24
Dec

Product Development Assumptions Must Factor In Predictable Regulatory Positions

I’ve posted to this blog on earlier dates on the topic of Google Glass. I don’t like the product for a number of reasons. This list includes concerns about regulatory agencies efforts to prohibit sale of the product. I think it’s mandatory for technology businesses to factor in the stance of regulatory agencies when they think about building solutions for markets. So, with Google Glass, and the new text to speech email reader products automotive manufacturers have announced, any useful product plan must anticipate likely regulatory action to ban the sale of these products for specific markets. Further, this type of product plan should include an assumption of how likely regulatory efforts will affect market size. The most notorious example of computing solutions crossing the regulatory line is, of course, Napster.

So where, if at all, does it make sense for technology businesses to undertake development for these markets? I think this type of “edgy” product development only makes sense for very large businesses, like Google. They have the financial resources to weather the losses likely to result from these types of efforts. The only legitimate driver, in my opinion, is an effort to brand the company as the leading edge of product innovation, and, further, one with the courage to question the positions taken by regulatory agencies.

This type of branding effort carries with it the “rebel” label, which has proven itself to be a very attractive label for the U.S. consumer market. Apple wielded the “rebel” brand to great positive effect. Perhaps Google is after the same territory.

But it’s very risky for early stage technology businesses, especially those running on self-financing, to challenge regulatory agencies. There are better ways to achieve a rebellious brand as a market leader than this type of effort. One last word on this topic: from what we’ve read recently, it looks as if European regulators may soon enforce privacy policies likely to substantially raise the cost of operating cloud services in an approved and legal manner.

Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved

23
Dec

Gauge Market Behavior to Choose Products for Development

Technology products should never be developed simply on a hunch about important problems markets need to solve. Business intelligence must be gathered from markets to support allocating any resources to build products.

I think products like Google Glass are an example of how not to develop products. Google appears to have designed this product to solve a common need for a less obtrusive method of maintaining a constant bi-directional connection to electronic communications than currently offered by smartphones, tablets and PCs. But I don’t think this need actually exists. In fact, if one reads an article authored by Matt Haber and published to The New York Times website back on Sunday, July 7, 2013, A Trip to Camp to Break a Tech Addition (http://www NULL.nytimes NULL.com/2013/07/07/fashion/a-trip-to-camp-to-break-a-tech-addiction NULL.html?ref=technology) one gets the sense the market is waking up to the debilitating nature of constant bi-directional electronic communication. Numerous studies point to much lower levels of productivity for people who do not take breaks from work.

My conclusion also applies to a new trend in automotive features development, which is proceeding in precisely the same direction. In other words, the major automobile manufacturers are adding text to speech computing systems to vehicles. The purpose of these systems is to permit drivers and passengers to listen to email, and text messages read to them while in transit. Once again, I don’t think there is a pressing need in the market for mobile data communications for this type of device.

Interestingly enough, in both the case of Google Glass and the automotive text to speech systems, there are serious questions about whether regulatory agencies will even permit the marketing of either device. Regulatory agencies are seriously concerned about the chance for driver distraction implicit to either product. So whether market participants actively pass up on buying these products, or not, may be entirely inconsequential. Regulatory agencies may prohibit sales of these products, altogether.

Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved

23
Aug

Finding Substantial Value in Collaborative Product Development with Market Peers

Last month we published a post on the risk early stage tech businesses take when they develop products for other products built by third parties. The example we cited in our post was a familiar one, Microsoft and Intel’s collaboration over the last 25 years. The key points about this collaboration? Intel produces the next generation of is X86 firmware and Microsoft debuts a new version of Windows. The danger implicit to this strategy, as we wrote, amounts to predicating the success of a product on the success of the other product. The historical example of why this type of inter business collaboration can work to the detriment of one, or both of the partners, can be found in the recent phenomenon (over the last 5 years) where tech consumers have switched from the devices built on Intel’s X86 firmware to devices built on ARM Holdings firmware. Examples of devices built on the latter architecture include most, if not all, of the products we refer to as small, smart mobile devices.

The kind of collaboration we noted, as it turns out, is actually nothing new. In an article titled Capturing the Value of Synchronized Innovation (http://sloanreview NULL.mit NULL.edu/article/capturing-the-value-of-synchronized-innovation/), Jason P. Davis describes precisely the type of business to business collaboration we worked with in our post, albeit at a much higher level. Mr. Davis describes a truly ubiquitous activity cutting across businesses at all stages of maturity. Examples of this type of collaboration, as Davis demonstrates, can be found all the way from whole sets of companies coordinating product release dates around the target debut of a new smartphone, all the way up to a new jetliner from Boeing or Airbus.

We came to two conclusions as a result of reviewing Jason P. Davis’ article:

  1. His “Synchronicity” is much easier to identify around hardware devices than it is around software applications. Based on our experience, we can say Davis’ “synchronicity” usually occurs around the debut of operating systems, or major platform releases (for example, Enterprise Content Management or “ECM”, or Enterprise Document Management, “EDM”)
  2. Despite the popularity of this activity, we nevertheless hold to our position. Early stage ISVs will do very well to carefully consider whether or not it makes snese to build products based on “synchronicity” before leaping into an effort

Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved

29
Jul

Collecting Information About Retail Customer Behavior Inside Retail Stores Makes Sense

Stephanie Clifford and Quentin Hardy authored an article, Attention Shoppers: Store is Tracking Your Cell (http://www NULL.nytimes NULL.com/2013/07/15/business/attention-shopper-stores-are-tracking-your-cell NULL.html?ref=technology), which was published on July 15, 2013 in the online edition of The New York Times. We’re interested in this topic, meaning technology to track the behavior of retail customers within a store. As far back as 2002 we had some involvement with ISVs developing solutions for the Radio Frequency Identification (RFID) market. These ISVs were working on very similar technology.

The systems Ms. Clifford and Mr. Hardy describe work within a different computing paradigm: namely WiFi management within a building. By tracking cellphone WiFi usage, ISVs have built methods to compile visit logs for individual customers. We agree with the article authors, the public concern about invasion of privacy issues around the collection of this information is certainly inconsistent with public attitudes about tracking cookies on websites. But there is an important difference. Some website visitor notices about the use of tracking cookies include a warning of a loss of functionality if cookies are not enabled in browsers. Bottom line: “If you visit our site and don’t use cookies, you won’t get the benefit of what we offer”. Perhaps reailers who want to use the technology described in the article should include similar language.

ISVs with technology brick and mortar retailers can use to compile this type of information have a near term opportunity to cash in. There are network and business intelligence components to the technology. We think it will take sometime before retailers can demonstrate relationships between store visits, shelf life for products, and likely buyer behavior. But the starting point, meaning systems to collect the information, appears to be in place.

Of course, there is a side benefit for retailers who choose to implement this technology. They will be able to pinpoint retail customers checking store prices for items against online competitors.

Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved

25
Jul

Avoid Designing New Technology Products Dependent on Parallel Changes Outside of Your Control

On July 10, 2013, Mr. Michael Endler, Associate Editor of Information Week, published an article to the Information Week website: Microsoft Preaches XP Conversion (http://www NULL.informationweek NULL.com/software/windows8/microsoft-preaches-xp-conversion/240157959). The problem Mr. Endler describes in his article, amounts to a public relations snafu for Microsoft®.

According to Mr. Endler, approximately 160 million Microsoft Customers for the Windows XP product are stuck on this now obsoleted platform. They can’t migrate up to Windows 8. The hardware they own won’t support the new operating system. PCs and laptops are now out of favor, so consumers have little, if any incentive to spend the money on the new hardware required to run Windows 8. At the same time, the old operating system still works (We, ourselves own a laptop running Windows XP and still use it daily with zero problems).

So what’s the lesson for early stage technology businesses? Don’t design products your customer can only use should he/she buy something from somebody else. This point may seem obvious, but for several product cycles Microsoft implemented the same product strategy. Intel® would introduce a new chip and Microsoft, in turn, would build an operating system designed to exploit the capabilities of the new chip’s kernel. But here’s the catch: Microsoft had no responsibility for the new hardware. From an accounting perspective the new operating system software was very profitable. As well, smartphones, tablets and thin client computers (like Google Chromebook) had not yet hit the market. So the serious vulnerability this product development strategy exposed was, apparently, not a major point of concern for Windows product management.

Now, of course, consumer tastes for computing hardware have changed dramatically. Microsoft is stuck with millions of customers who can only become more dissatisfied, as time goes by, as support for Windows XP falls away. With this conundrum in the spotlight, it shouldn’t be difficult to understand why the Surface initiative was an important step forward for Microsoft as it attempted to correct the product design methodology of the past.

Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved

11
Jul

Streamlining Development Processes can Deliver More Revenue for ISVs

In an article titled Steve Ballmer’s hits and misses from Build 2013 keynote (http://betanews NULL.com/2013/07/01/steve-ballmers-hits-and-misses-from-build-2013-keynote/), Derrick Wlodarz, who wrote the article, notes “Rapid Release is the New Norm”, and judges this point to be the ” . . . single facet of Ballmer’s speech (which you can watch here) [which] was by far the biggest theme of his near 25 minutes on stage”. We agree with Mr. Wlodarz’s assessment.

As innocuous as it may seem, the timing of product release, together with a businesses ability to hasten the development cycle, can result in a substantial contribution to revenue. Consider this example. Let’s say it takes an ISV 3.5 years to release a new software platform. The retail price for the new platform is set at $125.00 per computer. With a universe of, say, 100 million computers adopting the platform in the first year of its release, the bottom line contribution from the new product is $12.5 Billion for the first year in new revenue — certainly not a shabby contribution at all.

But let’s say the product development cycle is cut down from 3.5 years to 1 year, while at the same time the retail price of the software is reduced to $45.00 per computer. In the first year, the same 100 million computers are outfitted with the new software, for a $4.5 Billion revenue contribution for the first year. The next year there is another release, which magnetizes the same 100 million adopter for another $4.5 Billion revenue contribution. As well, a second 100 million jump on the first of the new releases in the second year for another $4.5 billion revenue contribution, and so it goes. The end result of the 3.5 year product life cycle is, perhaps, an additional $12.5 Billion over and above the contribution of the old product — a full 100% increase in revenue contribution, and, therefore, a really big deal.

The old adage “time is the enemy” is no less true for software than for any other product line. If Steve Ballmer can achieve the heightened efficiencies he alluded to at this conference, we think it’s a very very big deal.

Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved