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No Xbox DRM: Consumer voice matters when industry is competitive

The internet took a victory lap when Microsoft announced a major policy u-turn regarding it’s next-generation video game system. Microsoft pulled back limitations on used video game sales and frequent online checks verifying the system.  Key in their decision was massive consumer backlash. But also key to the u-turn was the presence of strong competition, specifically Sony, who announced their system would lack any restrictive DRM.  The pressure of consumer backlash combine with a viable alternative compelled Microsoft to give consumers what they wanted.

The video game console industry is particularly unique. It’s a large industry with only three significant players (Microsoft, Sony, and Nintendo), but profit margins can be very tight, particularly early in a new console’s life cycle. Consoles are often sold at a loss in order to establish a larger user base and make up the costs from software licenses. Early values are valued, even when selling at a loss, because the lifetime customer value will be higher and third party game developers will be more interested in selling games on the platform (leading to greater license revenue).

Microsoft and Sony are heated competitors, even on many fronts. Both have comparably functional consoles. Exclusive games, mostly developed by Microsoft and Sony’s own studios, are the key differentiating factors. Nintendo, while also a key competitor, has been targeting a lower price point and more casual gamer, whereas Microsoft and Sony have preferred the hardcore gamer and all-around entertainment center market.  Competition from mobile devices and the PC have further constrained the market size and profitability of the console market.

Compare Microsoft’s response to consumer demands for Apple to open up its iPhone platform, for example, allowing alternative default applications.  Apple and Android are engaged in a mostly two-sided war.  Android, in fact, is by far dominating in market share. But even with its lower market share, Apple is far more profitable. Incredibly profitable. Apple, who manufacturers both the hardware and software for its iOS platform, generates so much revenue, and commands such loyalty from its customers, that Apple has little incentive to respond to those customer demands. Rather, Apple can provide the product it wants to provide, not the product its customers claim they want.

Once again, we’re reminding how important competition is to improving the customer experience.


Why I prefer marketing to selling (updated)

I like marketing; I don’t like selling. Various jobs have asked me to perform varying levels of both. One I enjoy; one makes me feel dirty.

First, let me define marketing and selling for you. Marketing seeks to offer solutions for the needs of a group of people. While marketing is targeted, it is targeted at those with this need rather than a specific person. Selling is done to a specific person.

Let’s say I make lunches. Everyone in my office is my market for lunch. I can put up posters marketing my lunch and some people will buy it. If I’m selling my lunch, I go up to a specific person, relying on them to buy it. If they don’t, I’ve wasted lots of time trying to convince them.  Think about the difference between seeing a car commercial and going to the car dealership. One is exciting, the other leaves you feeling dirty.

I recognize I am coming at marketing with an idealistic view. I believe that marketing is a worthwhile endeavor when handled in a needs based manner. This is why often the best products need no advertising, relying instead of word-of-mouth and brand trust. While that’s an extreme (it worked for Google), most companies and products can benefit from smart marketing rather than selling.

Now social media throws some new tools in the marketing arsenal while also complicating my definitions (is promoting something on Twitter marketing or selling?). I think the best way to approach any marketing is to focus on building your brand and then letting that trust (and the quality of your products) sell themselves). For instance, marketing on Twitter or on your blog should be more about providing a service to your readers, whether by providing information on a subject important to them or highlighting research in your field. Corporate blogs are excellent tools to show your company’s expertise and provide valuable information to users, ensuring readers will turn into future customers when you have a product they might want.


Every employee is a content producer: The secret to SEO

The biggest secret in search engine optimization is that quality content, not buzz words, will get you top spots on Google.  This, of course, is the hard part.

Google’s PageRank determines the value of your website by who links to you. The more popular the linking site, the higher you’ll jump on search results.  The best way to get these links is to provide worthwhile and helpful content that others will want to recommend and link to.  One of the best ways to make this happen is to get your employees writing.

I receive significant push-back at this recommendation. Either employees are already too busy or they don’t know how to write.  Even if these excuses are true (and they are excuses), re-prioritization of resources and time (and some editing) can turn your entire staff into a blogging machine.

Recognize that your staff is already made up of experts in your field, and this if valuable for both your company and employees. IBM knew this and gave every staff member a blog, creating a vibrant and exciting array of niche, technical blogs. These blogs increased traffic and brand awareness for IBM while giving its employees visibility and respect among their peers (and likely helping them earn promotions or better jobs in the future).

Most companies can get away with a single blog written by most of the staff, each writing to their strengths. Have marketing people write about marketing your brand. Sales people can talk about new tricks they’ve learned.  The key is to make the content valuable to others, not simply self-promotion.

This should only take 30 minutes or so, and it can easily be done once or twice a week without hurting other aspects of your business.  The benefits far outweigh the added responsibility. Marketing and sales can become easier since clients have more ways to evaluate your company (and see how smart your employee’s are). Employees will enjoy the creativity and chance to show off their intelligence while learning new skills making them more attractive to future employers. This is a win-win and important for any company’s SEO and social media strategy.


Problem solving, marketing, and Bing

Microsoft’s newest rebranding of its search engine (is this the 3rd?) is coupled with an $80 million marketing campaign and an assortment of TV ads.  These TV ads follow the conventional marketing tactic: define a problem and present a solution.  Problem: Search doesn’t work, offering the wrong results for your query. Solution: Bing, the first decision engine.

But that problem doesn’t exist.

Microsoft’s incredibly annoying ads (and I liked the weird Seinfeld ads) are better suited for the late 1990s when search really didn’t know what words went together or how to best serve results. Now, search works pretty well.

If I search for breakfast or lcd vs. plasma, I get results for breakfast food and which kind of TV to buy (even without putting TV in the search query). This is the same on Google, Yahoo, and yes, Bing, and has been true for about a decade.  So Microsoft’s trying to solve a problem that doesn’t exist.

Mostly, Microsoft’s massive marketing campaign did more to impress the press and investors, who did their part to claim Bing was winning or posing a real threat to Google, which has been shown not to be the case. At best Bing is just a more publicized version of Windows Live. Let’s remember, Google became Google with no marketing at all (and only started advertising a little last year). Having good products helps.