Chapter 2, "First Movers, First
Mistakes: IBM, Digital Research,
Apple, and Microsoft"
Perhaps the most telling lesson one can take from Chapter 2 is that both large and small companies can be arrogant and stupid to the point of unreason. In the case of Digital Research, it is hard, even after all these years, to understand how Gary Kildall could have been so cavalier in his dealings with IBM. As the years passed, despite that Kildall became very rich (though not Bill Gates mega-rich) as a result of his business endeavors in the early desktop computer market, he became increasingly depressed over the unfairness of it all. Before his premature death at the age of 52 in 1994 in mysterious circumstances, Kildall believed he had slipped into obscurity, permanently eclipsed by the shadow of Bill Gates. This is not true; Kildall will live forever in the annals of American business as the man who blew what was perhaps the biggest business opportunity of all time.
On the other hand, IBM, the company that partnered with Microsoft in breaking Kildall’s heart, would over the years demonstrate stupidity on a scale that the father of CPM could not have imagined. Over the course of two decades, Big Blue would allow its lead in PCs, software, and other key markets to slip from its grasp one by one. In the end, it would be Bill Gates and Microsoft who would benefit from both companies’ foolishness, and neither Kildall nor IBM had anyone to blame but themselves.
Chapter 3, "A Rather Nutty Tale: IBM
and the PC Junior"
Not much analysis should be necessary at this point since this chapter describes succinctly what was wrong with the PC Junior and includes bullet points in specific detail about what IBM could have done to avoid what happened. The key lesson to keep in mind is that people never want to buy something that is clearly a second-rate version of a prime product. If you want to differentiate your product, instead add features and abilities that appeal to a different audience. Sometimes the feature you add can be as simple as a color choice; women will purchase pink iPod minis and Motorola Razr phones, and men won’t. A classic example of the “build towards” strategy in software occurred years ago when WordPerfect Corporation added several features to its word processors of great appeal to lawyers. The legal industry made WordPerfect an industry standard, and even today, despite the Microsoft onslaught, the product has held onto significant market share in law offices worldwide.
Chapter 4, "Positioning Puzzlers:
MicroPro and Microsoft"
Since Chapter 4 focuses on software companies, I’ll discuss positioning issues as they pertain to this industry. Software by its nature is an abstraction; no one can “touch” a software product, though you do interact with it. This makes it often important, if not critical, that you assign your product a physical identity so as to allow the market and potential buyers to “see” the product and easily conceptualize its value. Assigning software a physical identity is not usually very difficult (though it can be tricky, as the Lotus Notes example demonstrates), but despite all the ink spilled on the topic, many companies and marketing “experts” continue to get software positioning wrong. For instance, in
2004 I attended an industry conference and sat through a presentation given by a consultant who specializes in high-tech “messaging.” At one point, his presentation focused on Microsoft’s rollout of Windows 3.x in the early 1990s. During his presentation, he showed two slides. The first was filled with a fair amount of jargon and wordy gobbledygook. This, the presenter claimed, was Microsoft’s original positioning statement. The second slide, he claimed, represented Microsoft’s new, successful positioning strategy. It stated the following:
Windows 3.x Will Transform the Way You Use Your Computer
This is wrong. This is not a “positioning” statement—this is a tag line. You can tell by the generic nature of the phrase, because it can be used to describe any product. For instance: “Binky 3.x will transform the way you use mapping software.” “Binky 3.x will transform the way you manage shipping schedules.” “Binky 3.x will transform the way you live your life.”
And so forth.
Now, how exactly did Microsoft position Windows 3.x? It was very simple:
Microsoft Windows (finally) makes your PC work like a Mac (for a lot less money than a Mac).
Now, if you want, you could use the tag line: And thus transforms the way you will use your PC.
In the context of the events surrounding the early 1990s, this was a powerful statement. The Macintosh had been on the market since 1984, everyone who was interested in a desktop computer knew what a Mac could do (and what a PC running DOS couldn’t), and IBM had just spent the last several years bungling the release of OS/2. All that Microsoft had to do was produce a product that was good enough to stand up to the market’s scrutiny of its claim about Windows working just about as well as a Mac. Despite the beliefs of Microsoft haters and Macophiles, Windows passed that scrutiny, and the rest is history. Later that evening I had a chance to put my product positioning techniques to work. In addition to writing books on high-tech history and software marketing and sales, I’m also the managing editor of Soft*letter, a bimonthly newsletter dedicated to examining all aspects of the software business. As I was handling out a free sample of the publication at the conference reception, I was approached by a gentleman with some questions on how his company could position their software product.
“OK,” I said, “can you first tell me what your software product does?”
“Sure,” he said. “It Bzzzzz application Zaaaappppiinn integration MOM Bzzzz diagnostics errrrburrr help desk Xxxxx network architecture.” I blinked at him. “Uh, again, what does your software do? How would I use it?”
“Bzzzzz application Zaaaappppiinn integration….”
“No, wait, stop. What does your software product work with?”
“And how does it work with applications?”
“It monitors them.”
“And where does it monitor them?”
“It monitors them on a network.”
“And what precisely does it monitor about the applications?”
“It monitors them for their functionality. If an application crashes, it informs a help desk that the application has crashed.”
“What else does it tell the help desk? “
“It provides diagnostics that describes the network and user environment when the application crashed.”
“OK, that’s better. So, how about this? Your application functions as a sort of virtual fireman on call. He monitors your network for application problems. When a program crashes and burns, the fireman tells you that there’s a fire and provides helpful information that will assist you in putting the fire out.”
He looked at me thoughtfully for a moment. “You know, we paid some consultant thousands of dollars to come out and talk to us about our software. We talked about the fire, but never got to the fireman.”
If you need assistance in positioning your product, work your way step by step through the following process. (For your information, this is a streamlined version of the methodology I describe in The Product Marketing Handbook for Software.)
Successful positioning consists of working through these steps:
1. Visualize: The visualization process begins with writing a description of a product and what it does in 25 words or less. Why 25 words? Because if you exceed this, the person listening to you begins to tune you out because they’re overwhelmed by verbiage. The goal of this visualization is to develop a picture of a visceral, physical item or process that you can link to your intangible software product. Once you’re done with this exercise (and you’ll have to repeat it several times before you zero in on likely candidates), try it out either through formal market research or via some impromptu testing with likely prospects for your products.
2. Perform image creation and attachment: The next step in the process is to combine the basic visual identity you’ve created with favorable images and ideas. Let’s step outside the computer industry for a minute to get a different perspective. Let’s look at dough. Yes, dough. Now, in and of itself, just about everyone knows what dough is, what it looks like, and what you do with it. And visually, dough is not much to look at.
Now, just how does one make dough desirable? Fun? Enticing? You build a man made out of dough. He’s rather sexless and childlike in appearance, with a round little tummy, a high squeaky voice, and a high-pitched giggle (a series of characteristics common to babies, creatures with strong appeal to women, the principal purchasers of dough). We’re talking about the Pillsbury Doughboy, and he imparts to dough about as an attractive an image as you could expect it to possess.
In In Search of Stupidity, I discuss Microsoft’s disastrous “Two Nags” ad, which attached an inappropriate image to its two Windows products. But in 2003, Microsoft demonstrated how effective this technique can be in high-tech marketing with its “Butterfly” campaign. The company spent massive amounts of advertising dollars in this period to promote its MSN service, a direct competitor to AOL. Its ads focused heavily on MSN’s “spam-fighting” abilities and the features in the MSN service that protect you and your family from offensive and unwanted e-mail. A natural image to represent this type of activity might be a policeman or burly bouncer, but acting against type, Microsoft chose to use its MSN butterfly logo instead.
The butterfly was reincarnated as a rather nerdy-looking series of gentlemen dressed in ridiculous butterfly costumes who ran around protecting children from sexually explicit posters, dropped spam (represented as long lines of dubious-looking people) through trap doors, and so on. The result of the campaign was to not present MSN’s spam filtering as a militaristic strongman or grim censor (an image that Microsoft, given its problems with the government and the public during its antitrust case, probably wanted to avoid), but rather as a friendly and harmless virtual family companion.
3. Layer: Finally, after combining visual identity and basic images, the layering process can begin—extending the visual identity and its image to appropriate circumstances For instance, our Doughboy becomes ubiquitous on morning breakfast shows and around major holidays, both times when people are more likely to be thinking about buying baked products. The concept Pillsbury wishes to build in your mind is that dough is the Pillsbury Doughboy who appears at Christmas, which makes you think of delicious things and makes you want to buy dough. Pillsbury dough, to be precise. In high tech, ads for Intuit’s widely used TurboTax software appear in the three months before April 15th. Before Christmas, all the main video game systems are heavily advertised.
4. Build a marketing vocabulary: The next step after developing a strong visual identity for your product is to build a supporting “marketing vocabulary” around it. In high-tech marketing, the foundations of this vocabulary are jargon and buzzwords. Jargon consists of industry-specific slang and acronyms. Buzzwords are words and phrases that describe desirable features and characteristics.
There is a natural tendency for jargon to evolve into buzzwords. A classic example is the term WYSIWYG (what you see is what you get), which was coined by MicroPro founder Seymour Rubinstein, publisher of the one-time market-leading word processor WordStar, to describe the product’s text-formatting abilities. When first coined, WYSIWYG had a specific technical meaning; it described a text editor that formatted words in a fashion similar to that of a typewriter. Now, WYSIWYG functions as a buzzword. A product that has WYSIWYG is good, and one that lacks WYSIWYG is not as good.
5. Create descriptors: Once the appropriate jargon and buzzwords have been identified or created, we turn our attention to “descriptors,” short, pithy, catch phrases and sentences built from your marketing vocabulary that perform several functions simultaneously in the mind of the buyer. For one thing, they reassure the buyer about the nature of the purchase. For example, you don’t care if a toothpaste is “easy to use,” but you’d like your spreadsheet to be. For another, they serve as category cues, often letting the buyer know more about the nature of the product being discussed. “Powerful and full featured” means “high end.” Descriptors can also incorporate “validators,” that is, words and phrases that “prove” the truth of the assertions being made. “Market leading,” “endorsed by,” and “PC Magazine Editor’s Choice” are all good examples of common validators.
6. Describe the product: Visual identity, basic vocabulary, and descriptors are combined to create a product description. Ideally, the description is internally logical and consistent and cues the mind of the buyer almost immediately, describing precisely what the product is, its key characteristics, and the compelling reason(s) to buy it.
7. Repeat and integrate: The final keys to successful encapsulation are repetition and integration. Repetition is always critical, but it’s even more so when dealing with a product that is difficult to conceptualize. In this case, the marketing campaign must relentlessly and continuously repeat, almost to the point of physical pain, the company’s visual concept of the product, and its encapsulated description. The ultimate goal is to establish a mental link between product and concept that is as clear as the link between a word processor and a typewriter. A classic example of this technique in action was Microsoft’s relentless use of the phrase “rich text” (later “rich content,” “rich capability,” “rich whatever”) to describe its products’ abilities to create elaborately formatted text. The press and the competition sneered, but over time Microsoft succeeded in creating an effective buzzword for its products that other competitors began to copy.
The ultimate goal of the positioning process is encapsulation. A properly encapsulated product consists of a series of carefully structured ideas and concepts that are self-supporting, internally logical, and capable of being communicated to potential buyers with a minimum of confusion. The ultimate goal of the encapsulation process is to create a marketing identity for the product that automatically triggers these concepts, ideas, and associations in the buyers’ minds without having them to “think” about it.
Another advantage of this process is that it should, if properly executed, help you identify potential positioning conflicts. If during this process you realize you have already created a product with identical positioning characteristics, you have a potential positioning conflict on your hands. Recovering from positioning disasters such as MicroPro’s is expensive, ugly, and not always possible. Avoid them in the first place....