When features reverberate from product to product, consumers are likely to become indifferent while markets take the on ramp to commodities

Over the last year, or more, the same computing hardware feature set — very thin portable computers with ultra sharp displays, light weight, and rapid boot times — has reverberated across devices from different manufacturers targeted to the same market. This type of condition is a harbinger of product marketing producing commodities, leaving little room for brand differentiation. It’s time product marketers did their homework. Consumers are not likely to be lulled into complacency and just continue buying new versions of devices they already own.

Apple’s recent debut of the “new” iPad Air 2 is a case in point. The web site promotion for this device emphasizes features already claimed by Apple competitors, principally Microsoft, for its Surface Pro 3 2-in-1 computing devices.

But if I’m someone who recently bought a Surface Pro 3, does Apple product marketing really believe I’m going to chuck my investment of somewhere between $1 and $2K, or more, to buy yet another product claiming to be the thinnest device ever? If they do, I’m afraid they’re not likely to successfully achieve their objective. As Dr. Michael Porter has illustrated, competition to be the best is a comparatively low profit, zero sum game.

What the Apple iPad Air 2, and Microsoft Surface Pro 3 MARCOM illustrates is a disconnect between personal computer product marketing and its targeted customer base. To be fair, the video included with Microsoft’s Surface Pro 3 debut did include several portraits of how customers are actually using the first and second generations of Microsoft’s Surface. Post Surface Pro 3 launch, Apple purchased a series of online ads, which were displayed on the New York Times web site, providing much of the same information about organizations using iPad tablets. But connecting with your customers and coming to market with inherently unique products, which, in turn, deserve a fitting MARCOM statement conveying what’s unique, and different about them, is something altogether separate from a set of portraits of how customers are using your light, very bright, and thin ultra portable personal computers.

Actually, connecting with customers, as a short video presentation titled Managing the Uncertainty of Innovation illustrates, is the kind of high-value activity early stage ISVs can and should use to mine for truly unique product notions.

No doubt the iPad Air 2 has some truly unique capabilities, which can be compelling for a specific audience/market, but the current promotion about the product isn’t getting this message across. The same opinion covers current promotional efforts for the Surface Pro 3, and even very high ticket software — Microsoft’s Delve, IBM’s Watson, and Salesforce.com’s entry into the same space.

Bottom line: “the same space” is a mirage. No two “spaces” are ever the same. Product marketers need to find out just what “space” they want to target and then go for it.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved


Even Apple Listens When Microsoft Debuts New Themes for Product Promotion

For several days in August, 2014, the online New York Times web site ran a front page advertisement for Apple’s iPad tablet computer. This ad presented readers with a short success story illustrating how tablet consumers have been using the iPad for some real work, and not the leisure activity more often used for a promotional opportunity like this one.

The same type of marketing communications content filled up the middle portion of Microsoft’s online, audio and video webcast debut of the Surface Pro 3, which was originally published on May 20, 2014.

But Apple’s attention to Microsoft’s style of product promotion for the Surface Pro 3 evidently didn’t just stop with providing its audience of potential consumers with its own examples of business applications for its tablet computers. If rumors about Apple’s product development plans can be taken as a reliable indicator of where the iPad is headed, this attention appears to have also permeated the actual design of the new iPad. On August 26, 2014, Daisuke Wakabayashi published an article for the online Wall Street Journal titled Larger iPad Heralds Blurring Among Apple Devices.

With a rumored screen size of 12.9 inches, the new iPad will be larger, by nearly one inch, than the Surface Pro 3 (which has a 12 inch screen). But of even more importance, Wakabayashi’s contention about the new iPad and a “blurring among Apple Devices”, if it proves accurate, places Apple in lockstep with Microsoft along a path of positioning its tablet as a laptop competitor.

If readers remain skeptical about Apple following Microsoft’s lead, it may be helpful to reflect on what segment of the consumer market for tablets likely remains “untouched”, despite nearly 4 years of heavy marketing of this product. The remaining segment at the top end, one can argue, is largely made up of enterprise business consumers, and their siblings in the public and not for profit sectors. For these markets, the entertainment features of tablets are “nice to have”, but not “mission-critical” capabilities. Given Microsoft’s position in these consumer markets, it makes complete sense for Redmond to be leading Cupertino around the neighborhood.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved


Microsoft Struggles to Promote the Surface Pro 3 to a Mass Market

On August 10, 2014 Microsoft debuted a new set of video ads for the Surface Pro 3. A lot of the ad content is comprised of a feature comparison between the Surface Pro 3 and Apple’s MacBook Air. A lot of opinion has been expressed about this set of ads as simply the latest example of an ongoing comparison, dating back to the late 1990s, when Apple kicked it off with its infamous Mac vs PC ads.

Does Microsoft stand to benefit from this approach? In this writer’s opinion the answer is “no”. The original Apple campaign was likely effective as the result of a successful effort to bridge the gap between product and consumer. The “Mac” of the ad amounted to one type of person (consumer), while the “PC” was a radically different type of person. The ad then left the viewer to identify with one, or the other. Much has been written about the success of this campaign, so there is no need for us to spend time exploring it further here.

The current comparison is strictly product to product. One can argue the music background on the first of the new ads, with its female vocalist, is suggestive of a personality type, but the actual content is strictly feature to feature review. But, this writer would argue, PC consumers buying Macs are buying them more for what a Mac says about someone who owns one, than the actual features of the device. Sadly, the round of ads from Microsoft fail to speak to this human behavior pattern.

These ads may run against the grain of enterprise IT organizations, which would be very unfortunate. These organizations are most likely to motivate corporate users to scrap orders for MacBook Air laptops and replace them with orders for the Surface Pro 3. Enterprise customers are accustomed to evaluating products head to head (so-called “best of breed” comparisons are the norm), but strictly on a feature basis, without any attempt to add tone to the presentation by associating buyer type to products.

Bottom line: these ads attempt to plant one foot on either side of a gap between consumer and enterprise IT. This posture is not sustainable. The next round should position the product on one side of the gap, and preferably the enterprise IT side, where Microsoft has more friends.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved


Is Microsoft Struggling to Support the Devices and Services Objectives of Its July, 2013 One Microsoft Announcement?

After a string of marginally successful hardware device announcements, Microsoft seems to have fared poorly at the E3 Gaming Expo, 2014 held in Los Angeles. Given the amount of effort the XBOX team evidently put into Microsoft’s appearance at this event, (anyone who did not attend the event can watch a recording of Microsoft’s Press Conference at the E3 Gaming Conference, 2014 online) it should be a fair question to ask whether the potential return is worth it.

According to the latest 10-Q report Microsoft has filed with the US SEC, Gross Margin for the Hardware segment of its Devices and Consumer business, for the first three months of the calendar year, declined by 34%, from 2013 to 2014. Of course, during this period Microsoft announced the release of a new version of the XBOX product, which would incorporate the next generation features of the XBOX One, but would not have the Kinect® features.

Just after the end of the quarter, Microsoft also made a formal introduction for the press of the new Surface Pro 3, so some of the costs incurred during the quarter immediately prior to the announcement may likely be attributable to this tablet “designed to replace your laptop”. But, regardless of why funds were expended on these devices, at some point, sales of these hardware products have to start contributing, positively, to Gross Margin.

A number of reviewers from prominent publications — including the New York Times, and the Wall Street Journal — came away from the XBOX press conference at the E3 expo with the impression the new strategy is all about “shooter” games. Anyone reading the press lately would question whether this type of branding will really benefit Microsoft over the long term.

Further, while Phil Spencer provided a preview of what was to come for the audience for the Press Conference, in short, a presentation all about games, reviewers from the gaming community didn’t come away with the kind of “shock and awe” one would have hoped would have been the case.

Even worse, while analysts were also noting how Microsoft’s communications had de-emphasized the XBOX’s considerable feature set as a home entertainment control center, Sony, the market leader, in turn, specifically emphasized similar features on board the PlayStation 4 console.

It would seem Microsoft has a pretty clear set of objectives for the near term future of the XBOX — either get it right and, as Mr. Spencer also informed the press, take back market leadership, or carefully rethink the branding for this product, or, perhaps, spin it off.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved


Are Product Marketers Changing Direction on Tablet Computers?

Anyone watching the webcast of Microsoft’s debut, late in May, 2014, of the Surface 3 Pro computer would think tablet consumers are really after more traditional computers, but with an enhanced set of features for mobile work. But this view isn’t consistent with the opinion of some analysts, at least up to now.

In a review of this new hardware device from Microsoft®, titled Microsoft Surface Pro 3: A Tablet That Desperately Wants to be a Laptop, which was written by Joanna Stern, and published on the Wall Street Journal website on May 27, 2014, Ms. Stern expresses her opinion on tablet computer product marketing. Pointing to the Apple iPad, she notes: “Microsoft is clearly going after its original vision of the tablet here (stylus and all), rather than Apple’s more limited—but more successful—approach”.

While her review does not include a clear statement about tablets, and why they should provide consumers with a superior electronic reading experience, and a great method of viewing movies, she does state: “You can’t hold the Surface Pro 3 for hours, reading in bed. Its weight and cumbersome size wear out your arm, and the back corners of the tablet can get quite warm.” So, perhaps it’s safe to surmise she’s content with the tablet benefits statement Panos Panay summed up at the Surface Pro 3 debut – tablets are great for reading ebooks and great for watching movies, but not much more.

But, if these are the sole benefits consumers realize from their tablet computer purchases, manufacturers should plan on selling fewer of them, going forward. Once again, anyone following IDC’s periodic forecast for global tablet sales will note a recent revision downwards: IDC Lowers Global Tablet Shipment Outlook by 5.9%.

Since there are few PC manufacturers who would be pleased about the future prospects of a progressively diminishing world wide market for hardware, like the IDC report on tablets presents, Microsoft’s product strategy for the Surface Pro 3 may make a lot of sense.

In fact, anyone reviewing the press releases coming out of Apple’s world wide Developers’ Conference, 2014, will note efforts to closer align Mac OS X Yosemite with the iOS experience, kind of like the Surface product strategy, but in reverse.

As to the remaining major player in the tablet O/S arena, Android, clearly Chrome is Chrome, is it not? Whether one consumes the Chrome computing experience on a Chromebook, or on a Nexus tablet, or even a Samsung smart phone (but Tizen may be just around the corner), the bottom line is still the same — a lot of Apps and a set of variants on the same browser (Chrome).

So, in my opinion, Tablet product marketers are looking for opportunities to win market share from laptops, and vice versa. If they cannot succeed in this effort, there really isn’t much of a future for them, unless they plan on going head-to-head with the television set.

Disclaimer: I’m long Microsoft and do not have a position in either Google or Apple

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved


Microsoft Leverages Partnerships for Features Exclusive to the Surface Pro 3

Two exclusive features of Microsoft’s Surface Pro 3, namely the efficiency of the chipset supporting Intel’s quad core processor, and Photoshop Touch, would not be available without direct participation from Adobe and Intel in the collaborative design of the product. Readers can watch the webcast introduction of this product to catch the specifics of each of these features.

The development of these features is not the only recent example of Microsoft® successfully leveraging opportunities to collaborate with other ISVs. During the week of May 19, 2014, Microsoft also announced a joint effort with SAP: SAP and Microsoft to Deliver Tighter Integration for Application Development and Cloud Deployments.

The potential benefit to Microsoft’s bottom line implicit to these collaborative wins should not be underestimated. SAP is a very large force in precisely the same enterprise markets Microsoft already dominates with its operating system and office suite. Since the SAP effort focuses on Azure, its impact on Microsoft’s share of the enterprise segment of the global cloud may be important.

In turn, the collaborative wins with Adobe, and Intel around the Surface Pro 3 may result in some portion of Apple’s core market at least seriously considering a switch over to the Surface Pro 3, if not actually taking the big step.

I am interested in learning further about these collaborative efforts and who the stakeholders are within Microsoft’s organization. I suspect the product marketing teams for the Surface product and for Azure have been the drivers, but perhaps groups from the sales organization have played a role, as well.

The significance of all of this, is of course, is to better gauge the likelihood of Microsoft convincing other mature ISVs (for example, Oracle, and, perhaps, even IBM) to jump on its bandwagon as it increases the intensity of its competition with Amazon, Google and Apple in their respective core markets. If the right players are in place in Redmond to continue to drive these deals, we can confidently expect to see more surprising deals like the debut of this hardware device.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved


Microsoft Debuts the Surface Pro 3

Microsoft Corp. debuted the Surface Pro 3 hardware device in New York City on May 20, 2014. Powered by either an Intel i3, i5, or an i7 quad core processor, this device has the computing power of a laptop and the physical form of a tablet.

Satya Nadella provided the introductory remarks for the debut. Mr. Nadella conveyed a sense of urgency as he reported on the degree to which Microsoft is adhering to its “Mobile First, Cloud First Strategy”: “this is our focus for every device and for every service that we launch at Microsoft” (transcribed from the audio track of the Surface Pro 3 webcast).

With this intensity as the backdrop, he went on to report how “in particular, with Windows, we’re advancing on every dimension, from form factors, to business models . . . . and today is the next step on that journey.” (transcribed from the audio track for this webcast) Of course, form factors are the stuff of hardware devices, are they not? Therefore, with his brief opening remarks, Mr. Nadella actually provided a very helpful emblem of how the hardware device to be introduced, meaning the Surface Pro 3, represents, actually, more of the state-of-the-art refinement of this Windows product strategy for hardware devices, than anything else.

So, to take this a step further, if we look at the product from this vantage point, concerns about the future growth potential in the tablet market, given the global fiscal Q1 2014 results recently published by IDC likely have little bearing on what the sales future for the Surface Pro 3 will look like.

Perhaps this product will provide Microsoft with a knife and fork to cannibalize the laptop market, as some analysts have noted. But, then again, the product may prove to be a very useful method of capturing some of the very high end business laptop business Apple has come to own with their “Air” portables — iPad and MacBook.

This latter scenario is certainly reinforced by the participation of Adobe in this launch. The Surface Pro 3 will be the first computer built for a new version of Photoshop, which has been written for a touch screen interface, including the new pen Microsoft will ship with the Surface Pro 3.

Disclaimer: I’m long Microsoft

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved