Simplify your product!

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I thought Matt Burns’s article about Apple’s relatively simple product line struck a chord:

Garmin makes 82 GPS units that can be mounted in a car or carried in your hand. 82!?! That’s a lot and includes 27 designed specifically for the car. If Apple made a GPS, there would be two models available – maybe only one. Apple would shove everything they could into this one GPS and sell it at a profit instead of making similar different models that feature slightly different specs. 

I can relate, because I recently bought a Garmin GPS, but first had to wade through model-feature-comparison-hell.

There’s a lesson here that many product managers miss:  fewer choices is frequently the better design.

  • Does Garmin really need two models, identical in all respects except Bluetooth support?
  • Does every Windows install really need to ask what directory to use for installation?
  • Does my PC wireless configuration really need to ask me a bunch of questions about what network to use?  Why doesn’t it just find the strongest, test for openness, and use that one? (but let me change it later if I want)

If you’re a product manager:  SIMPLIFY!

Microsoft’s Ain’t the Gorilla No More

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I was surprised at Microsoft’s recent layoff news:  (a) this is their first major layoff, and (b) they’re only laying off 5%.  The financial analysts are calling this the indicator of general technology/software woes.

The technology sector is definitely challenged, but Microsoft’s problems are quite unique. They’re an old-line software company with a market structure and core business changing out from under them:

  • Most high-volume, general purpose software components (e.g. OS, productivity, etc.) will be free or pseudo-free (ad supported).    Key exceptions:   games, and small apps (e.g. $1 iPhone apps).
  • Most apps will be delivered as on-line services, with subscription or ad-based revenue models.   Exceptions:   apps needing heavy client-side interactivity, computation or data manipulation (e.g. PhotoShop).
  • Many software companies won’t sell software at all, they’ll sell the value the software generates (e.g. Google, Kayak.com, etc.)

Microsoft has cash and a huge installed base, so they’re not going away anytime soon.  But market structure changes are the toughest transitions for any company to navigate, and Microsoft hasn’t yet done a great job showing they’re up to the task.  Witness:  botched discussions with Yahoo, and I’m still amazed that Microsoft hasn’t jumped on a app store for Windows that makes it ridiculously easy to find, buy and install small-dollar applets.

My bet:  without bold moves, they gradually fade to an “inertia existence” (e.g. IBM, Sun), without the margins typically enjoyed by the gorilla.

Developers are now like aspiring novelists

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I just read a blog post about a developer with a #1 iPhone app that quit his day job.

The “indie developer” market seems alive and well (and not just for iPhone apps).  If you have talent and an SDK, you can give it a shot.  If you’re lucky, you can make a good living.  Software applications have become an expressive art like novels, paintings, music, and screen plays.

The downside is it’s getting very crowded because there aren’t barriers:   the only capital required is time.  There’s the joke about every waiter in LA being an asipiring actor; I feel like every developer I know is writing an iPhone/Android app.

Finally, a hit app does not make a sustainable business.  Very few writers are able to break out and build a sustainable franchise (e.g. Tom Clancy, JK Rowling).

I think the same will be true for indie developers.

“Home Theater PC” — getting close!

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I’ve written before about how the future of TV is IP-delivered.   As more video comes on-line, cable packages will get unplugged just like analog phone lines.  It’s no longer “if”, but “when”, and 2009 is looking like a good year.

A few weeks ago, I finally set up a “real” computer for our main TV:  a dedicated Mac Mini, wireless keyboard & mouse, and video camera, all hooked into a large LCD flat panel.  It’s great for family video conferences, viewing photos and videos, and watching Internet content (e.g. Hulu, TV networks, Comedy Central, etc.)

The missing component is software:   a classic desktop UI with a mouse and keyboard works, but isn’t ideal for a living room.  On the Mac, for example, the screen fonts are too small and the only way to make them larger (I can find) is to lower the screen resolution, which defeats the purpose of a high resolution display.

I really want a UI optimized for “living room apps” instead of “desktop apps”.  I want to use a single Wiimote-like pointing device to navigate, with optional use of a keyboard and mouse.

Apple’s FrontRow has a clean design, but is too limited and isn’t 3rd party expandable.  I’m testing Boxee, which comes very close to ideal but still has rough edges.

It’s all coming together!

Economic Downgrades and Musical Chairs

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This morning, a friend reported that Stowe, VT real estate is doing OK, in part because if you’re on the East coast, and you downgrade your Aspen aspirations a notch — you end up at Stowe.  (I also learned that Stowe is a big AIG project, which was interesting).

Similarly, McDonald’s is doing OK while Starbucks gets creamed.

In tough & uncertain economic times, we all tend to downgrade in a sort of musical chairs:  “A class” buyers downgrade to “B”, “B” to “C”, etc.  (Recession or not, I still don’t understand people paying $4 for coffee.)  It’s gotten so bad, we’ve got hedge fund guys flying first class instead of charter.  OMG!

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New ventures can look for existing premium products and services where you can be the more efficient, cost-effective downgrade offering.  The premium incumbent has already “taught” the market — can you find a better/cheaper way?

Existing ventures should ask:  “What are we the downgrade for?” and “What do our customers want to downgrade to?”

Recessions:  never boring.

What vintage is your VC’s fund?

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Jeff Bussgang wrote a great post about how VCs manage reserves.  When a VC invests, they allocate (reserve) some additional amount for follow-on financing.  For example, a company may raise $5m for Series A, but the fund will reserve $10m for Series B, C, etc.

In the current climate, many reserve models are at risk of blowing up:   VCs that assumed additional investors for later rounds may find themselves doing all the funding themselves (the “inside round”).  Jeff makes a good suggestion for every venture-funded entrepreneur:   understand what your investor is carrying for reserves for your company.

For entrepreneurs raising new funding now (tough, but certainly possible), a closely related issue is the age (vintage) of the VC’s fund.  Older funds are full of “reserve challenges”:  companies readjusting their funding strategies, and becoming more dependent on inside rounds.  In a newer funds, the bulk of the money is yet to be invested, and later investments from the fund will factor in current conditions and the realities of follow-on investors into the reserve model.

For entrepreneurs today fortunate enough to have multple funding options, fund vintage is a major factor to consider.  Newer is much better.

Netbooks defying categorization, but who cares?

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Last Christmas, I got my daughter an Asus EEE PC netbook.  We were one rev too early; the screen’s just slightly too small for Webkinz.  But netbooks are great “first computers” for kids:  small, light, and cheap enough it’s not a total disaster if it breaks.  Plus, flash-drive models have no hard disk to fail, the leading cause of laptop destruction among kids.

Between discussions with Antonio, and blogosphere chatter, it’s been amusing to watch the marketers try to figure them out.   Are netbooks a new “category” or just cheap laptops?  And, why are both Intel and AMD on record dissing netbooks?

I’m not a market expert, but the analysis path seems straightforward.  First, figure out who’s buying them and why, especially where the netbook purchase happens relative to other device ownership (e.g. smart phone and full-size laptop).    Extrapolating from our own experience, I’d bet that the typical netbook purchase is a first-time computer, in many cases for kids.  Then the question is:  when (if at all) do those users outgrow their netbook?  And: are we creating a “netbook” generation?

This seems like a replay of PCs vs workstations, back when PCs were viewed as toys.  Over time, unit volume drove PC price/performance improvements much faster than workstations, causing PCs to overtake workstations and ultimately removing any category distinction.  Now, “PCs are workstations”.

My bet:  the exact same thing will happen with netbooks vs laptops.

Your On-Line History May Catch Up With You

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I can never be a politician; I’m way too good at verbal gaffes.  In an attempt to be funny or witty, I frequently manage to blurt out something wildly inappropriate, embarrassing myself and everyone around me.  But there’s no a tape or video recorder to memorialize the moment.

The Internet is a different story:  every blog post you write, picture you post, Facebook wall you write on — it’s all there “forever”.  As time goes on, we’re all sharing more, building a “comet tail” of our content behind us.  And some have learned the hard way that drunken party pictures may not help your career.

As the “blogging generation” grows up and enters politics, it’s going to get really interesting.  Even with an entirely professional on-line persona, you can have expressions and opinions from the past that you regret.

It’s starting with the Obama administration questionnaire — what about that blog post from a few years back?

Other Big News: FCC rules for unlicensed spectrum

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There is some big news buried under Obama’s election win:  the FCC has adopted rules allowing for unlicensed use of some TV spectrum.

This is HUGE news.

Spectrum is a finite resource, and it’s availability (or lack of) is a limiting factor in satisfying growing demand for new services.  Most spectrum use requires a license, and incumbent license holders are quite adept at forming barriers against new competitors (good luck trying to start a new cellphone provider, for example).  The FCC occasionally auctions off spectrum, but that policy is fundamentally flawed (IMHO) if the goal is maximum benefit to the people.

Historically, the most disruptive and pervasive  applications have been unlicensed (e.g. Part 15), where, like the Internet, you don’t need someone’s permission to innovate.  Think of CB radio, cordless phones, the Family Radio Service, remote control of all kinds, low power FM, wireless headsets, Bluetooth and Wifi.

More unlicensed spectrum means more good stuff.