All Things

Years ago, Apple ran an ad with a bunch of lemmings all following each other off a cliff. After all, why think when it’s so easy to just NOT think? Well, here we go again. This year it seems like most all the major blogging/social networking services are one by one getting blinded in the headlights of MySpace.

As if we really need more of the lowest common denominator! There’s so much opportunity for innovation in this area, yet everyone wants to be the same. I’ve complained previously on my MSN (now Live) Spaces blog about Microsoft in this regard, and now the latest casualty apparently is Facebook.

With only 10 million users after two and a half years of operation, I guess Facebook just feels like a failure next to MySpace. Never mind the fact that they own the campus network space, they would rather throw out that distinctive so they can compete head-on with everybody. Usually these sorts of commoditization strategies don’t end up being as profitable as the competitors expect (the airline industry comes to mind).

Perhaps the Facebook users will again make a big fuss. Maybe management will listen, but chances are, based on the past history of fast-growing tech companies, they won’t. Most keep determinedly going in the wrong bone-headed direction until they go right off the cliff.

Xanga, which I use for my blog AeroGo and perhaps my favorite of the bunch, is likewise feverishly adding multimedia features, to compete not only with MySpace I suppose but also Flickr and YouTube. So far these changes seem mostly positive, but if Xanga can add these features so readily, they will very likely end up as standard on all sites.

Hasn’t anybody (or at least any VCs) noticed that there are a lot of people out there who don’t like MySpace? I mean really, it’s pretty raunchy by and large. It’s as if there was a town full of nice, somewhat distinct neighborhoods, yet all the developers were racing to fill these places with trashy businesses and dumpy apartments.

So why don’t any of these sites carve out a unique identity for themselves? I think the only plausible answer is the dramatic, rapid growth of MySpace. Why have 5 or 10 million users when you can have 100 million? Of course, these users apparently are also spending a lot of time on MySpace and so, presumably, potentially a lot of dollars.

Nevertheless, it seems that money is best made on the net by tightly targeting customers, not with mass marketing, so I suspect sites that are oriented around specific topics, activities and user demographics will ultimately yield a superior return. As I’ve noted before, these social networking sites need to differentiate themselves and find niches where they can thrive, as Facebook has (even if they don’t grasp the value of this).

Let me use Facebook as an example, since it has done the best job of targeting a very large yet tightly-defined niche (high school and college campuses). College students in particular have so many things they have to (or want to) buy, that the marketing/advertising opportunities seem almost endless, both at the local and at the national or branding/name recognition level. Everyone from the local pizza restaurant to students selling used textbooks to Hollywood film studios will want to target their users.

I’m not in school so I don’t use Facebook and don’t know how good a job they’ve done of capitalizing on this opportunity, but the folks developing (and funding) these sites need to remember that traffic often, but not always, equates to sales. Ultimately, it boils down to trust. I suspect that MySpace, as many city centers did, will begin to collapse of its own weight as many head to the “suburbs” of seemingly safer sites like Xanga and others.

The planned growth ideal for urban development might in fact be a useful metaphor for these social networking sites, which may do best if they concentrate on growing at a sustainable pace with a clear demographic or interest group in mind. Users need to come to trust these sites and feel safe in them. Then they will end up spending a lot more time and money there, and for the long run.

OK, I’m going to try to cover one of those “small items” I promised the other day. Actually, it may not be so small to the folks at Starbucks. Last week the Atlanta Business Chronicle reported that Coca-Cola appears to be developing a simple to prepare high-quality, single-serving coffee product that could be sold to its countless restaurant customers. This would supposedly make it easy for any restaurant to offer a line of coffees competitive with Starbuck’s, and presumably (hopefully!!) at a lower price.

While I suppose many would argue this wouldn’t matter much because the other places couldn’t match Starbuck’s atmosphere, to me this is actually a plus. I’ve never liked Starbuck’s atmosphere, though to be fair I haven’t visited many. I also seem to have a hard time figuring out what to order, and at nearly $4 each, don’t care to experiment too much. In any case, I think I like the French sort of coffee you get at La Madeleine or some of the beignet places we have here in Houston better.

There’s a new coffee/ice cream place here, Piccomolo, that my daughter likes. They offer free wi-fi and seem to be pretty popular, but don’t have a whole lot more ambience than a Baskin-Robbins. To me, coffee is about relaxation and either concentration (e.g. on a nice book) or conversation, which I think happens better in nicer, more comfortable and non-noisy settings (unlike Starbucks).

In any case, I think Starbuck’s relatively free ride is about over, and we’ll see a lot more serious competition in the coffee space before long. I hope prices will go down some, too. Coke’s likely approach of selling through their restaurant customers may be hard to beat. They’ve fought some pretty tough marketing battles over the years; maybe it’s appropriate their ticker symbol is KO.

After using a Mac for nearly 22 years and enduring Apple’s long decline in the late ’80s to 90s, it’s not possible to look at Palm without wondering if it’s deja vu all over again. The PDA maker has made so many questionable and even seemingly bizarre moves (such as buying the BeOS) that its survivability is certainly now in question.

As with Apple and the Mac in the 90’s, Palm still has a lot of enthusiastic and even loyal users, but the platform hasn’t thrived in years. The simplicity and reliability of the Palm OS and hardware (at least until recent years) is likely even more of an advantage in the handheld space than in PCs, yet Palm has failed to capture a lot of new users lately, despite its lower-cost Zire line. The Palm OS has been steadily losing ground to Pocket PCs and now, increasingly, to the Blackberry as well, which seems to be evolving rapidly.

In other Words, Palm (or PalmOne, or whatever they call themselves these days) is a company, like Apple in the mid 90s, that had a lot going for it, but has pretty nearly blown that advantage, and desperately needs to home back in on their core market and competencies before it’s too late.

In any case, this is the perspective I’ve had in mind as I’ve pondered the events of the past few days. It all started when my wife mentioned she wanted to get the new Zire 22. I was both glad and somewhat surprised, because she had had a frustrating experience with her first handheld, the Zire 21, and had finally returned it.

Susan is the kind of person who would probably be happy just running her life out of a shoebox of records (perhaps you have encountered the type), except there’s way too much information to keep track of nowadays, and even one shoebox would be too much to carry around. Though she had given me a Palm several years ago, she didn’t show much interest in getting one for herself until about a year ago.

She was working as a drapery designer and just had so many people, numbers, and project notes to keep track of that it was getting impossible to keep everything with her all the time. Increasingly phone numbers and other things would be at work or someplace else when she needed them, so she finally went for it and got a Zire 21 last spring.

At first, she was delighted with the 21, and its design was good even though it was a pretty basic PDA. If you haven’t used a PDA but have been considering it, the biggest gain comes from having all your information in one place, and being able to carry it with you (and back it up). It’s just a different experience when you can be working, shopping, travelling or whatever and pull out your notes right then and there from projects, Consumer Reports, past trips, etc.

Unfortunately, after a few days the 21 started having hard resets every so often. I looked it up on the web and was dismayed to find that this was a well-known problem linked to certain kinds of phones (she had a Motorola Nextel phone at the time). Apparently whoever designed the 21 failed to include shielding at a critical point, and so some phones cause a reset when going off close to the Zire (and, of course, she needed to carry them both in her purse).

Most perplexing was that the problem had been known for a year or so and as far as we could tell, PalmOne had not made any design changes. We tried to work around it for a week or so, but after losing her day’s data for the third or fourth time, Susan had had enough. Palm lost an enthusiastic customer, perhaps (I thought) for good. Interestingly, despite their return policy, OfficeMax took it back without a question. Apparently we weren’t the first to have a problem with it.

Anyway, fast forward to the other night when, Christmas money in hand, Susan and I walk into several stores looking for the new, improved Zire 22 (with color screen and flash memory). It turns out that no retailers around us seem to have any left, for either of two reasons, one ominous, one promising. First, the bad news. A lot of the mass merchandisers have dropped the Palm line, most recently Target (Best Buy’s selection has seemed pretty meager lately, too). It would seem the strategy of using the Zire line to penetrate these distribution points hasn’t worked out.

On the positive side, stores that do still carry the Palm brand were apparently uniformly out of Zire 22s in our area. This includes OfficeMax, Office Depot, and at least two nearby Radio Shack stores. While I heard lots of news coverage of how the iPod was selling well this Christmas, I wonder if the Zire 22 was selling as well in other places as it was here. Perhaps this will be a harbinger of better things to come.

While there are an unlimited number of features a PDA maker could supposedly try to cram into a handheld, I hope Palm will re-focus on the basic PDA functions and make sure these remain simple to use and the hardware rock-solid. I have heard enough stories of Palm users who loved their PDAs that I remain convinced there are still millions of potential customers out there if Palm will just get the basics right.

The industrial design of the Zire line seems quite good, but I hope the engineering has improved. As for Susan, she ended up instead buying a Kodak camera yesterday at OfficeMax (we’ve loved the other one we have). She says maybe she’ll still buy a Zire eventually. I wonder if Palm will still be trying to win her business.

Business Opportunities Weblog has an interesting calculation of how much a blog is worth based on Technorati data and approximations from the recent AOL/Weblogs Inc. deal (just enter your blog’s URL and their script will generate an estimated value). It’s all just guesswork, of course, based on analysis by Tristan Louis, but as they note at least now there’ some starting point to estimate value.

I really wasn’t expecting to write another post about retail anytime soon, but this week the news came that Office Depot is closing some stores and moving its Viking catalog operations to the Office Depot catalog in the U.S. (I believe Viking also has a substantial business in Europe).

I guess this shows how difficult it is to get mergers to really work. A lot of times, instead of the whole being more than the sum of the parts, it turns out to be substantially less. One recent example that keeps bothering me is Sears’ acquisition of Lands’ End, which was a $2 billion catalog seller of clothing, with a very loyal customer base in the U.S.

I was delighted when that deal was announced, because it looked like it opened all kinds of positive possibilities. Sears was always weak in clothing, so it would potentially shore up a real weak spot in their stores, while giving Lands’ End instant widespread distribution.

At the same time, adding Lands’ End’s catalogs could help make up for what seemed like the ultimate bone-headed business move in the early 1990s, Sears’ shutting down their wide-ranging catalog operation just when the internet was making it possible to run such an operation efficiently. I assumed Sears would still have enough mail-order competency to get a lot out of that.

Of course, none of that worked out, and following its acquisition by K-Mart, Sears is now apparently unloading Lands’ End.

In reflecting on Office Depot/Viking, I can’t really say I’m surprised. I used to be a very loyal customer of both, but while not really “dissatisfied”, noticed I’ve been buying from each less and less in recent years. I’m not really all that certain even why. This shows how the little things in retail really do make a lot of difference.

It should be noted that I’ve always received very good service from both, indeed really outstanding service from Viking. It was obvious, however, that like bookselling, the catalog office supply business is horribly competitive; whenever I’d do business with any of their competitors, e.g. OfficeMax, Quill, etc., they were always very good as well.

I guess the lesson here is that, while so many mergers appear unwise, even when they seem to make sense, they can be very hard to pull off. I can’t help but wonder if the smarter way to do acquisitions is to buy much smaller operations that fill in specific gaps in technology, product or customers and don’t cause wrenching change to the whole company while being digested.

I’m sure the failure rate for these type acquisitions is fairly high, too, but executives aren’t betting the whole company in these instances, and when they succeed the payback may be much higher. It’s interesting that Cisco Systems, which is perhaps more of an innovator in business methodology than technology, is a very aggressive acquirer using this approach. Whatever it is they’re doing likely deserves some study by anyone considering a merger/acquisition.

I had a curious shopping experience this morning at OfficeMax. My LexMark laser printer died recently and I’ve been thinking about getting a new one (or maybe repairing the old one). Since my son recently bought a laser printer, I’ve just been handing him PDFs to print whenever I need to; this has worked surprisingly well (there’s a reason why Microsoft hasn’t been able to stamp out Adobe). Of course, it helps that print to PDF is built into Mac OS X (and I wish I could get Classic to do it so I could convert a lot of old newsletters to PDFs and easily put them on the web).

For these reasons, I haven’t been too eager to quickly go out and buy another unit, even though I absolutely LOVE laser printers. Nevertheless, OfficeMax had a good sale on printers this week so I thought I’d go down to the store and look at an actual printout; I was considering an all-in-one unit since my fax is only half working (scans or copies look terrible) and the price was quite good.

The curious part was that once at the store, I had a fairly tough time actually trying any of the printers out. I never did try out the all-in-one unit I came in to look at. I’m pretty ambivalent about spending money on fax capability; the technology seems mostly obsolete for most people. My inclination was either to get something cheap with print and fax to replace my old fax (in the rare case I need it, which is hardly ever nowadays), or else get a good mono laser printer with duplexing (the one thing I missed on my LexMark). I guess the more I thought about it, it seemed pointless investing in a machine that would fax but was a fairly crude laser printer.

So I started looking at the other machines on display, and did manage to get one plugged in (with some difficulty), but had to ask for paper to print. The folks there were very happy to help, but told me that they don’t usually turn on the machines anymore, and some of them may not even have toner inside. That made me wonder, “Why should I even bother to go to the store, and why do you bother to build them???”

Besides this, there have been several times where OfficeMax would send me a coupon good only for online orders. Sometimes I would go in to the store to look at something, and then go home to order it (with free shipping), when I could have just brought it home with me, because of the coupon! The folks at the store knew about this and weren’t fazed when I explained why I couldn’t buy from them.

Because those deals were often pretty good, I wasn’t so much upset at OfficeMax as simply bewildered why they were working at cross-purposes with their brick-and-mortar stores. When I went in today, I was expecting the same thing, but this time the sale was at the store, too, maybe because a coupon wasn’t involved.

OfficeMax seems like a nice company (though I’m still waiting on the rebate check for my son’s printer; I’m going to have to chase that down since emailing is getting me nowhere), but the online vs. physical store dilemma seems to show up a lot of places. Barnes & Noble, for example, is one of my favorite retailers, but they can’t seem to get this right, either. Whereas Borders gives you readily-accessible terminals that let you check their online inventory, bn.com is chained behind a counter at Barnes & Noble.

What retailers need to grasp is that they need a seemless linkage between their physical, online and other forms of interfacing with the customer (e.g. phone and email). I order a lot online and some companies seem to get it, even offering a way to pay for an order filled out online via phone, for customers concerned about giving out their credit card info over the net. Customers should be able to deftly move from one type of interface to another, without running up against barriers such as at Barnes & Noble.

One company that seems to get this is GM, at least to some extent. I recently used their BuyPower website to locate the particular van we wanted for our sizable family, and was even able to print the window sticker off the net. When Susan and I took this in to the dealer (you should always take your wife to buy a car; studies have shown you usually get a better deal), the BuyPower consultant didn’t even know they had any in stock, but since I had the VIN number it was no time till he found it and we were taking a test drive. There were probably five or more closer Chevy dealers (who didn’t have any left in stock), so I would not have looked there except for the internet.

The lesson here is that retailers should take advantage of the strengths of each customer interface, instead of creating barriers between them. Computers are very good at searching, and so I was able to find just what I was looking for. On the other hand the physical dealership, with a vehicle to be seen and test-driven and an experienced salesman (or woman, who are often better to buy cars from), will do a better job of overcoming customer uncertainty and actually closing the sale.