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November 09, 2005

Growth

Do you believe growth can be indiscriminate and never stop?

As companies that have been on dominant positions within specific markets can say, growth is not forever. Grow undisturbed if your product is the only viable and visible offer. Competition in the steamer and your salespeople will cry for strategy, support, change, more advertisement, planning. Smart vendors and companies know this without help from an Agency. Eye firm on the market, good products to play, room to reposition, re-invent, integrate with new brands and sometimes create brands that dig into own target space but have better long-term potential. Good companies are about their past, future, what their image is to their clients and what specific needs this image fulfills. Selling a product in a competitive market is a never-ending play, a discover, reshaping and get better. Like organisms, these companies believe that getting down is suicidal, giving up the very reason they are in game, deadly.

Many firms, after a long period of market dominance and a sudden dip in sales, may call in wondering what they are doing wrong and what they can do to perform better. These companies have plenty of cash and sometimes believe markets are "theirs". More superstition can be found and it does not matter what you'll tell and do for these companies, little chances are that they will change. They'll follow advice, schemes, policy and strategy and if they're diligent will do so until the next bump in the road.

There are companies that have such strong dominant position it seems impossible they will, one day, vanish. Microsoft is such a company and its demise will keep observers busy for at least two more decades. Dell will vanish much faster due to its extremely simple core business management (look at what Lenovo is doing to the same core). The key here is that Lenovo does it better and (incredibly) for less.

Some call Microsoft a mafia. It has to be if it is true that Microsoft has introduced zero innovation in the last 10 years. If you can survive without ideas for that long time you must have some deep roots. Rotten but deep. Whoever may want to restart Microsoft will have to restart from scratch, without Gates. Conceivable? Probably not.

Apple is not making mistakes and full steam ahead to becoming the next monopoly. How awful a monopoly it will be is hard to imagine today. In the meantime every single product they release is a joy to use, consider, analyze. Take Front Row, released with the latest iMacs. Re-evaluating experiencing media seriously is not everyday business. Experience DVDs with your family and friends from the couch, hence a software layer that sits on top of the Mac OS X Finder that allows you to operate the computer screen as you were a big fat old TV's ON SCREEN DISPLAY, remote included. And unsurprisingly Apple's remote has just 6 buttons (Apple understands only your kids can operate Sony's and Pioneer's and Microsoft's 42-keys remotes). Nobody before had the balls to launch media files on a computer, leave the desk and go sit on the couch with us, the customers, and wonder out loud with us "how the hell am I suppose to manage the show now that I am not at the console?". Geniuses, or quite honestly, "designers". Apple, Front Row. Taking the risk nobody even thought was worth taking.

Apple can do it because is small and can take risks nobody else feel they should. Customers say growth. Insane growth.

If Sony had the iPod mini would they kill it after 12 months to replace it with the "nano", a candy-bar sized player that only comes in white and black so thin you may want to swallow it? Of course Sony could not. For the same reason Sony can not make an iPod killer. They believe they have to include a phone! The iPod, a very focused product that does one thing only extremely well, in a wise and clever way, we agree that is what the iPod is all about. You want to stick a phone, maybe even a 1 Mpixels camera in it? Maybe speakers?

Creative has so far lost huge amount of money in advertising for their mp3 players and the only choice they have now is retreat or die. They thought "cool" can be beaten by raw advertising power. They did not have a product. Creative's ZEN website, their fore-runner MP3 player is so obsessed with making every page look like an album cover they forget to say basic things. Customer is asking if he can plug "this thing" in a computer or how is he supposed to manage his music. No, no, he is asking if we can make a website for people that all they know is how to press the PLAY button. Can you do it? Customers say, no growth.

Napster is close to give up their iTunes-like but subscription-only service as they are losing millions. Why? Their service gives you close to unlimited downloads as long as you pay a fee every month. Stop paying and you lose everything, thousands of files if you are an mp3 hungry customer. Do they have a product? No, hence no growth. Napster's website is designed for doom. One thing: they require visitors to click a tab to start searching for a tune. The search tab is very prominent, second from left, top nav. But their focus and the whole deal is on downloading a software client iTunes-style. So why you offer to search via the website when the whole (or)deal is about downloading a software client? Just follow the logic of the website and search for "Madonna", you'll get this: "We are still working on getting music by madonna. We get new artists and music everyday. Check back soon". Customers say, no growth.

Selling music is not about making money. Apple makes few cents a song, not even enough to keep the software infrastructure going. Music money goes to copyright owners and RIAA. Money comes from the players and players come from a tight, well-designed retail experience that integrates in full a host of otherwise conflicting interests. Customers put 99 cents on just the track they wish to get, fast and securely and legally, good quality that can be (legally) played on a limited number of devices. They don't feel constrained in the process and RIAA gets the rest. What Apple gets is in the hardware which is marketed under a cult brand because music is a religious experience. Customers complain about iPods getting scratched as if they were supposed not to, everything gets scratched, come on, it's an MP3 player. No, no, don't say it like that, customers say, my iPod, not an mp3 player, it holds MY MUSIC, it is my music, I love it. Do you understand? And they look at you with watery eyes, grabbing their tiny white devices, enjoying their isolation, in empathy and "one" with their "communion wafer". Apple made.

Get it? Just if you were wondering why iPods are white. iBelieve, do you?

Intel is betting, first time ever, the PC is over and shifting focus on cool, low-power processors that are going into portables and other lightweight, cheap and widespread appliances. Losers, for now AMD is topping Intel in retail sales. Sony is buying into IBM's Cell for their incoming PS3, Microsoft is buying into IBM for the XBox 360 and even Nintendo is going IBM with Revolution. These processors are fast, fast and hot. Is Intel wrong for the first time or just waiting for Apple to really start kicking the market with OS-X powered supercool and well thought media appliances (this time Intel-based)?

Growth is not forever and is not for-ever granted. Companies that can change, people that can change and switch to the customer's chair frequently and listen are taking the burden, honestly and naturally, and court growth in a very much alike fashion as growing fruit trees, passion and strategy and talent.

Those that are not of this bunch can be helped but rarely change. What can not change, as you can tell, has only one way to go.

Posted by lck at November 9, 2005 03:22 PM

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