Personal spending and income fall dramatically

Tags: Katrina, Rita, Marketing, Hurricanes, Economy, Taxes

As we predicted at the beginning of the week, consumer spending and income have shown their largest declines in nearly four years. At the same time, the consumer price index minus food and energy increased 2.0% over last August. So not only are consumers taking less money in, the things that they do buy are costing more. And all of this is before we know the full economic of Rita.

I predict this will be a long tough winter. If I had one investment I'd bet on, it would be on anyone who makes or sells sweaters.

The next step beyond 1080p: 2160p

Tags: HDTV, LCD, Plasma, Chi Mei Optoelectronics, CMO, 1080p, 2160p, Structured HDTV, Marketing,

In the neverending battle for resolution, justice, and bragging rights, Taiwanese manufacturer Chi Mei Optoelectronics Corporation has announced a 56-inch LCD panel that has a resolution of 3840 x 2160 pixels. For those of you playing along at home, that's more than 8 million pixels, driven by over 24 million transistors on one large piece of glass.

If one wished to drive this panel at its native resolution, you would want a 2160p HDTV signal. Given that we've observed previously that there aren't even any sources that drive 1080p, it's clear that the panel manufacturers are leading the HDTV standards bodies. Our prediction: someone is going to have to figure out new HDTV standards in the future that are resolution-independent, something we call Structured HDTV for lack of a better name. More on that in a future piece.

Sony markets flat TV to the key decision-maker in the home: women

Tags: Sony, Flat Panels, Plasma, LCD, HDTV, Style, Marketing

Unlike much of the HDTV world which tends to market technology advances to men, Sony is breaking with tradition and pitching its new Bravia flat TV line to women on the basis of style. And to put its media where it's message is targeted, Sony has purchased all of Wednesday's advertising space on Style.com, the Web site for Conde Nast fashion bibles Vogue and W.

My view: this is a brilliant move on Sony's part. Women are a neglected target for consumer electronics, yet they control many if not most home purchasing decisions. Other manufacturers have been marketing flat TV's features first and style second. Sony has realized that style may be just as important as resolution in sealing the deal. Bravo Sony.

It's official -- Toshiba is delaying HD-DVD in the US until next year

Tags: Microsoft, Games, Gaming, XBox 360, HD DVD, Blu-ray, Marketing

We commented yesterday on Blackfriars view that Intel's and Microsoft's backing won't significantly boost Toshiba's HD-DVD format over competing Blu-ray disks. Well, today, Toshiba announced it is delaying the US launch of HD DVD player to next year, eliminating the estimated six-month lead HD-DVD was expected to have over Blu-ray shipments. The result: both products will enter the US market at roughly the same time, meaning that this will be a true test of marketing for both companies. As noted yesterday, we're betting on the marketing prowess of the vast array of consumer electronics firms supporting Blu-ray carrying the day.

Intel and Microsoft attempt to standardize HD DVD by press release

Tags: Microsoft, Games, Gaming, XBox 360, HD DVD, Blu-ray, Marketing

This article announcing that Intel and Microsoft are throwing their weight behind Toshiba's HD DVD disks hit the wires this morning, and now has various analysts, this one from In-Stat, claiming that it has changed everything:

"Microsoft and Intel have tremendous clout," said In-Stat analyst Gerry Kaufhold, saying that their backing would likely give HD DVD an edge over Blu-ray, especially in North America, their strongest markets.

My reaction was a little different. It was, "Huh? How did this change anything?" Want to follow my reasoning? Just ask yourself the following questions. And just to make it a little easier, I'll provide the answers after the questions.

1. How many consumer electronics products with optical drives do these two companies sell? I believe the answer to this question is exactly one at present, but will be two next year: Microsoft XBox and XBox 360. To my knowledge, Intel sells no products containing optical disks today, although they do use optical disks in their reference design and prototypes.


2. How many HD-DVD units will these products sell? Xbox will probably never be upgraded to HD-DVD. XBox 360 is not currently planned to use HD-DVD, although it could clearly be.


3. Will that number of units change the market balance between HD-DVD and Blu-Ray? No.

While that reasoning is a little on the extreme side, the point is still the same. These two products are intended for consumer HD recording and playback. Intel and Microsoft don't really make consumer products other than gaming consoles. And if I look at content providers (e.g., movie studios and the like), Blu-ray is leading HD-DVD. Add in the fact that there are already Blu-ray players and recorders on the market in Japan made by Sony, Samsung, and Sharp, and that Toshiba is considering delaying their HD-DVD introduction in the US until 2006, and this announcement rings a little false.

Our take: HD-DVD's success rides entirely on companies who aren't big players in consumer electronics. Blu-ray is a format that Matsushita/Panasonic, Sony, Dell, Apple, Philips, LG, Thomson, Hewlett Packard, and Samsung all are behind. I believe that the Blu-ray consumer electronics companies have the marketing power and execution to create a de-facto consumer electronics standard much faster than Microsoft, Intel, and Toshiba can, and therefore, Blu-ray will win.

But feel free to make up your own mind: this Engadget comparison between Blu-ray and HD-DVD is one of the best summaries I've seen.

Public speaking is not a data dump -- Amen

Tags: Public Speaking, Marketing

Today's New York Times has a great article about Grading the C.E.O. Speech, in which it tells several good stories about bad and good public speakers. I particularly liked the pointers at the end:

Veterans of the speaking circuit have their own pointers. Ms. Corcoran urges brevity. "A speech is a sales call," Ms. Corcoran said. "Give just enough, and then stop."

Long or short, avoid at all costs "the dreaded data dump," said Mr. Gallo, the speech coach. He lauded John S. Chen, the chief executive of Sybase, for keeping to a dozen slides in an hourlong talk, and Jeff Taylor, the founder of Monster.com, for limiting the information on his slides to about seven words each. But he reserved his highest praise for Mr. Chambers of Cisco, whom he called "the most electrifying speaker in corporate America today."

Fond of strolling the stage and into the audience, Mr. Chambers asks a question or rests a hand on a person's shoulder in the style of an evangelist or television talk-show host. Speaking without notes, he merely glances at PowerPoint slides that he has memorized, and he maintains constant eye contact with his audience.

If anyone wants to know how to do create memorable public presentations, Blackfriars offers a course, "Making Messages Work" that emphasizes the things are weren't in the article, namely how to boil down your message to something short, simple, and most importantly, persuasive to a wide audience. Give us a call if you are interested -- it's our most popular training and it only takes about four hours.

Palm does -- correction, will do -- Windows

Tags: Microsoft, Palm, RIM, Treo, Marketing

OK, does anyone else find this a little odd? As predicted over the weekend, Palm announced that it going to release a Treo using Microsoft Windows Mobile 5.0 software. But did anyone noticed the delivery date? mid-2006. So why was the announcement done yesterday? After all, no one will be able to buy this phone until next summer.

The answer: In light of its poor earnings, Palm needed some good news to announce. And MIcrosoft, after its article about Windows Vista being completely broken, needed some good PR as well, lest the chorus of "Microsoft is so 1999" get too loud. But what I don't think either company sees is that these announcements attempting to freeze the market just don't work any more. Consumers buy shipping products, not ones they have to wait nine months for. Microsoft and Palm have nothing to complain about if they get poor coverage next year when they actually ship their product. After all, by then it will be old news.

Marketing through the coming energy crunch

Tags: Katrina, Rita, Marketing, Hurricanes, Economy, Taxes

What can businesses do about the economic damage caused by the triple whammy of three dollar gasoline, increased product prices, and higher taxes caused by the late fall hurricanes? Blackfriars has taken a look at what the longer-term impact of hurricanes Katrina and Rita will be on consumers, and how marketing can help businesses weather the storm.

If you'd like to compare our point of view with others, here's the Wall Street Journal saying that key refineries and ports appear
to have weathered Rita's worst while Forbes says Rita will pack punch at the pump

Massachusetts markets its demand for software

Tags: Microsoft, OpenOffice, Office, Marketing

One of the interesting marketing campaigns going on nowdays is on the demand side. An article at PC World notes that Massachusetts is now formally notifying vendors that it will only accept software that supports open XML-based document standards. In essence, they are marketing their requirements to software vendors. Of course, Microsoft is quite annoyed by this, but it is one of the few recent examples of demand-side marketing I've seen.

As an aside, here's a bit of trivia for readers. Everyone knows what a monopoly is, but does anyone know what a monopsony is? It is a market with only one dominant buyer, just as a monopoly is a market with only one dominant seller. Governments are often monopsonies for many types of services and products, which is one of the reasons this move by the Commonwealth of Massachusetts is so interesting. This could be the tipping point away from de facto software standards to de jure ones. And that would not be good news for Microsoft, who has made billions off its de facto (but decidedly NOT de jure) standards.

Google Ads now on the blog

Tags: Google, AdWords, AdSense, Marketing

You may have noticed that this blog is now carrying ads. Now that Google has added AdSense integration to Blogger, I couldn't resist trying it. I will report how it works out as I understand more about the system. Recognize that the service agreement prohibits my disclosing the actual payouts, so don't expect that information, but I should learn some about the mechanisms being used.

Google AdWords a non-zero sum game

Tags: Google, AdWords, Marketing

I, Cringely has an interesting article about Google adjusting AdWords pricing to incent marketers to pay more. He calls the approach a bit evil; from where we sit, it's really profit optimization. Just shows what you get when you combine marketers with extremely smart software people.

Consumer product success can be measured by the language used in its marketing

Tags: iPod, iTunes, Marketing, Apple, Dell, Ditty

By this point, most everyone has heard that Apple CEO Steve Jobs slammed "greedy" record labels at the Paris Apple Expo. But if we dive into the language Jobs used, his mastery of marketing becomes very clear. Look at the quote he used to describe the problem and why the prices shouldn't go up.

“The problem is we are still competing with piracy,” he said.

“The labels make more money from selling tracks on iTunes than when they sell a CD. There are no marketing costs for them. We are competing with piracy, so it needs to be a fair price: If the price goes up people will go back to piracy,” he warned.

What he did here was to name the competition to his iTunes service -- namely piracy. Then he went on to note his product's differentiation in terms of benefits -- that it is actually making more money for the record labels than they are making for themselves. And then he notes and names the competition again (the enemy is piracy, not the record labels), all in a grand total of four sentences. It's also very understandable language. This passage has a Flesch reading ease score of 81, making it readable and understandable by just about everyone.

Compare this with the Dell executive's quote that announced its new Ditty flash music player today (which, by the way, won't be available until nearly Christmas, in case anything thinks it is competing with the current Apple iPods);

"Dell is committed to helping customers get more out of their personal computers for entertainment and productivity by offering complementary products that are easy and fun to use in and outside the home and office," said Michael Farello, vice president of electronics and accessories for Dell's consumer business. "With every new generation of Dell personal technology products, we continue to increase value for customers by adding innovative and relevant features at attractive prices."

This quote has no recognition of the competition, no differentiation with competing products (despite the fact that the Dell has a display which the competing iPod shuffle doesn't), and no interesting language. It also is dense and hard to read. It has a Flesch readability score is 7.5. That is a lower readability than that of an auto insurance policy and only about 17 points higher than the tax code.

This isn't the dusty dull IT business; consumer products like the iPod and iTunes live and die by marketing. And based upon the marketing language being used by Apple and its competitors, it will be a while before Apple has viable competition.

Oversupply of flat panel TVs at Christmas?

Tags: HDTV, LCD, Plasma, Flat Panels, Samsung

The analysts at iSupply have a counterpoint to Samsung's claim that flat panel TV price drops will stabilize at the end of the year. Instead iSupply's research says that there will actually be a small glut of panels in the 4th quarter, leading to greater price decreases.

The two articles aren't actually as contradictory as they might seem. My belief is that Samsung is looking at their demand projection versus their production. iSupply is looking at the demand projection of all panels versus the manufacturing capacity of all suppliers. A wild card in all this is the increasing supply of panels coming from China, which Samsung may not be fully taking into account. But with high heating prices stretching consumer budgets extra thin this year, that demand forecast for flat panel TVs may be lower than expected too. For the moment, I'm buying the flat-panel glut scenario as being the more likely of the two, but my belief is that the resulting price decreases are likely to hit more toward January and February than December.

Why video gamers should pay attention to Nintendo

Tags: Nintendo, Xbox 360, Playstation 3, Games, Gaming, Marketing

I thought this analysis of how Nintendo's strategy fits in the video game market and why its innovations matter was particularly insightful. The best observation: it is much cheaper and more profitable to dominate an emerging gaming category than one that is already mature. Therefore, Nintendo's innovations in new gaming genres and controllers is actually a formula for the largest long-term profits in the industry compared with companies that dominate mature categories. Definitely worth a read, particularly for those interested in the business (as opposed to the technology) of video gaming.

Nintendo steals the Tokyo Game Show with its new Revolution controller

Tags: Nintendo, Xbox 360, Playstation 3, Games, Gaming, Revolution, Marketing

Despite all the money being spent by Microsoft and Sony on their next generation consoles, Nintendo may have stolen their thunder this week in Tokyo by announcing their new Revolution controller. IGN has posted a video that they got from the Tokyo Games Show that shows the new Nintendo Revolution controller in action.

I haven't put the link in the title page because many browsers seem to interpret it as a porn site address. The proper procedure to view the video is as follows:

1. Copy this URL: http://videogames.3yen.com/wp-content/images/nintendo-revolution-trailer.mov


2. Launch a copy of Quicktime Player


3. Tell Quicktime Player to open a URL


4. Paste the URL into the open URL dialog box


5. Enjoy.

One of the impressive thing about the video is that while it emphasizes users over technology. The video is really all about what can be done with this new product, not what is in it. It's an example of benefits-based marketing at its finest.

Kudos to Nintendo for thinking deeply about the gaming experience and recognizing that the user interface, not the graphics, was the biggest opportunity to differentiate its games from the other major consoles. And since the Nintendo Revolution is really the only platform where developers can reliably expect this advanced controller, it should draw a new cadre of developers to what many have been viewing as a third-place platform, even though it sells at quantities comparable to XBox. If the actual games and products are anywhere close to what is shown in this video, Nintendo may have pose a serious threat to its big-spending competitors.

Execs bolting from Microsoft

Tags: Microsoft, Apple, Marketing

Business Week has an article titled "Troubling Exits At Microsoft" that talks about the problems that currently dog Redmond's business including excessive focus on defending its monopolies, stifling bureaucracy, and general incompetence. But it turns out you don't have to read it in Business Week; you can get the same in a more timely manner from Mini Microsoft, a blog written by a Microsoft employee.

The handwriting was on the wall for this six years ago when I wrote a piece for Forrester Research titled, "Memo To The Judge: Swing The Ax On Microsoft." In it, I said this:

Let's face it -- Microsoft is already too big to exploit the talent that it has locked up inside itself. Splitting up the company will unlock this value and establish an industry landscape comparable to the breakup of AT&T. Today's Microsoft shareholders would, at minimum, receive shares in both a monopoly operating system company and a competitive applications company. Meanwhile, users would get stable platforms, standards, and competition -- and the US Government wouldn't get dragged into the software babysitting business. So what are we waiting for?

What indeed. This is a marketing challenge, a business challenge, and a strategy challenge. Apple CEO Steve Jobs said when launching the project to develop the iPod nano nine months ago that playing it safe was the most dangerous thing he could do. Let's hope that type of thinking makes its way north to Redmond before the great Microsoft crash of 2006. But at the very least given our current energy crisis, could the last executive leaving Microsoft remember to turn off the computers before he leaves?

The Big Battle Over Ad Budgets

Tags: Advertising, Marketing

Emarketer has a new report out about how online advertising is siphoning away dollars from traditional media and is accounting for some (but not all) of the growth in media budgets this year. That conclusion parallels our data. We're seeing ad spending as a percentage of marketing budgets declining, but marketing budgets are planned to grow about 20% this year. So eMarketer's growth by about 5% makes sense in that context.

Technorati Tags: Advertising, Marketing

Microsoft grabbing AOL to cut off some of Google's partner revenue?

Tags: Microsoft, Google, Marketing, AOL

This post from paidcontent.org argues that Microsoft teaming with AOL is really intended to eliminate AOL as a Google customer, thereby cutting off a substantial portion of its revenue. I have to say, this is probably the first time I've seen an argument that makes that deal make any business sense.

But I do have a little question for Microsoft CEO Steve Ballmer: how does this enhance Microsoft shareholder value? Because after you've taken over AOL, you will have a ton of customers and service costs that MSN doesn't have today. And last time I checked, both AOL and MSN are currently money-losing services. So you'll pay a bunch of money to hurt a competitor and you'll lose more money at MSN every year as a result. It will be interesting to see how you market the value of this to both your investors and the public.

Microsoft expects to launch XBox 360 on Nov. 22 in the US

Tags: Microsoft, Games, Gaming, XBox 360, Marketing

At the Tokyo gaming conference, Microsoft finally announced its target release dates for XBox 360, namely Nov 22 in the US, Dec 2 in Europe, and Dec 10 in Japan. The company also noted that it is producing 'millions of units" at three facilities in China. As Blackfriars has noted before, we expect those millions of units to be severely supply constrained. Financial analysts have estimated that Microsoft will ship something like 1.6 million at Christmas. I will be surprised if they break a million. Remember, as recently as a month ago, a demo unit at IDF wasn't yet working up to spec nor was the unit considered ready for production yet..

One other note in the interview: Microsoft admitted that they will be losing money on each and every console for a while. No surprises there, but it clearly puts out in public the equation that XBox sales will also be tempered by how much money Microsoft is willing to lose to gain market share in the gaming business. Admittedly, if current numbers are correct, it's pocket change for the software giant (only about $75 million for 1 million units), but that's before we know what Sony's counter-promotions will be like too. With the economic effects of hurricane Katrina hitting consumers hard this fall and winter (check back for a long blog post on that in the near future), the rumored Sony promotion of a $100 Playstation 2 for Christmas could hurt XBox 360 sales at 3x and 4x that price, particularly with game availability being limited on the XBox 360.

Consumer research: what comes after the number four?

Tags: Gilette, Razors, Marketing, Retail

In 2003, the famously funny columnist Dave Barry penned a column in reaction to Shick's introduction of its Quattro razor, which concluded with the following two paragraphs:

Gillette's arch-rival, Schick (maker of the Xtreme 3 shaving system) has announced that it's coming out with a new razor that has -- prepare to be floored by innovativeness -- four blades. Yes! It will be called the ''Quattro,'' which is Italian for ``more expensive.''

Of course it will not end there. I bet an urgent memo has already gone out in Gillette's marketing department. ''Hold some focus groups immediately!'' it says. ``Find out what number comes after four!''

Well, you'll be glad to know that after two years and millions of dollars spent on market research, focus groups, and intense R&D, P&G/Gillette has an answer. The answer is a five-blade razor to be introduced next year. Yikes. And marketers wonder why business executives sometimes accuse them of being overpaid.

There is a serious marketing issue here, though. Will consumers really perceive five as being better than three or four? Yes, five blades provides differentiation, but is that the most important differentiation to the buyer? I'm sure Gillette has done their homework on this and have concluded that the anwer is yes. But if I were Shick, I'd be seriously considering the tyranny of too much, and explore another dimension of differentiation in razors. After all, there is no real data that says that more blades are better for shaving. Perhaps it is time for Shick to see if Apple's Jonathan Ive or design firm Frog Design could design a razor where less is more. It has got to be better than designing a six blade razor in response.

Plasma price drops slowing through end of the year

Tags: HDTV, LCD, Plasma, Samsung

The folks over at HD Beat note that while Samsung is predicting a drop in plasma prices of 3-5% in Q3 this year, it will slow to 1-2% for the rest of the year. That means that today's $3000 50-inch display will only drop to about $2850 by the end of December.

The bottom line: if you are planning on getting a plasma this year, there is very little point in waiting unless you plan to wait until next spring, when we'll likely see another round of larger price cuts as manufacturers dispose of 2005 inventory and introduce 2006 models.

John Dvorak's Windows Vista versions

Tags: Microsoft, Windows, Marketing, Vista, Windows Vista, Tyranny Of Too Much

OK, I admit it; John Dvorak's take on the multiple Windows Vista versions is much funnier than mine.

But I take solace in the fact that Dvorak is also more interesting than what is actually being talked about at this week's Microsoft Professional Developer's Conference in LA. Have you heard the breathless news that Bill Gates talked about? The headline: Microsoft will push Windows Vista and Office 12 in 2006. And here I thought their big strategic initiative was replacing Clippy.

I think Dori Smith may be right: Microsoft has become boring because it doesn't take chances. Maybe it truly is having a midlife crisis as Forbes.com claims. But from where I sit, it is not the fault of the people who work there; it's the fault of the executives who don't seem to understand the tyranny of too much or The Innovator's Dilemma. But no matter how you slice it, boring doesn't justify a $283 billion market cap for a company, but it does provide a pretty exciting opportunity for Google and it's kin who are willing to take chances.

Windows Vista and the tyranny of too much

Tags: Microsoft, Windows, Marketing, Vista, Windows Vista, Tyranny Of Too Much

The folks over at Ars Technica have a great description of the seven different versions planned for Microsoft Windows Vista. Now we don't expect Microsoft to pay attention to our observations on the tyranny of too much, but seven different versions? Isn't this the same Microsoft that has testified to two anti-trust courts that they couldn't remove Internet Explorer or Windows Media Player from Windows because they didn't want a fragmented user experience? Apparently fragmented user experiences are bad if courts order them, but good if Microsoft creates them.

Seven different versions will just be another reason for both businesses and users to delay upgrades to Vista. And without compelling reasons to do so other than better eye candy, this may be Microsoft's slowest release to take hold since Windows Millenium Edition.

Two interesting iPod nano articles

Tags: iPod, iPod nano, Marketing, Apple

A couple of iPod nano articles over the weekend really caught our attention. One of them in Gizmodo actually explained why
so many people call the iPod nano design clean. But even better, the article goes into some depth about the subliminal design factors that affect people's perception of products. It's this sort of thinking that really separates great products like the iPod from the run-of-the-mill widgets produced by most high-tech manufacturers.

The second article is over at Ars Technica where they decide to do some destructive testing of their iPod nano. Yes, it's enough to make a gadget geek cry, but you have to give these guys an A for effort. We were particularly impressed with the fact that it was still playing AFTER IT HAD BEEN RUN OVER BY A CAR NOT ONCE BUT TWICE. The coup de grace only came from throwing the iPod nano about 40 feet in the air and letting is smash onto concrete.

You have to admit, Apple designs amazing products.

The Gap eliminates clicks to gain retail differentiation

Tags: Gap, Web Design, Marketing, Retail, Marketing Measurement, eCommerce

Today's New York Times features a great article on how The Gap's radical simplification of its eCommerce site is delighting customers. One of the fascinating bits: this is a home-grown solution, not a modification of an off-the-shelf software product.

But Mr. Lenk said the company had little choice. "We looked at the things we wanted to do, and the scale at which we wanted to do them, and quickly came to the conclusion that the only way to ensure success was to go custom," he said. "We could go with software packages and try to customize them, but that usually gets you into trouble."

This is a great example of marketing driving technology instead of the other way around. Further, because this is a custom application, the Gap should achieve real differentiation in the market longer than if they had used an off-the-shelf product. When you can get similar products from twenty different retailers, delivering a differentiated on-line experience is worth its weight in gold. We expect the Gap's investment in building a better experience to deliver benefits for years to come. This is just another example of how less is more in today's tyranny of too much.

Sharp joints flat-panel price cutting tomorrow

Tags: HDTV, LCD, Plasma, Sharp

Panasonic started it, Pioneer joined the fray, and now it is Sharp's turn to start cutting prices on flat-panel displays. The Wall Street Journal today notes that Sharp wll cut flat-panel LCD prices by as much as 26% tomorrow. The coolest bit: Sharp's 65-inch LCD will arrive in November for a cool $21,000 MSRP. Actual selling prices will be lower, but still won't compare with Panasonic's 65-inch 1080p plasma display that will hit the street for less than $10,000.

Google scores a marketing coup by hiring Vint Cerf

Tags: Marketing, Google, MCI, Vint Cerf, Microsoft

The news wires just reported that TCP/IP architect Vint Cerf is joining Google. Ever since the WorldCom debacle, I had wondered what Vint was going to do, and now we know. One of the few true gentlemen in technology (and a true graybeard at that -- photo courtesy of the Washington Post), in the olden days of the Internet, Vint was renouned as the only person who could get away with wearing a tie at an Internet Engineering Task Force meeting. Vint will be a huge idea source for Google and I believe he will surprise a lot of younger scientists with his insight and willingness to try new things.

This is a true marketing coup for Google execs Eric Schmidt, Larry Page, and Sergey Brin. And if you are Steve Ballmer or Bill Gates, it's probably time to throw another chair. And in case anyone was wondering, throwing chairs isn't good marketing, especially when it shows up in a lawsuit you brought to court.

Apple small announcement: the Ipod Nano

Tags: iPod, iPod Nano, Marketing, Apple

The San Francisco Apple announcement is over now, so check out the iPod Nano. Just as the iPod defined music players, this little guy -- it is smaller than a credit card -- redefines the category with its high-resolution color display and incredible thinness. Jewel-like doesn't even begin to describe it. Only Apple could make a flash music player an object of desire.

OK, so now we have the IPod U2, iPod, iPod Nano, and iPod Shuffle. Plus, we now have an iPod phone from Motorola, cleverly called the ROKR E1 (advice to Mr. Zander: if you're going to announce with Steve Jobs, you really should have marketers that can deal with names, not just meaningless streams of letters and numbers). Did anyone notice that the iPod mini doesn't exist any more? And what happened to the iPod micro? After all, doesn't micro come between mini and nano?

Really, though, I'm picking at nits. Despite the Nano's premium price ($199 and $249), this will be a very hot product.

By the way, Walter Mossberg at the Wall Street Journal now has a review up (subscription required). The bottom line: he loves it.

Who needs the digital home?

Tags: Intel, Microprocessors, IDF, Microsoft, Marketing, , Digital Home

The Economist has an excellent article calling into question the very basis of the digital home concept being promoted by Intel, Microsoft, and others. When I attended the Intel Development Forum, I found the digital home concept the least credible of all the technology demonstrations, simply because it made three false assumptions:

1. that ordinary people wanted only to consume content,


2. that they wanted a central media PC as the repository for all their digital media, and


3. that central media PCs would have none of the interoperability or security problems current PCs do.

The Economist nicely sums up these points and also notes that the digital home is a solution for which there is little or no problem motivating it:

All this points to a huge problem with the digital-home vision: the lack, among most consumers, of any sense of crisis about the status quo in entertainment. “We don't think many folks are looking for an electronic nerve centre in their homes,” says Pip Coburn, who runs Coburn Ventures, a technology-consulting and investment firm. After all, popping in a DVD, say, is so easy and works so well. By contrast, getting a digital home up and running promises several lost weekends of fiddling with manuals and settings, and hefty expenses in new gear. According to Mr Coburn's formula for evaluating new technologies, whereby adoption is a function of the users' sense of crisis (ie, motivation to change) outweighing their perceived pain of switching, the digital home ranks as a clear “loser”.

The result? I think one of the analysts captures it nicely:

As John Barrett, research director at Parks Associates, says, “it seems that we've concocted a new variant of the ‘paperless' office.” This, you recall, was the consensus a decade or so ago among technophiles (but almost nobody else), that computer technology would save our forests by freeing us from having to read and write on paper. Today's variant, says Mr Barrett, is “no more tapes, CDs, DVDs, discs.” In other words, expect them to be around for a very long time to come.

The bottom line: simplicity and flexibility trumps technology for consumers most days of the week. And with the issues of digital rights management and interoperability problems haunting the digital home reality, marketers of the digital home vision have their work cut out for them.