What Happens When the Marketing Mix Changes?

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What happens when you take away one of the 4-Ps? It makes the whole universe of marketing a heck of a lot harder. In essence, this is what has happened in the modern software business and this is why the smartphone world will never end up like the PC world.

If you are not familiar, the 4 Ps are:

  • Place
  • Promotion
  • Price
  • Product

When Apple came out with the iPhone 3G in 2008 it also changed the rules of software sales. By building an App Store, Apple took away one of the 4 P’s, Place, and put all the stress on Price, Product and Promotion. Not too bad, you’d think. Even I was a big proponent at the time. Back in the Palm days we talked about how much easier it would be for customers if there was one single place to purchase apps and download them directly to the device. After all our biggest problem in those days was awareness and our biggest support problem was installation. By having a store on the device that would take away these problems, our world as developers would be so much better. What could go wrong?

Yeah, well, the law of unintended consequences always finds something.

By removing Place suddenly all the emphasis was put on the other three Ps. Since all apps were in one spot, it became clear very quickly that reasonable software prices were not sustainable. App prices began to drop and drop and drop until prices for the average app reached about $0.35 each. With Place defined and Price so low, Promotion became a problem. Where can we each promote our apps and still make a profit when the average app is only a few cents? And how do we promote when the only place people go to find apps doesn’t take ads? So it all comes down to Product.

Don’t get me wrong, some products found their way in this world. Gaming, in particular, has done quite well with its pay-to-play models, where the app can build buzz, become its own network effect, and then build revenue off a small sliver of heavy users. But this hasn’t worked as well in productivity where apps are either a few bucks or, if you really want to be successful, free. Most of these free apps have some way of making money away from the app stores.

I’m only picking on software but this is also one of the major problems with smartphone hardware as well. Once upon a time we bought PCs from a plethora of computer, retail or web outlets. Now, unless you are an Apple customer, you head to your local carrier store. For device manufacturers Place is gone, too. The carriers dictated Price, Product features, controlled all Promotion. Compared to the carriers, app stores so far have been downright benevolent.

What breaks this logjam, at least for the software world? I don’t fully know but clearly business models are changing. Games have started to figure this out. Fewer and fewer of them are fixed price, buy once stuff. Pay to play models are more and more prevalent. The same will be true for productivity apps. The future clearly will be some sort of freemium subscription model. The beauty is these models don’t need to be expensive. The infrastructure is cheaper, the distribution is cheaper. But it still costs money every year to develop and support these products. I hope consumers will adjust.

The Spy Novelist Who Knows Too Much

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Great read from The New York Times for this weekend about Gérard de Villiers, a pulp-fiction spy novelist in France who has an uncanny knack of writing about world events before they happen.

Last June, a pulp-fiction thriller was published in Paris under the title “Le Chemin de Damas.” Its lurid green-and-black cover featured a busty woman clutching a pistol, and its plot included the requisite car chases, explosions and sexual conquests. Unlike most paperbacks, though, this one attracted the attention of intelligence officers and diplomats on three continents. Set in the midst of Syria’s civil war, the book offered vivid character sketches of that country’s embattled ruler, Bashar al-Assad, and his brother Maher, along with several little-known lieutenants and allies. It detailed a botched coup attempt secretly supported by the American and Israeli intelligence agencies. And most striking of all, it described an attack on one of the Syrian regime’s command centers, near the presidential palace in Damascus, a month before an attack in the same place killed several of the regime’s top figures. “It was prophetic,” I was told by one veteran Middle East analyst who knows Syria well and preferred to remain nameless. “It really gave you a sense of the atmosphere inside the regime, of the way these people operate, in a way I hadn’t seen before.”

Great read for the weekend. The article, I mean. Something tells me Mr. de Villiers collection would take longer. Oh, and I’d have to learn French.

Really Hard Work

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I really like this very short post by David Smith, esteemed writer of iOS apps. David doesn’t like the idea that to win you have to work really hard. Instead, he thinks the key to success is persistent work.

The difference isn’t just semantics. There is a big difference in how you view your goal if you are trying to work hard versus working persistently. It isn’t about the amount of energy you expend or the stress you survive.

In my experience the people who succeed are typically the ones that outlasted their peers for long enough to become confronted with opportunities well prepared.

I hope he’s right. What is this for me? 16 years and counting? (Although I must admit there has been plenty of stress along the way!)

RIM and the Case for a Third Smartphone Winner

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Blackberry bushes love the Northwest. They grow like crazy here and are generally considered a weed. In the spring blackberry bushes flower and then the fruit grows through the summer, with full bloom in August. The fruit is delicious but often very hard to get to as the plant has some nasty thorns. There’s a fast food chain here called Burgerville that specializes in fresh fruit milkshakes. Their blackberry shakes are to die for. None of this has to do with BlackBerry, the product (and now company as RIM changed its name) but I couldn’t resist the fruit/plant discussion.

I saved a whole mess of articles on BlackBerry announcements last week. I’m looking for signs of life and, frankly, a clue. I may be one of the few people on the face of the planet that believes strongly that there is room for a third mobile platform. I think iPhone and Android are basically attacking the same market segment — entertainment-centric people — and there is room for a product well positioned as an information-centric platform. At one time RIM was well positioned to capitalize on that market with its messaging-centric devices.

So the question I’ve been asking myself for the past month since the company name change, BlackBerry 10 and new devices were announced is this: can BlackBerry be that company.

There are some potential signs of life from the things CEO Thorsten Heins at the announcement. He said his devices are aimed at “people who need to get things done, people who need simplicity, and balance” and “people who consider true multitasking a must have.” Okay, maybe some signs of life. But then Heins also said, “hyper-connected social multi-taskers” and “We will soon give you more ways to connect your mobile experience to not just other people, but the whole world around you,” neither of which, frankly mean much of anything.

What does it mean to be an information-centric user? It means that the devices are designed and meant to make us more productive, caring less about entertaining us. Let me give you some examples, some of which could be accomplished today and some of which are dreams of a better future:

  • Calendar, contacts and tasks are all interconnected seamlessly across all devices
  • Devices are smart enough to change directions for you when it sees you have steered off course
  • Devices talk to parking meters and tell us which spot, closest to my meeting, is available
  • It monitors my calendar and traffic patterns and tells me that I need to leave
  • It sees a meeting request and automatically schedules it tentatively, waiting for approval
  • It knows all the information I’ve created and all the connections I have and tells me all about a person as I walk into the meeting

This is the tip of the iceberg, obviously, and the one company who is doing any of this is Google.

Jean Louis-Gassée backs this up with an article on why iPad just isn’t up-to-snuff as a professional tool. ”But when we take a closer look at the iPad ‘Pro’, we see that Apple’s tablet is far from realizing its ‘professional’ potential. … The more complex the task, the more our beloved 30-year-old personal computer is up to it. But there is now room above the enforced simplicity that made the iPad’s success for UI changes allowing a modicum of real-world ‘Pro’ workflow on iPads.”

Back to BlackBerry. There was nothing in the BB10 announcements and reviews that left me believing that RIM has this perspective. Here’s a few additional quotes:

  • Walt Mossberg review: “If you use a corporate network controlled by an IT department, and want to keep your work and personal apps separate, BB10 has a simple way to do it. You just swipe down and press a button called “Personal” or “Work” and the apps, and even the background, change. However, email and calendar entries are still intermingled.” A sign of hope. At least they get the dual use for devices.
  • Interview with CEO Thorsten Heinz, answering the question, “What does BlackBerry mean to you?” Heinz said, “Innovating in the field of mobile computing by being bold.” I have no idea what that means. What? Android isn’t bold? Apple’s sitting on their laurels?
  • Alec Saunders, VP Developer Relations from a developer event in Amsterdam: The themes BlackBerry wants to encourage for BB10 apps are “integrated, social and beautiful”, he said. ”Don’t just port the apps you’ve built over — build us applications that are specifically for BlackBerry 10.” You don’t want popular apps just new stuff? And how is “integrated, social and beautiful” different then the apps on iOS and Android?
  • Joshua Topolsky in his Z10 review talks extensively about apps. He highlights a few of the bundled ones: Messages, Camera, Maps, Browser, Remember and Story Maker. Camera and Story Maker (a video editing app) are primarily consumer-oriented. Browser is a requirement for all. Remember, Maps and Messages are all prosumer apps. Unfortunately Topolsky’s biggest problems are with the prosumer apps. He particularly finds the Messages app, Blackberry’s original claim to fame, slow and painful for anyone who gets lots of messages. Maps, he said, is horrible at directions. He does mention that Dropbox, Evernote and other third-party services can be added at the operating system level.

Maybe the reality of these devices in professional hands will prove differently. Or maybe BlackBerry felt they needed to match iOS and Android strengths before moving in its own direction, something I don’t believe but could be enticing for an also-ran uncomfortable in its own shoes. But I highly doubt either of these are the case. My gut tells me BlackBerry is in an awkward position and will never again regain its former glory.

Map The Future

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My friend Michael Mace wrote a book on a topic that, I think, he is one of the world’s foremost experts in: mapping the future. I met Mike when he was the chief competitive officer for Palm. Since then we have had long conversations about where the market has been and where it was heading. I am constantly amazed at the foresight he has had.

Mike just released a book on the topic called Map the Future and I was privileged to read a pre-release copy.

Most companies think about the future the wrong way. Visionary companies try to impose their will on the future, like a military drill sergeant; analytical companies try to predict the future in detail, like a weather report. Both approaches fail when there are changes we didn’t anticipate. The reality is that the future’s not determined yet, so you can’t predict it exactly, and you can’t always control it. What you need instead is a map of the possibilities, like a highway map for the future, so you can see where you can and can’t go, and then nudge events toward the future you want to see. Map the Future teaches you how to build that future roadmap, and how to use it to drive strategy.

Mike describes it as a cookbook for business strategy. I highly recommend it: Mike’s site, Amazon, or Barnes and Noble.