Nook fans the flame Amazon Kindled

I’m impressed.

I’ve watched companies try to defend their outmoded business models with the Next Big Thing staring them right in the face.  It usually turns out badly.  The most personal of these for me is Kodak.

I grew up in Rochester, where they printed money at Kodak Park, a 7 mile long vertically integrated plant that made film.  My Dad’s group invented a better film process, and I can show you the building that exists because of that invention (unless they have imploded that building to reduce property tax).  Kodak also invented the Kodak Killer, the digital camera, in 1975.

Instead of drinking this hemlock, they stayed the course.  Later, a close friend led development (in Japan) of the world’s first  consumer digital camera, the Kodak DC40 (and Apple QuickTake 100), introduced in 1994.

It seemed obvious to him where things were headed, but Kodak missed it, and has been working to shift gears (transmission grinding sounds) for 15 years.  I know many who have suffered as a result.  Stock down 90% from 1994.  I do not think this will be Barnes & Noble’s fate.

B&N has been cheating death at the hands of Amazon by doing the old way really well.  Their stores are a pleasure.  But I think they saw an image of their ultimate demise on the screen of the Kindle.  So instead of installing fireplaces or offering free massages to shore up the store paradigm, they decided to make the best e-reader, period.  And credit to whomever set  the bar high for that product, because they have apparently hurdled it.  Many comparisons have already been written, focusing on features, standards, and content.  For my part, I would like to point out their Killer App, which is listed most of the way down the lengthy “Product Comparison” page.  Nook on left, Kindle on right:

Try reader in store before buying! Physically.  In a comfortable place with books to compare and people to answer questions.  It’s genius.

Think about what you know about adoption of new technology products.  The timing is perfect.  Kindle made a splash and spent big money to pioneer the category.  They sold a goodly number to bleeding-edge consumers, and are on version two.  Sony, Google, and others have validated the category.  Now the Majority Market, which has questions about readability, weight, quality, usability, and what the heck 3G is, can come and kick the tires at a store that knows books.  [This may be the fastest Chasm crossing ever.]  While there, they can’t open two browser windows and compare price, or choose 1-Click to buy.  They will even be able to come back in for help.  And they’ll probably notice a $100 photography book while they’re there.

We study the need to innovate your own business models out of existence, or be vanquished by the one who does.  This is a rare example of a company that sees the train coming, and runs to get on board, instead of just bracing for impact.  I hope B&N survives the leap.

Apparently, branding still works

Mac volume was up 17% last quarter, while other PCs were up around 2%.  Total Apple profits up 47%.

There you go about Apple again, Craig.  Acer is also up strongly.

Acer did take over the #2 worldwide unit share position, at 14%.   But Acer’s average selling price is low, and  prices are falling — laptop prices down 20% across the industry – so Acer’s margins are tight at 2%.  Volume gains are driving marked profit growth (percent increase in net income), but the law of small numbers applies.

C’mon, it’s bad all over, so of course margins are low;  Acer’s share capture puts them in the driver’s seat when things get better.

Acer’s 2% net income yields about 6% share of industry profit.  By my calculations, the average Acer PC generates $10 in net income, while Macs deliver around $120.  So Apple’s paltry 3.8% unit share captures 20%+ share of personal computer profits (iTunes, iPhone, etc. excluded).  Their shareholders like riding that bus.

Well, those same drooling sycophants Apple has tapped for decades must be propping them up.

Last quarter saw the highest number of Mac sales ever, with about half to new customers.  Mac average prices are UP (2-3X the average for a Windows PC), so they aren’t buying new Macophiles with low low price or free printers.

All this during the Great Recession.

They are only a player in the US…they control the OS…if not for iPod…

It is about the brand.

Much has been written on how this is done.  I can offer no new insight;  I’ll simply point out that branding is showing its worth under pressure.  While others cut, go low, and promote deals to survive the downturn, Apple widens the gap from competition with brand touchpoints –  beautifully simple design, cool but approachable personality, great buying and ownership experience.

I spoke to a solar entrepreneur this week about the commoditization of that industry.  He said “I want my company to be the Apple of solar.”  Good idea.

* Data quoted or extrapolated from public IDC and NPD sources.  I suggest calculating for yourself if you intend to rely on the figures.

For the person who has everything?

My Christmas shopping worries are over.

Actually, this brings up other worries.  These things, and others in the How On Earth category, would not exist but for consumer demand.  On the surface, it’s funny.  But at its foundations, it is tragic.

Naming algorithm discovered

Naming is difficult.

I noticed an announcement that IBM has a cloud email service offering, at affordable per-seat prices.  IBM acquired Lotus years ago, and this seems a natural move for the Notes email app.  So what to call it?  They apparently got the Smarter Planet* people to do this mathematically.  I have reverse engineered the naming algorithm…

[new name] = ([IBM email subbrand 1], [IBM email subbrand 2]) *

([nemesis' cloud cue], [universal coolness signal])

[new name] = (Lotus, Notes) * (Windows Live, [Apple's "i"]+[anything])

[new name] = LotusLive iNotes

QED

* Smarter Planet is a solid positioning campaign, in my opinion; credit to Ogilvy and John Kennedy.

Raising four girls

I love my girls, but I’m flummoxed by some of the conversations.  An actual exchange from this morning regarding bread/toast:
“WHY are there so many end pieces?”
“Well, there are exactly two in every loaf.”
“No, there are NOT!”

I’m a marketing leper

Ironically, Marketing has a brand image problem.

I notice a growing tendency for people to associate Marketing with negative traits.  In group discussion on the clean energy market, I talked about how to discover people’s emotional motivators and appeal to them.  Response: “we don’t want to manipulate people.”

Introducing oneself as a marketer, especially among the social entrepreneurship and green crowd, is starting to feel like notifying new neighbors of a sex offense conviction.   Watch out marketers, we may soon be required to shout “Unclean” as we walk into Whole Foods.  Politically astute CMO’s are even renaming themselves to avoid being seen as Chief Misappropriation Offender.  The trend seems to be toward Chief Commercial Officer.  Sounds like someone who generates revenue and profit.

The marketing community needs to build a better brand.  Unfortunate associations:  profligate spending, lack of accountability, shrill tactics (The Most Amazing Sale Ever, Until Tomorrow’s Even More Awesome One), deception (insider product endorsements in social media, anyone?).

As I often say, a brand’s image will, over time, converge with what is true.  So maybe we have a problem with the reality of what we’re doing, and need to change that truth in order to earn more brand value for Marketing.

Here is what I will do to help:
1) root all marketing plans in business objectives;
2) track the correlation between brand health and profit health in core metrics;
3) replace “we don’t have enough money,” with “here is our plan, within budget…here is an alternative which improves the probability of success by X%…it requires $Y additional funding;”
4) sincerely seek input from peer functions;
5) demonstrate skill and excellence in execution;
6) accept the same accountability as Sales for results.

How about you?

Is “Sustainability” sustainable?

Words like Green and Sustainability have undergone rapid transformation.  They have moved quickly from being signals of leadership to wallpaper – labels for any form of goodness, nearly bereft of meaning.  The leaders in corporate good have become the victims of fast followers who label anything beneficial with the same terms, confusing stakeholders, and neutering others’ legitimate claims.  Here is Seth Godin talking on Ad Age about the insincerity of green marketing (ff to 3:20 if you want to abbreviate), and the promise of the few authentic efforts:

The terms themselves are challenging to interpret.  Green:  this is a color.  Since it is the color of trees, this word has been co-opted to signal anything that is a boon to flora.  So, if a company turns off the lights at night — which saves electricity, which reduces the emissions of coal-fired power plants, which reduces greenhouse gasses, which reduces global warming, which reduces catastrophic weather shifts, which reduces desertification, which preserves green plants – they put a “Green” claim on their packaging.  The company might be the most water wasting, truck driving, forest paving in its industry, but turning off the lights allows them to claim Green.  And Green has been stretched further, to encompass anything that benefits the natural world, whatever its color.

More difficult to digest is Sustainability.  The word sustainable indicates that something can last a long time.  So when companies claim to be leaders in Sustainability, does this mean they lead in making things last forever?  In fairness, I think this is generally what people are claiming:  “our sustainability practices ensure that the resources we and our customers use do not become depleted.”  But it is an unwieldy word, being used in an unfamiliar way.  And again, people are pitching the Sustainability tent over anything beneficial.  I think a Samuel Johnson is apt:  “he who praises everyone praises no one.”  If everything is sustainable and green, then nothing is.

I’d love to see two things:  1) consensus definitions of terms, with criteria for use of those terms (see earlier post on Burt’s Bees and Natural); and 2) better terms, where the meaning is plain.  Here is my simplistic proposal.  “Responsibility” can label a broad set of beneficial things impacting society, the human condition, the environment.  “Stewardship” can be used to label efforts to take good care of things that don’t belong to us (generally, the natural environment).    Stewardship would be a subset of Responsibility.  I.e.,  “Hi, I’m Nicole.  I work in the Responsibility office of Toyota.  I’m in charge of Stewardship, so I work closely with our electric car effort.”

So, how to set and uphold standards?  Not easy.  Perhaps the UN’s Climate Change Conference in Copenhagen could take this up as a side item.  A quorum of government and industry representatives could review and endorse proposals for definition of terms, and standards for these terms.  Ideally, they would also endorse a small number of  logo programs designed to uphold these standards (see http://ecolabelling.org/ for 300 logos currently available…ugh).  One of the most promising of these is the B (for beneficial) Corporation certification:  highly rigorous standards and audits applying best practices from many sources.

Organizations abiding by the rules of such programs may use the logos, and would pay a nominal amount to fund an administration and promotional efforts.  To give weight to the UN’s endorsement, they should award the winning programs a few million dollars to help them generate market traction.  Why would the vaunted UNFCCC care about something as crass as a marketing/logo program?  Eventually, market forces may sort out these standards, since the consumer is willing to reward social and eco goodness.  But a program of this sort will accelerate the process by making it easier for consumers to sort the wheat from the chaff.  Consumers will send resources to the most eco-friendly businesses, which benefits the environment, etc…reducing reliance on elusive global consensus in emissions policy.

Disc golf

I shared with a new acquaintance that I had taken up disc golf.  His response: “Isn’t that a stoner sport?”  Well!  I admit that a couple of 11-year-olds and I had some discomfort with a gentleman of about 50, as he held forth on the merits of various Chapel Hill disc golf courses, while holding forth a beer, at 8:45 AM.  But c’mon, he wasn’t stoned.

I suppose it’s appropriate to denigrate sports associated with controlled substances.  You know this rogues’ gallery:  skateboarding, snowboarding, weekend (ball) golf, fishing, Olympic swimming…nothin’ but stoners.  I’m much more comfortable with the nobler sports:  American football, global football, cycling, baseball…you know, the ones where the drugs are a lot more genteel.

Apart from the mind expansion benefits, here is what I like about this game.  1) You can play 18 in under an hour if you hustle (30 min for speed golf), 2) woods are cool in summer,

3) it is cheap (even if you throw over the big pond before you’re ready, it’s only $8 for a new Boss driver),  4) cool names for throws: Hyzer, Anhyzer, Tomahawk, Roller, Thumber, Scooby, 5) kids and spouses can play together happily, 6) you can develop mad skills if you try, 7) there is a disc designed for every permutation of wind, skill, distance, and flight path…with cool Dungeons & Dragons names like Wraith, Banshee, Beast, and Valkyrie.

Truthfully, my version of the game does involve a lot of weed.  Like Poison Ivy.  The closest course is loaded with it — good motivation to stay on the three foot “fairway” path through the woods.  But much like ball golf, one great shot will bring you back.  I threw a thumber around a tree with a Classic Roc 172 the other day and janked it.  I was stoked.

SolarFred is making sense

A post by SolarFred rang true with me.

To the Street, the solar uneducated, a solar panel remains a solar panel. The Street just wants to know how much it costs. It’s always the first question. There will increasingly be the pressure for installers to simply get these consumers that lowest price. The commoditization of solar is upon us, but perhaps not quite set yet.

How can your solar company resist this commoditization pressure? … [truncations mine]

… Think about Diane’s. This was New York City. We could have gone to any fast food place for our burger and fries, but we went to Diane’s. Why did we pay probably double the price for basically a Big Mac– plus 20% tip? …

… Think not only about your technological innovations, but your company’s “experience.” As your new solar products come on line, how will you better serve the solar installers that will be selecting these new innovative PV panels on the consumer’s behalf? Easier installation designs are obvious. Loan programs. Well vetted leads. Good training. What does good training mean? What does any of that mean? Define those things for you. Perhaps, if you create a unique Diane’s-like experience for your customers, whoever they are, you will be less susceptible to the 2010 fast food solar PV meat market to come.

As I’ve also written, the solar business is at a critical juncture.  If it doesn’t play its collective cards right, it will commoditize, and miss out on huge potential value capture in years to come.  If a commodity is something that cannot achieve attractive margins due to undifferentiated substitutes and ample suppply, I hold that nothing is inherently a commodity (even PCs).  The behavior of suppliers commoditize categories (vendors do it to themselves).

As SolarFred rightly states, solar players can act now to ensure margins remain healthy as the market grows.  In effect, he is calling for experiential branding of solar products and services.  But it is awfully tempting to minimize price, if you just brought on new capacity and need cash for next quarter.

To each his own ball game

David Churbuck is an exceptional writer.  Here is a sample from his recent post on scoring baseball.

I never think to bring a sweatshirt in this summer of damned rain, sunspot anomalies, and El Nino disturbances that makes the sighting of a lost snowflake a distinct possibility one of these evenings. I take my card – with the Kettleer’s Gothic Germanic Script on one side, the ad from UBS Wealth Management Services of Hyannis utterly out of place during this Deprecessionary Summer. And I settle in, arriving 15 minutes early to get a prime spot in the top row of the old bleachers (the pipe railing is a nice back rest and the old gents who have the Knowledge sit there). Popcorn bag gets wedged on the springy green foot plank of the bleachers so it won’t blow over and shower the miscreant delinquents under the stands with my dinner. Moxie gets saved for the end of the bag when the popcorn salt makes it imperative.

Then the card gets filled out. First the opponent.

He goes on to compellingly describe his discovery of the true baseball fan’s art of recording and analyzing every detail of a game.  And there I am lost.

His enjoyable post brings to mind the axiom “to each his own,” as throughout, I kept thinking “no way would I do this.”

Often, people don’t appreciate things because they haven’t gotten below the surface.  Witness NASCAR (here, the baseball connoisseurs gasp that I would dare draw this parallel to the Sacred American Tradition, and begin to plot my dismemberment).  On the surface, NASCAR is a bunch of loud cars, purposefully limited to a clunky design style referencing moonshine running getaway cars, going around an oval hundreds of times.  Not so interesting.  But wait!  Study the driver and team histories, the latest dirt on who bumped who and who threw their helmet, and don a pair of headphones that pipe in the driver-to-spotter-to-crew chief radio chatter about tire wear, and you really get it!  I’ve sampled this, and I still can’t make myself watch.  But clearly many do, and have the flags on their porches to prove it.

It seems that America specializes in obsessive behavior.  The term “all in” seems to describe anyone who meets the minimum requirements for participation.  For instance, I know of no one who claims to be a cyclist who is without $3000+ of gear and who doesn’t look like Lance Armstrong when saddled up.  My friend is psyched to be driving to Florida (12 hours?) to acquire a bike worth $4000 for less than $2000.  And don’t show up to rock climb without a massive rack of gear and tape over the rips in your fingertips.

I can get as obsessive about a new interest as anyone.  I’ve recently dipped my toe in the water of disc golf, which my kids label my latest “phase”, and now own 11 highly necessary discs with different flight ratings.

But man, as much as I appreciate the cultural import of baseball and genuinely seek common ground with its adherents, keeping an encoded score sheet (and cross referencing it with the published box score later!!) about a game that requires frequent trips to the concession stand to keep me at the park, sounds like self-inflicted water boarding.  I’m starting to appreciate my brother’s conditions of participation in sports: “OK, I’ll go, but only if you don’t try to help me improve, or suggest better equipment.  I just want to have fun.”  Ironically, this is the same brother who scored baseball games as a kid.

Well, back to pruning my Japanese maples.  Did I mention I have six varieties, including dissectum and palmatum cultivars?