, by Steve Rivkin and Fraser Sutherland, in the chapter Giving a Good Name, the authors ask the following questions about new products. The questions are as important for software and services as they are for toothpaste and household appliances.
- Is a specific need fulfilled?
- Is it really an improvement over what already exists?
- Is it easier to use than what already exists?
- Is it safer that what already exists?
- Is there a competitive point of difference?
We could apply the questions to any new product including Microsoft's Vista operating system and Apple's first telephone. How will your next product or product upgrade fit the five points?
Equally important is the question of how your prospective customers will see the difference.
Is a specific need fulfilled?
Microsoft's Vista operating system replaces their XP operating system, a system that was slow, dangerous, and full of virus style add ons locked into the operating system to the detriment of everybody. If you want a list of specific needs for improving XP, you could turn to any of the 61 million Web pages listing problems with XP. Unfortunately Vista does not appear to fix any of the problems. There are few new things in Vista and the new things just make the old stuff look different.
Apple's first telephone fulfils a need among Apple fans to replace their non Apple phone with something from Apple. The fact that Apple's new phone is old technology and is severely expensive will not stop Apple habituates from buying the phone. For everybody else, there are far more modern phones already available long before the Apple.
One of the first successful Web sites did nothing more than explain how to send a fax from a computer. When people first connected telephone lines through modems to computers, the fax software industry was born with software products converting printable material to faxes. The second generation fax software stored the faxes for subsequent reference. Today faxes gave almost disappeared and all the software that can print, has fax sending built in or provided automatically by the operating system. There was a specific need for fax software, the faster programmers filled the need with software you could add on to existing software then the dinosaurs of the industry, including Microsoft, slowly sucked the market dry by building the fax feature into their software.
A need can be temporary and you can build a business by filling a series of temporary needs, you just need to recognise the needs early and resign yourself to the fact that some needs will be recognised first by your competitors. If you are also good at marketing, you can make your software the successful software when several companies release the same solution at the same time. If you are good at sales then you can sell your whole company for a big profit right at the peak demand for your temporary solution.
Is it really an improvement over what already exists?
Microsoft's Vista is not the faster lighter safer more flexible operating system that people want, instead it is slower, heavier, less trustworthy and less flexible, continuing a trend set by Microsoft with Windows 2000. The only real differences are transparency and a new menu system.
The transparency stuff has been used in games since last century and for a while in Sun's 3D desktop but it slows down both the presentation and the comprehension of information, which will lead to a market for products that remove the transparency, the same as people rushed to remove the delay caused by animated transitions in Windows 2000.
The new Vista menu looks interesting if you do not have to sit down and use it day after day. There are already products to remove the menu overhead of previous Microsoft operating systems and they will be converted to provide alternatives in Vista.
If Microsoft's Vista is not an improvement, just a cosmetic change, what does Apple's first phone give us? There is a smiley style mouth etched on the front. The large screen is old hat because large screens are already available from several companies. The MP3 player is nothing new, my previous phone and the phone before that all played MP3s, and Apple's phone does not yet have an SD card slot or a mini or micro slot, which makes the Apple approach years out of date. The Apple phone lacks FM, something readily available for years in other brands. Clearly Apple want to keep their phone out of date so they can come back every six months with an upgrade, one that will rip more money out of their loyal customers. The Apple phone may be primitive compared to existing phones but it will sell because to an Apple addict, the Apple phone is an improvement on the iPod, Apple disciples will at last catch up with everyone else and be able to carry just one Apple device instead of carrying an iPod and a phone.
An improvement can be illusionary and only needs to be visible to a niche market. Think in terms of creating a computer game or a book, a movie, any form of entertainment. If you create something exciting then it may be too exciting and there could be a niche for a less exciting version. In movies and computer games, there a ratings for parental guidance. When you create a product with a restricted rating, you could start a second brand to release a similar product with a different rating. Disney created the Buena Vista brand to release entertainment that is too adult to get the G rating traditionally associated with Disney. You could create simplified versions of all your products for younger audiences and ensure they get a G rating.
While on the subject of multiple brands, there is also a niche created by distribution. Electrolux used to sell door to door, so Electrolux purchased the Volta brand to sell to retailers without devaluing the Electrolux brand. There are three major cable networks in America and they compete to buy the big movies. There is a demand from each channel for the movies they miss in the initial auction. If you produce a big movie then buy the rights to similar stories and license another brand to produce a cheap competitor. When you go to the big three networks, you can sell your big movie to the main bidder then go back to sell your own cheap knock off to one of the losers from the first round of bidding. You make a profit on both the original and the clone. Computer software developers sometimes sell old versions of their products under a cheaper brand.
The important thing is to release your competitor for your product before your competitors release a competitor. Adobe competes against Adobe Photoshop by selling Adobe Photoshop Elements. Some potential Photoshop customers will buy Photoshop Elements instead of Photoshop but in most cases the people buying Photoshop Elements will be the people who were going to buy Paint Shop Pro.
The free open source Gimp will eventually push both Paint Shop Pro and Photoshop Elements down market but the Gimp open source license restricts the packaging of Gimp with other products which makes Photoshop Elements a better choice for manufacturers of cameras and scanners. There is a market for products that are no better than the existing products but can be very easily packaged with other products and easily rebranded. Could your product be instantly changed to look like it came from Kodak or Canon or Nokia?
Is it easier to use than what already exists?
Some Apple iPods are easier to use than competing MP3 players because the competing MP3 players offer all the things that the iPod does not. The Apple phone may be marginally easer to operate than the many phones already on the market because the other phones already offer so many more features. If the iPod can be used to judge the Apple phone, the Apple phone will end up with a warehouse full of accessories you have to carry to use the Apple phone and will then be vastly more complicated than the existing devices that have everything built in.
One big selling point for Microsoft's Vista operating system is the zero entry entertainment option where you can play media without starting the whole operating system, but that was already available in XP and just hidden away at the last minute to make Vista seem easier. For most people, fixing the minor corrections already started in XP would make XP far better than Vista.
Microsoft will spend a lot of money showing people situations where Vista looks easier than the existing products and, if they cannot find a situation where it is easier, they will just show lots of cute people smiling. They could grab a bunch of good looking people, give them a mixture of valium and mega caffeine, then film the zombies sitting in a park with a laptop. The computer graphics people can add butterflies then the studio adds a voice over promising incredible ease of use, then the music department drowns out the voice over with upbeat music so the voice over can never be interpreted as an actual promise. This is not a new idea but it works repeatedly with all classes of products and especially well with software, where anything that looks different, looks new.
Whatever you do to make your product easier to use, think about how you will show prospective buyers that your product is easier to use. You need a convincing demonstration. You have to compete with products that are actually harder to use but, due to trickery, look easier to use. Tricks include hiding options from users when they first start using a program, a trick that can make the product many times more annoying later on when the user has to change something.
Is it safer that what already exists?
Microsoft's Vista is closed source software which makes it a total unknown, something to stay away from for at least two years while everyone else finds all the problems. Microsoft releases big bunches of repairs as Service Packs and Windows 2000 was not trustworthy until Service Pack 4, which was released several years after Windows 2000. Vista will not be safe for at least two years and two service packs.
The real danger with Apple's first attempt at a phone is not the phone, which is very ordinary, but with the service. Apple make there iPods with batteries you either cannot replace or cost more to replace than to buy a new item. The Apple phone is likely to also be a use once and throw away item. To radically increase the cost to you, and the profit to Apple, Apple sell the phone locked into the Cingular network. Locked in networks lead to the network overcharging so they can pay huge fees to the company creating the lock in, in this case Apple. You pay over the top to buy the phone then you pay Apple a huge margin on every call. Then in six months the battery fails and you have to buy a new Apple phone.
Think about how your product can be dangerous, not safer, because locking your user into an expensive service is the current fashion. Give the product away free then make the user buy something related to the product. Apple charge so much for music downloads that they could give iPods away for free if they simply forced iPod users to buy all the music through an Apple Web site. VoIP phone makers give away software based phones for free but locked into one Web site where the user buys dial out and dial in services. Hardware VoIP phones are sometimes heavily subsidised for the same reason.
If your software product sells for $30 and you can split it up into six parts, then sell each part for $9.95, you would make more money. You could give away the first part for free and still make $49.75 on the other five parts.
Is there a competitive point of difference?
Competitive points of difference are what you pay your marketing people to invent. QANTAS set up another airline named Jetstar to compete against QANTAS in the lower price segment and, more importantly, drag enough money out of the market to stop competitors entering the market. Jetstar prices are lower because the new company hires people at cheaper rates under contracts that offer fewer benefits. The cheaper labour allows lower ticket prices.
Virgin Blue competes against Jetstar and has few obvious advantages on some flights because both airlines offer the same service for the same price. Both airlines fly into Melbourne and there is a real competitive point of difference on those flights. The airlines use different airports on the opposite sides of the city. For most visits to Melbourne Virgin Blue lands at the airport closest to where I want to go. On occasions Jetstar has cheaper flights to Melbourne but never enough to make up for the difference in travel time.
Microsoft has only one competitive advantage with Vista and that is the tendency of computer manufacturers to preload Microsoft operating systems onto the computers. If Microsoft had to compete on product difference, most people would stay with an earlier version of Windows. I stick with Windows 2000 on my Windows based computers because it is so much faster than XP and Vista turns out to be many times slower than XP, which makes Vista useless to me.
Microsoft do have another competitive advantage and that is their ability to switch off support for older operating systems. Microsoft never really fixed USB support in Windows 2000 because they wanted people to upgrade to XP. In my case, I know how to avoid the USB problems in Windows 2000 and cannot be bothered learning how to overcome all the problems built into XP. A switch from Windows 2000 to Linux would be easier than the switch to Vista.
If Microsoft want experienced computer users to stay current with the latest Microsoft Operating system then they should bring out a competitive point of difference not based on control of the market.
Apple's first phone will move a lot of money away from conventional fashion accessory phones including the Motorola Dolce & Gabbana phone best known for gold paint that peels off. The Apple phone is too big to look good in the old refrigerator white of the iPod so Apple went the way of all the other phones out there and used black mixed with cheap metal. Apple has few technical details on there Web site, presumably because the phone does very little. The Apple phone does less than my old phone and less than the model that replaced my old phone but the advertising graphics on the Apple Web site actually make the Apple phone look good.
If you have a competitive point of difference then you have to show the difference in a way that is instant so that people can see the difference on the first part of the first Web page where they see your product. If you get the presentation right then the impressive presentation could be the only point of difference you need. Apple also made sure their impressive presentation works without the artificial colour or flavour of Flash or Quicktime.
You need a point of difference and it has to be visible, dramatically visible. Car manufacturers are flooding the market with truly ugly cars in an attempt to make something stand out. You can make a product stand out with good packaging and make it stand out in different markets by packaging the product under different brands. When someone suggests improving a product, listen to the way they explain the improvement and think about how you will present the improvement to prospective customers, ideally as a dramatic colourful picture.