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Forget coming, the Chinese are already here

January 25th, 2012 No comments

I haven’t been back to Photonics West, the premier conference and trade show for the photonics industry, in years. I’ve missed it! But being away gave me a chance to notice something that, while obvious, might have slipped by the regular visitors.

Years ago, many of us in the industry debated the role of the Chinese in the photonics marketplace. Low quality, many reasoned, but the rest of us recalled hearing that argument before about Japanese manufacturing, then Korean, Thai, and everyone else. We could guess that today’s low quality were gathering skills to compete directly with U.S. manufacturers.

Only five years ago many companies were already feeling pressure from Chinese manufacturers (indeed, in lower skill assemblies) but today the tradeshow floor wasn’t filled with Chinese made products from American and European designs. It was filled with Chinese people selling Chinese products. From optics to lasers, all the way to complex instruments the Chinese were no longer content to offer cheap labor to product manager’s problems, they were here today to meet with researchers directly, and see how well the fruits of their labor would solve their problems or create the next markets.

This dilemma and what exactly is behind was well documented< recently by the New York Times. While the problems and trends described in that article sound intractably difficult to solve, the photonics industry is different. Unlike Apple’s supply chain which has almost completely translated off shore, from nuts and bolts to qualified engineers, photonics still enjoys a significant infrastructure here in the United States.

The challenge that this high tech industry faces is whether our experts are willing to make the sacrifices that our Chinese colleagues often have. Are we willing to pay for opportunities with a bit more risk and yet still receive less pay off than fellow executives and entrepreneurs do? It’s well known that people value their own wealth only in comparison to their own peer group. That’s too bad, because the U.S. is a rich nation, and making the choices that Chinese companies must do every day feels much more painful to our entrepreneurs. They argue it’s not worth it to them; they’ve invested so much into their small businesses. One of my industry colleagues spoke of the kind of deals he can accept these days; he has to feed over 20 employees in his small business and he’s got to find opportunities that keep them safe, but also provide him a good return. It all made perfect sense, and he’s by no means rich, but I wonder if his Chinese competition would be willing to accept much less.

I hope he’ll reconsider. I want him to be rich: he’s had a business for more than a decade already and he’s grown slowly and steadily. He’s a critical part of the infrastructure that remains here in this very high-tech industry. If he can’t compete with the Chinese at his door, then our industry may mirror what’s already happened in the iEconomy and what could have been a beachhead to maintain our position in the world economy, will go to the far east, just like Apple’s semiconductors and the engineers who support them already have.

Building an eco-system

January 17th, 2012 No comments

I remember buying used books in the college book store. I was amazed how expensive they were, but I remembered most how heavy they were as I quickly learned not to carry them with me to classes. That’s a shame because having the book there to refer to right after a lecture might have made it easier to work out the problems assigned. We actually used books during class in elementary school; keeping these heavy things with us was a necessity. So was a sturdy backpack.

I predict Apple wants to change all that. In the process, they want to improve the way we learn and even the way books, themselves, are created. The Kindle and Nook are both excellent eBook readers. They are light and easy to read in typical light. But textbooks, especially those for earlier grades, are in color. Interacting with textbooks can make them more effective and more stimulating. Have a textbook that’s attached to the internet, so it can be updated, fact checked, compared with other sources, and shared with friends makes it even more powerful. E-readers fall short on interactivity because their beautiful screens are slow to refresh, and their unsophisticated, but perfect just for reading, software is limited. That’s what keeps them cheaper (around a fifth of the price of an iPad) but whypreferred iPadsto Kindles.

The iPad isn’t new, so why hasn’t it already become the text book replacement I suggest it should be? Apple’s been here before, but it’s all about the eco-system. As each new Android phone is released with better and better specs, even than Apple’s offering, pundits predict it will kill off the iPhone. It doesn’t happen because, like buying into a camera system, buying an iPhone is gaining access not only to a nifty phone, but also a huge app-store, and giant accessory market.

In order to bring iPads to classrooms, Apple needs an eco-system. This, I predict, is what Apple will announce Thursday, 19 January. Many are calling it GarageBand for text books. It really means that by making the tools available to develop textbooks, new, interactive textbooks that take advantage of all of the iPad’s features, Apple can crowd-source the eco-system that it needs to build out this market. This is not to say that suddenly everyone will be able to make text books that the Texas Board of Education is likely to accept, but there is still a need for iPad compatible tools that make this development much easier. Tools that expand the interactivity of the book with the rest of the world. Imagine how much better Facebook would be if kids we’re able to share references from their homework instead of just the latest “re-post this if you think….” Apple has a long history of enabling content creators, and not just content consumers. Not a bad strategy if you develop tools to both consume and create digital content. If you want to know where Apple is going in the future, expect them to look for opportunities to enable one side or the other of the content equation.

And check back in a couple of days to see if this is at the heart of Thursday’s announcement.

Not eyeballs, but ears

November 3rd, 2011 2 comments

If you remember earlier days of the internet, the discussion was often about eyeballs. How do I get more eyeballs looking at my site; how to I get them to stick around longer? Eyeballs were motivation for free services like Yahoo, and later Google, hoping to become the coveted homepage which would appear first whenever you opened your browser. Getting these eyeballs was about selling advertising through banner ads and then more sophisticated advertising.

Google was the most clever here, realizing that eyeballs weren’t free and that a homepage had to offer something of real value to users every time they used the internet. Used is important; sure the internet is a source of entertainment, but it’s also a place where we find things (including that entertainment) and answer questions. Google’s solution is to develop new and innovative ways to use the internet, like integrating all that search with the real world of mapping and route finding.

The business model for each of these companies hasn’t changed much since that original default homepage concept. Google has lead the way with adwords and microcontent, but if Google, (or Bing, or Yahoo) is the gateway to all that useful content from so many dozens of other companies such as Yelp, Wolfram Alpha, or Weather.com, or this blog, they can collect advertising fees for their efforts.

Alert readers will already know where I am going with this by my choice of content providers (well, except this one). Apple’s iPhone 4S and Siri have done something more than just make voice recognition finally useful. (Note: I haven’t actually used it yet, but reports are that it does work pretty much as well as television commercials would lead us to believe.) They made a very clever end-run around Google and the other search engines. Using restaurant search from Yelp, a giant searchable database from Wolfram Alpha and local weather from weather.com, Siri replaces Google as a gateway to information in such a disruptive way, I’d be surprised if their competitors saw it coming.

Back in the day, companies competed for all those eyeballs, offering better and better services (targeted search, local weather reports, entertaining content) and figured they’d figure out a way to pay for it later. Perhaps they were all so focused on finally covering their costs that they didn’t even notice the rug being pulled out from under them. Although, it remains to be seen how Apple will pay for the content, it’s not like either Apple or Weather.com can advertise when Siri tells a user to bring an umbrella. Still, holding the key to the treasure trove of information on the internet is, as Google can tell you, very powerful indeed. If voice-initiated internet search takes a significant share, it behooves companies to start thinking about how that effects their promotional strategy, before the next unexpected disruption comes.

You can change your mind

October 21st, 2011 No comments

Google’s Android chief Andy Rubin thinks that talking to your phone isn’t such a great idea. I’ve expressed some reticence here as well, arguing that it has to actually work well (unlike the existing features on Mr. Rubin’s Android phones, no wonder he doesn’t like it) and it really won’t be useful in every situation. In a cube-farm office, for example, dictating e-mails to your is silly, and mildly embarassing, as well as a disturbance for your colleagues. And, lo and behold, dictation has been around for a while, but I’ve yet to find an office using it.

With all the attention Apple’s Siri is getting, you might be forgiven if you thought Rubin is just expressing sour grapes that his primary competition may have leap-frogged him for a while. Instead, I think there’s a marketing lesson there for us. Rubin worked at Apple once, maybe there he learned a few things from Steve Jobs who often did the same thing that Rubin is doing now: dissing the competition’s technology.

Mr. Jobs has told us that no one wants a netbook, and released the iPad. No one wants a 7″ tablet, but who knows if there is one on the drawing boards. What Jobs often meant by these observations is that there is something wrong with the technology on the market. It doesn’t meet customer’s expectations in some way and he and his team at Apple are going to figure out what that is, and if it’s a worthy market, they’ll solve the problem, likley calling it something else entirely.

Rubin is likely playing the same game. Today he can tell us that people shouldn’t be talking to their phones, but to a person on the other side. Tomorrow, he may very well reveal a technology that works ‘just like a real person on the other side.’ I can imagine Google combining their artificial intelligence solution with search and crowd-sourcing to make this very argument. That unlike Siri, Google’s voice activated assistant compiles the information knowledge of real people–you’re not talking to an AI, you’re talking to the millions of fellow internet users.

Market leaders really need to shoot down their competition and promote their own products, even in the face of weaknesses. The lesson that Rubin may have borrowed from Jobs is to be out there, aggressively taking a position, ignoring the accusations of hippocrite and sour grapes, because, at the store counter, few are thinking about the mood of the CEO when deciding if they really need the latest Andriod phone or Apple iPhone.

Categories: Business Tags:

Smug satisfaction of being right

October 5th, 2011 No comments

So that is why people like to predict the future. It’s because of the overwhelmingly smug satisfaction we get from being right! After all, we rarely highlight being wrong, so I get to claim an unblemished record for now.

Yesterday I made some predictions about the tech moment of the day: the Apple iPhone announcement. I predicted Apple wouldn’t change the form factor, that they’d upgrade the hardware making it faster and improving the camera, and that the presentation would focus on the new software, iOS 5 and its capabilities. I even mentioned that voice activation might be the surprise that steals the show.

I guess you could say I nailed it. But wasn’t it too easy this time? Frankly, I am not such a huge fan of the current form factor for the iPhone. The glass on the back of my phone is cracked, the phone is less comfortable to hold and more difficult to tactily find the front/top of than it used to be. Tech pundits didn’t want to solve any of these problems, they wanted a bigger screen, because, well, other phones have a bigger screen.

The iPhone has a fantastic screen. Probably the best screen out there. It’s not bigger, but it does display more pixels than almost any other, and I am quite surprised, actually, that folks really want to carry around even bigger phones. Isn’t miniaturization one of technology’s magic bullets?

Apple did exceed my expectations though. Check out what they’ve done with their acquisition of Siri for voice control. I am dubious about talking to my phone as I see people do on their Android phones. It goes like this: press a few buttons and load the application. Stare at the screen for a moment to ensure that it’s ready. Speak your phrase into the phone, slowly and carefully: “F i n d p e e t z a h” Wait. “F i n d p e e t z a h” Wait. “F e y e n d p e e e t z z a a a h”, go to the maps application and type pizza into the search field and continue on with your business. It barely works, not terribly convenient when it does, and it’s a bit odd and certainly unacceptable in a wide variety of situations to ask your phone for that sort of thing. I have “voice control” on my phone. I’ve used it, let me see, never.

With Siri, though, I started to have the same thought I had when Apple introduced the iPhone. Four years ago I saw the commercials of the way it scrolled and opened applications and above all how effective and useful the web was on it and thought “if it actually works that well, that’s really something I’d get.” At the time I had a Windows Mobile 5 phone that I’d learned was really just a large, blocky phone that got my e-mails. You could surf the web, but you really wouldn’t want to do that to yourself, just as you can use google voice, but it’s not really worth doing.

If, on the other hand, I find myself in an Apple store in front of an iPhone 4S and try out Siri and it really does work like that, well, maybe I’ll stop being such a luddite about this voice stuff. My contract’s got about another year. By then the iPhone 5 (or something really competitive) might be out. I can always talk to my phone in the car. There no one can hear my conversation about not having any friends because I smugly think I am right all the time.

Predictions: check back tomorrow!

October 4th, 2011 1 comment

Predicting the future is a human obsession, but we’re not very good at it. There is a trend on books from business advice to congnitive pychology to highlight our shortcomings and suggest ways to deal with and even profit from the randomness in the world.

Few reading this blog are coming here for up-to-the-minute tech news, but I still feel compelled to resist all the research on embracing unpredictibility and make a prediction–if for no other reason just to see how I did a few hours later when all is revealed. So, without further ado, here’s what will happen today at Apple’s “let’s talk” event.

Apple makes an effort to concentrate on one thing at a time for its events. It’s a good strategy, ensuring focus from the media and customers. As a result, much talk about discontinuing iPods will not be addressed. Is there really any point to making a fanfare about discontinuing a product? Of course, the iPod continues today, it’s simply seamlessly merged with your phone.

There will be a new iPhone and as I own an iPhone 4, it is clear to me that its design is barely an improvment over the previous phone. The shape is less comfortable, and the antenna problem is real. The specs are better, and it’s a thinner, smaller, phone with a superb screen, which is great, but, aside from returning to some variation on the iPhone 3G there is little to go back to. Nope, all the changes will be the usual hardware refresh–on the inside. Faster chips and better camera will enable the phone to take advantage the real news: the new OS while keeping up with specmanship of other phones out there.

Apple believes that the bigger screens of competing phones are more like badly behaving portable tablets. I’ve seen them, and gosh they look great, but frankly, the thing is supposed to be a phone and these lovely devices just look huge. I thought we left that age; like many, I want my phone to slip in my pocket. I would be surprised, indeed, if Apple didn’t agree with me here and chose to go with more screen real estate.

Expect a 4GS. Whatever the name, expect, above all, for people to be disappointed with hardware changes of the iPhone 5–it’s only a speedbump.

Instead, expect new CEO Tim Cook to spend much more time on the real advancements of today. This is the first time that OS5 is being announced to the masses. It happens every year and every year Apple watchers forget that the world wide developers conference, WWDC, is only public because the media shows up for news. It’s not a consumer event. Only now will the results of working with developers for months be shown to the greater consuming masses. And that means iOS5 features and internet cloud integration. We’ll see a long re-hash of what close Apple watchers already know. We’ll see highlight features and demonstrations of cloud-based music (an iPod in the sky!) and integration across macs, iPads, and iPhones. We’ll see how the iPhone will have access to data not stored on it all.

Apple is not alone in finally realizing Oracle’s promise of the thin client. The new Amazon Fire tablet actually embodies this even better, but the cloud is just another name for the client-server model and it turns out that Apple’s smart phones and devices and smarter still when coupled to the internet in the sky. Expect loads of examples of why that is and how Apple’s solution is, in Tim Cook’s opinion, the way it’s done.

There may even be some exciting voice recognition improvements in iOS 5, although I still wonder asking our phones questions in public will really work. Sometimes it’s great, like in the car when you’re supposed to be driving, but screaming into your phone on a crowded New York side walk or in an airport line is bad enough when people can reasonably expect you’re communicating with another human. When they realize you’re just trying to get your phone to stop asking you to repeat yourself, that’s going to get old fast.

So, in short:

  • iPhone 5 = not really. just a speed bump
  • it’s all about iOS5
  • expect the cloud to be the big news
  • some voice recognition introductions could steal the show

Check back tomorrow. I’ll come clean on how good or bad I was at this.

Categories: Business Tags:

Second hardest thing in business

September 30th, 2011 No comments

The hardest thing most people have to do in business is lay people off. It’s a business decision that very few take lightly and most of us will do almost any thing to pass the responsibility on to someone else. I honestly think it can be harder to lay someone off than to be laid off yourself. (I know that’s certainly been my case.)

The second hardest thing might be to raise prices. Nobody likes it and today, customers have grown to expect the opposite. But as many small tech companies have noticed, we’re usually not selling millions of widgets with healthy year-on-year growth, so that, even in a weak economy, we might be forced to raise prices.

Setting prices in the first place is a difficult task. Of course you’ve got to cover your costs–all of them, even the tiny hidden ones–but you’ve also got to have something left over to help your business grow. As conditions change, though, what used to be rolled up in the economies of scale might become a distraction from strategic goals and prices have to be increased to accommodate this market reality. Meanwhile, your customers are going to have trouble seeing what’s in it for them. Understanding how you set the price and what’s changed is something you’re going to have to explain.

Therein lies the good news in this uncomfortable situation. We need to communicate with customers, and the more often we have a chance to do that, the better we can take care of our relationship with them. Raising prices is an opportunity to have a (difficult) conversation. The wrong way is to wait until customers send a purchase order and ask them to revise it. Instead, bite the bullet and be pro-active. You’ve got to let them know not only what is happening, but, most importantly why.

You may be raising prices because costs have gone up, or because your competitors are charging more and you just think you can squeeze a bit more out of the market. Niether point is terribly interesting to your customer. Better is too look for something that might actually matter to them. You may be reaching, but maybe all you can say is that doing this strengthens your committment to manufacturing the widget they purchase, or enables you to invest in necessary improvements. That isn’t much, but it beats begging and usually, it is, at least, an honest answer that a rational purchasing agent can understand. It is especially true that original equipment manufacturers (OEMs) need to see their suppliers as partners who need to make money if everyone is going to be successful.

You know the story: that’s a feature, not a bug! You’re not raising prices, you’re ensuring the success of their product! Hopefully that’ll work! If you can’t afford not to raise prices, then losing the customer is the best thing for your business anyway, and if not, you could always back off. Just don’t try that too often!

Categories: Business Tags:

We got along just fine without them

September 27th, 2011 No comments

I’ve been bought a few times. Well, not me, actually, but the company for whom I was working was acquired by a larger one. Once or twice, I was on the acquired side too, but, with many small tech companies developing ideas which require much more money than the owners can find between the couch cushions, being acquired is a common occurance. And it rarely happens friction-free.

The so-called “cultured clash” usually has more to do with communication than differences in how to run a business, which is not to say there aren’t real issues. One experience I’ve seen repeated without fail is the feeling of employees at the smaller company that the red-tape and bureaucracy of the bigger is costly and a waste of time. ‘We never had to do that before we were acquired and we got along just fine!’

There’s just one big flaw in this thinking. You, dear acquired company employee or business owner, did not get along just fine. Otherwise, you’d have had little reason to be bought! Sure, there are exceptions. When the price offered was just too rich to ignore by the folks who stood to make a bundle, but those situations are rather rare–just look at how many successful acquisitions there are compared to failed ones–the acquired companies are struggling, somewhere, at least a little bit.

Once we realize that what looks like a bunch of annoying extra work may actually be covered by things like economies of scale, it’s easier to adapt to the new procedures. They are making you enter your orders at a company thousands of miles away, and you have dozens of new passwords for your e-mail; how can this be better? Maybe tracking business costs is exactly what propelled the bigger company to the top and keeping e-mail secret is more critical to their success than to a little $10 million dollar business.

Of course, the acquiring company may really have much it could learn from the acquired. The first step is to get things working well in whatever system the big-unmovable force needs, and only then suggest improvements. Ego during this process rarely helps anybody, and if you find the other side (remember, you’re on the same side now) is too arrogant to learn from you, it’s hardly the mature thing to cross your arms, stamp your feet and insist: no, you know better!

Some little companies grow up all by themselves, proving their business model and way of doing things really is the best thing out there. Most, though, go through some pretty big changes as they transition from five to twenty-five, to two thousand and five employees. Acquired or not, you’re likely to be doing business differently than you did before if you’re lucky enough to stick around through all that. Enjoy the ride!

Categories: Business Tags:

The price is right

July 29th, 2011 No comments

Most business-to-business companies don’t offer coupons, but that doesn’t mean there isn’t something to learn from the strategy. Actually, most of us, whether we use coupons or not, don’t really give them much thought. It seems they’re just another means to entice us to buy something.

Even if we’re not manufacturing peanut butter, there is much to be learned from coupons, for they tell us a great deal about prices. How do you price your product or service? Do you just have a standard mark-up over labor and materials? Have you done research into what competitors are charging? Smaller businesses often don’t even have direct competitors. They’ve done a great job offering some product or service that no one else offers the same way, so competitive market pricing can be very difficult to determine.

Even if you can’t just look at the marketplace to discover what the price should be, a flat mark-up of costs is rarely the best strategy, although it is a good place to start. It is surprising, though, how often this model is applied. I worked with a company some years ago that was selling a laser product for about 60% less than their competition! They weren’t losing money, so no harm done, but after we unceremoniously raised the price we generated more revenue without damaging sales one bit.

Coupons are more than just promotions to encourage purchases that might not have happened otherwise. Instead, they help to divide the market place up and provide valuable information about the real prices people are willing to pay. Suppose you see a coupon for 50¢ off your favorite peanut butter. A thrifty, unemployed college student might very well make the effort to bring that coupon, along with many others, on his next shopping trip. A couple of married professionals with three kids won’t be able to find the time between bringing kids to soccer practice and late night business dinners to take advantage of the lower prices they get by finding, clipping, and sorting coupons.

Manufacturers get to offer their products at two different prices and nobody complains. One lower price enables people who have the luxury (or inconvenience) of valuing money more than time to still buy their goods, and the other allows those whose time is worth too much right now to simply pay top-dollar and get it over with. The manufacturer a chance to see how the product is seen in the market place, without risking pricing it too high or too low, losing customers or leaving money on the table.

It’s still unlikely that an original equipment manufacturer (OEM) is going to start offering coupons to their customers, but adapting this strategy to determine prices based on time, but also delivery, guarantees, service, and of course, volume discounts, can provide valuable insight and reduced risk.  What’s worked for your business?

Categories: Business Tags: , , ,

Will the real customer stand up?

July 7th, 2011 No comments

Who is your customer? It’s not as obvious as it might seem. In many businesses, the real customer might not be the person your company is thinking about, but it should be. Simply put, regardless of who drives your business, you’re real customer is the entity who decides to pay you for your products and services. Let’s look at some examples:

Are you a Google customer? If you’re like the majority of us and you only use their services such as search, mail, and maps, then not really. Google’s customers are the people who buy AdWords, and search placements. Without you and me, Google might not have much of a business, but without advertisers, they’d have even less.

Are you looking for new opportunities with Monster’s job boards? Monster has to spend some of its resources making sure you find value in their site; but you’re a volunteer product, not the customer. This is true for all sorts of recruitment firms and the source of many a misunderstanding between recruiters and job seekers. ‘This guy doesn’t seem to be working for me…’ is a common complaint, but frankly, you shouldn’t expect them to. The job seeker typically doesn’t pay anything for the privilege of someone finding a job for her. Monster and other recruiters work for the businesses for whom they find candidates. They’re marketing message must reflect this.

During the start-up phase of a company developing a web-based application to optimize how we buy things, the company constantly had to remind itself who the real customers were (stores) and not be distracted by all the positive feedback they got from people who planned on using the application (individual users). Like many businesses today, exactly who your customer is might not be so obvious because you must get a group of people excited about your product and then leverage that interest and enthusiasm with someone who will pay you.

In an earlier article we discussed the importance of letting people know what you can do for them. Of course, it’s impossible to get the right message if you haven’t even identified who your customer is. Hopefully, you’re well ahead of this game, but given a little thought and you might even be surprised.

Categories: Business Tags: , , ,