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Picking technological winners/losers is easy

Picking technological winners/losers is easy

If you know the formula, picking technological winners and losers is easy.

"But they are useless. They can only give you answers." - Pablo Picasso on computers.

Among the many careers I want to try before I die - televangelist, rock star, college bar owner, psychic - is founding an organisation to help a neglected group of which I'm part - Sarcastics Anonymous.

"Hello, my name is Bob and I'm sarcastic," I can hear myself say.

"What else is new?" I hear the assembled group respond.

I'll probably never get SA off the ground. I need a 12-step program, but I'm stuck at two: 1) Notice something, and 2) snicker at it.

I need to stop before I sneer again. I'm especially vulnerable to self-improvement books. I want to write The three habits of somewhat effective people, and a satire of Life's little instruction book written in the mangled English you find in the instruction manuals of some Japanese products.

Most of all, I want to write When good things happen to bad people and its sequel, When good market share happens to bad products.

Ever wonder why bad products win? The quadrant charts beloved of expensive market research companies don't explain it. Neither does product quality, except to break a tie, nor customer stupidity.

Three factors determine the success or failure of any new technology product: what it will do for its customers, its affordability or lack of it, and how much disruption it causes. Here's how it works.

Customers: customers make buying decisions, as opposed to consumers, who use products. The two are distinct. For a new product to succeed, it must do something useful for the customer. In other words, the customer and consumer must be the same.

Think about the ill-fated OS/2 in this light. IBM defined the IS director as its customer, positioning OS/2 as a stable platform for client/ server applications. The customer wasn't the consumer. That was the end user, for whom OS/2 provided negligible benefits.

Affordability: new products are risks. High prices make them riskier. Consider Lotus Notes, so expensive in its early, critical years that Doing Nothing, its only competitor, had about 50 times more market share.

Disruption: disruptive products, those that don't get along well with the installed base, are guaranteed losers. Bet against them.

There are two ways new products can be nondisruptive. One is to avoid touching the installed base. Early PCs were like this. Alone they sat on end users' desks, connected to nothing.

The other way to be nondisruptive is to integrate smoothly into the existing environment, creating a smooth migration path. The early NetWare, for example, was invisible. F: behaved much as the C: end users already knew; LPT1: simply went to a better printer.

Windows was another spectacularly successful example. Version 2.0 looked like a GUI toolkit to developers, saving them work. End users didn't even have to install it; it shipped as a run-time environment with Windows applications. Version 3 remained nondisruptive, but in a different way, by running DOS applications transparently instead of loading only when needed.

Compare Windows with the early OS/2, vying for control of the GUI operating system market space. OS/2 made you throw out your hardware. Your software? OS/2's DOS "compatibility box" was useless, so you had to start over with a new OS/2-specific word processor and spreadsheet. Log on to NetWare? Sure, using a new, immature technology.

(IBM did a great job, though, compared with Next. Next had no identifiable customer or consumer, cost a ton, and integrated with nothing at all. It had "Market Failure Guaranteed" stamped on every box.)"What makes you the expert?" I hear some of you ask sarcastically.

Nothing. I'm applying an old, well-worn marketing principle: make buying from you easy. So don't sneer at me - save it for the venture capitalists who squandered billions ignoring this simple rule.

A fool and his money, after all . . .


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