It’s the application, Stupid

Posted: 09.10.07

I remember when PDAs first hit the scene and how the very very smart VCs stopped investing in PC companies because “Pocket computers” were going to kill the PC. They were idiots, of course, but they were not alone, and their holdback on funding did damage the PC industry a little. It seems ludicrous now with the benefit of 20/20 hindsight, but for a while a lot of people (not me, of course, I’m just not that smart) thought it might happen. It didn’t. And if I asked 20 of you I’ll bet I’d get five to ten reasons why it didn’t happen.

Sony’s PS3 hasn’t sold as well as most people thought it would or should, and if you ask 20 people why, you’ll get four or maybe five reasons. Why such a concentrated result? Because most people think they know why, and are more than happy to tell you about it. Of course I, the foremost authority, do in fact know why (and yes, I’m going to tell you).

Smart phones are going to kill Blackberries. Everyone knew that. Hmm, what’s that on the side of your hip there, buckaroo? Rather than be killed by phones, PDAs and phones copied Blackberry and there was even a Chinese rip-off called the Redberry.

FIGURE 1. The shameless RedBerry rip-off of the Blackberry. (Source: Unicom)

iPod takes over the MP3 market. That did happen, much to the chagrin of the companies already in the market and who pioneered it. And again let’s ask the 20 Oracles why.

Why? Well you knew the answer before you read this far from the headline. It’s the application.

What most of the electronics/CE/PC industry fails to register is that no one buys hardware for the hardware’s sake. Game enthusiasts don’t go out and pay $800 for an Nvidia GeForce Ultra because they admire its form factor, nifty fan, or layout of the high-speed memory; they buy it because it’s going to accelerate the application.

People don’t buy iPods because they like Steve Jobs (OK, some of them do), they buy them because Steve Jobs made the application work—the consumers just want to listen to music and don’t want a lot of hassle getting it.

FIGURE 2. iPod rip-off of Robert Longo’s Men in the Cities series. (Source: Apple)

People didn’t buy the Wii in droves because it was less expensive than the PS3; they bought it for the apps. All game consoles have always been and will always be sold by the apps—including the ones that are sold to be hooked up as supercomputers.

PCs weren’t driven out of town on a mule because PDAs don’t have and can’t run the apps people need to use everyday to justify the high salaries they get that let them buy BMWs. And BMWs are not sold because people like the logo or type of metal that is used in the pistons, they buy them for the app—status.

And people buy mobile phones because of voice applications, not as a camera, or MP3 player, or a web browser, so saying that games didn’t take off as expected on mobile phones misses the point—people don’t buy phones so they can play games or watch videos, those are secondary or thirdary reasons. Likewise, people don’t buy PSPs to make phone calls.

So the trick, no it’s not a trick, the skill in selling hardware, any hardware, is in understanding the user’s need for the associated application. Gun companies get this, the application is clear. Nvidia gets it, they sell more mid-range parts than high-end parts, but they market the pizzazz of the high-end stuff and get the halo effect.

Intel gets it but hasn’t really figured out how to translate it. They should. The Centrino program was a smashing success not because of their integrated graphics but because they delivered an application solution—wireless communications almost anywhere.

There really is no killer product, there’s just good application delivery. So, anytime you hear someone tell you the XYZ Company is going to kill the ABC industry or the MNO company, bet on the thing that’s going to get killed because most likely XYZ ain’t going to pull it off.

Corollary® on Information™ Gap©

We’ve gotten quite a few nice responses to the editorial on how a company becomes held hostage by PR and lawyers.

A couple of readers pointed out that one of the other indications of this happening is when the little circled letters appear in every sentence. You’ve heard us complain about this cluttering nonsense before. I’m reminded of a comment an older Polish mechanic made to me when he saw me painting the handles of my tools, “You think the wolf don’t eat the marked sheep?”

Indeed, do those over-lawyered and PR-controlled companies that insist on putting little ©, ®, and ™ on everything they can possible make a claim that it actually will prevent something, or that it denotes anything or contributes anything other than a speed bump to your reading? Get over yourselves. gray