consumer | Paul Wallbank - Communications Professional

Innovations customers don’t need

3DTV was seen as the great hope of the consumer electronics industry, it’s failure proves hype doesn’t always beat substance.

The news that ESPN is closing down its 3D sports channel is the beginning of the end for an innovation that nobody really wanted.

In the 1980s, telephone companies rolled out digital services under the name ISDN – Integrated Services Digital Networks – which were expensive and appealed to few businesses, gaving them the nickname Innovations Subscribers Don’t Need.

3D TV fits that description of an innovation which customers never wanted. While the technology was seen being the great hope of stimulating sales in a moribund consumer electronics market, consumers were never really convinced.

The 3D TV push of the last two years is typical of many technology products in that there isn’t an immediate need for them but manufacturers and retailers hope that they can hype a market into existence.

Usually that model fails, but not always.

Sometimes though, these technologies are subject to their own hype cycle and over time they come back in ways we don’t quite expect.

It’s difficult to see how 3D TVs can make a comeback but who knows? What we do know though is they were expensive toys for the few who bought the hype.

Airtasker’s crazy idea

Can Airtasker’s crazy idea redefine local businesses?

“Anyone who says something is crazy these days is crazy themselves,” says Jonathan Lui, the founder of Sydney based startup Airtasker.

The crazy idea Jonathan shares with co-founder Tim Fung is to create a global marketplace for small tasks.

If you need someone to walk your dog, do some gardening or be an extra in elaborate marriage proposal then Airtasker is a site to find the right person.

Since launching last year Airtasker has advertised more than 54,000 tasks with users looking for everything from dog walkers to computer repairers and actors.

Tim and Jonathan came upon the idea of a site for small tasks when moving house with the various hassles of cleaning, moving and packing. Instead of relying on friends and relatives to help out, they saw the opportunity for connecting willing workers with small tasks.

The site turns around how traditional classified advertisements work by paying on results rather than advertising. Lui sees it as “de-centralised social commerce.”

It’s not just small household tasks either, Jonathan sees Airtasker helping out larger companies with tasks like market research, mystery shopping or even local council inspections of street signs.

Unlike many of the crowdsourcing sites, the Airtasker team want to keep away from commoditising labour, instead seeing their ‘runners’ providing valuable local services.

One of the interesting aspects about the internet is how two opposite forces are working against each other – while the internet creates globalised marketplaces it also gives people new channels to discover local services.

Jonathan sees Airtasker as being at the forefront of hyperlocal marketplaces, with a global website enabling small traders and microbusinesses to deliver services locally.

That may be a crazy idea – but we live in crazy times.

Is there a tablet to cure the reality distortion field?

Microsoft founder Bill Gates puts up an argument for Windows 8 tablets. But is he living in a reality distortion field?

It’s hard not to be impressed by the calibre of guests CNBC’s Squawk Box when they’re able to get Warren Buffett and Bill Gates on together for an interview.

During the interview Bill Gates made an interesting assertion about Apple’s iPad, ““A lot of those users are frustrated, they can’t type, they can’t create documents, they don’t have Office there.”

Bill’s undoubtedly right, some iPad users are frustrated by the device’s limitations. However for every irritated iPad user there are a dozen baffled by the lack of a Start button on Windows 8.

The reality distortion field though is strong, “Windows 8 really is revolutionary,” says Bill. “It takes the benefits of the tablet and the benefits of the PC and it’s able to support both of those.”

The Microsoft founder is enthusiastic about the company’s Windows tablet, “you have the portability of the tablet but the richness, in terms of the keyboard and Microsoft Office, of the PC.”

It’s notable Gates mentioned Microsoft Office, particularly given the question was about the cloud. It’s clear one of Microsoft’s priorities is to maintain their strength with productivity applications and move with their customers onto the cloud.

The problem though for Microsoft is that Apple’s iOS and Google’s Android are dominating the cloud focused operating systems, leaving Windows behind.

Making matters worse for Microsoft is it’s clear Windows 8 tablets are never going to catch their competitors. Consulting group Gartner last year predicted the global market for tablet computers will double over the next three years, but Microsoft will capture barely 10% of the sales.

OS	2011	2012	2013	2016
iOS	39,998	72,988	99,553	169,652
Android	17,292	37,878	61,684	137,657
Microsoft	0	4,863	14,547	43,648
QNX	807	2,643	6,036	17,836
Other Operating Systems	1,919	510	637	464
Total Market	60,017	118,883	182,457	369,258

Sitting in a reality distortion field is fine when things are going well and you dominate your world, but Microsoft – despite still being insanely profitable – no longer dominates the markets that made it into one of the world’s leading companies.

The challenge for Bill Gates and Microsoft’s management is adapting to those changes, projecting your own frustrations onto the users of a competitor’s product, isn’t a recipe for success.

Moving to a subscription economy

Customer subscription models are changing many industries which opens up opportunities for smart businesses

One of the biggest changes in business is the move to subscription based services rather than selling one-off, lump sum products. This is affecting industries ranging from the motor industry to software.

Business Spectator has a good interview with Tien Zhou of Zuora on the subscription economy and how it’s changing the business world.

We’re pretty passionate in our belief that every company will be a subscription business in the next five, 10, 20 years. That’s certainly what we’re seeing with digital companies, whether they are technology firms (software, hardware), media and publishing firms, or telecom companies. The ideas of content and access are starting to blend together and we are seeing more and more commerce companies dip their feet as well. So we’re really see this as an across the board phenomenon.

Probably the industry most focused on the subscription model right now are newspapers – subscribers have always been an important revenue stream for the print media and the loss of their advertising rivers of gold means they are looking at ways to get more money from readers.

As Tien Zhou points out, businesses moving to subscription services is an across the board phenomenon.

Yesterday I mentioned the Google Maps connected treadmill, that is a subscription model where the treadmill seller gets money from the initial purchase, but also a revenue stream from the services attached to it.

The same business model applies to connected motor cars or the social media enabled jet engine. The aim is to replace lump sum purchases with lifetime subscriptions.

Getting customers onto lifetime subscriptions has been one of Microsoft’s aims for the past decade as the company realised that software users, particularly those using Microsoft Office, hung onto their CDs for years and increasingly decades.

Perversely it took Google and Apple to show Microsoft how to wean customers onto subscription services.

That Microsoft Office is a good example of the evolution of subscription software, or Software-as-a-Service (SaaS), isn’t an accident. The enterprise computing sector is currently the most profoundly affected as companies like Google and Salesforce threaten high cost incumbents.

A good example of the changing economics of software is the supermarket chain Woolworths moving onto Google Docs.

With 26,000 seats, the reseller can expect to make $260,000 a year in commissions based on Google’s standard terms of $10 per seat per year.

That total sum is less than the commission a salesperson would have earned for a similar sized IBM, Oracle or Microsoft installation.

A whole generation of IT salespeople who’ve grown fat and comfortable on their generous commissions now find their incomes being dramatically reduced.

Similar things are happening in industries like call centres with Zendesk, point of sale systems and event ticketing with Eventbrite – incumbents are finding their incomes steadily being eroded away by online services.

At the same time agricultural and mining equipment suppliers are introducing big data services for their customers where the information gathered by the sensors built into modern tractors and bulldozers are providing valuable intelligence about the crop and ore being gathered.

The subscription business model is nothing new, King Camp Gillette perfected the strategy with the safety razor at the beginning of the Twentieth Century. The razors were cheap but the blades were where the money was.

Microsoft and the rest of the software industry tried to introduce subscriptions in the late 1990s with Software as a Service, but failed because the internet wasn’t mature enough to support the model. Today it is.

Like many things in today’s economy, the subscription model is going to change a lot of markets. It’s a great opportunity for disruptive businesses.

Subscription envelope image courtesy of jaylopez through sxc.hu

Can maps change the way we work?

Big data and mobile computing are changing the way business operates as maps become an important part of our normal work and leisure time.

“Work the Way You Live” is Google’s motto for their enterprise maps service which the search engine giant hopes to make as ubiquitous in business as it is in the home.

At Google Atmosphere the company showed off their mapping technology and how it can be used by large organisation. It’s a compelling story.

The technology behind Google Maps is impressive – twenty petabytes of images, one billion active monthly users, 1.6 million map tiles served every second and a target of getting those tiles onto the users screen within ten milliseconds.

Maps are one of the Big Data applications that cheap computing makes possible, until a few years ago even desktop computers would have struggled with the sort of mapping technology that we take for granted on our smartphones today.

Rethinking products

Adding mapping technologies to products allows businesses to rethink their products. A good example of this is the internet connected treadmill.

Using the treadmill a jogger, or a walker, can map out a route anywhere in the world and the screen will show them the Google Street View as they travel along the route. The treadmill even adjusts to the changing gradients.

The Google Maps driven treadmill is a trivial example of the internet of machines, but it gives a hint of what’s possible.

The search for truth

The success of a map depends on whether it can be trusted – this is what caught Apple out with their mapping application which was released before it was ready for prime time. Google, and most cartographers, take seriously errors and changes.

In the early days of Google Maps, the company would pass errors and changes onto the private and government mapping providers they licensed the data from. It could take months to fix a problem.

“It was really hard, you have to get maps from all over the world to create the product,” says Louis Perrochon, the Engineering director of google maps for business.

“That’s a limitation if you work with third party data so we started a project called Ground Truth where we build our own maps.”

Google pulls together its Street View data, satellite images and information sent in from the public through their Map Maker site and the Maps Engine Lite to build an accurate map of an area.

Changing consumer behaviour

Having accurate and accessible maps has changed the way consumers have behaved; “this revolution hasn’t happened slowly,” says Google Enterprise Directore Richard Suhr, “it’s happened really quickly.”

“Customers have become savvy about spatial. What this means is that businesses are starting to rethink the problem.”

“What are the exciting things I can do with maps, what else can I do with my data.”

That’s a big question of all businesses – how they use the massive amount of information in their organisation will mark the winners from also runs over the next decade. Maps are one way to visualise their data.

While Google Atmosphere was a marketing event for the companies mapping technologies the message is clear – mapping is changing the way we work and play and it’s affecting business.

How is mapping changing the way your business works?

Three screens, one screen

Is Blackberry, Apple or Microsoft right about the way we’ll use computers in the future?

One of the points that came out of Blackberry’s Z10 launch last week was CEO Thorsten Heins’ talking about the company’s ‘one screen’ strategy.

Blackberry sees the smartphone as being the centre of people’s computer usage with them replacing personal computers and tablets as the main computing tool.

This is at odds with the rest of the phone and computer industries who are struggling with managing the three or four devices that most people use.

Apple overcame this by having different operating systems – OS X and iOS – and even then the mobile iOS is subtly forked for the different ways people use tablets versus smartphones.

With Windows 8, Microsoft chose to go the opposite way with an operating system which works on all devices. Sadly it doesn’t seem to have worked.

Blackberry’s strategy is to assume smartphones will be their main communications device. It’s a big bet which doesn’t align with what seems to be experience of most people.

Over the last few years Blackberry’s smartphone market share has collapsed from 40% to 4%, so it’s the time for brave bets although its hard to see that customers will use smartphones instead of PCs or tablets is the right call.

It’s an interesting question though – can you see your smartphone being your main computer?

Taxing the internet

Cash strapped governments are trying to find new ways of raising revenue. Can they find sources online?

On Friday the US Senate passed a motion supporting the rights of states to collect sales taxes on internet sales.

While not a binding vote or a law, this is the latest blow in the fight to control, and tax, online commerce.

The stakes are high, companies like Amazon have built their business models on basing themselves in low tax jurisdictions while many bricks-and-mortar retailers have complained they are at a disadvantage compared to out-of-state or international suppliers.

For consumers a few dollars in avoided tax isn’t the main reason they shop online, most internet shoppers cite a better range, convenience and, in many cases, superior service as the reasons they buy over the web.

But it is clear the online retailers do get an advantage over local stores.

While provincial governments cite protecting employment in their regions as part of the motivation for trying to tax online sales, the bigger issue is the desperate search for sources of revenue to balance cash strapped state and local budgets.

Those budget requirements aren’t going to ease – the global economy is restructuring in a way that doesn’t favour 19th Century levies like sales tax or stamp duty, while aging populations and declining incomes are increasing demands on government services.

With governments caught in a pincer of rising costs and falling revenues, it’s not surprising they are trying to find ways to get more money.

It’s not clear though they’ll win this battle though, the Senate vote is a symbolic gesture and the difficulties of being able to tax all forms of internet commerce can’t be underestimated.

The struggle ahead for local governments also can’t be understated, the public demands more services while administrators have to deal with rising infrastructure costs and the pension liabilities of retired public servants, teachers, firefighters and police.

Even the bravest politician struggles to find the political capital needed to deal with that challenge.

How we tax the internet is going to be a task that will define our governments and society in the first half of this century. We’re going to have to think very carefully about the choices we have ahead.

Tax image courtesy of ctoocheck through sxc.hu

Facebook’s struggle to stay relevant

Are Facebook’s advertising policies alienating users and leaving advertisers unimpressed?

Are we getting sick of Facebook? Tech magazine CNet stirred up the interwebs on the weekend with the claim that Teenagers are Tiring of Facebook a meme was pushed by the New York Times’ Nick Bilton dissecting his experience with the service.

It’s not just teenagers moving away from social media sites though, many adults are getting sick of intrusive adverts and promoted posts getting in the way of the news about family and friends.

As an example, here are the ads taken off the page of one fifty year old woman’s feed.

“I find these offensive” she says, “I’ve been posting my results from a fitness program and now my Facebook page is plastered with ugly weight loss advertisements.”

Clearly the targeted advertisements are working too well and clumsy marketers are destroying the user experience with ugly and offensive ads.

Not that those ads are working as Nick Bilton found when he decided to promote a post to his 400,000 followers.

From the four columns I shared in January, I have averaged 30 likes and two shares a post. Some attract as few as 11 likes. Photo interaction has plummeted, too. A year ago, pictures would receive thousands of likes each; now, they average 100. I checked the feeds of other tech bloggers, including MG Siegler of TechCrunch and reporters from The New York Times, and the same drop has occurred.

When he decided to advertise, his engagement went up by ten times. Leading Nick to conclude that Facebook were suppressing his unpaid posts while pushing the one’s he pays to promote.

Even for advertisers, a few hundred likes doesn’t translate into much of a return.

That suppression of useful posts is one of the reasons teenagers are moving, one 17 year old I asked about why he’s moved from Facebook said the ads cluttered up his feed.

Which leads us to the reason why people use Facebook – they use it to talk to friends and relatives; not to watch ads.

It took commercial radio and television a decade to figure out the right mix of advertisements and contents, a balance that is still tested today. Social media sites are going to have to get that mix right soon.

Facebook has the most at stake and their time is running out.

Firing your customers

Getting bad clients out of your life can be very therapeutic, it’s something all business owners should do on a regular basis

Running your own business can be tough, but one of the therapeutic advantages of dealing with the stresses of self-employment is the ability to fire stroppy customers.

Steve Cody, the proprietor of marketing agency Peppercom, gives a list of five types of clients worth sacking in Inc Magazine.

It’s a good list although it misses the general “pain in the ass” client who demands a solid gold level of service for a pittance. These are particularly common if you pitch to the lowest end of the market.

Lists like Steve’s are good reminder of Pareto’s Law, or the 80/20 rule which is usually put in terms of 80% of business revenues come from 20% of customers.

The converse is also true, 80% of business hassles come from just 20% of customers and they are almost certainly not the most profitable ones.

Pandering too much to the bad customers can hurt your health as well – running your own business is stressful enough without dealing with troublesome clients.

So sacking bad clients is good, not only is it therapeutic but it also helps the bank account. It’s worthwhile doing whenever a customer drives you too far.

Go on, you know you want to.

On being evil

Microsoft learn what its like to be the weakest kid on the block while Google consider a future of being evil.

“Don’t be evil” are the opening words of Google’s corporate code.

When it was framed in the late 1990s there was one company in particular everyone in the tech industry thought of when the word ‘evil’ was being used.

At the time Microsoft defined evil in the technology industry. The main reason was their crushing of real or potential competitors like Netscape, Java or the troubled IBM joint venture of OS/2.

Topping everything though was Microsoft’s tactic of fake error messages designed to scare customers away from the competing DR-DOS system in the early 1990s.

So it’s rather delicious that Microsoft seems to be getting a taste of its own medicine twenty years later as Google Maps returns an error message on Windows Phones.

This is particularly galling for Microsoft as Windows Phone is essential for the company’s resurgence and, as Apple have learned, maps are a critical feature for smart phone users.

It’s too early to accuse Google of having become evil as Microsoft did during their period of dominance as Tim Wu discusses in Why Does Everyone Think Google Beat The FTC but the search giant is flexing its muscles on many fronts.

For Microsoft, they are learning what life’s like when you’re not the toughest, meanest kid on the block.

Karma can be a real bitch.

Yelp’s problem with activists

Yelp and other online review sites have a problem when the Internet mob gets stirred up.

It’s been a bad couple of years for James Knight, a dentist in Fort Dodge, Iowa.

First his wife found some text messages he’d exchanged with Melissa, his attractive assistant who’d been with his practice for ten years.

Then James’ spouse demands Melissa is fired.

James then has what was no doubt a difficult conversation with Melissa’s husband explaining why she’s been sacked.

Then Melissa sues him for discrimination. He wins the case.

Melissa appeals to the state’s Supreme Court and loses there as well however the case now has national attention.

This attracts the ire of the Internet mob, who start posting bad reviews about James on Yelp despite most of them not even living in Fort Dodge, let alone using his service.

For Yelp, the rabble descending on James Knight’s review page is as much their problem as it is his.

Yelp is one of the leading customer review sites which are changing the way small business operates and getting “smashed on Yelp” isn’t good for one’s reputation.

Recently a builder also attracted the ire of the online lynch mob when he threatened to sue a customer over a poor Yelp review.

As consequence, his Yelp page was overwhelmed with negative reviews by people who’d never used his business. The service had to delete 65 of those reviews which clearly had nothing to do with the quality of service the builder provided.

The problem for Yelp, an other online review sites like Tripadvisor, is that for their sites to be trusted the reviews have to be reasonably accurate – self righteous internet mob skewing results is going to damage the service’s credibility as much as the targeted businesses.

What this means for Yelp is that the low cost online business model doesn’t work, for the site to be relevant and credible there has to be administrators checking reviews and dealing with these situations.

There’s also a lesson for all of us using the web – mindlessly joining online lynch mobs creates more damage than it fixes.

Picking on a mid-Western dentist because he appears to be a pussy whipped jerk isn’t really solving humanity’s problems – we can all find causes that are a better use of our time.

Fiddling the prices

Has the Internet’s promise of transparency failed as online retailers vary prices.

Discriminatory pricing is nothing new, a good salesperson or market stallholder can quickly sum up a punter’s ability or willingness to pay and offer the price which will get a sale.

Anybody who’s travelled in countries like Thailand or China is used to Gwailos and Farang prices being substantially higher even for official charges like entrance fees to national parks and museums.

The Internet takes the opportunity for discriminatory pricing even further arming online stores armed with a huge amount of customer information which allows them to set prices according to what the algorithm thinks will be the best deal for the seller.

Recently researchers found that the Orbitz website would offer cheaper deals for people searching for fares on mobile phones and prices would vary depending of which brand of smartphone people would use.

Writers for the Wall Street Journal did an experiment with buying staplers and found the same thing.

Interestingly, one of the factors Staples’ seems to take into account is the distance customers live from a competitors’s store – the closer you live to the competition, the lower the price offered.

There’s also other factors at play; sometimes you don’t want a customer, or you don’t want to sell a particular product and it’s easy to guess the formulas used by Staples and other big retailers do the same thing.

One of the great promises of the internet was that customers’ access to information would usher in a new era of transparency. In this case it seems the opposite is happening.