Tuesday, August 7, 2007

Exploiting an Industry's Culture

Sometimes, an industry becomes uncreative or stops taking risks. This lets an outsider come in and gain market share by exploiting the mistakes made by an entire industry. It's fun to look for these industries and understand what they're doing wrong.

My favorite example is the video game market. (Roger Ehrenberg has a good summary of the Xbox side of this.) Ten years ago, everyone in the video game industry was happy thinking that all gamers were young males. The fact that other people spent enormous amounts of time playing Solitaire and Minesweeper didn't seem to bother anyone.

Then The Sims came out. This should have been a wakeup call. To a young male such as myself, it was a complete waste of time. To Electronic Arts stockholders, it was gold. That happened in early 2000. Believe it or not, nothing much happened for a long time. People at least talked about why nothing happened, though. It was apparently pretty hard to convince a publisher to risk large amounts of money on something that wasn't a clone of a successful game. All successful games involved things that young guys like to do. (Solitaire didn't make any money for Microsoft.)

You can tell where this is going.

The Wii was the next big one. Now you can play bowling and have enough fun doing it that your grandmother will join you. (Trust me, she doesn't like Halo.) Even so, the industry sat around for a few months saying that the Wii was just a fad and it would be back to young males sometime soon. (The definition of "young" seems to change, though. 35-year-olds play Halo 3.)

I think the video game industry has finally woken up. They've given a term to gamers who aren't young males! That could well be what was missing before. "Casual gamers" don't like to play first person shooters, and now even Microsoft wants to lure them to the Xbox.

Okay, that's a story of an industry's culture having major problems and some companies exploiting that. That story is almost complete. There's another one that's happening right now.
Of course, I'm talking about cell phones and the iPhone. Many years ago when I bought my last cell phone, I really wanted a good user interface. Despite spending a lot of time designing user interfaces, I didn't want to figure out someone else's bad user interface. There were a lot of them back when I bought mine. The Sony Ericsson collaboration seemed to be doing okay, so I got one.

Apparently my $200 purchase towards a decent UI didn't motivate the entire industry to work on improving, however. Apple has figured out how to make and sell fashionable and easy-to-use consumer electronics, and they've exploited Sharp's inability to do the same.

Now, it's still not obvious that the iPhone is a runaway success. It should be noted, however, that everyone at least knows what an iPhone is. I'm a bit jealous of my friends who have them, too. That's going to help attract buyers to a cheaper phone if Apple came out with one.

The cell phone story isn't complete, but I'm betting that it'll end up with Apple doing well. They didn't do well at first with the iPod, either.

Alright, now we've talked about the story that's mostly complete and the story that's happening right now. What about an industry that has a cultural problem right now but hasn't yet been exploited? One of the best ways places to look is a small industry that doesn't have a lot of players in it. If one company is dominating a market, then any cultural issues that that company has could be exploitable by a complete newcomer.

A few of you have probably figured out where I'm going with this one, too.

Is the hardware diagnostics field vulnerable? PC-Doctor is the big player here and we might have some problems. Several potential vulnerabilities might be there.

First, are our diagnostics any good? Well, I happen to know something about our diagnostics. I find it really hard to believe that a newcomer (or even a current player) can do as well here. This is what we do, and we do it well.

Are really good diagnostics what people want, though? Well, it is what companies like HP, Lenovo, Dell, or Apple want on the machines that they ship to their customers. They want to be able to trust those diagnostics, and they can when they run PC-Doctor.

Here's a potential exploit, though: What do the customers of those big companies want? Do they want fast and trustworthy diagnostics? I don't think they do. They want something that says that their machine is broken, why it's broken, and how they should fix it. They don't care if it works 95% of the time or 99% of the time. They just need it to work this one time.

Furthermore, they don't care if the problem is hardware or software. That's a critical question to a PC manufacturer who only warranties hardware defects. That's not the right question for a lawyer in Florida who wants to know if he should download a new driver or buy a new hard drive. Right now, PC-Doctor doesn't deal with software issues.

How could this be exploited? Well, suppose a company made some really good software diagnostics. Then they could add some fairly bad hardware diagnostics to it. The big companies might not be impressed by these hardware diagnostics, but the end users might be since the software solves the problem that they want to solve. It would take a new entrant to the diagnostics industry a while to build up a complete set of hardware diagnostics, but they might be able to do it by focusing on what the consumer needs instead of what the big companies need.

I could also be part of the culture that's screwing up. If that's the case, then I wouldn't even know that there was something else wrong. Is our user interface so bad that no consumer would ever use it without a tech support guy telling them what to do? Are we completely unaware of this?

Should I be worried about this? I'd love to hear what you think.

This originally appeared on PC-Doctor's blog.

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