iPhone interface appears on Windows Mobile Pocket PC (video)

An enterprising gent in Europe has cleverly reskinned his E-TEN M600 Pocket PC to mimick all the functions of Apple's iPhone, including flick scrolling of addresses and music playing. Those appalled at this congitive dissonance of seeing the iPhone user interface on a competitive platform should remember this: "Beauty is more than skin deep." But Apple lawyers examining just how many copyrights such skins infringe should remember a different maxim: "Imitation is the sincerest form of flattery."

UPDATE: Apple has contacted the author and asserted its copyrights prohibit him from using them. The video has been taken down.

Technorati Tags: Apple, iPhone, Windows Mobile, YouTube

Marketing's dirty secret

This article over at Small Business Hub rang pretty true to my ears. It's titled, Backroom Confessions Of A Marketing Executive. The quick summary: if you don't have marketing measurement to guide you, your marketing activities may produce more pits in your stomach than results.

Technorati Tags: Marketing

Two new iPhone tidbits today: the Oscar iPhone ad and a keynote analysis

For those who watched the Academy Awards Sunday night, Apple ran a made-for-the-Oscars TV teaser for its iPhone. Named "Hello", it simply does a 30-second history of great movie actors answering the phone in the style of an Oscar retrospective, and ends with an iPhone shot promising a June introduction. It was nice awareness advertising, but the general blogosphere reaction is that it's no 1984 ad. That said, the fact that Apple has started a demand generation campaign more than three months before the iPhone is available bodes well for my prediction that Apple will sell every one of these things they can make, despite its $500 price.

Secondly, one of the folks over at Actioncorp TV has done a very nice analysis of the Jobs' introduction of the iPhone at MacWorld. The video podcast uncovers some details that less observant attendees missed. For example, despite the fact that Jobs said he'd cover it, did anyone else notice that he never demo'ed iCal on the iPhone, even though he said he would? And the fact that Jobs showed an iTunes screenshot that strongly suggests Apple will sell ringtones for the iPhone? There's a lot of good material in this podcast; iPhone devotees will find the keynote sleuthing well worth the six minutes needed to view it.

Technorati Tags: iPhone, Actioncorp TV, Apple, Marketing

Apple's iPhone pricing: too high or too low?

Apple iPhone followers got two conflicting pieces of data regarding its $499 price point. In one survey done by an online shopping firm Compete as reported by MacWorld UK, only one percent of the consumers who said they were likely to buy an iPhone said they would pay $500 for it. Sounds bad right? Stay tuned -- there's a gotcha in that survey that I'll address in a minute.

On the other side of the pricing gap, though, was an article in today's Boston Globe that insists that increasingly, cell phone buyers are insisting on style over circuitry. That report features a lovely portfolio of cell phones that are currently hot fashions, including the Prada/LG black touch-screen phone and the Dolce & Gabbana gold RAZR. Not one of the phones featured with a price had a price less than $700, making the $500 Apple iPhone look like the bargain of the bunch. So which view should we believe?

Blackfriars view is that Apple is marketing the iPhone, not as a phone for "the rest of us", but as a mass-market luxury item. Designer products such as those noted in the Globe article have high prices for one essential reason: they create exclusivity and thereby, desirability. Apple has chosen a relatively high price for the iPhone for the same reason: to position it as an aspirational purchase, similar to a Fendi handbag or Jimmy Choo shoes. And by introducing it at $500, iPhones will remain rare enough that they will garner the same types of attention, at least for the first year or two.

Can Apple succeed with such an exclusive position? I think so. Remember, Apple is only aiming to sell about 10 million iPhones by the end of 2008. That's still a pretty exclusive product in a market of one billion phones worldwide. And as the Globe article notes, there are certainly 10 million people who will consider $499 a small price to pay for having an exclusive bit of electronic fashion. I believe that despite the company having orders for 12 million iPhones to be manufactured. Apple won't be able to keep iPhones in stock for most of its first year of availability, even at $499.

So what about that survey that Compete did? Well, let's look at the data quoted in the article:

Online market research firm Compete surveyed 379 people in the US, most of whom had heard of the iPhone and have shopped for an iPod, to find out how interested they are in the device to produce the uncommissioned report. The iPhone is a combined music player and cell phone that Apple plans to start selling in the US in June and in Europe by the end of the year.

Among the 26 per cent of respondents who said they're likely to buy an iPhone, only 1 per cent said they'd pay $500 for it. When Apple introduced the iPhone in January, it said it would cost $500 on the low end.

Forty-two per cent of those who said they're likely to buy the phone said they'd pay $200 to $299.

Let's do some math now. 26% of 379 people said that they were likely to buy an iPhone. That 98 respondents. Now the article says that 1% of those 26% would buy the iPhone for $500. One percent of 98 is .... one. One person out of 379 said they'd buy the iPhone for $500.

Now here, you have to actually wonder about that result and how they asked the question, especially when 42% said they'd buy one for $200 to $299. Did Compete ask those questions serially, or did they simply put the question up as follows:

What is the most you would pay for an iPhone?

• $500 or more
• $400 to $499
• $300 to $399
• $200 to $299
• less than $200

Since this was an online survey, this format is quite likely. And it will give quite poor data. Why? Because it causes the reader to believe that there will be alternative prices for the iPhone that are lower than $500! And if Apple sticks to its mass-market luxury item strategy, there simply won't be other prices available. The result: some of the people who said they'd only pay $200 to $299 will still buy the iPhone at $499 anyway.

The bottom line: mass-market luxury items are everywhere today, and they form one of the fastest growing segments of consumer products. Steve Jobs is smart enough to tap into that trend with a unique product. And he's going to sell millions of them at quite healthy profit margins as a result.

One more thing: by the time Christmas of 2008 rolls around, Moore's Law says that the price of the electronics in the iPhone will be half what they are now. Don't be surprised if those 46% of consumers get their $299 iPhone then; they just have to wait eighteen months before it makes business sense for Apple to sell it at that price.

Technorati Tags: Apple, Compete, Dolce & Gabbana, Fashion, iPhone, Marketing, Prada, Pricing

The Sirius/XM merger: time to abandon ship on satellite radio

Engadget.com was ingenious enough to score a copy of the Sirius and XM merger presentation. Go to the link and take a look at it, and then come back here.

Now, without looking at the presentation again, what were the top three reasons that Sirius and XM claimed should make investors embrace this merger? If you were really paying attention, you might get a couple generalities, like greater programming choices and accelerated free cash flow. But did you see statements like "$X million increased revenue" or "profitability of at least $0.xx per share by 2009?" Nope. The only point really emphasized was that it was going to be easier for the two companies to compete in the marketplace with 14 million subscribers than they had 8 million and 6 million separately.

Blackfriars take: This is a lousy presentation in both content and effectiveness. But the fact that executives mustered such a weak case illustrates a more significant issue: satellite radio is a lousy business. Satellite radio has immense fixed costs that never go away and requires huge marketing expenditures to capture subscribers. Regulatory issues are huge, yet the subscriber revenue stream is weak at best. The two companies came to the joint realization that the only business model that could work ever make them profitable in finite time would be to gain monopoly pricing power, just as the cable TV industry did. That's why these companies want to merge: they need less direct competition and more revenue.

But there are huge risks out there preventing Sirius and XM from achieving that monopoly position. For one thing, the FCC has to say that they approve, and the chairman of the FCC has said would be prohibited by its rules. And while the two companies intend to merge their broadcast systems, it's not quite clear how that would work, since the two technologies are incompatible. Do they intend to replace the 14 million devices already in the market? What will that do to customer loyalty (hint: it won't help it)? And more importantly, what will that do to the combined company's cost structure?

This merger is like two sinking ships colliding. The two companies have thrown millions of investor dollars overboard chasing the likes of Oprah and Howard Stern, yet now they are pleading that they need more faith, time, and money to stay afloat. Perhaps instead of merging, a better survival strategy might be to abandon ship.

Full disclosure: the author has no positions in XM or Sirius.

Technorati Tags: Communication, Marketing, Presentations, Satellite radio, Sirius, XM

Google's "toys" attack Microsoft's lifeblood

Everyone and their brother is noting that Google Apps Premiere Edition (lame name, by the way) is now openly attacking Microsoft's Office franchise. We had predicted this day was coming last year in The Attack Of The Unstoppable Toys. But now, Google's "toys" are now Microsoft's competition, whether Redmond thinks they are or not.

One huge advantage Google has in this initiative is that its application package is a service over which it has complete, day-to-day control. With divisions of General Electric and Proctor & Gamble as its launch customers, Google should get lots of feedback for features and services that those business customers want. And unlike Microsoft, who has to wait through long deployment cycles for its installed software products, Google's software can be upgraded daily. The result? While Google Apps may not meet all the needs of businesses today, it could evolve to do so very quickly. Microsoft has good reason to worry.

Technorati Tags: Google, Google Apps Premiere Edition, Microsoft, Office

Apple and Cisco share an iPhone trademark, but not iPhone.com

Both the Wall Street Journal and the New York Times today reported that Apple and Cisco have come to an agreement to share the iPhone name. Neither company disclosed terms, but overall, the consensus seems to be that both companies got what they wanted. We assume the lawyers have been sent home, and everyone is happy.

Now, we here at Blackfriars believe that a good round of Kumbaya beats going to court every day of the week. But we also believe that Cisco and Apple should think a little bit about Internet marketing as well. Using the extensive resources available to us here at Blackfriars World-Wide Headquarters, we took the liberty of researching where iPhone.com might take us on the Internet. It turns out that the domain name was registered via GoDaddy.com, and you can imagine our surprise when we typed iphone.com into our browser and arrived at the Nuvio Web site, a company that sells Voice Over IP (VOIP) services. Now given that Cisco's iPhone is a device that uses VOIP services, there is clearly an opportunity for some confusion here, especially since Nuvio bills itself as "The Internet Phone Company." Perhaps they shouldn't have sent the lawyers home quite so soon after all.

P.S. Cisco does have iPhone.net registered, so at least someone there thought a bit about the Internet branding before this dispute started.

Technorati Tags: Apple, Brand, Branding, Cisco, iPhone, Naming, Nuvio, Trademarks

Why do people get stuck on airplanes?

Today's Wall Street Journal tries to answer the question, "Why do nightmare airline delays happen? It's position? The WSJ pins much of the blame on airline reluctance to cancel business, FAA policies restricting pilot hours and first-come first-served air traffic control rules. I think they are overthinking the problem, though. There's an obvious reason that airline service continues to decline that no one wants to talk about:

Most high-ranking government officials and executives don't fly commercially any more.

Security in the post-September 11 world gave corporate CEOs and their staffs a convenient excuse to bypass commercial aviation in favor of private jets. Congress members and administration officials have been using private jets paid for by lobbyists for most of the last decade. And very wealthy individuals haven't flown commercially for ages -- as noted in a recent Wall Street Journal article, some of them have children who, when forced to fly commercially, just sit down and cry in the middle of the airport. Frankly, we all have wished we could do that at some point in our lives.

Now in the olden days, when an airline screwed up the itineraries of half the executive suite of GM or P&G, corporate travel offices would threaten to change their preferred vendor list of carriers. Therefore, a JetBlue or Northwest had huge incentives to fix their operations -- or else suffer huge losses. But now, with "the people who count" flying private, few corporate travel offices even bother to complain to their carrier. Airlines aren't truly mission-critical for them any more.

So if corporate executives aren't the proxies for the everyday flying public that they used to be, what can the airlines do? Well, they can start by eating their own dog food. Assign executives to fly the line routinely, arm them with free drink coupons and trip vouchers, and have them firefight issues they see. When they share the service experience with their customers, they'll have a lot of suggestions on how to do better. And if airlines were to honestly document and publicize those experiences, they could create good publicity and marketing buzz far beyond anything they could buy.

Airline executives may not be Chrysler's Lee Iacocca, but they could do worse than to emulate his leadership in bringing Chrysler back from near-bankrupcy. As Iococca once said, "We are continually faced by great opportunities brilliantly disguised as insoluble problems." Airline executives aren't going to find those opportunities sitting in the home office. It's time for them to go looking for them.

Technorati Tags: Airlines, Customer Service, Marketing, Public Relations, Private jets

JetBlue's apology: cheap fares and cheaper crisis management

Today's New York Times notes that JetBlue’s CEO, David Neeleman, is mortified by his company's week-long inability to deliver customers to their destinations after last week's blizzard:

The founder and chief executive of JetBlue Airways, his voice cracking at times, called himself “humiliated and mortified” by a huge breakdown in the airline’s operations that has dragged on for nearly a week, and promised that in the future JetBlue would pay penalties to customers if they were stranded on a plane for too long.

....

The crisis began Wednesday when an ice storm hit the Eastern United States. Most airlines responded by canceling more flights earlier, sending passengers home and resuming their schedules within a day or two. But JetBlue thought the weather would break and it would be able to fly, keeping its revenue flowing and its customers happy.

On the contrary, JetBlue’s woes dragged on day after day. On Saturday night, for instance, the airline said that the 23 percent of flights it had canceled on Saturday and Sunday would also be canceled Monday. The confusion led to angry exchanges between customers and employees, prompting the airline to call out security personnel.

Neeleman has good reason to be mortified. As Dan Gilmore notes, even today, JetBlue's Web site is providing little guidance to travelers about how they can actually get to where they are going, putting what little guidance they have under the pleasant euphanism, "Operational Interruptions." And while Neeleman is promising financial compensation for future travelers that JetBlue strands, that's providing little comfort to current travelers sleeping in airports.

What can JetBlue do? Well, for one thing, it might help if customers didn't have to buy the New York Times to know that JetBlue is feeling their pain. Blackfriars believes that JetBlue should:

1. Step 1: Publish an apology online along with directions on what customers should do. Pretending operations are anything like normal at this point is pointless.


2. Step 2: Deliver stranded JetBlue customers to their destinations. At this point, JetBlue's competitors are running normal operations. If JetBlue can't fly them to their destinations, they should rebook their stranded customers with companies who are flying. Not tomorrow -- today.


3. Step 3: Send every inconvenienced customer something that proves JetBlue is sorry. This can be something as simple as a voucher for a free flight to get them to try the airline again. JetBlue got nothing to lose here, since few customers affected are likely to fly JetBlue again without it.


4. Step 4: Invest in JetBlue's people and systems to do the right thing by customers, even when conditions are bad. This crisis has proven the company needs better operations, more rapid communication, and smarter decisions when operational problems arise. While Neeleman's promise cited in the article to fix operations is great, it will take money to make it happen. Spend that money now.


5. Step 5: Document all these efforts on the Web site -- and keep it updated as changes occur. Like it or not, JetBlue isn't going to be able to hide its flaws from customers for a long time to come. Rather than fight the publicity, JetBlue might as well embrace it and make it work to its benefit.

Northwest Airlines went through this same process, eventually recovered, and now requires its pilots to return to the gate after three hours of delay. Mistakes and problems are always going to happen in the airline business. The difference between bad and good companies is how employees are empowered and respond to problems. Southwest Airlines empowers its employees to break rules so long as they are doing right by their customers, and it has been the most profitable airline for years now. JetBlue, on the other hand, appears stuck trying to maintain its low-cost, low-frills origins, and is rapidly paying the price for its unwillingness to do right by its customers. And until it starts acting instead of apologizing for this crisis, it's going to have a lot fewer of those customers for quite a while to come.

Technorati Tags: Airlines, Customer service, Marketing, JetBlue

Jobs played hardball on iPhone? No, he just marketed it properly

Today's Wall Street Journal has a front page article titled, "How Steve Jobs Played Hardball In iPhone Birth". But the article didn't live up to its title, as illustrated by this quote:

Mr. Jobs played hardball. He pointed to statistics showing that carriers' traditional voice revenues were declining. But he also made a compelling argument: He said that Apple could help Cingular capitalize on the Internet, people familiar with the discussions say.

Early on, both sides determined it would be a bad idea for Apple to offer its own cellphone service, leasing access to Cingular's network. Even though Virgin Mobile USA and other startup cellphone operators were using that method with some success, Mr. Jobs was cautious. He viewed the cellphone business as an unforgiving one, where carriers are blamed for network problems and overwhelmed by customer complaints.

If this description is accurate, Jobs simply marketed his product, with no evidence of hardball. After all, we here at Blackfriars say that a proper marketing pitch includes:

1. A problem statement from the listener's point of view. Jobs' argument of declining voice revenues was a classic example of this.


2. A solution description emphasizing benefits for the listener, not features. Cingular wanted to know what it was getting out of the deal; Jobs told them that he could help them capitalize on the Internet.


3. Strong differentiation and validation of the solution. Cingular needed to know how Apple's proposal would differentiate it from other carriers and provide value that others couldn't achieve. By rejecting an MVNO approach, Jobs started differentiating his ideal deal from other possibilities, Further, Apple's iPod business successes and its discussions with other carriers provided implicit third-party validation of its solution.


Having the elements of a good marketing strategy was just a component of the sale, to be sure. But as simple as these ideas are, Jobs took the trouble to use them and used them properly. These techniques were influential in getting a deal done with a major carrier, and telcos are notorious for being tough to deal with.

Bill Gates is famous for his exclusive and secret deals with PC makers to promote Windows to the exclusion of all other operating systems, going so far as to demand payment for every PC shipped, regardless of whether it had Windows installed or not. Steve Jobs' negotiations with Cingular sound like they were significantly more cordial and balanced than those deals. Jobs' marketed the iPhone to Cingular like the smart businessman he is. But hardball? Hardly.




Technorati Tags: Apple, Cingular, iPhone, Marketing, Hardball

Apple TV: A Trojan Horse device for the Apple TV Network Network

I love Robert X. Cringely's musings, if for no other reason than the fact that he has made some amazingly prescient predictions. I'm particularly reminded of his story about the Google datacenter in a box, which preceded Sun's announcement by nearly six months. Well, he's back again, this time analyzing the odd feature set contained in the Apple TV device. His insight? Did anyone else notice that it's an always-on device with a 40 GByte disk? If it is for watching TV, why does it always have to be on?

Cringely has a simple answer:

I think sometime this summer Apple will ship a firmware upgrade for the Apple TV and it will suddenly gain an important new capability. That's when the Apple TV becomes a node on the iTunes peer-to-peer video network.
....
Say Disney releases Cars 1.5 -- a direct-to-DVD release expected to sell millions of copies in its first few days. There is no way iTunes could even hope to participate in a launch like that simply because there isn't enough bandwidth at a good price -- or any price. Even BitTorrent would have troubles handling a small part of such a launch until enough seeds were populated and running. But what if the movie was effectively pre-seeded -- loaded over a few days on a distribution tree of thousands of Apple TV boxes which could then deliver the movie locally at high speed if purchased. Or if not purchased the seeded copies could still work together to serve other Apple TVs on the same ISP subnet.

...

If you are wondering what Apple might accomplish with such a peer-to-peer distribution system, it would be nothing less than the undermining of TV. First Apple would eliminate its current dependence on Akamai, reducing its network costs for iTunes by about 100X, making the network costs effectively free. Hello HDTV!

...

There are only two forces I can see necessary for this P2P deployment: gaining a big enough installed base of Apple TV boxes and the removal of some or all Digital Rights Management (DRM) code from the content. Gaining a critical mass of Apple TV boxes simply comes down to keeping the real purpose secret until there are 500,000 to 1 million units in the field.

Blackfriars speculated 18 months ago that the iTunes Store would evolve into an Apple TV network. And we know there's been significant effort in peer-to-peer networking and that it may be a feature of the upcoming Leopard release. But we had always assumed that Apple would just enlist the millions of Mac owners to do this. Imagine how much more effective that effort can be if it uses Apple TV as a Trojan Horse into living rooms instead.

We will add one marketing twist though: we don't think Apple is going to expect to use consumer's peer-to-peer bandwidth for free. Instead, we expect that nodes in Apple's peer-to-peer network will get iTunes store credits for seeding movies to other users. With a financial incentive in place for consumers to help Apple build out its network, it should grow quickly.

One detail we can't figure out how to resolve though: what happens when ISPs like Comcast cut off consumers who actually use a significant portion of the bandwidth available on their unlimited Internet access? Especially given that Apple will actually be competing with the TV parts of their business, we don't expect the cable and telcos to be particularly helpful with this effort. Perhaps Apple has built in a throttle on their Apple TV upstream bandwidth to keep users under the Comcast limit. Regardless, the battle between content and bandwidth providers is about to get a lot more complicated -- and we should expect a few casualties along the way.

Technorati Tags: Apple, Apple TV, BitTorrent, HDTV, Internet, iTunes, iTV, Peer-to-peer, Robert X. Cringely, TV

The real explanation why Nintendo is eclipsing Sony and Microsoft in gaming

We've all read the stories (heck, I've written some of them) about how Microsoft's XBox 360 has the one year edge over Sony's Playstation 3, or why the PS3 rules over XBox 360 through its support of 1080p video or its superior marketing. But I think the surprise of the winter season was seeing Nintendo's Wii post sales numbers that eclipsed both of those platforms -- and did it at a profit to boot. How can that be when the two other platforms are so technologically advanced? Heck, the Wii doesn't even do HDTV!

Well, here's a pretty good reason why Nintendo is rocking customers, and it has nothing to do with technology. It's all about good old fashioned customer service. It seems a woman had a problem with her few-months-old Nintendo Wii, and with some trepidation, she called the customer service line. Read the entire story at the site, but the punch lines tell a lot of it below:

She wasn't Japanese, but clearly Nintendo is a Japanese company. Only a Japanese service center would apologize for taking 30 minutes to repair a piece of electronics when my expectation going in was that I'd be without it for two weeks.
....
In those 25 minutes, they'd transferred all of my Miis, friends, and saved games from the old console to a new one. She logged on to make sure my 500 points transferred to the shopping channel. She sent me out with a $0.00 invoice showing a warranty replacement of my Wii and a reset of the warranty clock, meaning the Wii I took home has 15 months of coverage from today, even though I bought my original one almost 3 months ago.

So this is my Valentine to Nintendo. That was the most awesome customer service experience I ever, ever had.

Think she will buy more Nintendo products and promote the Nintendo brand with her friends? I do.

Moral: Great customer experiences can come from technology, but they can also come from just plain, old respect for the customer's time, money, and loyalty. Nintendo gets it; Sony and Microsoft still have work to do. And until they get it, Nintendo is going to keep surprising them -- and making money every step of the way.

Technorati Tags: Customer loyalty, Customer service, Games, Gaming, Marketing, Nintendo, Wii

Snow/ice storm hitting Blackfriars today

Blogging activity may be intermittent today as we cope with our first major storm of the winter here in Massachusetts. Despite that, though, we're just happy we're not in Oswego County, New York; 10 feet of snow in a week seems a bit over the top.

Blackfriars goes Mac mini for email

Over the weekend, we here at Blackfriars finally transitioned our email over to our RAID-powered Mac mini server from our hosted Earthlink service. Why would we want to run our own email service? Well, here are a few reasons:

1. We got tired of "Mailbox full" rejections. A 10 Mbyte restriction on email inboxes is so 1990s. Earthlink, are you listening?


2. We didn't like the fact that when we wanted to send an email message across the office, those messages had to pass through California.


3. We wanted secure WebMail.


4. We wanted unlimited mailboxes.


5. We wanted to be able to have a consistent outgoing email server, regardless of whether we're in the office or traveling.


6. When we're not getting mail, we wanted to be able to actually figure out if the problem is with us or with our email service. And with the number of Earthlink email outages we had been seeing, this was getting to be a real issue.

Fortunately, Mac OS X Server makes running an email server pretty much a load and go operation. What wasn't easy was getting our email server addresses to resolve correctly both inside and outside our firewall (long story). And we still can't seem to get Verizon to properly reverse-lookup our static IP address to our domain name, but hey, it works, so I'm not complaining too much -- yet.

I was originally tempted to try doing this with an Ubuntu Linux server, but in the end decided my time was worth a lot more than the difference in price between the two systems. And while Mac OS X Server does have some rather annoying quirks (not the least of which is that its serial number copy protection doesn't play nicely with the built in firewall), once I have the system running, it just keeps humming along without a peep. We've had it running in various test configurations here for a couple months now, and the only time it has been down has been when I brought it down. You have to love that in a server.

Moving our blog and Web site over to the server will take a bit longer, but so far, our server experience is going well. And best of all, we can see the lights on the disks flash when email arrives. Try doing that with a hosted service.

Technorati Tags: Blackfriars, Earthlink, email, Mac mini, Mac OS X Server, Small business, Ubuntu

PirateBay shows more marketing savvy than the movie industry

Boing Boing has a link to probably the most innovative Oscar marketing site I've seen. PirateBay, the Swedish BitTorrent site that has taunted the Motion Picture Association of America for the last couple of years, has created a concise and well-laid out rundown of all the Oscar nominees this year. The kicker: it includes links allowing viewers to download the movies and view them at home. Despite the inconvenience of multi-day downloads, I expect this will be a very popular site right up until Oscar weekend.

It's a crying shame this site is illegal, because opening up the viewing of Oscar nominees to a public willing to download the movies for money is a terrific idea. Many of the movies listed, particularly as you get away from Best Picture nominees, aren't in widespread distribution (try to find the foreign film or short subject nominees at your local theaters, for example). In many cases, I'd happily pay iTunes prices (e.g., $10 to $15 dollars) to see movies I think might be interesting before the Oscar awards. But because of existing distribution contracts and release windows, the movie industry can't bring itself to create a similar site, even if it would generate new revenue. They are just too afraid of cannibalizing existing revenue streams and customers.

In a few years, after the rest of the movie studios have signed up with the iTunes store, we might see something like this from Apple. But why do the movie companies (and for that matter record companies) always wait for someone else to show them how to sell their products?

Technorati Tags: Apple, Apple Movies, Boing Boing, iTunes, Movies, PirateBay, Oscars

More death of print? Or just death of consistent revenue for print?

Scott Karp at Publishing 2.0 linked to an interesting story about the decline of print. Colin Crawford at IDG noted in his blog that the absolute dollar growth of online revenues at IDG now exceeds the decline in print revenues. He goes on to say:

In the US, our online revenue now accounts for over 35% of our total US publishing revenues. Next year, for many brands online revenues will be greater than print revenues, if fact they already are at some of our key brands and by 2009 – approximately 50% of IDG’s US revenues will come from online.

To drive this change and to focus on online revenue we’ve changed the business mission of our organization away from print. Going forward IDG Communications will define itself as a web centric information company complemented by expos, events and print publications.

Said another way, Colin believes that online will be the future cash cow, with in-person and print media playing supporting roles.

Ummm. OK. I'm not convinced that the growth in online revenues that IDG is counting on are going to get them to where they want to be. After all, there is a LOT of online content out there, and while IDG's is good, so are a lot of other people's. And my skepticism is raised even more by a post that Chris Anderson, author of The Long Tail, wrote just the other day:

Back in The Day, Nicholas Negroponte proposed the "Negroponte Switch", which was a prediction that everything wired would become wireless and vice versa. Terrestrial broadcast becomes coax and fiber optic cable. Meanwhile twisted pair becomes GSM and cordless. And so on. It was good enough to become a meme, especially if one didn't think too hard about it.

With approximately the same rigor (i.e. none) I will now set out to do the same. I propose that in the analog-to-digital conversion things that are paid will become free and vice versa. So music and books and other media are turning from paid products to free marketing, while free-to-air video and radio become a subscription or on-demand product for a fee. And so on.

So what IDG is seeing is the formerly free stuff (e.g., online) becoming a larger revenue source, and the formerly pay stuff (print, conferences) becoming more free. Yes, you hope they will compensate for one another, but there's no guarantee. And one of the comments to that article made even a better point:

As price is a balance between offer and demand, those industries whose services are evolving to commodities due to competition pressure are going to be almost free in the long term, while those industries whose services are going through a differentiation process are going to increase their margins.

We are willing to pay for scarcity and not for abundance; we'd pay for those things that make ourselves different from others.

That last sentence is the essence of marketing in any economy.

Coming back to IDG, their real challenge is differentiating themselves in an increasingly commoditized media world tyrannized by too much choice, not deciding what channel to publish their content to. If most of the print world is going online, is good content and a strong brand going to be sufficient differentiation to make up for the loss in value from the abundance of online content? Frankly, it's too early to tell. But Mr. Crawford is right, when he says at the end of the article that there will be even more new skills for his organization to master. One of those new skills may be coping with a much less predictable -- and possibly smaller -- revenue stream.

Technorati Tags: Anderson switch, Business, Free, IDG, Marketing, Negroponte switch, Opinion, Publishing, Publishing 2.0

Happy Cog: communicating value in fourteen words or less

We here at Blackfriars are always pushing companies to craft strategic statements, more commonly known as elevator pitches, for products and concepts. In fact, our most popular training course is one titled, Crafting Elevator Pitches. Elevator pitches, for those not familiar with them, are short, easy-to-remember statements that describe a company or idea in less than 30 seconds. Well, Happy Cog Studios did such a good job with their elevator pitch that they designed their Web site navigation system around it. We're impressed, both with the elevator pitch and with the site.

Thanks to our John Gruber over at Daring Fireball for the pointer to these guys. And if you want to read about the philosophy behind the redesign, you can read it here at Zeldman.com.

Technorati Tags: Design, Elevator pitch, Happy Cog, Strategic statement

Disney sells 1.5 million movies via iTunes, sees early revenue of $25 million a year

A quick look through the Disney earnings call transcript on SeekingAlpha turned up a couple interesting bits about the success of movie downloads through Apple's iTunes store. Here are two of them; both are from Chief Financial Officer Tom Staggs

Our Studio performance also indicates that the distribution of our films on new digital platforms is not cannibalizing traditional platforms. To date, over 1.5 million of our movies have been downloaded through iTunes, and we think this broader distribution of our product is a catalyst for broader consumption of our product.

As a comparison, Steve Jobs noted that 1.3 million movies had been sold via the iTunes store at the beginning of January. But there was a little more detail provided later in the transcript:

We're, right now, pacing that our downloads, for example, from the Studio and iTunes, it's at a pace to do a little better than about $25 million of downloads for the year. It's nice because it looks like that's a purely incremental audience by all accounts. Certainly our DVD sales in the first quarter would point to that being worst-case and not cannibalistic. Best case, audience expanding. And I think it's probably the latter that's true.

This is a little hard to figure out, but it suggests that Disney is not seeing any downside to its DVD sales as the result of doing digital downloads. That got reinforced a bit later in the following exchange:

Unidentified audience member
...In light of Wal-Mart and Target's pretty public protests about you putting movies on iTunes, I was wondering if you saw less of a mix of DVD's sold through those channels this quarter and/or do you expect to see a change if subsequent quarters? Thanks.

Tom Staggs
I think that it's safe to assume that given the strong results we saw in DVD, we were selling through strong numbers through all of our major retail partners. And we're pleased and hopefully, they're pleased.

And we also feel they must see the same evidence we do of the lack of cannibalization. Yesterday we announced that we will participate in Wal-Mart's DVD -- their sort of movie download program.

And so we'll be there on Wal-Mart for downloads. So I'd say that we're pleased with where that relationship is and I think it's a great distribution partner to have. And with obviously the strong content that we've had, I think we made a difference in their quarters as well.

So what does it all mean? By making its movies available via iTunes, Disney stands will collect an additional $25 million in revenue just this year (side note: Bob Iger estimated that the number may be closer to $50 million at a Goldman Sachs conference). They can claim it is in addition, because they haven't seen any significant effect on DVD sales. And they don't see any threat to this revenue stream from Wal-Mart and its download service; in fact, Tom specifically calls it their "sort of movie download program".

The outstanding question: how long will other studios sit on the sidelines and let Disney collect tens of millions of dollars in digital movie revenue from iTunes that they don't get? Our bet: not long.

Full disclosure: the author is long Apple, the owner of the iTunes store, as of this writing.

Technorati Tags: Apple, Disney, Downloads, DVD, iTunes, Movies

The difference between Apple and Microsoft thinking

I wrote yesterday about Steve Jobs call on the music labels to end their requirements for digital rights management on digital music. I thought it might be useful to cite both Apple's and Microsoft's public positions on DRM music and compare them.

First, an excerpt from Steve Jobs' letter:

Imagine a world where every online store sells DRM-free music encoded in open licensable formats. In such a world, any player can play music purchased from any store, and any store can sell music which is playable on all players. This is clearly the best alternative for consumers, and Apple would embrace it in a heartbeat. If the big four music companies would license Apple their music without the requirement that it be protected with a DRM, we would switch to selling only DRM-free music on our iTunes store. Every iPod ever made will play this DRM-free music.

And now Microsoft's response, quoted in today's New York Times:

Jason Reindorp, marketing director for Zune at Microsoft, said Mr. Jobs’s call for unrestricted music sales was “irresponsible, or at the very least naïve,” adding, “It’s like he’s on top of the mountain making pronouncements, while we’re here on the ground working with the industry to make it happen.”

“He’s certainly a master of the obvious,” Mr. Reindorp said, adding that “the stars were already aligning” to loosen the restrictions.

In a nutshell, Apple asks consumers to imagine the possibilities of a different digital media world. Microsoft calls such vision irresponsible, naive, and obvious, while simultaneously claiming they are lobbying those same labels to make it happen anyway. In Jobs' letter, he mentions consumers once, but customers three times. In Microsoft's statements, consumers and customers are notably absent; its words focused only on competition and the industry.

With messages like these, is it any wonder that Apple has won the marketing war for music customers?

Technorati Tags: Apple, Marketing, Microsoft, Music

Steve Jobs calls on music companies to stop insisting on DRM

Steve Jobs has written an open letter defending Apple's approach to music and Digital Rights Management (DRM). He openly discusses why Apple employs DRM (because the labels have made it a condition of providing their catalogs) and the challenges associated with maintaining such a system (namely, that the labels have made it a requirement that should their DRM be breached for more than a few days, they have the right to withdraw their catalogs). He also notes that despite iTunes' success, the vast majority of music sold today is on compact disks, which are DRM free. And that leads to a very compelling argument, which he makes in the final two paragraphs:

So if the music companies are selling over 90 percent of their music DRM-free, what benefits do they get from selling the remaining small percentage of their music encumbered with a DRM system? There appear to be none. If anything, the technical expertise and overhead required to create, operate and update a DRM system has limited the number of participants selling DRM protected music. If such requirements were removed, the music industry might experience an influx of new companies willing to invest in innovative new stores and players. This can only be seen as a positive by the music companies.

Much of the concern over DRM systems has arisen in European countries. Perhaps those unhappy with the current situation should redirect their energies towards persuading the music companies to sell their music DRM-free. For Europeans, two and a half of the big four music companies are located right in their backyard. The largest, Universal, is 100% owned by Vivendi, a French company. EMI is a British company, and Sony BMG is 50% owned by Bertelsmann, a German company. Convincing them to license their music to Apple and others DRM-free will create a truly interoperable music marketplace. Apple will embrace this wholeheartedly.

Blackfriars posed the same idea nearly a year ago. We embrace it wholeheartedly and applaud Jobs' effort and leadership even more.

Technorati Tags: Apple, DRM, iPod, iTunes, Marketing, Music, Steve Jobs

Presentation skills or content? Great businesses need both

Joann Lublin has a great article in today's Wall Street Journal (subscription required) about how presentation coaching can provide a boost to your career. The author had the chance to sit in on a public workshop put on by improvisational troupe Second City:

I observed Second City's recent session to gain insights into the pluses and minuses of a six-hour program. Its communications division used to offer this $595 public workshop once or twice a year. However, demand is growing so fast that it will be given five times in 2007, says Tom Yorton, Second City president. The unit has also provided customized courses for employees of more than 50 businesses since 2003. "Presentation-skills training has become our most requested offering," he says.

Taught by Second City performers, the Jan. 22 workshop emphasized fun and feedback. Many participants said they came because they felt nervous, spoke too fast or sounded boring during presentations. "Um, I want to get rid of my 'ums,' " one man added.

"Skills, methods, philosophy and ideas we use to create successful scenes on stage ... are the same skills required for successful communications in business," explained Ms. Scott, an actress and director.

Joseph Pine's book, The Experience Economy: Work Is Theater & Every Business a Stage notes how much of business is starting to morph into commercial theater. It's no surprise that skills that were traditionally the domain only of actors are now in demand for business people.

Regular readers will remember that we highlighted a similar article in the New York Times last month. As I meet with leaders of large, multi-million and -billion dollar companies, I continue to be struck by how few have actually had this type of training. And, sad to say, too often it shows.

But becoming better at presenting ideas actually breaks down into two different skills: 1) distilling what you want to say into a clear and understandable message, and 2) then communicating those messages well. Too many presentation skills classes focus only on the latter, while neglecting the need to have a story to tell. Said another way, too many companies want to turn business people into actors while neglecting the script they are forced to use.

Stop and think: how often do you go to the theater, come out, and say, "That was a lousy play, but the actors were great!" If you're like most people, you had the best experiences when both the script and the actors were excellent. Blackfriars trains executives to improve both what they say and how they say it, because we believe you need both to be truly successful. And the last thing any business needs is customers walking out their doors, grumbling that they should have seen something else.

Technorati Tags: Communication, Experience Economy, Presentation coaching, Presentations, Actors, theater

Windows Vista secret Wow!

OK, we are often pretty harsh on Microsoft here, mostly because the Zune launch and the Vista restrictions have demonstrated about as much marketing savvy recently as I have hair. And occasionally, I wonder if I've been living in my folicle-and-Windows-free cocoon too long. But today, I read an article by Roger Ehrenberg over at Information Arbitrage that reached similar conclusions. One of my favorite pieces was the following reaction to the recent NewsWeek interview with Bill Gates:

Bill sounds a little like Glenn Close in Fatal Attraction, and that he is getting ready to boil Steve Jobs' bunny. First off, Bill, after having spend an amount exceeding the GDP of several sovereign nations - $500 million - to launch Vista, don't you think you could have spent even a little of that on media training? THAT is your elevator pitch? Sorry, Bill, but you're not getting the VC funding you desire. You're not even getting out of the elevator. Your answer on security: poor. Your paranoia and irritation at Apple's successful branding and image-making? Nauseating. You're the richest guy in the world. You do lots of great things with your money. You're a brilliant man. The Apple threat and a changing world is making you become unhinged. Do something about this. Fast. For your shareholders sake. Please.

And if you think that's bad, our friend Bill a/k/a Mr. Malaprop is getting the crap kicked out of him by former friends in the media - everywhere. For some reason Microsoft and Bill just don't get the props they used to.

Bill's poor press presentation is classic when companies don't craft a clean and honest message. If a person doesn't have a major point he or she is trying to make, the person tends to react to questions with whatever comes to mind. Media-trained people usually use the question as a way to make the point they are trying to get across in a different way. And despite Roger's speculation above, Bill Gates has had media training in the past, big time.

So if Bill Gates is not applying the lessons he knows, we have to consider the possibility that Microsoft didn't bother crafting key messages for Vista and Office. The allocation of marketing dollars at Microsoft today ranges from quirky to bizarre. The latest example: the whatswrongwithu.com Web site that asks Asian consumers what's wrong with them for not buying XBox 360 consoles in droves. Hmmm. It's not clear whether that web site or Vista marketing is working harder at destroying Microsoft's brand, because both are doing such a good job of it.

Oh, one more detail about Vista and Office marketing. One of the best ways to figure out how a company feels about its product is to look at its warranty and support costs as a marketing message. If the company charges a low price for its warranty and support contracts, that communicates high confidence in their products; after all, if they expected to get inundated with toll-free calls and warranty demands, they'd lose money hand over fist. So a low support price signals high quality product. On the other hand, if a company charges a lot for its warranties and support calls, it exhibits low confidence in the product and implies that the company needs high revenue from its support center to offset the high costs of running it. The simple story: low support price, good product; high support price, bad product.

With the release of Vista and Office, Microsoft just raised its per-call support prices 51% and 40% respectively. I'd expect to see similar numbers for corporate support fees.

Microsoft's right. The Wow! does start now.

UPDATE: Matt Hartley at OSweekly.com joins in wondering whether anyone at Microsoft actually thinks about what they are spending their marketing dollars on. I had been to the Clearification.com site once before, but hadn't realized it was a Microsoft-sponsored Vista promotion. But no, Microsoft appears to be building on its Zune marketing model with Clearification for Vista. Yikes.

Full disclosure: I have no position in Microsoft stock.

Technorati Tags: Marketing, Media training, Microsoft, Support costs, Vista

Packaging is marketing, not an afterthought

Mitch Ratcliffe has a detailed analysis of how Apple's packaging differentiates it from other PC makers. He presents side by side pictures of unboxing both an Apple MacBook Pro and an IBM/Lenovo ThinkPad X60. Despite the X60 being the lighter laptop, the MacBook Pro's marketing-oriented packaging creates a better user impression and experience. Even the side-by-side photo gallery doesn't do it justice.

Lesson: A business owner wouldn't put trash in front of their store entrance. Similarly, PC manufacturers who lavish millions on product development shouldn't put trashy packaging in the way of their product experience. It's marketing, not just an afterthought.

Technorati Tags: Apple, IBM, Lenovo, Marketing, Packaging

New pay-per-click advertising

Blackfriars has been running pay-per-click advertising from Google Adsense for about a year now. But frankly, we haven't had much to compare it with other than traditional advertising, so we're not quite sure if it is great or just OK. So we're starting an experiment today.

As of now, we're running the blog with ads from SearchFeed.com at the top, while we're running Google Adsense ads as part of the posts. We have been seeing some HTML errors in the current blog template, so if the blog isn't displaying properly for you, please leave a note and let us know. And similarly, let us know if you find the experience with the new ads better or worse than what you remember. In exchange, we'll let you know in a few weeks what our experience with SearchFeed.com is like.

Technorati Tags: Advertising, Google, Google Adsense, Pay-per-click, Searchfeed.com

Harry Potter and the Deathly Hallows: $35. A good read: priceless

Scholastic Corporation has announced that .Harry Potter and the Deathly Hallows, the final novel in the Harry Potter series, will go on sale on July 21 for a list price of $34.99. But for some reason, the Wall Street Journal is expressing some concern about the price.

The price is $5 higher than author J.K. Rowling's most recent book, and a sign that Scholastic is intent on maximizing its profits on what is expected to be the last in the Potter series.

Aggressive price discounting by big book retailers such as Amazon.com Inc. and Barnes & Noble Inc. means many consumers will be able to buy the book for $20 or less, however. Amazon.com is now taking preorders for $18.89, as is Barnes & Noble, which will charge $20.99 or $18.89 for members of its book club.

And to see if this concept that the list price is too high is resonating, the Journal has even running a survey asking its readers whether they think this is too much, a fair price, or that J. K. Rowling should be asking for more.

I find it ironic that this whining about book prices is being run the Friday before the Super Bowl, when attendees will an average of $5,540 per ticket for an afternoon's entertainment. That's just me, though.

More seriously, however, pricing the Harry Potter books is a serious marketing challenge. There are two opposing forces Scholastic has to balance:

1. Low prices help maximize reach in the target market.. Since children and teens, the target market for the Harry Potter series, have somewhat lower buying power than adults do, Scholastic has significant incentive to lower prices to saturate that population of readers with the book.


2. High prices better communicate the value of the product. This is the last book in the Harry Potter series, a series of books that has sold more than 300 million copies, been translated into 63 languages, and made author J. K. Rowling the most successful writer in literary history. Higher prices would signal the historic value of this final volume in this seven volume series spanning the last decade.

In my view, the first argument won out with Scholastic. This book could have gone on sale at $50 a copy and still sold tens of millions. But the PR backlash from excluding young readers would have been such a negative factor for both Scholastic and Rowling, so I believe they reached a compromise. And as noted in the article, substantial discounts are available.

The lesson here, though, is that pricing is a way of publicly communicating value. Low prices signal low value, high prices, high value. The Deathly Hallows is the Super Bowl climax for the world's most beloved wizard. $35 is a small price to pay for a decade of great stories.

Technorati Tags: Books, Harry Potter, Marketing, Pricing, Publishing, Super Bowl