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The Personal Information Technology Report

December 10, 2002

In this issue:

Wireless Marketing: Too much talk about voice

Why OS X could mean new growth for Apple

Wireless marketing: Too much talk about voice 

The story in brief: Spending millions of dollars marketing a commodity service -- wireless voice -- is a waste. To differentiate themselves and convince more consumers to go wireless, carriers must think applications -- and real ones, not ring tones.

The holiday season is here and so is the marketing onslaught by wireless carriers. But they should not be of good cheer. While any child can go on at length about the key differences between Bratz dolls and Barbies, the wireless carriers' commercials and print ads don't begin to distinguish one service provider from another. 

Despite the millions the companies have spent hiring beautiful Hollywood actresses, creating catchy taglines and filming attractive, young, determinedly cheerful people using wireless phones, the only message that comes through clearly is: You can make voice calls on a wireless phone. 

That's a well-understood fact by now. So why pour so much money into reiterating an old message? 

Marketing types would say the companies are building brands-but is that working? The ads in the current crop are virtually indistinguishable from one another. They either focus on quality of service or emphasize how "hip" it is to make wireless phone calls -- especially to your family. 

Ask anyone on the street or at your next holiday party if they can remember which carrier is behind which ad. Odds are, they'll recount detail ("that guy in the trench coat doing the X-Files impression") but not which carrier's logo shows up at the end of the commercial. That should make the carriers cringe. 

And well they should, for the failure of these campaigns to make distinctive brand statements is not entirely the fault of marketers and ad agencies. Too often, those groups are asked to spin cloth of gold from a tangle of dross. The truth is, with all the carriers essentially selling voice first and foremost, the marketing options are minimal. The main tactic is to make one company more attractive than another by associating good feelings or a particular lifestyle with it-but none of the ads is especially creative or accomplished in attempting this. 

Further, with voice the primary sale, the carriers largely wind up preaching to the converted, cannibalizing each others' customers. It's a bit like the newspaper battle in Chicago: In a region of about 7.5 million people, the two morning dailies fight over the 1 million who bother subscribing to a daily newspaper. Only recently have the Windy City's newspaper barons decided to go after non-readers with new products, trying to expand their customer bases.

The wireless carriers would do well to follow suit, both in offering differentiated products and in reaching out to new customers. Further, they already have a model to follow: wireless in the corporate information technology world. 

Becoming Indispensable

Corporate IT departments, under more pressure than ever to justify their existence and investments, are adopting wireless applications and devices precisely because they show a fast, substantial return on investment. They achieve such ROI because most end-users quickly appreciate how wireless applications make their lives easier. (Compare that response to the obstacles companies face getting users to accept knowledge management or enterprise resource planning systems.)

Corporate end-users see wireless devices as an extension of their desktop workstations and most or all of the data they need to do their jobs. Whether that is appointment data or a customer profile or inventory levels is moot: what's key is that the data is critical and the corporate user can get it when, where and how she wants it. 

That is precisely the sort of essential data ubiquity that wireless carriers must deliver to the consumer market. The wedge is already in the door, because corporate users also are consumers. They're likely to get Aunt Carole's birthday email on the same phone that delivers the email about a rescheduled business meeting. 

Unfortunately, outside the realm of the business network, these users will find few reasons to use their wireless phones for anything more than phone calls. The applications simply aren't there -- and without indispensable applications, users will see their wireless phones primarily as voice devices, with one being as good as another and price the major differentiator among them. That's a business model that's not worked well for the long distance carriers (or the airlines, for that matter). And it's a model that leaves marketers very little to work with.

Yet the only wireless consumer applications mentioned in the recent ad campaigns are ring tones, game playing and instant transmission of photographs. None of these makes a wireless phone indispensable. 

What would? The answer: Applications that extend useful, critical data to consumers when and where they need it. Such applications could include:

Bill payment/bank account access. About 37 million Americans now use online banking services, according to the Pew Internet and American Life Project. So the comfort level with accessing personal financial data electronically is steadily growing. Carriers could capitalize on this, enabling consumers to look up their account balances with a keystroke while they're in stores-and to enable them to transfer cash between accounts, including credit cards, if necessary. 

Stored value and impulse transactions. Follow NTT DoCoMo's lead in Japan by enabling consumers to use stored value in their phones to make purchases - not just at convenience stores, but at any merchant accepting credit cards. Security would be the key issue: With identity theft in the headlines, carriers could gain an edge by making their payment method more secure than using credit or debit cards, even if the phone or device is lost.

Wireless phones also could be a valuable tool for fast transactions, such as ordering movie tickets or downloading coupons at the point-of-sale. Carriers could help merchants create special programs to reward frequent buyers: e.g., the phone accesses a database with the user's shopping history that creates a personalized coupon on the spot. AirClic is one application developer working on such uses (See AirClic: The Future of Web-based Businesses).

Access to personal databases. Extend applications on a user's PC or home network to their wireless device. For example, enable a consumer to automatically record a point-of-sale debit in an electronic checkbook that also updates his PC-based banking software. Enable phones to access contact management databases that reside on a home PC. USB ports, infrared and Bluetooth already allow peer-to-peer applications synchronization. New XML tools now allow immediate real-time synching through the Internet. Eventually, it should not be too difficult to position wireless phones as the universal interface for all IP-addressable devices in the home, from media recorders to thermostats, from anywhere. 

Solid applications require time to create, so the lack of differentiation among carriers is a problem that will linger. Many truly useful applications will require partnerships with application developers and an array of businesses -- which almost always slows time-to-market. Yet while taking steps toward truly useful applications, carriers also could pursue other routes to customers and not just hire the latest Hollywood name to tout voice service. 

Substance over image

For instance, carriers could bundle wireless and wireline service. Yes, that means hurdling some regulatory barriers as well as overcoming fears of cannibalizing the parent company business. Yet a wire/wireless offering could actually help local carriers retain local service customers by enabling them to provide their own local/long distance packages -- with the long distance service supplied by the wireless phone. SBC Communications is gingerly attempting this in some of its markets.

And why not get on the Wi-Fi wagon now and make it an integral part of service plans? Even before the announcement by AT&T, Intel, and IBM of their plan to form a national Wi-Fi network, Wi-Fi was on track to become a mainstream wireless technology. Yet most carriers are conspicuous by their absence in this arena. 

Supporting Wi-Fi makes handsets more valuable right now by giving them robust Internet access that 3G still can't deliver. It could also give consumers who aren't likely to tote around pricey laptops more reason to carry wireless phones to manage simple Web transactions. Here, carriers and phone manufacturers should adapt existing work, be it the Symbian or Microsoft Smartphone operating systems and IPv6 technologies. They should take responsibility for getting Web content to the devices they sell. Forget about requiring Web developers to create sites specifically for wireless access. The goal is always ubiquitous data access. 

In the past, carriers have touted capabilities their phones and networks could not deliver. Over-promising was bad business -- yet being trapped in a commodity market like voice is hardly an improvement. Selling image may work with the so-called early adopters, who always need the latest toy, but won't make substantial inroads with those unconvinced they need wireless service. 

Carriers must face facts: marketing is not a substitute for creating indispensable applications to drive consumer reliance on wireless service. The first carrier to talk about more than voice will send a clear, distinct message more powerful than the prettiest Hollywood presence. And that will be a tale worth marketing. 

-- Sharon J. Watson

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Why OS X could mean new growth for Apple

The story in brief: With a reworked operating system, Apple is repositioning the Mac as a robust, user-friendly machine that adds new, much-needed simplicity to personal computing, networking and information technology. Its biggest problem is getting the word out to users conditioned to believing that Windows is something we're stuck with.

There's one in every group. Whether it's your condo association, your community activist organization or your neighborhood book club, when it comes to sharing documents, spreadsheets and databases for the orderly flow of business, there's always the one person who invariably causes workflow problems with four little words: "I've got a Mac."

For users of Apple Computer's Macintosh systems, their choice is a personal lifestyle statement. Not for them is the easy sellout to the cheaper, ubiquitous and applications-rich Windows operating system. Mac users see themselves as a part of a principled, rebellious, ragtag band raging against the (Microsoft) machine. Apple has long reinforced this identity, from the famous "1984" Super Bowl commercial to the more recent, if grammatically challenged, "Think Different" campaign.

It's fair to say that there has been a resulting backlash of resentment against the Mac and Mac users, certainly shared by this analyst. Do you think I like rebooting my PC three times a day? It's just that some of us need to accommodate the real world. My clients use Windows and my suppliers use Windows and I need to share files with them. Toward Mac users, I have equal amounts of envy and irritability. Mac users, at least those who are not professional artists or designers, can declare independence from the software establishment because they can afford to. They are the same people who claim a healthy diet drives their vocal loyalty to organic grocery chains, when you really suspect it's all about letting you know they can afford to blow $100 in the express checkout lane.

But as networking and applications integration become more important to personal information technology, no company can afford to wall off customers. In a world where Windows dominates the desktop and Unix dominates the Internet, the increasing isolation of the Mac OS was a liability.

Wisely, Apple saw this coming. Further, it remembered it was in business to make personal technology easy, not make people predisposed against Microsoft feel good about themselves. Apple's degree of determination may earn it new converts among more pragmatic users - and not all of them purely from the Windows camp.

Enter the Jaguar

For the benefit of users who have sat out the general bickering over PC operating systems, earlier this year Apple overhauled its OS approach with Jaguar, the code name for OS X, the operating system being shipped with all new Macs. Based on software developed by NeXT, the company formed by Steve Jobs between his stints as Apple CEO, OS X, with a Unix core, took the company's OS development in an entirely new direction - one designed to foster applications integration across PC platforms as well as create an easier and more manageable user interface than Windows.

While long-time Windows users will still find the Mac environment a bit cumbersome, a quick test drive of the new iMac system immediately reveals many of OS X's advantages. For one, it integrates common applications, such as browsers, media players and search engines, in completely new ways. A web search for a nearby movie theater using OS X's Sherlock feature will simultaneously bring together Yellow Pages, MapQuest, a download of the movie trailer and the ticket purchasing site all in the same window.

Other features include a Web page creation program that bypasses conventional HTML editors with simple point, click and drag menus and options. Finished pages can be posted through a direct account interface with Earthlink that Apple builds into to the OS. While not for commercial users, this feature gives consumers everything they need to set up a Web page. For the average family, the third party domain registration process and hosting set-up are no longer necessary. Apple, Earthlink and software applications partners have come together to make basic Web programming a no-brainer from the moment of system start-up. 

Applications integration like this has been talked about for a long time, but it's gratifying to see a major PC manufacturer begin to drive it. Perhaps that's why, within only a few months, interest in OS X has caught fire in the applications development community. Momentum picked up after Tim O'Reilly, a leading computer technology analyst and publisher, reported after an admittedly unscientific survey that OS X was drawing more "switchers" from the Unix and Linux communities than from Windows.

Apple clearly wants to increase its share of the consumer space. By targeting Web-based and communications applications, it's off to a good start. Once word gets out that Microsoft Office applications can run on OS X - and that the same machine can also support Unix-based software such as X-Windows - the professional community may follow. Windows still has the largest share of the professional desktop, but Macs might start to find that a more hospitable environment.

Raising expectations

If anything, Apple deserves credit for challenging the lowered performance expectations that Microsoft has conditioned most users to accept. OS X is as important a contribution to personal computing as Windows was. Windows eliminated the cumbersome text commands of DOS. OS X eliminates the need for users to navigate the increasing number of applications, applets and plug-ins that sit on top of the OS, which in the Windows environment tends to overtax computer resources, leading to the inevitable system freezes. 

Which takes us back to the beginning. While good things may be happening with the Mac, its marketing is still more anti-Windows than pro-personal information technology. Apple is still hung up on telling us how much easier, stable and intuitive the Mac is. True as this may be, nobody uses Windows for its simplicity, stability or intuitiveness. Windows trades on its ubiquity. Apple can build only a limited market share positioning itself as an alternative for right-brain users with an antipathy for ticky-tacky sameness. This alone won't get the mainstream market to pay more.

Instead, Apple must use OS X to drive home the point that consumers have better options in the way personal technology can be packaged.

People don't put up with Windows because they prefer it. They use it because it's economical and can run far more applications. With the adoption of Unix, Apple has begun its attack on the applications end. Now it needs to emphasize the value of their machines. This means more than saying Macs have cool designs or make PCs more friendly. Apple's core message should be that it makes the overwhelming amount of consumer network hardware, software and applications manageable in ways Windows can't. 

-- Steven Titch

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