End Users & Predicting Who Will Win

Tech Crunch is reporting that Revver is in trouble and willing to sell itself cheaply, having accumulated almost $1 million in debt.  Microsoft is launching a hostile bid for Yahoo.  This smells a lot like the late 1980′s merger and acquisition market, now moved over into the high tech arena.

There’s a great book I read (well, listened to) last year called Blown to Bits.   It talks about how the digital economy is fundamentally stripping out profit from long-standing companies, ranging from local printers and travel agencies (the first to go) to Encyclopedias and newspapers, to other businesses.  By doing things faster, more efficiently, and often cheaper, the web can have a huge economic effect on traditional things like newspaper ads.  If you have a garage sale, the local newspaper may still be your best best- but why not try it on craig’s list as well, for free?  If you have left over stuff, you can sell it on ebay.  And if you are just unloading a couple of big items, like a couch or golfclubs, the price of the ad can outstrip your asking price, making ebay or craig’s list a much better alternative altogether.

Another  point Blown to Bits makes is that many companies may enter a digital marketplace, but one will come to dominate, a few more may do reasonably well, and the others will eat the crumbs- in essence, another version of the long tail.  Think of Amazon.com becoming a sales portal for books and more; Ebay as a portal for the secondary (and sometimes primary) market for just about anything; Google for search; and it goes on and on.  While the quality of the old Encyclopedia Brittanica  was scholarly and well researched, people now want information faster than ever before.  What used to cost thousands of dollars for a set can now be found on a CD ROM for about $20.  And the jobs of all the sales people as well as researchers have largely evaporated in favor of the frequently quirky and not totally reliable Wikipedia, and Google itself.

End user issues help determine who will win- who has the interface that is easiest to navigate and adopt?  Who gives you what you want, and what you need?  Who gives you features that rethink how something like email is delivered?

Macs are starting to gain marketshare, and the ipod is winning the mp3 player market because the end user is delighted more often than not.  Things work.  Customer service is good.  You don’t have to read a 400 page manual to work something, and online help is easy to get as well.  The interface is lovely, and it’s easier than ever to find and even back up your stuff.  Apple surprises and delights users because the stuff looks fresh and new; it has features without feature creep; and it keeps end users in mind always.

R evver may be losing the battle in part because blip.tv and other services are better looking and easier to use.  Subtle likes and dislikes drive the market, and when more novices are entering the arena, end user impression will make all the difference.

It’s also why I am not all that concerned about Microsoft trying to purchase Yahoo.  I have a yahoo account, but I rarely use it- my google account is my home on the web. Yahoo works, but it is visually cluttered and not as intuitive as Google.  Now that said, I love Flickr, a Yahoo service, because it is everything Yahoo itself is not- clean, easy to use, social and seamless.

Google wins in my book for many reasons.  Email is threaded and easily searchable; Google docs work well for online collaboration, and even my igoogle home page is customizable and changeable as my whims dictate.   I never knew I needed any of these features before I had them, but I use all of them, and they’re simply wonderful- helping me keep my digital life somewhat organized and under control.  Google knew before I did, how threaded email would help me- something my comcast email still can’t do.

If you want to get some perspective on how the digital age will continue to carve profit out of traditional companies, read Blown to Bits.  In the alternative, listen to Douglas Adams’s series on BBC Radio 4 called Hitchhiker’s Guide to the Future.  While some of this may seem a bit dated since it was produced in 2001, shortly before Douglas passed away, but for the most part, it is talking about a future we are living today, and growing into shortly.  Entertaining and insightful, you don’t want to miss this.

Thinking About Culture and Assimilations Online

Microsoft is buying Yahoo, and the question of the day is what does this mean for both Microsoft and Yahoo, along with the many users of their products.

Ultimately, the success or failure of the venture will depend on just one thing- Culture.

How does Culture Form? 

The first day of school, every year, is an exciting and terrifying experience. There’s excitement about seeing old friends, and who will be in your class; there’s fear about what the new teacher will be like, and whether you’ll get along; it’s like entering a new micro-society. Fortunately, all the other kids in your class, and the teachers feel the same way. You will be forming a community we call the Classroom in fairly short order. People will self sort into roles including class clown, the smart one, and all the other iconic classroom roles within the first few weeks, if it takes that long. The class may even develop its own set of rules, and as people get to know one another, the class will hopefully function well as a unit. If it doesn’t, and kids don’t find a flow, the atmosphere will be disruptive for everyone in the room.

This same sort of situation takes place in almost any group or community setting.  Whether it’s online or not, business or pleasure, each group has some cultural DNA- it’s what makes the group or community stick together, and often it’s what brought them together in the first place- a set of common interests or goals.  Sometimes the rules are very clear from the outset, but more frequently, they are largely unspoken rules of behavior and conduct that develop over time.  We can call this “family values”- the rules you have in your household, or “community values” for larger groups ranging from the PTA to message boards and blog posts, but at the heart of it, the story is the same- everyone coming together to form new rules.

When Cultures Have to Merge 

Two things tend to happen when cultures come together.  Some people assimilate, and others continue to remain separate and distinct, tied to the larger group for reasons other than just common purpose.  Let me explain.

Immigrants to the US tended to form small pockets and communities- think Jews in the lower East Side of Manhattan, Little Italy, Harlem, and Chinatown;  the wonderful neighborhoods in San Francisco, and for that matter, most of the interesting neighborhoods in large US cities have an ethnic focus.  People tend to congregate there because other people like them are there, and they feel comfortable with others with whom they share a culture, even if they live in a strange new place.  Over time, many people try to assimilate into the larger world and community that includes more than just the “neighborhood”.

Often, the roots or cultural DNA remains established in the physical area people initially settled, even if many of the original residents no longer live there.  Think about the french flair that remains in New Orleans despite the fact that the Louisiana Purchase occurred in the 1800′s.  French and Creole cultural elements remain, and even the laws of the State remain based on Napoleonic Code rather than English Common Law, causing headaches to law students everywhere who learn general legal principals rules and have to add the addendum “Everywhere BUT Louisiana.”

How Does Any Of This Apply Online? 

Well, businesses are organizations just like the local PTO, Church Group, or school.  Each has its own set of operating principals and rules, making it easy for stereotypes of “An IBM Guy” or for that matter, “A Mac User” to become cultural shorthand to tell us a lot about someone before you even know them.  Just like you know it’s a safe bet to guess that your new jewish friend likes bagels, it’s a safe bet to guess that anyone over the age of 50 who has worked for IBM has a closet full of suits he wore to work for years, looking as much in uniform as if it were standard issued apparel.

When companies merge, there’s always fear about what the purchase will “change”.  Recently, when Sears bought Land’s End, people worried about the future for Land’s End.  Land’s End has a reputation for good clothes at a good price, great customer service and reliability.  Sears has a good reputation for Craftsman tools and decent, affordable appliances, but a lousy reputation for clothing quality.  (My favorite joke was always the “seer sucker suit” interpreted as “any sucker who walks into Sears will buy that suit”)   People were worried the cultural DNA of Land’s End would be forced to become that of Sears.  Surprisingly, Land’s End has been able to keep on doing their thing, and the merger’s main change has been to allow Land’s End customers to get their hands on product at a local Sears or do returns there rather than through the mail.

Microsoft and Yahoo

This merger will be interesting.  Microsoft has been seen as a big giant who works on innovation, but the end user is not always in mind when they design products.  The engineers are in control, and feature creep seems to predominate over intuitive usability.  Yahoo is an online community and search engine along with some interesting web -based tools like Flickr, that I use all the time.    I can see what Microsoft gains by purchasing Yahoo.  I’m not sure it’s as clear to me what Microsoft can do to leverage Yahoo, and what the merging of these cultures will mean.

For me, I rarely use Yahoo except for flickr.  Why?  It’s interface is clunky and visually distracting.  Google by way of comparison, has important usability features I just don’t find on Yahoo, like threaded email conversations, google docs, google groups- Google is my grocery store or mall, where all of my online needs are satisfied in one interface.  In Yahoo, the process of getting in and out are burdensome enough, and the integration with all the other things I use isn’t as smooth.  It’s not as simple as new and old.   It has to do with ease of use, intuitive interface, and being able to solve most of my problems myself, quickly and easily.

Remarkability

Seth Godin talks about remarkability all the time. What makes something special and noticeable, and worth talking about.  Unfortunately, I don’t really find most of Microsoft or Yahoo remarkable now, and I doubt the merger will change any of that.  I worry that Flickr will change, but they will probably be smart enough to leave the good stuff alone (hopefully).

Microsoft may want to change its ingrained perception in the marketplace, but that will involve a cultural change and shift that aren’t easy to accomplish.

Think about the purchase of Cingular by AT & T.  First, they spent millions rebranding every AT & T store into Cingular stores, because Cingular had a decent reputation, then almost as quickly, they decided to change them all back again to the “new” AT & T.  I think this branding and rebranding was remarkably stupid.  Tide doesn’t change when you put a new label on the outside- it’s still laundry soap.  AT & T had developed a lot of brand disloyalty over the years, and this follows them around.  Branding changes don’t change the animosity built up over years of bad experience with land line phone services- they lost consumer trust, and just because the phone is cellular doesn’t change things.   Experience tells us not to expect stellar service, and that’s why lots of people are still waiting to buy an iphone- years of built up brand disloyalty with AT & T, having nothing to do with their cell service.

Microsoft and Yahoo may do things differently, but the cultural DNA, as seen from the outside, leads me to suspect everything will be more of the same, middle of the road, “good enough” products, but nothing that will surprise and delight.  And that’s really too bad for both companies in the end.