processors: music and movies. We will certainly see new iPods and music offerings, and we may see the iMovie video store before Christmas, along with an Apple-branded flat screen TV/media center to watch those movies on (although we'd bet that is more likely for Christmas 2006).
  


• Intel doesn't have to buy Apple to have a huge effect on the market. Blackfriars agrees that Intel is looking for a way to show more of its value, yet Microsoft stands in its way with little innovation and slow release cycles. With Apple, Intel can now deliver showcase products in Apple skins years before Microsoft will ever support them. And because Apple doesn't support a million different configurations, it will innovate two to three times faster than Redmond ever could.
  


• An Apple platform could still be rebranded by OEMs. Pat Gelsinger, one of the smartest guys in Intel, now heads up the platform division. While Apple's OS may not run on garden-variety Wintel hardware, there is no reason Intel could not sell Mac hardware as a platform to its OEMs. HP already sells Apple iPods under its name, and the world hasn't come to an end. HP could just as easily license Apple Macs for sale -- -as could Dell, Sony, and eMachines. The fly in this ointment? Microsoft's secret OEM deals with PC manufacturers. The trick to getting around it? Intel and Apple have to clearly define this new Mac platform not to be a PC.
  

The more I think about the Apple/Intel deal, the more I like it -- and I'm typing this entry on a Powerbook. But I think what Jobs sees is that there are huge opportunities in new types of products that people don't strictly think of as computers. The new Apple/Intel alliance allows him to address those markets, just as the Pixar/Disney alliance did for Pixar's movies. And if Microsoft's monopoly gets broken, that's just icing on the cake, not the goal. But more importantly, it could establish Steve Jobs legacy as truly the smartest marketer in Silicon Valley for once and for all.

The next two years are going to be very interesting.

Microsoft preparing to revamp music toward subscriptions

Tags: Microsoft, Music, Apple, Marketing

CNET reports that Microsoft is preparing to launch a subscription service for its Music Store. We've noted the challenges associated with both Janus and subscriptions from the likes of Napster before. Yet, I don't think Microsoft understands that this is a marketing and not a technology challenge yet. The article has a fairly damning statement to that effect:

"The most important question is what ability Microsoft and its partners have to explain this model to consumers," said Jupiter Research analyst Michael Gartenberg. "At this point, the whole online music market is centered around Apple and the other guys."

Given that Apple's iTunes now accounts for more downloads than all peer-to-peer networks, and that the iPod, which won't play Microsoft-encoded music, now controls 82% of the player market, Microsoft is going to have to do a lot more than rework its music store to succeed in this market. Bill Gates might actually have to look up Steve Jobs phone number.

Stop your PowerPoint before it kills again!

Tags: Communication, PowerPoint, Presentations

This blog entry warns presenters to stop using PowerPoint as a crutch and to start thinking about what message they want to get across instead. Blackfriars says amen.

Sharp decides marketing is key to flat panel success

ags: HDTV, Plasma,LCD, Intel, Marketing

Today's Wall Street Journal has a great article on Sharp's realization that it needed to do more marketing for its LCD flat panel displays to make inroads with consumers. The big aha:

Despite being the world's top seller of liquid-crystal-display televisions, surveys showed that the only TV brand many Americans could name was Sony.

It was easy to see why: Sharp didn't do much in the way of advertising in the U.S., besides occasional TV spots. The company was late in catching on to U.S. consumer trends, such as the move toward bigger TVs. Indeed, Sharp didn't even roll out its new TV models overseas until half a year to a year after they had hit stores in Japan.

At least they recognize the problem. When was the last time you saw any advertising for flat screen TVs from the manufacturer?

Blackfriars can say one thing. The first flat screen TV company that can create a simple, quick branding element like Intel's three tone advertising signature stands to gain a lot of market share with consumers.

Walt Mossberg on Apple and Intel

Tags: Apple, Intel,Marketing

Today's Wall Street Journal has a very rational article on the whole Apple Intel announcement and what it means for average consumers. No surprises, but as usual for Walt, well-written.

AVFX starts using Orion Ltd plasma video walls

Tags: HDTV, Plasma

Blackfriars recently did some work with AVFX, the same AV company that did the audio and video for the Democratic National Convention last year. They just announced that they are starting to use plasma video walls from Orion Ltd., Korea as shown in the picture this post links to. Now that is high-definition TV!

The plasma pricing precipice

Tags: HDTV, LCD, Plasma

Over at the AV Science Forum, there is a bunch of discussion about the possibility of 50-inch Plasma panels for under $3,000 in the coming months. With brand name pricing of 50" plasma panels now more in the $4,000 range, this may herald a real pricing discontinuity for plasma panels, probably in response to the huge volume of production coming online in the LCD world.

This sounds like good news, and it is for buyers. But for producers, this can be a dangerous game. The sub-$1,000 PC drove numerous PC manufacturers out of business because they just couldn't make enough money to keep them alive versus the likes of Dell. One might argue that plasma pricing may create a similar situation, except that the major manufacturers are Panasonic and LG.

This isn't a mass market product -- yet. But 50-inch plasmas aren't the most popular sizes, either. The most popular size of large screen flat panel is currently 42-inches. We already have a 42" Plasma on the market for $1,399. With the current price erosion in the market we could see sub-$1,000 42" plasmas in the market by Christmas of 2006. If that happens, watch out; retailers could have a VERY merry Christmas that year.

Some overlooked details in the Apple/Intel announcement

Tags: Apple, Intel, Marketing

I just spent an hour watching the Apple World Wide Developer's Conference keynote. I found I discovered a couple of points that I think have been overlooked in most of the stories on the matter:

1. Apple has been running OS X on Intel for five years. This has been reported a bit, but it just shows how good Apple is at keeping a secret. Know any other companies with development projects they've kept secret for five years?


2. Apple is actually shipping Intel developer systems this month.. I had thought that they were only shipping the XCode development package this month. But in fact, Apple is selling an only-for-developers Intel-based computer to developers for $999. This shows that the things that Jobs showed weren't just demos. It means they are shipping all the technologies shown in the keynote in developer products. Quite remarkable.


3. Paul Otellini did a great job representing Intel. Yes, Paul is a marketing guy, but he was on stage with probably the best marketer in Silicon Valley, and yet he not only held his own, he was disarmingly charming in front of what was probably not the easiest crowd. I suspect we will see more smart alliances and innovations from Intel under his leadership

Overall, Jobs told the story well and made it seem logical. He still has a big job to do in convincing the rest of the world that this is going to do good things for the company, but you have to give the guy credit: he isn't thinking just quarter-to-quarter. This is a CEO who projects where things will be several years out and still will fund contingency projects to make sure he can deliver. If only more tech CEOs had this type of long-term thinking.

Apple's Intel transition leaves too many questions unanswered

Tags: Apple, Intel, IBM, Marketing

The Jobs WWDC keynote is now over. The Wall Street Journal, CNET, and the Times all got it right: Apple is converting its processor line to Intel Pentium processors. And there were no real additions to the story; that WAS the story. There was no WiMax, no Intel doing anything different, just as Jobs put it, "a brain transplant." With software support, I might add -- Jobs has put in place both development tools, partners, and emulation technology that will make the transition relatively painless.

But that's the technology part of the story. The marketing issues aren't nearly as clear. So here are the questions I still have in my head after listening to this story:

• How does Apple keep people buying PowerPC Macs?. With this keynote, Jobs has just pre-announced a June 2006 product, namely a Mac with Intel inside. While he hasn't announced end-of-life for current products, he has certainly seeded uncertainty in the prospect and customer base as to the future of current products. So what will keep Mac sales afloat for the next year?


• Is Apple's stylish design enough differentiation in an Intel world? Yes, Apple plans to build a Macintel box, not a Wintel one, but will a good GUI, great industrial design, and customer service be enough to sell products against the likes of Dell? This change just raised the stakes on Apple marketing to new highs.


• What else is changing in the Mac platform? Is a new Mac just an Intel motherboard with Apple software? Or are there new places where Apple is adding differentiation? Will Tiger run on a garden variety Dell?


• What are the barriers to replication?How does Apple keep Dell from just copying any successful innovations out of Apple? It's not like there is necessarily any hardware barrier to entry any more.

As I noted before the keynote, this transition is a marketing issue as much as a technology one. Jobs did a great job of answering the technology questions for the developers. But the marketing jury is still out wondering whether this is a brilliant adaptation to a changing world or one more roiling change in an already unsettled market. We won't know until we see how customers vote with their dollars. But customers rarely like big changes in strategy until they understand the story again. And this story is still pretty unclear.

I got it wrong -- it really is an x86 Mac that Jobs is announcing

Tags: Apple, Intel, IBM, Marketing

OK, it appears I got it wrong. But given all the speculation of the last few days, it is nice to know the actual facts. Here is what Steve Jobs is announcing today:

• Apple is migrating away from Power PC processors to Intel. Jobs just got fed up with the slow upgrade cycle and IBM's inability to deliver high-performance, reasonable power consumption procesors.


• The first Intel-powered Macs will be in June 2006. The first ones come out next year, and they plan to have the whole product line converted by June 2007. That gives developers a lot of time to change over, especially since it is mostly just a recompile. But there's an open question of how Steve avoids the Osborne effect of this changeover killing existing product lines.


• Emulation gets Apple over the transition hump. Just as with the transition to PowerPC, Apple will use an emulator called Rosetta to keep old apps working on the new architecture.

More after we've had a chance to hear all the details.

A picture of Sharp's new 65-inch LCD

Tags: HDTV, LCD, Plasma

The Gadget Blog has a nice picture of the new Sharp Aquos 65-inch flat panel TV. They aren't promising any TV formats above 1080i (so no promises of 1080p yet), but it does sound impressive.

Why would Intel make Power processors for Apple?

Tags: Apple, Intel, IBM, Marketing

A few people have asked why Intel would break with its X86 tradition and make Power processors for Apple? I have three good reasons:

1. Sony


2. Nintendo


3. Microsoft

With all these consoles using Power chips, and gaming console volumes in the millions of units per year, Intel wants a piece of that business, and they won't get it without making Power chips. An Intel Power chip would be good business for Intel and would provide risk reduction for these three big names at the same time so they don't end up over a barrel with IBM in the future.

Blackfriars' prediction on how an Intel Mac alliance plays out and why

Tags: Apple, Intel, IBM, Marketing

I've been reading the many opinions being bandied about on this Apple Intel deal. A lot of people are just looking at the technology pieces of this Apple/Intel deal and trying to see how those fit. But an awful lot of opinion currently looks like this:

1. An unexplained business miracle happens that converts Steve Jobs to the dark side.


2. Apple goes Intel x86 for Macs.


3. Another business miracle happens that allows Apple to negotiate this transition well.


4. Apple profits, goes belly up, becomes Microsoft, or just ticks off its entire customer base

But the truth is this is a business deal, one in which both Apple and Intel want something. We know Jobs wants better parts supply and would love better prices and volumes. But what does Intel want from a deal like this? Why do they care? After all, Apple probably wouldn't make it into the top five OEMs for Intel, so why would they want them as a customer this much? And why would Apple start rolling this out with mobile devices, as claimed by the Wall Street Journal?

The answer? Intels need a lead vendor to launch a Centrino-like platform with WiMax wireless.

Intel has invested tens if not hundreds of millions in this wide area wireless technology. It views WiMax as the obvious upgrade for both individuals and businesses. The only problem: no one is stepping up to build it in as a standard part of every mobile computer. There's a chicken-and-egg problem here: if no computers have WiMax, no router manufacturers or carriers have any interest in it either. Intel needs a lead user.

Oh, one more thing. Probably the most visionary and highest profile executive in Intel below CEO Paul Otellini is Executive VP Pat Gelsinger. He just got moved to head up the platforms business. So any Intel deal with Apple probably has a platform component to it; it can't be just a part sale.

So here's the deal that I believe Jobs signed up for. I believe that Intel signed up to make low-power Intel G5 processors (probably dual-core ones) for laptops. These G5 processors are a little different from ones to date, because they talk to standard Intel platform components (e.g., Northbridge and Southbridge chips and the like); heck, they might even design it to use the same pinouts as a Pentium M. But more importantly, they also get bundled with a WiMax wireless chip. This is the part that they plan for 2006. They then plan another high performance part for 2007.

But because Intel is signing up for a lot of design work, it wants a concession from Steve. It wants the platform design to be licensable to other OEMs like Dell and Acer. After all, if only Apple makes it, it isn't a platform -- it's a proprietary design.

Apple would like this approach instead of a typical Intel x86 approach because it eliminates "the Osborne effect"; that's the case where your customers stop buying your current products as soon as you announce your new one. And given these products won't arrive until 2006, the Osborne effect would be fatal. So Intel would have to concede producing G5 products, but in turn, Apple would have to concede the platform idea.

This is the deal that I think is the most likely scenario past just using WiMax parts. Why? Because the deal gives Apple a stream of highly competitive products (which hasn't always been true), while also providing a key differentiation: the ability to use wide area WiMax wireless out of the box. And Steve doesn't mind reopening the Mac clone business because he now runs a very successful software company, something that wasn't true when he took over Apple.

Think about it. Let's imagine that Dell decides to build a Dell-branded Mac. What OS does it run on those boxes? They probably don't run Windows, because there is a ton of intellectual property in Mac machines that isn't part of the processor and needs software support. And Microsoft is busy during this time frame with Longhorn. So Dell licenses Tiger. How much does profit does Apple make on additional Tiger sales? Lots (think Microsoft profit margins). How about iWork and iLife? Shake? Final Cut Pro? Same answer.

So the bottom line: this could be a tipping point for Apple. Monday could mark the day that Apple begins the transition from proprietary Macs to Mac platforms. But Steve is doing the deal for marketing reasons, not technology ones. And if he has played his cards the way I think he has, Apple stands to make a ton of money in the process, which, after all, is what marketing is about.

P.S. Monday update: I've blogged this separately, but a lot of people are just being directed to this post, so I'll append it here.

A few people have asked why Intel would break with its X86 tradition and make Power processors for Apple? I have three good reasons:

1. Sony


2. Nintendo


3. Microsoft

With all these consoles using Power chips, and gaming console volumes in the millions of units per year, Intel wants a piece of that business, and they won't get it without making Power chips. An Intel Power chip would be good business for Intel and would provide risk reduction for these three big names at the same time so they don't end up over a barrel with IBM in the future.

Evidence of the price war in plasma

Tags: HDTV, LCD, Plasma

In news unrelated to Apple and Intel, we can now see clear evidence of the flat panel price war in the market. PC Connection is now offering a 42" HDTV 1024x768 plasma panel for $1399 . Another reputable vendor, Crutchfield has been offering a 37" 1920x1080 HDTV LCD for $1999. Both of these pre-orders for non-big-name products not in stock, but the prices are dramatic new lows for products with those specs. This just shows how intense the competition for the flat screen TV market is becoming.

Most analysts believed we wouldn't see this type of price pressure until Thanksgiving this year. It appears Christmas is coming early to flat panel buyers.

WSJ on Apple-Intel

Tags: Apple, Intel, IBM, Marketing

The Wall Street Journal now has an article reiterating the CNET story that Apple will announce using Intel chips Monday. Interestingly, nothing in the article contradicts anything we said here yesterday, other than the specialized server idea. We stand by our opinion that this doesn't mean x86 Macs, just Intel chips in the Mac design, probably G4 or G5 ones and/or WiMax chips.

Why Apple/Intel could be true, just not in the ways you think

Tags: Apple, Intel, IBM, Marketing

CNET is now repeating the rumor of Apple ditching IBM's Power series of chips in favor of Intel. We've argued against this rumor a couple times before here and here, so to say we are dubious is an understatement. But here are a couple of thoughts about why there might be a germ (not a lot, but a germ) of truth in the story, even if Apple still uses G5 and G4 processors.

• Apple uses lots of different processors. Intel processors are already in the XSan series of storage products that Apple makes. Garden variety Intel processors could be in the next Apple base station, the next Apple iPod, or in a number of other applications. So the Apple/Intel alliance could be literally true -- just not for Macintoshes.


• Intel has great technology other than mainstream processors. Pentiums, Celerons, and Centrinos aren't the only chips Intel makes. One particularly intriguing idea might be that Apple might be signing on to Intel's WiMax series of wireless chips for wide area, high bandwidth wireless.


• Intel could make G4 and G5 processors. Much of Apple's complaint against IBM has been around fabrication, not around architecture, and the Power architecture can be licensed from IBM (don't believe it? Look here). Intel has LOTS of fabrication capacity to keep busy. Getting a contract to build another million chips a year, even if they are not x86 parts, could be just what the doctor ordered.


• Apple might have a new specialized server product in the works. Jobs has said this upcoming World Wide Developer's Conference is all about Tiger and its applications. What if Apple were to introduce a new Spotlight search server, whose job it was to index and search an entire network of content, including Windows file servers, Macs, and Linux machines? Apple might build such a server out of Intel PC parts, put a specialized version of Tiger on it, and make it an enterprise product to compliment its XServe and XSan products. Alternatively, Apple might introduce an HDTV distribution product using Intel hardware, as has been rumored previously.

The bottom line: there are a number of reasons Steve Jobs might bring Intel's new CEO, Paul Otellini, out on stage at the developer's conference. Just don't expect to see a Wintel Mac.

Sharp launching 65-inch LCD TV in August

Tags: HDTV, LCD, Plasma


This week seems to be flat panel TV story week. Thanks to Engadget for noticing, CNN has a report saying that Sharp will release a 65-inch LCD panel in August in Japan and throughout the world by the end of the year. The report notes that this is really a shot across the bow of plasma-makers, despite LCD's higher prices currently. Why? Because:

Sharp said its 65-inch TV was better than similarly sized plasma sets because unlike plasma models it can produce an image with resolution of 1,920 horizontal by 1,080 vertical pixels.

Matsushita's 65-inch set, for example, produces 1,366 by 768 pixels of resolution.

So not only will the Sharp panel support the possibility of upcoming 1080p HDTV programs, it will looked, well, sharper than the plasma at close viewing distances.

Constraints on big LCDs? Glass!

Tags: HDTV, LCD

Today's Wall Street Journal has an interesting article today on how the sheer physical size of glass needed for manufacturing LCDs is constraining price drops on large LCD panels. But it had a very cool fact about Samsung's upcoming plans:

Samsung plans to build LCD screens as much as 100 inches in size. On the way to that goal, the company will use substrates that are 5.31 square meters, as large as a king-size bed, in its eighth-generation plant, and 6.72 square meters in its ninth-generation plant. At an industry conference in Boston last week, Lee Sang Wan, the president of Samsung's LCD business, recalled that such large LCD TVs were inconceivable five years ago. "Size should no longer be considered an issue for LCD TVs," he told the Society of Information Display.

But at the same conference, other engineers declared that the 10th generation of plants and glass substrates is likely to be the last. That glass will be 10.8 square meters, too large to be carried by oceangoing cargo containers and airplanes. Only low-bed trailer trucks could transport it, meaning the plants that make them would have to be built within driving distance of the factories where the glass is turned into a flat panel for TVs.

If all marketers are liars, and Seth Godin is a marketer, then....

Tags: Communication, Books, Marketing

Marketer Seth Godin has a new book out titled "All Marketers Are Liars". He has also established a Web site that solicits stories from readers that he can then use to promote the book. I'm not going to link to the book or the Web site because I don't think anyone should waste their money on them.

Blackfriars likes some of the concepts in the book. We also believe that story telling and creating new worldviews are powerful marketing tools (although not the only ones). But most people will never read that far, assuming that the primary point of the book is in the title. And they'll use that to reinforce their view that marketers lie to sell product. The only problem: objective data doesn't support that worldview.

In our April survey, we asked 300 senior business executives whether they thought marketing was the public face of corporate strategy. Nearly three quarters of executives agreed with that statement. So if all marketers are liars, and marketing is the public face of corporate strategy, then most corporate strategy must be to lie. Do you really believe that? Three quarters of executives also believed that marketing was important to their company, and two-thirds believed that marketing provides their company with significant competitive advantage. So lying is the way that you gain business and competitive advantage? Hmmm. I think the Securities And Exchange Commission might have some issues with that, particularly with Sarbanes/Oxley in effect. Also the Federal Trade Commission. And the majority of business executives, for that matter.

Seth wants to be controversial to generate buzz. We get that. But will you take out a bank account with a company that lies to you? How about have heart surgery with a doctor that lies to you? Companies will spend nearly $1.1 trillion on marketing this year. Do we really want to waste nearly 9% of the US gross domestic product on lying to customers who might want to buy our products?

The bottom line: Seth may have some good ideas in his book, but he has taken too much of his book's thesis to heart. He's lying about marketing and marketers to sell books. Clearly that's his worldview. But we don't have to buy it, and you shouldn't either.

US marketing to exceed $1 trillion in 2005

Tags: Marketing, Market Research, Advertising

Today Blackfriars announces our new sizing of US marketing activity. This new full research report projects that spending on marketing by US organizations will be about $1.074 trillion dollars (yes, that's trillion with a T). If marketing were a vertical industry, it would be the fifth largest industry in the United States.

This research is based upon data from our extended senior executive survey we conducted in April which we have correlated with economic data from the US Census and the US Department of Commerce Bureau of Economic Analysis. We not only sized the dollars spend in nine different types of marketing activity overall, we also were able to use our survey to provide dollars spent for six major vertical industries, including finance, information, manufacturing, other services, professional services, and retail trade.

You can read the full press release about the research here, and you can purchase the report from the Blackfriars Research Store. We're very excited about this research because we think it will clarify how important marketing is to US businesses. With marketing making up nearly 9% of the US gross domestic product, it's about time that marketing got some respect.

This research came about because Blackfriars readers asked questions about whether we had sized the market. Please keep those questions and comments coming!

Sun's Share ads

Tags: Communication, Sun, Marketing, , Advertising


Sun Microsystem today launched a new ad campaign around the word "Share". While we applaud their brevity of copy, the communication may be a little too minimalist for most to figure out what they are talking about. And what is up with their technologists holding up blank sheets of paper? We'll see how the ad campaign plays out, but at the very least, we can't accuse Sun of overwhelming us with the tyranny of too much -- yet.

More on the flat panel price wars

Tags: HDTV, Plasma, LCD

The Wall Street Journal today has an article titled Flat-Panel TVs
You Can Afford chronicling the price wars currently underway in the flat panel market. The article notes that we may be hitting a tipping point on flat panel pricing.

In recent weeks, prices for flat-panel television sets have been falling sharply in a round of heavy discounting that wasn't expected to begin until much later this year.

The price cuts could trigger a significant shift in the country's adoption of flat-panel sets, which first hit stores five years ago and last year accounted for only about 15% of TV sales in the U.S. While all consumer electronics tend to fall in price over time, most new products experience a period of steep declines right before they become mainstream items. DVD players plunged to below $300 from $700 in 1998, for instance, and digital cameras went through a similar tumble in 2002.