Tip to Microsoft and Verizon: think better -- lots better

Two news items this morning caught my eye: first, that Microsoft had developed two new lines of Zune music players to compete with the iPod, and second, that Verizon was introducing a touch-screen phone made by LG in November to compete with the Apple's/ATT's iPhone. And while I admire the hard work of both companies, I"m afraid I have bad news for both: both products are doomed. Why? Because they are too much like the products they are trying to replace.

See, the problem with imitating a market leading product is that you give the prospect no reason to buy your product instead of the lower-perceived-risk dominant vendor. Said another way, marketing a me-too product, by its very nature, increases awareness of both the new product and the market leader. Unless the upstart company provides significant -- I repeat significant -- differentiating value to the buyer, the competitor ends up promoting the market leading product as well as their own. And since the market-leading product already has established its value proposition before the competitor showed up (if they hadn't, they wouldn't be the market leader), they are more likely to make the sale.

For example, take a look at Engadget's comparison chart between the new Zunes and the Apple iPods they compete with. The striking impression you get from the table is that the products are nearly identical, with similar list prices, capacities, form factors, and colors. With so many items in common, how can Microsoft claim that the Zune is so much better than an iPod? The anwser is that it can't, at least not in a simple and easy to understand way.

Verizon has more in its favor, since its network is itself a differentiating factor to its prospects. But I challenge any Verizon salesperson to successfully sell the new Voyager handset without uttering the words, "It's like an iPhone, but it has...." The product is just so derivative and similar, that comparisons will be irresistible to most ordinary people, and that comparison will just continue to validate the iPhone's lead, even if the LG device sells well.

Back in the olden days of computing, there was a mantra that said that to successfully compete with IBM (the market leader at the time), your product had to be 10 times better or you'd never get in the door. Today, too many companies are ignoring that mantra and trying to sell "just as good" instead. Regardless of how necessary it is for those companies to compete with the market leaders, me-too isn't good enough. To win, they have to be better -- lots better.

Full disclosure: the author owns Apple stock.

Technorati Tags:
Apple, iPhone, iPod, Marketing, Microsoft, Zune, Verizon, LG, Voyager, Differentiation

Halo Homage: The Future of Gaming

This video paying homage to last week's Halo launch had my family rolling on the floor laughing. It's probably the best "if you extend the trend indefinitely you get..." analysis I've seen. And of course, the more you know about the video game market and Halo, the funnier it is.

Not to be outdone, the Zune gets a price cut and an apology to boot

After writing about the strategy and marketing behind Apple's iPhone price cut to $399 yesterday, I was most amused to see Woot imitating Apple with a price cut on the Microsoft Zune to $129. It's a one-day only deal, so I've captured the image up above. But considering that even a refurbished previous generation 30-Gigabyte iPod (Apple no longer makes a disk-based iPod that small) will set you back $200, it certainly demonstrates that the dollar value difference between Apple's and Microsoft's marketing skills.

But note I didn't say Woot's marketing skills, because Larry Stalin's apology letter accompanying the price cut (and lampooning Steve Jobs) is literally priceless. Here are some excerpts.

Second, I am sure that we are making the correct decision to lower the price of the 30GB Zune from $149.99 to $129.99. This confidence is based on more than the holy doctrine of corporate infallibility. The Zune is a breakthrough product, and we have the chance to “ride the lightning” and “shoot the curl” this holiday season, not to mention “kill the messenger” and “rock the vote”, further enabling us to “pay the rent” and “keep the lights on”. It benefits both Woot and every Zune user (but especially Woot) to drag as many new victims as possible into the Zune “dungeon”. We strongly believe that misery loves company this holiday season.

Third, being in technology for 1+ years, give or take a year, I can attest to the fact that the technology road is bumpy. There is always some idiot changing lanes without signaling, and the potholes never seem to get fixed. If you always wait for the next price cut or to buy the new improved model, you’ll never buy any technology product. I mean, why should you? Truth is, you don’t really need any of this junk. We’re afraid you’ll catch on to that fact and overpaid frauds like me will have to go back into fields like telemarketing and burrito construction. Fortunately, most of you continue to languish in a consumerist stupor, wallets spread wide for us to plunder as we please. The bad news for us is that if you buy products from companies that support them well, you will receive years of useful and satisfying service. But we’re hoping you’ll buy from Woot instead.

I have to say, Larry's pitch was so entertaining and funny, I was sorely tempted to buy one just to reward the guy for his creativity. Larry's proven ability to convert someone who has no interest in a product into a prospect demonstrates that he has a very bright future ahead in either comedy writing or marketing. I hope he sticks with marketing. It might pay better, and we need the laughs.

Technorati Tags:
Apple, iPod, Marketing, Microsoft, Steve Jobs, Larry Stalin, Woot.com, Zune

Microsoft and Sony fall short in holiday video game console sales

UPDATE: According to Engadget.com, NPD has refuted the numbers that are the basis for the story below. So take the below with a grain of salt, although they don't sound wildly off to us. But it certainly explains why I couldn't find the original press release link on the NPD Web site.

New NPD estimates of US sales of video gaming consoles for the fourth quarter were as follows:

XBox 360:	2,000,000
Nintendo Wii:	1,800,000
Sony Playstation 3:	750,000

Now, Blackfriars did some estimates back in December of the sales of XBox 360s and predicted that Microsoft had to sell about 4.1 million units in the holiday quarter to make its press release goal of selling 10 million units by the end of 2006. So the open question is how Microsoft did outside the US, since NPD's estimates are US-only.

Blackfriars' estimate is that international XBox 360 sales were only about another million units, meaning that XBox 360 sales are currently at about 8.9 to 9 million units as of the beginning of this year. Now this isn't a significant problem for Microsoft, since it probably just shipped another million units to retailers on December 31, since its press release explicitly counted units that were in transit or storage for subsequent sale. However, for video game producers and retailers, though, those units don't really count in the installed base.

Now Microsoft isn't the only company falling short here. Sony had predicted selling 2 million PS3s this holiday season, and while it undoubtedly sold well in Japan, we estimate that supply constraints kept its total sales only to about a million or so world-wide.

But of course, the big winner here is Nintendo, who managed to sell 1.8 million Wiis in the US last quarter with only six weeks of product availabilty. And when you add in Japanese sales, where Nintendo is much favored over Microsoft, odds are that Wii actually outselling XBox 360 world-wide at the moment.

Technorati Tags: Blackfriars, Sony, Playstation 3, Microsoft, XBox 360, Nintendo, Wii, Marketing,

Microsoft's Zune advertising just gets weirder

Happy New Year!

And now without further ado.... TechZo has posted what it claims is Microsoft's latest ad for its Zune music player. I wonder if it might be a hoax, since it runs about 45 seconds, which is not a standard length for broadcast TV. I wonder.

But just for fun, I ran it through Blackfriars' advertising review to see how it scores on our 25 criteria for effective ads. It scored 5 out of 100 points. That's not just failing, but failing with an attitude. Impressive.

Just for the record, the only points that the ad received were for the appearance of the logo, and the fact that the ad creates an emotional response, albeit a bizarre one. But there is no question that this is one ad for the record books; I'm not sure I've ever seen one quite this awful.

Technorati Tags: Advertising, Advertising review, Blackfriars, Microsoft, Zune