Stick a Fork in the Old Ways

Stick a Fork in Segmentation, Cuz the old way is Cooked

Actually, stick a knife in segmentation, but fork sounds more pithy as a title. Drop back a few centuries; you are invited to dinner at the local Earl's. Bundling up against the winter cold, you slog through the mud, or if you have a carriage, sit shivering while you watch the cold breath of your horse as it plods up the hill. The castle is not the cold, drafty, stony place like in the movies, but more likely to have whitewashed walls, wooden windows sealed against the cold, and tapestries adorning the walls. You sit at the dinner table, usually pretty early in the day, and as the meal is served, take a cloth package out of your clothes and unwrap your knife. Yep, food and drink are provided, but you are expected to provide your own cutlery. No fork needed, stab with the knife, eat with the knife, fingers are fine, as you are likely wearing a napkin the size of a towel over your clothing, which is probably a good thing, as it might be your winter outfit (singular, your one outfit).

So, let's say you are not the guy chowing down with the Earl, but the smithy in the local village making cutlery knives for the limited number of folks that can afford them. You better make a damn good knife, as they are buying a knife. Not a butter knife, a seafood knife, a steak knife, a salad fork, a dinner fork, soup spoon, coffee spoon, or whatever the heck they call those tongs we use to fail at getting crab meat out of crab shells.

Skip forward a few years and meals to CES 2008 in Las Vegas, surrounded by even more variants of cutlery, this time all plastic for consuming inedible food, while surround the plastic cutlery are a few things that plug in, or have batteries. All part of the madness that makes up CES. I've been going to CES's since 1984, back in the time when the shows were blissfully politically incorrect. Each year, I try to glean an overall insight from the show. Sort of like the point in any movie that is where the filmmaker makes their key point, what my wife and call the 'author's message'.

There's a bunch I can talk about with CES, but I'm going to talk about segmentation. Or how I believe some of the tenets of segmentation in the device and consumer electronics have been blown to pieces, though scale of innovation, scale of products, and the impulse price points that key products continually drive down to. I've been a marketeer most of my career, I've been a product manager a bunch of times, and have spent many years as part of product phase review processes for computer peripherals, cell phones, mobile devices, mobile apps, and software. A basic premise is "who is the product targeting", what demographic segment, psychographic segment, competitive segment. The discussion is ALWAYS based in the singular, who are we gonna get to buy this product, who is going to buy this KNIFE????

I've been doing some informal market research, my kids, my niece and nephew, other friends and family members, folks on planes, VC's, industry folks. A few questions…how many iPods do you have? How many digital cameras do you have? Laptops, PC's??? Craploads. How many of them died or were used to capacity? Some, but less than you would expect. How many of them are fine but on the shelf with much faster turn rates for purchasing in the past? A bunch. How many of these 'extra' products were almost impulse buys because you really wanted that 'one feature' of the differentiated product? And as a result of having multiple, somehwhat differentiated products, how often do you find yourself using the different variants of iPod or Digital Camera for differing 'applications'?

I'm sure Apple gets this, Nokia seems to get it for elements of their product line, and a big part of their 'going forward' strategy, but not sure too many other companies do yet. In case I'm being lame here at explaining, three real life examples.

Digital Cameras: We travelled the world with a bunch of cameras (the kids had their own), but our primary cameras were a Canon ELPH ("Small"), and a Canon S3IS ("Prosumer"). Both were successors to prior products that went to shelf or mother-in-law. One product did not preclude use or consumption of the other. Greek island vistas, the Prosumer, Zip-lining in the Alps, tiny ELPH digital camera in pocket. Coming back from the trip, we said, OK, now we've got over 20,000 photos on iPhoto from the last eight years, time for a digital SLR, and bought a Canon Rebel XTI. But after using the XTI, the tiny ELPH doesn't cut it anymore, so time to shop a small pocket camera with better optics and flexibility, the Canon G9. OK, so maybe we are further down the digital photo curve than many folks, but how many people out there reading this have multiple digital cameras and turn them rapidly? And how many cameras did you have ten years ago? We've got more than the knife at our disposal.

iPods: Apple has been a master at this. Most folks have multiple iPods. I've got an 80GB (listening to it right now on a transcon flight), but I also have an iPod touch for when I want Video, browser, and cool factor, and we have a slew of other iPods in hand me down or shelf mode. None has died, none (except for the original 10GB) has been fully utilized. There's no forced "utility in use" change, there is just desire for a new feature set, being fulfilled at price point that is accessible from everyone from my 13 year old nephew buying his stuff with his soccer refereeing money to everyone else that I've quizzed on this topic (my nephew has the 16GB iPod touch, I've got the 8GB, figure that one out).

PC/Laptops: I think we are just at the beginning of this process with PC's and Notebooks. I see folks all around the country with their 2^nd or 3^rd Treo or Blackberry, lugging their 15" or 17" laptop, while at home they have their iMac, PC, or laptop hooked to a 22" monitor that's 1/5^th the cost of a few years ago. Nobody LIKES carrying a laptop. Years ago, I asked an audience of 500+ how many folks had laptops. Most. I asked them how many LIKED carrying 5-6 pounds of laptop and A/C adapter…not too many hands went up. But only now are viable alternatives starting to show up. OQO, various HTC devices, the ASUS EEE (which I ordered the first day it went up for sale on Amazon and will be a topic of one of my next posts). Meanwhile the basic laptop is getting to the 'pass it down or throw it on the shelf' price point.

Me, I've got three laptops. My trusty Toshiba satellite that I took on my trip, loaded up with everything, Microsoft office, Vista Premium etc. A lightweight Lenovo X60s with embedded EV-DO, XP, Thunderbird email IMAP'ing my gmail, Outlook for exchange, free Star Office (another TBD post on all this), and my 1.5 pound (.65KG) ASUS EEE, $399, Linux everything. And a Kindle, which is another story, but still part of this equation. We are just at the beginning of this folks, all will be connected via Wi-Fi, and ever more via Mobile Broadband (HSPA, EV-DO, and when my kids are older and bigger, even Wi-Max (at some point in the indeterminate future) ;- ).

We are barely past the Knife phase here, and NONE of us will have "a" portable computing device. Heck, I would posit with the phones we are all carrying, whether we are using data functionality or not, we already ALL have more than one portable computing device. And I'm not a Qualcomm guy any more, but pay attention to their Snapdragon platform, as it will drive innovation across platforms in incredible ways, but from folks using Qualcomm silicon, but in the competitive response it will generate. And the scale of volume of these new categories will be staggering. They won't eliminate the desktop, which is all morphing to all-in-one iMac like solutions except for the pros and the gamers, they won't eliminate the notebook, and in fact will drive innovation in notebooks, as incumbents protect share from new entrants, but it's gonna be big.

Cell Phones: This one drives me a bit nuts, because 20 years in, there are amazingly cool devices, but we are still in the Knife phase. In phones without SIM cards, people are limited to one Knife, or paying to have multiple Knives, and parts of the world with SIM cards, if the phones are 'unlocked' you can ostensibly switch between devices, but you better have strong fingers, long fingernails, and not prone to dropping anything. This one is not as simple, there is no magic wand, as there are business model issues, number provisioning issues, security issues, identity issues, a bunch of 'this is the way we've done it for 20 years' issues, but it's gotta change, as the 'one device' is a choke point for innovation, as almost by definition, unique differentiated services will need varied physical platforms to drive from.

So what does this all mean? Product managers and marketers will need to start looking at their product with more peripheral vision. Selling the new notebook platform with the all-in-one as a bundle, with key features, platform drivers, that lock-in customers to not only those devices, but further platform plays. Selling the tiny cell phone, along with the bigger messaging device. If not selling at point of sale, driving a relationship that drives the sale of the "you bought the knife, time to buy the fork". Realizing that product turns will be faster, lower price points are accelerating 'feature based' platform purchases. Focus on product and utility…i.e. barriers of folks buying into your platform, such as different AC adaptors and connectors by tier. Make it easy, focus on utility and continuity of relationship. Go for the full place setting, cause just a knife doesn't cut it anymore.

 

 

Comments

[Steve Caliguri]

Hey Jeff,

Good to see you are back! Let's catch up soon. I don't have your contact info, so call or email me.

Steve

[solaiemes]

Interesting and useful metaphor, I would extend it with your permission.

Following on, cutlery is slowly disappearing from the focus, in the future it will be increasingly on the food itself: what do I want the cutlery for? ... the services. Spoon, fork and knife is all you need to eat almost anything. A decent browser and a few other basic enablers wisely combined will provide you with most of the things you need. Customer lock-in based on hardware will be increasingly difficult.

Silver cutlery? Fine, but most people don't buy it. To open and broaden the customer base, engaging those that feel that technology is too complicated or expensive, a plastic or inox cutlery box is enough.

Focusing on mobility, right now, silver cutlery (iPhone, etc.) seems to be all we have. But that's not totally correct. Most modern handsets come with several enablers that can be smartly combined to go further that what has been done in the past, examples:
- Why install an application for sharing videos when most 3G handset supports videocall?
- Why installing applications for multimodal interactions when a decent mobile browser is enough (not talking about iphones here ...).

In Solaiemes we are convinced that this is the way forward for mobility. Perhaps that's a bit against the marketing/market wave but it is surely the technology trend.