The revenge of the consumers

The ever-insightful Walt Mossberg wrote on Thursday about the PC industry's unrelenting focus on business users at the expense of consumers. When I was covering the personal computer business for Forrester, I was horrified what users put up with from IT shops all in the name of "productivity", without asking the question "productivity for whom?" Walt sums it up nicely:

This focus on the corporate world can have real, and sometimes negative, consequences for consumers and small businesses. For example, some of the big security problems in Microsoft's software in recent years came because the company included features used only by corporate IT staffs in the products it sold to everyone. One was a communications feature, meant for network administrators, which sleazy operators misused to bombard people with ads. Why was that on my PC in the first place?

Other technology sectors do the same thing. Cellphone carriers, for instance, seem to think noncorporate customers don't need many phones with decent email software.

If we then move on to another WSJ article from last week by Rebecca Buckman, we see that venture capitalists have started shifting their investments accordingly.

The consumer-investing craze is being driven, in part, by the widespread availability of high-speed Internet connections in today's homes. That's opened up a low-cost delivery channel for Web services, such as photo-sharing sites, and inspired the creation of gizmos for handling digital music and video.

Another factor pushing the venture capitalists: Business has slowed at start-ups that focus on selling old-style, licensed software, semiconductors and telecommunications equipment to businesses. These industries traditionally have delivered big returns to venture investors, but over the past few years, many big companies have reduced their technology budgets and aren't buying as much fancy software or telecom gear.

So what does it all mean? It means that consumer electronics and systems are where the action is going to be for at least the next three to five years, if not the next decade. And that's going to require different, simpler, and more expensive marketing to those consumers than speeds and feeds. It's the reason Blackfriars analyzes technology from a marketing point of view; marketing is going to be the big differentiator in selling to consumers. And it's the reason that companies like Apple and Google are now the hot stocks, and Microsoft and Dell aren't.

The one piece of advice I have for investors in technology in the coming year is to focus on the companies that make the world simpler, market their brands and products well, and invest in customer service. Consumers have been ignored and belittled by big technology companies too long -- and will vote with their wallets.

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