“Turn the damn thing off”

In 1986 when I was selling one of the first cellular phones in Denver, a prospect said to me, “I don’t want a phone in my car. It’s the only place where no one can find me.” It actually caught me off guard, but as the months progressed, I got better and better at handling that objection. First I retorted that, “it has a ‘POWER button’ and you can turn it off if you don’t want to be disturbed.” Then I added the all powerful: It is a tool for you to use when you chose to: power it up, power it down, give your phone number out, or don’t give your phone number out.

That helped me sell a lot of phones, along with an ROI that it was giving people the ability to buy more (productive) time. When Caller ID hit in the early ‘90’s, it was fantastic. You could freely give your number out, and then screen your calls. With this capability, nearly all cellular numbers made it onto business cards. By the late ‘90’s cellular became like a garage door opener: once you got used to just pushing the button during a big rain or snow and driving on in, no one ever goes back to getting out of the car to lift the door. "How did you ever live without it?"

Last week, a good friend was lamenting about his newly acquired first Blackberry: It was becoming all consuming to him. I said, “Well, what did you expect? That’s why they’re called ‘Crack’berrys.” He went on and on about going on vacation and constantly looking at it. I said, “Turn the damn thing off and stop bothering everyone else.”

Is History repeating itself? Not exactly: Early cellular was car based. Most people jealously guarded their mobile number. Minutes of Use were 10X the cost or more. It was primarily a local calling apparatus.

Since then, technology has given us incredible advancements in the cellular networks, devices and software. Given that e-mails, within the broader internet were predicated on a model that had zero incremental cost, and our e-mail could be read anywhere at any time: Everyone has an expectation that you will read your e-mail and respond. Maybe you will do it instantly, or eventually. However since the written medium has more permanence than the spoken word, the record of the request forces an action.

This 'semi-formal record' is what causes the uneasiness and anxiety about Blackberries. Consciously or unconsciously someone has documented an attempt to reach you. Whether the message was sent to your desk, or to your mobile, the sender doesn’t know or care. What weighs on your mind as the receiver, is conscious knowledge that these obligations (e-mails) are building.

Like 22 years ago, my advice is the same. Having these devices allows me to control my time. I think they are great, but I won’t ever let it control me: The Blackberry is my tool to control and not the other way around. Know when to say when and just put it away when appropriate.

There are no bad dogs, only bad owners. It’s not the Blackberry itself that is causing this much stress, it’s their owners.

Sales Force: May the Force be With You

Last week I had a chance to hear Marc Benioff and his team rev up the SalesForce.com faithful at the Tour de Force in the Palace Hotel in San Francisco. Among the speeches, panels, and even a guest interview with Marc Andreessen (Ning), there were some new products as well as an alphabet soup assault of acronyms like Force.com, Platform as a Service (PAAS), Cloud Computing Architecture (CCA), etc.

Behind the deluge of products there were a few unique announcements and some traces of SalesForce.com strategic directions. Much of the focus was on improved developer tools in Force.com. These are all critically necessary for developers and the ISV community if SalesForce.com is to be successful in establishing itself as a platform player and moving away from being just a CRM vendor. What was unique was making this an on-demand development offering.

What I found even more interesting was the new pricing they announced. Over the last decade software and service pricing has evolved multiple times with more than 15 different models and variations. One of the biggest problems has been value pricing for the use of enterprise applications –specifically for infrequent users. No one has really cracked this nut.

Now SalesForce.com has announced special “per log-in” pricing for apps built on Force.com. The intent is to charge for a person who only logs in to use an application occasionally. These are the “non-power users“ of applications. In the past I’ve referred to this as the Occasional Use Pricing (OUP) dilemma. You want to let people use the product occasionally, but you can’t charge them the full value of the software. And if you lower the price to the level they are willing to pay, you undercharge the power users and leave money on the table. Salesforce may not have completely solved this problem, but they are trying a new approach that could help.

The intent is to charge $5 for each time a user logs in to use an application rather than the monthly dollars per user fee usually associated with SAAS pricing. (As a special introductory offer they are charging only 99 cents per log in.) As Marc pointed out, they expect to learn a lot from this experiment. I’ll also be following this new initiative closely.

This approach really addresses two distinct types of occasional use: occasional users and occasional usage. Occasional users are the ones that use the application on occasion, perhaps a few times a month, but don’t want to pay a high monthly fee. Occasional usage applies to those people who don’t really require ongoing use of the application, but due to a special circumstance have what amounts to a one time need. By addressing these two needs with this new Occasional Use Pricing (OUP), they may be able to attract more users and extract greater value from applications. This should also benefit other ISVs and the developers in the SalesForce.com ecosystem. You can expect to see more of this, even if it is only moderately successful.

Finally, as I step back and look at the overall announcements, I was struck by the breadth of their strategy. SalesForce.com is continuing with their focus on the CRM platform. They’ve moved into offering the platform as a service (PAAS). In addition to bringing out their own developer environment (IDE), they are also entering the utility computing fray with their Cloud Computing Architecture (CCA).

Although I like the direction of the strategy and the strategic adjacency of these new initiatives, I can’t help but wonder if they should ameliorate their risk by partnering with others. Not just with their developers, but some of the other major players. These relationships could speed time to market, further accelerate revenue growth, reduce risk and add credibility to the SalesForce story.

Now, they are competing on multiple fronts with the old line platform vendors (MS, SAP, Oracle), the new platform vendors (Google and Facebook), IDE companies (MS), as well as CRM companies (Oracle, SAP) and utility computing or cloud computing companies like IBM and Amazon. That’s a healthy dose of competition.

So even if this strategy seems to be a stretch, I congratulate Marc on the boldness of his vision. May the Force be with you as you pioneer new aspects of the SAAS model. I just keep thinking there may be lower risk, higher leverage opportunities to partner with key players and turn them into partners instead of potential competitors. Let me know what you think about these strategies as well as their new pricing experiment.

What do Facebook and Muhammad have in common? Well if you can’t bring the mountain….

Recently, I had a chance to sit in on a Digital Media session at the Asia America MultiTechnology Association conference. The panel was led by Mark Stevens of Fenwick and West who did his usual masterful job of teasing out some interesting tidbits from his panelists. They included Tim Kendall the Project Manager of Facebook's recently botched Beacon introduction, Yoon Lee of Samsung, David Richter of DivX and Chris Corvalho of Lucas Films.

Needless to say there were a variety of views represented. They ranged from US and Asian cultural differences that help explain variations in consumer electronics adoption rates, to snide remarks about how this coming CES will once again be the year of the Digital Living Room - something that seems to be a continuously moving target.

Although I found some of these topics interesting, the real morsels of insight came from several points made by Tim Kendall of Facebook. These provided a few key signposts of how we may see Facebook evolve as it attempts to monetize its 58 million users.

Tim kicked off with a relaxed apology for the Beacon privacy debacle, echoing some of the points made by Mark Zuckerberg in the press recently. As he said in his mea culpa, "Beacon may go down as Facebook's biggest screw up." He hoped this was the worst mistake they ever make. They certainly learned a lesson from it. You might think this would have damaged Facebook, but so far it appears to be mostly a PR gaffe. As comScore Media Metrix recently reported, Facebook had 20M visitors the week of Beacon’s announcement and 22 million for each of the two subsequent weeks. It then rose to 25 million the week of November 25^th. We’ll see how the December numbers shape up.

One of the key points Tim made was how Facebook will evolve from a community site to a community that you can take with you as you travel the web. Imagine for a minute, as he explained, that you’re a member of the Facebook community. You decide to go to Netflix to pick up a video, say, Tom Cruise in Top Gun. When you land at Netflix you identify yourself with a Facebook ID. Then before you finalize your selection, you decide to see who else in your community has seen the film and what they think of it.Hmmm, more context, more relevance, more ad dollars. Repeat across multiple websites and presto, you have some serious incremental ad revenue.

So "If the mountain won't come to Muhammad, Muhammad must go to the mountain.” Or in Facebook’s case, if we can’t squeeze enough dollars out of our site alone, let’s take our revenue generation engine to the places where we can monetize the community to the hilt.

I’ll follow up in another blog entry or in an upcoming Milestone Group Quarterly with a discussion of 5-6 other key initiatives that Tim talked about. In the meantime, let us know what you think.

Author: Chris Kocher

The Telecom Wallet or “How I learned to live with the Bomb”

A funny thing happened in the communication industry about 10 years ago. A bunch of fancy guys decided that what the country needs is for all telecommunication services to come from each of them: as a single supplier to the consumer. Why fight for a bigger piece of pie when you can fight for the whole pie? In my last blog posting, I spoke about the Quadruple Play, in which Cable Companies and Telco’s, each want to provide all of a households communications services. However, it took mergers, takeovers, buyouts, changes in the Telecom Acts, changes in administrations and many years for policy to allow these companies into a greater diversity of communication businesses. Then the ability to combine those offerings efficiently took billing and customer care advances. But we are there now.

A long time ago, a great friend and mentor of mine, Brad Hughes, introduced me to the concept of the Telecom Wallet. He explained that phone companies were very interested in how much a family spends on all communications within a household each month. The sum of their telecom services was the Telecom Wallet. Since I worked at Telephia (now Nielsen Mobile), this was a great concept to dive into with our survey tools.

One of my epiphanies (while sober) was that when I graduated from undergrad and got my first place, my telecom bill was $30/mo. This covered a residential line and half a dozen LD calls. When I got a steady check, I got basic cable for another $20/mo. My Telecom Wallet was now $50 in 1985. Currently, for my family of 4: its $400/mo. (In 23 years it has increased TWENTY-FOLD!) Believe it or not, I try to be frugal (no Satellite radio, no Onstar, only 1 premium cable channel, no GPS subscription, and TiVo was paid for years ago). My Telecom Wallet could easily grow by another $200/mo. if I took my foot off the brakes this holiday season.

While this is my industry and passion, there is ticking bomb. It lies in the essence of the Quadruple Play strategy. I believe most people in America don’t know what their total Telecom Wallet (monthly cost) is. They never lump all the elements into one pool and really look at it. If they did, they would freak out. An offering of a Quadruple Play forces a focus on the total Telecom costs which do add up fast. This almost always forces the consumer to see the “$300 or $400 light” and do one of the following: 1) Reassess their expenses for Telecom and make cuts, 2) Shop for the best bundle once there is an awareness of bundled offers, 3) Do nothing at all (which is what most people are doing), or 4) Sign on because it will simplify thier life (the path least chosen).

In the end, writing one big check to your Cable or Telephone Company for $400/mo. will negatively alter consumers’ buying behavior away from communication services in the short term. I suggest that the Quadruple play go back in the closet for now. One day soon, all the elements of the Quad Play will flow through a fat wireless pipe; each seperate service morphing into mere applications. At that time, we will pay the meter for what flows through our pipe regardless of the device or location.

Author: Gary Cohen

What is the power of the Quadruple Play?

The first I heard of the Triple Play (Telephone, Broadband-cable modem, Cable TV) was in 1999. I was with SBC sitting in a market-wide (San Diego) meeting discussing our strategic levers across all product lines. I represented the cellular/pcs business unit and the discussion centered on “how to combat the cable company’s Triple Play threat”. Our solution was to have our own “bundle” to compete against theirs. We would use the Telecom Triple Play: Telephone, Broadband-DSL, Cellular as our bundled offering.

Seemed like a reasonable idea. When consumers subscribed to all three services, we would give them a discount, and someday combine it all onto 1 bill. By throwing cellular into the mix, we thought we would trounce those cable guys. The program sunk like a lead weight.

It is 8 years later and I don’t bundle, do you? Qwest Communications (formerly US West, where I got my start) has been clinging to a telecom Triple Play for nearly 6 years, AT&T sends high gloss/high fashion collateral to my house quarterly to pool my services and Verizon has been pushing bundled offering in its Telephone markets forever. In offering a single bill & @10% discounts the Telco’s have not attracted many new takers relative to their total bases over time. While the bundle has proven to be a good retention tool, it is not a net revenue generator at all.

Now we are entering the world of the Quadruple Play! Cable Companies have added cellular to their offerings, while Telco’s have been getting into the Media space, both through a variety of partnerships. Did you know AT&T has had this going for 2+ years and some of the cable companies have been offering cellular for about a year?

Guess what? People aren’t biting. Rich people don’t care about a single bill or a paltry discount. Poor people can’t and won’t spend that much money on communications. The middle class is shopping for the best value for the 4 services and saving more money by sending 2 to 4 checks a month to 2 to 4 communications suppliers. They are saving more than the 10% by truly matching services to their needs. The Triple and Quadruple Plays are interesting and logical for the operators, but they don’t seem to get it from the consumer’s perspective. For the rest of the story: Tune in next time to: “The Telecom Wallet” or “How I learned to live with the Bomb”

Author: Gary Cohen

My Best Flight Ever (with wireless access)

When working for Birdstep Technology I needed to travel to Oslo and Stockholm often. Since United’s partners were SAS and Lufthansa, I had to use them for at least the Nordic portions of my journey. I hated this arrangement, because I could never get upgraded and because the Scandinavian airline food, thought tasty to Swedes and other low spice peoples, was horrible to me. Pickled fish and hard boiled eggs with cabbage is Devil’s Island food. However, the cure for my businessman blues was soon discovered.

I digress: on flight to Europe, I could be the spokesman for Ambien. If it were legal to do so, I would set up a kiosk in the SFO International terminal pushing $10 pills that guarantee no jet lag going over. I always dozed perfectly and never remember the long trip east. But on the flight back, I am always wide awake, bored, restless and anxious to get home.

The exception was when I took a magical flight that had high speed internet access. Connexion by Boeing was awesome. I was in a zone of productivity and connectedness that I had never experienced. Since I had my Skype and headset with me, I was making calls all over the world from my airplane seat (seemingly for free: $30/flight) and closing out e-mail threads from the past 3 months. I as amazed by my new capabilities and freaked out all those around me who gazed upon my total bliss. Business Class from Europe on United, became less of a premium than flying a wi-fi plane across the Atlantic in coach. Sadly though, it all went away in an instant.

At the end of 2006 Boeing shuttered the operation due to huge losses to keep the satellite operation going. Too few planes were retrofit with the $650K package, too few airlines signed up and too few people shelled out the $30. It doesn’t seem that my $150 (over 5 flights) to the cause helped.

Yesterday JetBlue introduced limited in plane wireless through a company called LiveTV. They started with only one plane in the fleet, but that should grow in deployment and wireless capabilities. Several other US airlines (but not United) are in talks with Live TV, Aircell and Row 44 for in flight wireless offerings next year. It is all good news. While the general public has never liked the idea of listening to an annoying “loud talker” yak away on their cellphone in the row behind them, seeing a workaholic like me pounding away on a laptop or typing my micro messages into a handheld doesn’t seem to ruffle their feathers while they watch reruns of The Office and savor their 1 ounce of pretzels.

In Fight Club, Ed Norton says: “Business travelers have had disposable experiences when they reach their destination on a business flight.” With an ability to ‘opt-in’ to the world 30,000 feet below, you might view your experience differently when seated in rows 14-46 on a 4+ hour jaunt.

Author: Gary Cohen

Caution: Tough Road Ahead

2008 is emerging to be relatively difficult market conditions for selling tech, and it appears buyers are re-thinking 2008 spending. Seems IT buyers are cautious for a variety of factors. Off the top of my head... oil is approaching $100/barrel, US markets are in financial turmoil (and related sub-prime crisis), there is an unresolved and costly war in Iraq and a very nervous situation emerging in Iran, an election year with a wholly unimpressive and undifferientiated field, and a very weak US dollar... recession anyone?

What to do? Our five themes as we head into 2008 for emerging tech, media and telecom clients:

Focus - Use the 80/20 rule relentlessly - sales organization, customers, product development, cost structure, channel, etc.

Right-size - Align your cost structure with predicted revenues, communicate to your teams another mean season is just around the corner

Delivering - Make some tough choices organizationally who is delivering and who is not

Partnering - Parter 'big'; find larger partners with existing capabilities you envy to access new markets and new channels

Selling - Sell 'value' and 'ROI', get religion about it... Don't pay it lip service, do it!

 

Thoughts?

 

Author: Mark Zawacki