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Pattern Recognition: Maps Mea Culpa; Marketplaces; Lesser Evils; Particularity

My goal is to write one 'Pattern Recognition' a week. Just the top 3-4 stories that stayed under my skin. Here's what stuck this week:

  1. Maps Mea Culpa: Unless you were trapped in a bomb shelter all day, you probably read Apple CEO Tim Cook's 'owning' of the fact that the new Maps in iOS 6 is a poor replacement to the old Maps in iOS 5 (and before). First off, that's the textbook right way you do it. Accept full responsibility, without caveat, something that I blogged about regarding brands and trust. For good measure, Apple even created an App Store section for Maps Alternatives (meh). Second, as I blogged about a couple of weeks back, almost regardless of what Apple did in launching iOS 6 and iPhone 5, a backlash was inevitable. This just provided the match. Third, know this; while Apple was not perfect in the time of Steve (see Me.com, Ping, AirDrop, AntennaGate), this time is different. Those instances were new products, new features or instances that touched a tiny subset of users. Maps is a CORE feature, and this is the first time that Apple has taken users BACKWARDS based upon business goals conflicting with consumers' best interest. Consumers trust Apple because they have repeatedly protected consumers interests and by ensuring that the solution would always get better. In this context, sideways or backwards is not acceptable. COOK SPEAKS: "At Apple, we strive to make world-class products that deliver the best experience possible to our customers. With the launch of our new Maps last week, we fell short on this commitment. We are extremely sorry for the frustration this has caused our customers and we are doing everything we can to make Maps better."
  2. Mobile’s Hidden Opportunity - Marketplaces: I love the evolution taken place in marketplace models (see: Kickstarter, 99Designs, Etsy). In fact, I blogged about the topic recently for O'Reilly with respect to my own experiences using 99Designs for design of a new logo; it's an article that pissed off a bunch of designers (see the comments section). This piece by Matt Cohler frames the role of mobile, and codifies what models are most interesting. MONEY SHOT: "The best opportunities for creating new marketplaces (or reshaping old ones) via mobile will be in markets where supply is inherently constrained and there are no viable (similarly priced) substitutes for that supply. Aggregate that scarce supply and the demand will follow. This playbook isn’t new to mobile. Mobile just makes it a whole lot easier."
  3. The Lesser of Two Evils: A friend of mine noted that in recent times, elections seem to come down to a choice between the lesser of two evils. He notes, "If you play that one out, at the end, all that you are left with is evil." I thought about this in reading Matt Taibbi's excellent article, 'This Presidential Race Should Never Have Been This Close,' which forked me to a great article by Frank Bruni of the New York Times. Bruni suggests that the electoral process systematically generates (increasingly) shitty candidates. Regardless, of which candidate you are rooting for, the current scenario is pretty sad. I will, however, express a bit of schadenfreude for Mitt Romney, who if he had even one iota of intellectual honesty or personal humanity, and simply ran on his record and history, probably would have been electible by people like me. Instead, the '47 Percent' ads simply kill for the simple reason that it's a case of a man in his own words confirming how most people believe he thinks. JUST TRY SHRUGGING THIS OFF: "If this race had even one guy running in it who didn't take money from all the usual quarters and actually represented the economic interests of ordinary people, it wouldn't be close. It shouldn't be close. If one percent of the country controls forty percent of the country's wealth – and that trend is moving rapidly in the direction of more inequality with each successive year – what kind of split should we have, given that at least one of the candidates enthusiastically and unapologetically represents the interests of that one percent?"
  4. Spray vs. Solve; AKA The Power of the Particular: In the movie 'My Big Fat Greek Wedding' there is a joke about Nia Vardalos' dad. He seems to think that Windex is a magic tonic for which the answer to every challenge is to spray some Windex on it; "it" being EVERYTHING. This is emblematic of what ails so much of tech where the ethos is to "spray," be it 'speeds and feeds,' lines of business, social, mobile, media, real-time, analytics, etc. when the answer instead is to "SOLVE." This is why I am such an acolyte of the Apple model (see 'HP, Dell and the Paradox of the Disrupted'). David Brooks ruminates on the outcomes that such particularity yields (''The Power of the Particular)'. EXCERPT: "It makes you appreciate the tremendous power of particularity. If your identity is formed by hard boundaries, if you come from a specific place, if you embody a distinct musical tradition, if your concerns are expressed through a specific paracosm, you are going to have more depth and definition than you are if you grew up in the far-flung networks of pluralism and eclecticism, surfing from one spot to the next, sampling one style then the next, your identity formed by soft boundaries, or none at all."

September 28, 2012 in Apple, Branding, iOS, Marketing, Mobile, Pattern Recognition, Politics, Post-PC, Streams and Nuggets | Permalink | 0 Comments | TrackBack (0)

On co-creation, contests and crowdsourcing (O'Reilly Radar)

Two-logos

I had decided to update the branding at one of my companies, and that meant re-thinking my logo.

The creative exercise started with a logo design contest posting at 99designs, an online marketplace for crowdsourced graphic design.

When it was all done, I had been enveloped by an epic wave of 200 designs from 38 different designers.

It was a flash mob, a virtual meetup constructed for the express purpose of creating a new logo. The system itself was relatively lean, providing just enough “framing” to facilitate rapid iteration, where lots of derivative ideas could be presented, shaped and then re-shaped again.

The bottom line is that based on the primary goal of designing a new logo, I can say without hesitation that the model works.

Read the full post HERE.

Related

  1. Makers, Marketplaces and the Library of the Commons
  2. Ruminations on MacWorld and the Future of Trade Shows
  3. Creating New Synapses in the Global Brain: Notes from Foo Camp

 

August 06, 2012 in Branding, Design, Digital Media, Economy, Pattern Recognition, Streams and Nuggets | Permalink | 0 Comments | TrackBack (0)

The Apple Education Event: Can you say Halo Effect?

Apple-Ed-Event

Only Apple could take on the educational textbook business, an industry seemingly frozen in the 1950’s, where three gorillas dominate 90% of the market, and credibly expect to win.

Then again, only Apple has the moxie and constitution to re-think the entire textbook value chain from device to development tool; from online marketplace to bricks-and-mortar, and into the classroom.

That Apple today simultaneously launched a new interactive book authoring tool, an updated online bookstore and a new platform for creating, instigating and managing online courses is…let’s face it…so very Apple-like.

This is what they do. Build great tools that only run on the Mac, that tie into a software platform that seamlessly integrates into their three flavors of ‘iDevices’ (i.e., iPod touch, iPhone and iPad), and that feeds into an iTunes + iCloud universe, which is the axis point for Music, Movies, TV shows, Books, Apps and Personal Media, not to mention 250M credit card-backed iTunes accounts.

I mean, this is the definition of a ‘Halo Effect,’ right? Every thing that the company does reinforces everything that the company does, and every new initiative builds upon this advantage, in the process creating new advantages in terms of brand, market penetration and, most importantly, mindshare.

It’s almost Microsoft-like (back in the days when the PC ruled the roost); namely, that there is an air of inevitability, that through the Apple approach, which is all about focus, rigor, integration, leverage, derivation and optimization, that when Apple decides to attack, they are destined to win. (To be clear, though, Apple winning does not mean that everyone else must lose.)

In fact, one great irony is how until recently, the conventional wisdom was that Apple couldn’t win with this type of vertically focused approach, and that Google’s aping of the Microsoft horizontal model was destined to prevail.

Why Apple’s Approach to Textbooks is Credible

In pointing their attention at the textbook, Apple does so with several tremendous advantages. One is the simple fact that education is a core part of the company’s DNA, Apple having built their initial education beachhead in the mid-1980s with the Apple IIGS in K-12, and later on, with the Mac in higher education.

In fact, beyond Apple’s strong Mac presence in education, there are now more than 1.5 million iPads used in schools, over 20,00 education and learning apps built for the iPad, and over 1000 universities using Apple’s free online lectures archive, iTunes U.

Two is the basic truth that the ethos of a lightweight device whose battery lasts all day, that is durable, richly interactive, loaded up with compelling content, highly customizable, and equally critical, which is coveted by the ultimate end-user of the device (the iPad was the number one coveted device by teens over the holidays), is iPad all the way.

After all, it’s not like there is some other device that is even remotely in the ballpark in terms of units sold, developer adoption or customer embrace.

Three is the fact that in targeting the textbook arena, Apple was cognizant of the ‘core jobs’ that they’d need to address to be successful; namely:

  1. Making it easy to create the textbooks themselves;
  2. Extending the concept of a textbook to be visually elegant and meaningfully interactive;
  3. Nailing the information management side by making textbooks readily searchable, and cross-linkable between the table of contents, the text body and the glossary terms;
  4. Enhancing the study side of the equation by making notation and highlighting very easy, and conversion of same into study cards in a single click.

So, in the big picture, how do I read what Apple is doing? Number one, they are changing the rules of the game for a company like Amazon, which has a credible hope of competing in this space, given the success of Kindle.

Thus, by providing an enhanced ebook experience, and the tools to create it (something I suggested that Apple would do back in 2009), Apple is laying down the gauntlet.

If Amazon wants to compete, they either need to up their game by building tools and forking more heavily away from Android, or they need to focus on being the best low-end and/or single-purpose solution.

They simply are not going to succeed going toe-to-toe with Apple in segments where being best-of-breed and scalable matters.

As to Google, given the fact that the Android Market still has a confused relationship with customer billing, that the platform still does not support in-app purchasing, and the company’s seeming inability to launch a credible alternative to iTunes, the Android-based tablet business remains best suited for folks who want to surf the web while on the potty.

Moreover, in turning iTunes U into a courseware platform, Apple is basically taking the end-to-end problem of online course logistics, and solving it by enabling instructors to create full-fledged courses that incorporate a syllabus, document assignments, and which build a new type of courseware ‘bundle’ that is a composite of iBooks, Apps, Audio, Videos, Documents and iTunes U lectures.

Plus, because it’s deeply integrated with the new iBooks, a professor can reference a specific page in an assignment, and by clicking on the reference, the app will take the user to the specific content section, be it a reading passage, a video, an interactive element, or even a custom note within a reading passage.

Finally, because the courseware ‘envelope’ is bounded by a new iTunes U app, teachers can post messages and update assignments, and students can mark the assignment as completed when done.

Personally, there’s more than a little irony that the same company the rebooted the music business by unbundling the single from the CD package is now looking to reboot the education business by bundling apps and media into courseware. 

Related Notes:

  • The fact that iTunes U, which was previously limited to college courses, is now going to support K-12, is a big win for underfunded school districts, not to mention, homeschoolers, a rapidly growing segment.
  • iTunes U could see major uptake outside of the US since the service will be available in 123 countries. Given that iTunes U will drive ownership of both iPads and the underlying content and apps that make up a course, this initiative could end up catalyzing a lot of international growth for Apple in the months ahead.
  • The new iBooks model further muddies the already fuzzy boundaries between iBooks and Book Apps. Book Apps are clearly more dynamic and functionally rich than iBooks, but they are also more expensive to produce, and equally vexing, whereas Apple has pushed to maintain higher price points on iBooks, with Book Apps, they have allowed the category to be subject to the same downward pricing pressures as ordinary apps.
  • By taking a leadership role in education, and coming off as deeply earnest about this being a core part of the company’s mission, Apple gets to counter attacks that they are a walled garden and a bully with the fact that in market after market, they are the hero of the consumer. I expect them to see continued brand uplift from this.
  • On the downside, serious questions have been raised by others about the EULA in iBooks Author, inasmuch as Apple is trying to handcuff the author’s ability to do what they want with the output of the tool, and potentially raising questions of who owns the 'output' that is generated by the tool, but crafted by the author. Needless to say, this is an aspect of Apple that, business logic notwithstanding, makes more than a few queasy.
  • It seems clear that many of these books will be 1 GB in size or larger, suggesting that the iPad of the not too distant future is going to need a lot more storage for education-oriented users.
  • What, no social? It’s hardly surprising that Apple opted not to incorporate social functions into the new iBooks, given their two left-feet in this domain, but it’s also a missed opportunity to enhance collaboration and shared learning efforts.

UPDATE: Fred Wilson is the best (i.e., I love the richness of his perspective, and how business and product strategies manifest in the real world), but it's hard to imagine him celebrating ANYTHING that Apple does, which makes his complete dismissal of Apple's efforts here unsurprising (see 'Textbook Cases').

Related:

  1. Holy Shit! Apple's Halo Effect
  2. Apple's Segmentation Strategy, and the Folly of Conventional Wisdom
  3. Rebooting the Book: One iPad at a Time
  4. Amazon's Prime Challenger to the iPad
  5. It’s Time to ‘Think Different’ - Conventional Wisdom is Dead (Apple’s Q1 Earnings Call)

January 20, 2012 in Amazon, Android, Apple, Books, Branding, Digital Media, Education, iOS, Post-PC, Streams and Nuggets | Permalink | 0 Comments | TrackBack (0)

The Netflix 'narrative' problem, and how to fix it

Netflix-AppleTV-HiRes
A brand is a distillation of the 'narratives' that a company pledges to satisfy for its constituency base of customers, partners, employees and investors.

These narratives speak to the company's value proposition, including the core jobs it is hired for and outcomes that it delivers, and equally, represents a commitment to deliver same consistently. 

When well-managed, the brand creates a trusted bond that can materially increase customer loyalty and operating margins, while reducing the cost to acquire new customers. In the process, such brand equity is tantamount to free advertising, and also inures a nice 'halo' effect on the company's stock.

But, when a brand appears to disregard the promises behind its narratives, irreparable damage can come to the business.

In the packaged goods realm, Perrier is a textbook example of a company doing everything wrong in living up to the standards of its brand (when reports leaked out about the cancer-causing chemical Benzene polluting its sparkling water product), and never rebounding from this disconnect.

Tylenol, by contrast, is a textbook case of a brand coming back stronger than ever by living to its credo in the face of dark circumstances (when pills tainted with Cyanide lead to several deaths of Tylenol users).

Enter Netflix, who faces a comparably life-threatening disaster (to their brand, not consumers' lives) to that faced by Perrier and Tylenol some time back, prompting the obvious question. Is the Netflix story destined to play out like Perrier or Tylenol?

But first, two disclaimers. One, I am a very happy current Netflix streaming customer and a former Netflix DVD customer, having quit the latter when the pricing model changed (I did not see enough value to continue, given my family's usage patterns).

My happiness with streaming stems from the fact that Netflix's streaming catalog is sufficiently wide and deep (although obviously not to the level of the DVD offering), and the service is sufficiently rich and enjoyable that my entire family accesses its programming on a near-daily basis.

As such, Netflix streaming has earned a spot in my living room, and in fact, is the primary usage anchor to my Apple TV.

I state this upfront, as I know many who don't see the streaming programming in a similar wide/deep/good enough light. Your mileage may vary.

The second disclaimer is that when I first trialed the Netflix hybrid service a few months back (yes, I ignored Netflix marketing for YEARS), I contacted DIRECTV, my satellite service, to tell them that I was canceling my Starz pack.

“Why?” Asked the DIRECTV support person. When I told them that I was allocating those dollars to Netflix, I promptly got a significant discount not to cancel Starz, which tells you all that you need to know about how DIRECTV views Netflix competitively.

These two data points provide some context for understanding Reed Hasting’s most recent shareholder letter, where he adroitly positions Netflix streaming as in the 'HBO bucket' (@ $8/month vs. HBO @ $12/month), as Peter Kafka notes in this extended excerpt Hasting's letter in Kafka's excellent ‘Comeback Plan’ piece. Says Hasting:

In television… the networks (ABC, FX, etc.) have long relied upon exclusive content to differentiate among themselves. As video moves online, so too has this practice of exclusive content. HBO has an exclusive license to recent Universal movies that includes its online HBO GO, for example. Netflix has signed exclusive licenses for DreamWorks Animation, for Relativity, and others. In episodic television, exclusives are also the norm. Netflix doesn’t license “Deadwood” from HBO because they see strategic value in keeping it exclusive. Netflix licenses “Mad Men” and “House of Cards” exclusively for much the same reason.

…We don’t have to “beat” Starz or other networks to succeed…We won’t have every movie or TV series; but we do provide enough value that consumers also want to subscribe to Netflix.

Any given consumer will have only one of DirecTV or Comcast, say, for their video service. That is classic either‐or competition. But with premium television networks like Netflix, the more good experiences there are, the more consumers are willing to spend to have multiple channels from which to get enjoyment.

Netflix Faces an Interesting Quandary

But, pursuing such an opportunity is not without peril.

On the one hand, Netflix is well-positioned to go after the HBO ‘premium channel’ bucket. Their long-tail catalog is relatively cheap and deep (in contrast to movie blockbuster programming), and they seem to have a good process in place for locking down that content.

In the big picture, it makes Netflix streaming better value and more enjoyable than HBO, save for HBO's hit series and new movie releases (which is 70-80% of my viewing time on HBO). 

At the same time, it seems very plausible that Netflix can "sprinkle in" enough 'must see' programming to secure a major foothold in this market.

If they can, then being on-demand, having wide distribution and delivering the composite viewing experience that Netflix offers (in tandem with the aforementioned) is a compelling value proposition for their rapidly growing 20M+ base of subscribers.

The quandary, however, is that streaming is diametrically opposed to DVD (and vice-versa), not only in terms of business model, but customer base as well.

It's the proverbial fork in the road, which is why they wanted to get rid of DVD in the first place. However, in being so ready to kick their loyal DVD customer base to second-tier status, they essentially dumped their long-term spouse to run off with the 'hot blonde,' which is tantamount to betrayal.

Is it any wonder that their brand image, stock and subscriber base has taken such a serious hit?

Now, I have a theory as to why they would act so dispassionately (economics aside), but more on that in a moment.

Either way, streaming is now the dog, and DVD is now the tail, and there is no use in pretending that it is otherwise. You can't fully put humpty-dumpty back together again.

For the DVD user, this is a perfect opportunity to see if the grass is greener elsewhere, and if it's not, take some solace that Netflix had their come to Jesus moment, and is re-committing to you. Forgive, but don't forget.

For the non-DVD Netflix user, other than the WTF aspect of how poorly orchestrated this was and the corresponding questions it raises about Netflix's once-pristine stewardship, it's mostly a non-event.

For investors, however, it's a value reset (as Felix Salmon notes at Reuters), for which there are no easy answers, save for time. The stock is down 75% since mid-year, and could go up, down, or sideways. It's anyone's guess. What is HBO worth, anyway?

In a perfect world, Netflix would operate the DVD service going forward (so as to maintain their brand equity), but someone else would own the business, maybe private equity.

What about Warren Buffett? He likes great brands. What about the DVD device makers, who need to extend the useful life of DVDs? 

Pursuing such a move would be Amazon-like in terms of knowing your core business, but being platform-minded and thinking outside the box in terms of growing and mainting the mindshare of your constituency.

Until they reconcile this intellectually, I suspect their body language is going to be akin to the unhappy couple that stays married for the benefit of the kids. Everyone's unhappy, including the kids.

A Brand Collision with Corporate Culture

10a_Images_DevicesI read a particularly harsh take on Netflix’s corporate culture called ‘Netflix: Terror at the Top?’

It argues that Netflix has a fear-based management culture where people are pretty readily discarded if they don’t live up to expectations.

There's good and bad in this. Great companies demand peak performance from their personnel, regardless of whether it’s someone operating at customer-facing, production, business development, marketing or management levels.

'A' players hire 'A' players. 'B's' hire 'C's,' and so on. While there's nothing warm and fuzzy about this, the fact remains that it often leads to better products and solutions.

But, one gets the sense that Netflix is dogmatic about this to the point that people are pushed out if/when they disappoint, and sooner or later, everyone disappoints, which creates a bit of schizophrenia, even if it has (clearly) served Netflix well -- prior to the current cluster-f-ck. 

In this context, one can see how pragmatic, intellectually-focused Reed Hastings sees one business materially contracting, and another showing substantial growth. He sees fundamentally different customer bases (color me dubious on this assertion of his) and different economics + licensing rights.

Were he a cynic, he could simply milk the business AOL-style, and keep his mouth shut. But, then how to position a service where the DVD narrative confuses the messaging, positioning and business approach of Streaming, especially when heretofore, the conventional wisdom was that Streaming was something free bundled on DVD?

Thus, the Qwikster moniker could be looked at one of two ways. As a company intentionally tarring their old business, so as to better segment their new business. 

Or, as a realization that as 'NOT Netflix,' the footprint of jobs that the service could target might change. They have already talked about games, but why not incorporate game consoles and Blue-Ray players, for example?

Either way, they now have a profitable, variable cost business with no uptick in subscriber acquisition cost to maintain.

It’s like saying, “DVD you can come if you want, but streaming is who we're courting.” Hastings basically compares DVD to the aforementioned AOL dialup business in ther earnings call.

Envisioning a Native Controller Client

Netflix-Controller

Here's where's the company can start turning the page. Namely, by showing how, as a native IP streaming service, Netflix has the potential to create new extensions to its core offering that make it more:

  • Social
  • Manage-able
  • Synchronized

The above Netflix Controller client that I've mocked up shows how such an experience might come together.

On the social front, the client makes it easy to broadcast what you are watching now to friends, including one-click access to that current scene/sequence that you are watching now for synchronized viewing, something that can't be readily done with DVDs.

A structured chat interface makes it easy to communicate in a way that is synchronous, shared and contextually linked to the specific content being watched, which opens to door to all sorts of news ways to both discover content and connect with like minds in real-time.

The ability to tie favorite scenes, movie trailers and favorite reviews together into a sort of IMDB on steroids type of listing is the third leg that makes this type of experience fresh and alive.

It hearkens back to a classic old Logitech ad introducing the wireless mouse where they contrast wired vs. wireless by showing a baby wearing a diaper (as the wired proxy), with the label 'Good' above the picture.

Adjacent to it, is the label 'Better,' with a diaper-less, giddy baby peeing a stream in the air. The message being that wireless is liberating.

Netting it out: Netflix needs to play a bit of three-dimensional chess so that its legacy DVD customers, who made the brand what it is, don't irreversibly pollute it, as many are emotionally prepared to do.

In parallel, it needs to spend some with its investor base articulating why Netflix's updated vision is a greater outcome than simply milking legacy (including better articulation of the likely 'honest outcome' for DVD).

And it needs to get back on offense by showcasing what a native IP streaming service can do that neither a legacy DVD biz nor a premium cable/satellite channel can touch.

Related:

  1. The Magic Adapter: Apple TV and the battle for the living room
  2. Apple, TV and the Smart, Connected Living Room
  3. Is Facebook a Brand that You Can Trust?

 

October 26, 2011 in Amazon, Apple, Branding, Coaching, Digital Media, Entertainment, Media, Pattern Recognition, Post-PC | Permalink | 0 Comments | TrackBack (0)

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