Michael Dell Recognizes Blocking What Customers Want To Protect Your Own Biz Model Is Dumb

from the smart-man dept

There have been lots of different writeups on Michael Dell's recent Churchill Club talk, with most focusing on his trashing of netbooks or talking up Windows 7. But at the end of that article there was something even more interesting, which Derek pointed out to us:

Clark asked Dell about the fact that, through virtualization, many companies end up buying fewer servers, and less hardware in general. "The first thing you have to remember is that any time a new technology comes along that's good for customers, you get in the way of it at your own peril," Dell said.

Indeed. This is a point that so few companies seem to recognize. Instead of focusing on what the customers actually want, they freak out about how it may cause them to sell less of what they currently offer. This is the key in avoiding the innovator's dilemma and marketing myopia. You have to focus on what benefits the customer actually gets -- and if you try and get in the way of that, they'll just go somewhere else instead. But it's so rare to hear execs actually recognize that point -- so, kudos to Michael Dell for acknowledging it.

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It's Not The 'Good Enough' Revolution; It's Recognizing What The Consumer Really Wants

from the and-that's-good-enough dept

It's hardly a new idea, but BullJustin points us to an article in Wired about what the author, Robert Capps, refers to as The Good Enough Revolution, in which he talks about various offerings that have succeeded in the marketplace, despite not having the "quality" of the leading products. So, he talks about the Flip Digital video cameras, compared to higher end camcorders, mp3s vs. CDs, and things like Zoho Writer vs. Microsoft Word. His explanation is that these "lower quality" products are "good enough," and tend to offer certain features, such as easier accessibility, lower price and better ease of use.

I'd argue that the concept of "good enough" misses the point -- and the real issue is that the actual quality is in those other characteristics that he discusses. The real problem is that some start to focus on the "quality" of some aspect of the product, rather than the quality of meeting what the consumer wants. It's the same thing we've discussed over and over again, with a company (or industry) not really understanding its market. The first automobiles were a lot crappier than the fancy horse carriages you could buy -- but they did the important thing better: getting you somewhere faster and cheaper.

The issue is that the focus on "quality" is on the wrong attribute. It's also why many people falsely claim that the VHS beat Betamax, despite "lower quality." Yes, it may have had lower quality of the recorded video, but that wasn't the attribute people cared about. They wanted to be able to record longer videos, which the Betamax was not set up to do, but VHS was. In almost every one of these stories, you find that it really was an issue of quality -- but the real question was what attribute the market cared about when it came to quality.

With the MP3 and the Flip Camera and Zoho Writer (and many others), it appears convenience is a driving attribute. So while all may seem to have less in terms of the type of "quality" that some like to focus on, they ignore what the market actually wants, which appears to be convenience.

This, too, is one of the reasons why it doesn't make sense to get so focused on the product when you don't know what the market actually wants. The people who create the initial products almost always assume that the most important attributes are the product itself, rather than the convenience it provides users. There will always be snobs who want to focus on the "highest quality" possible, but they're part of a small market, rather than a mass market. And if that's "good enough" for them, that's fine -- but it misses the real marketing opportunity.

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Protecting Yourself From Consumers Is Not A Recipe For Success

from the if-you-do,-you're-making-a-mistake dept

William Patry continues to use his new blog to make some great points that bear repeating. In a new post discussing Theodore Levitt's "marketing myopia" concept (something I believed in long before someone showed me Levitt's work), he points out how the industry seems to miss this basic point: that it's not selling "property" to people, but a benefit the customer wants. If something else better satisfies that benefit, customers will go there. From there, he points out that the entertainment industry is way too focused on property, and acts as if copyright is there to provide a special protectionist plan for them alone:

I believe that too many companies in the copyright industries appear oblivious to the very idea that consumers have needs; to them, consumers are passive purchasers of what those companies decide to sell. And if they decide not to sell at all, too bad; that's their prerogative as a property owner. Copyright is the method by which control over consumers is achieved (or the decision not to sell is enforced). Copyright owners' adoption of control as their principal business model results in closed systems, in which copyright owners try to tightly control everything connected to their works: which play back devices will be offered to the public; what types of access controls will be interposed before consumers can ever see, hear, or in the case of books or other literary works, even read a snippet of the work; the time period during which consumers will have access to the work; how many times can consumers see, hear, or read the work; in what format will consumers be able to access the work; what will they be able to do with the work once they finally access it.

Copyright owners speak of this control as protecting their property (the subject of next week's blogs), but once your focus is on protecting yourself from your customer, you are in deep trouble. The government did not grant a monopoly in order to simply horde it: copyright is not a TARP fund. There is a huge divide in perception on this point: when copyright owners succeed in enjoining, shutting down, or crippling services that give consumers what they want, e.g., MP3.com, Launchcast, or RealDVD software, copyright owners see a threat removed, but consumers see an industry determined to thwart their desires. (I do not speak here of those who want simply to copy works as a substitute for paying for them). When is the last time (or maybe even a first time), copyright owners lobbied Congress for greater consumer access to their works, or sued to increase such consumer access?

This perception gap is huge and is critical to understanding the divided nature of the Copyright Wars. Control is seen as essential by the content industries, while consumers see it as a dagger through the heart of the very reason for copyright. All businesses should be free to commit suicide by putting their interests ahead of their customers (unless they are financial institutions, apparently, or insurance companies operating as hedge funds), but they should die on their own and not stay propped up a government granted monopoly.

Great stuff, as per usual from Patry. In the post, he also discusses how he, too, at one point (when he worked at the Copyright Office) was pulled by this sway of control, as he was among those who pushed to add protections for building design, but was eventually convinced otherwise by a colleague, who pointed out that copyright wasn't the reason new buildings would get built.

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FCC Apparently Not Very Concerned About Consumer Views On Broadband

from the keep-quiet-and-take-what-we-give-you dept

We recently expressed our concerns with the state of the government's attempts to increase broadband in the US. Karl Bode, over at Broadband Reports has now hit quite a homerun with his analysis of 5 signs of why the broadband plan is in trouble. The whole thing is worth reading, but I wanted to highlight number 5 on the list, because it's a big problem:

The FCC continues to hold "workshops" to discuss the direction and scope of the national broadband plan. They're also recording presentations by all of the FCC's "constituents," and offering consumers instantaneous access to all of the documents being presented at the workshop at the Broadband.gov website. All of this is absolutely great. What's not so great?

There are 51 panelists attending the latest 8 workshops. Out of those 51, there are just five people not directly associated with a company: Dave Burstein, Craig Moffett, George Ford, Victor Frost and Henning Schulzrinne. Moffett is a stock jock who's positions (such as upgrades are unnecessary and consumers should be paying more money) are clearly not going to serve anyone but investors. Ford works at the Phoenix Center, an AT&T-funded "think tank," who's job is to parrot AT&T policy positions.

Of the remaining three, only Burstein, a long-time telecom beat reporter, will likely ask any hard questions -- and then again his job is to get scoops, not to represent the public interest. Zero of the originally scheduled attendees acted as public interest witnesses. After complaints by consumer groups, Dr. Mark Cooper from the Consumer Federation Of America was added at the last second, but the fact that this was an afterthought raises questions about how "transparent and inclusive" this process really is.

This definitely seems like politics as usual. And it's a problem, not just for the FCC, but for the very businesses involved in these discussions. Ignoring consumer will these days is increasingly a suicide pact. The businesses leading this discussion would be well-served to look at what's happening in other industries (music, newspapers) where business execs have been trying to ignore consumers' rights and interests, in the belief that they have some sort of monopoly control over their market. Those things can disappear quickly, and when stripped of such artificial protections, it's amazing how fast the consumers you mistreated will move elsewhere.

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ISPs And Entertainment Companies In Denmark Look To Set Up Piracy Review Board

from the the-board-declares-you-a-pirate dept

While the EU has repeatedly said that three strikes-type legislation is a violation of basic human rights, there is a loophole. It's been said that it would be okay if there's an independent board reviewing the cases to make sure it's not just based on random accusations. That seems to have brought ISPs and the entertainment industry to the bargaining table in Denmark, where apparently they're trying to hash out the details on some sort of "Pirate Review Board" whose job would be to manage these sorts of disputes. Similar attempts have gone nowhere to date -- and the reports coming out of this one suggest the two sides are also far apart, with the entertainment firms trying to push the ISPs to take on more responsibility and expense.

That said, it's worth noting who's missing from all of these conversations: actual consumers. Effectively, the ISPs end up defending their customers here, but the interests may not be totally aligned. Now, some may say that "pirates" deserve no seat at the discussions, since they're the ones "breaking the law." But the concern is about those on the margin: those where fair use may apply or who aren't causing any harm to the industry. The entertainment industry likes to automatically lump every "pirate" together into a single group, no matter how incorrect or misleading that may be. Someone should be standing up for legitimate consumer rights in the setup of these sorts of panels. ISPs, alone, may not be the best positioned to make sure consumers don't get harmed by a "pirate" review board.

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Nintendo Boss: Used Video Games Aren't Good For Consumers

from the oh-really? dept

The folks over at GamePolitics are highlighting the most ridiculous part of a VentureBeat interview of Reggie Fils-Aime, the president of Nintendo of America:

VB: Used games are coming up as a big issue again. Why?

RFA: More and more retailers are experimenting with the used game model. We don't believe used games are in the best interest of the consumer. We have products that consumers want to hold onto. They want to play all of the levels of a Zelda game and unlock all of the levels. A game like Personal Trainer Cooking has a long life. We believe used games aren't in the consumer's best interest.

VB: Because?

RFA: Describe another form of entertainment that has a vibrant used goods market. Used books have never taken off. You don't see businesses selling used music CDs or used DVDs. Why? The consumer likes having a brand-new experience and reliving it over and over again. If you create the right type of experience, that also happens in video games.

First off, it's rather stunning to claim that a vibrant used market isn't in the best interest of consumers. As studies have shown repeatedly, healthy second-hand markets actually help both consumers and original producers because it adds more value to the product. That's rather obvious once you think about it. If someone knows they can resell the product at a decent price later, then it both lowers the risk and increases the value of the original product. On top of that, the used market also helps better differentiate on pricing, again benefiting both customers and producers.

Second, it's quite odd to claim that there's no used book, used CD or used DVD market. A few years back we noted that the used book market had become a multibillion dollar industry, and you just need to look on, say, Amazon or eBay to see thriving sales of used books, CDs and DVDs. To claim that there's no such market either shows ignorance of the market or is an outright lie -- neither of which is a good thing.

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