Thursday, January 29, 2004

It's Doubled Since Grade School

Scientists Discover New Form of Matter

This makes a total of six forms of matter. And I remember only having to learn solid, liquid and gas just 25 years ago.

Waves at HP

Having worked in the tech industry for a decade and a half, I have watched a number of interesting corporate changes over the years. I watched Apple grow from a small company to a large one, flirt with bankruptcy, and recover. I remember visiting this small company I never heard of called "Cisco" back in the early 1990s (if only I had bought its stock then!). Stupid acquisitions like the AT&T purchase of NCR were interesting. And all of this was before the whole tech bubble and subsequent burst.

One of the sadder things to have watched has been the trashing of Hewlett Packard's culture. I never worked for HP but I have called on them for years as a supplier and know people who work there. HP was recognized throughout the tech industry as one of the prototypes of the modern tech company in the way they treated their workers, their open environment, and the close interaction between top management and staff.

All of that has changed, and it's becoming public. I recommend reading Fear and Loathing at HP.

What is TAM, SAM, SOM?

TAM, SAM, SOM
The first part of creating a marketing plan is to figure out the size of your market. The total market category is usually referred to as the TAM, or Total Available Market. For example, the TAM for cellphone cameras has shown significant growth over the last few years and is forecasted to penetrate about a quarter of all cellphones in 2004.




Not that the total cellphone forecast in 2004 ranges anywhere from 500 million to 550 million handsets. I have used the smaller number here (500 million) since in forecasting, it is usually better to underestimate and beat forecast than it is to overestimate and come up short. However, what is important here is really the order of magnitude and not the exact number since forecasts are rarely very accurate.


The next part of a marketing plan is to figure out your SAM, or Served Available Market. A particular product usually can't meet the specifications of 100% of the TAM, so the total market share a product can possibly penetrate is usually less than the TAM (It is possible for a SAM to be equal to a TAM, but is unusual in technical products).

This is when segmenting a market becomes useful to figure out the SAM for your product. If your SAM is less than the TAM, it can point you towards product extensions. In the end, instead of one product serving the entire TAM, you typically will have a series of products with different SAMs that together serve the entire TAM.

There are a variety of ways to segment a market (I got this question in an interview: How many ways are there to segment a market. Answer: There is no limit, but how you do it depends on what you are looking for). For the purpose of this analysis, I will use two examples: country penetration and camera resolution (the number of pixels used to capture the picture).




The country penetration rate is dependent on a variety of factors including migration to higher speed cell standards (2.5G and 3G), how the phones are distributed, the churn rate, and cultural factors. These are all reasons as to why in Japan and Korea cameras are essentially a standard feature. The main issue here is that the product I am marketing isn't necessarily usable in every region "as is" and may need modifications depending on cellphone standard (GSM, CDMA) and other country specific issues.

Resolution is also a big issue. I am not going to go through the definitions, but the chart shows the cellcam market moving towards higher resolutions over time (CIF is about 100K pixels and 3M is 3 million pixels).


The last step in this exercise is to figure out your SOM, or Share of Market. How many am I selling today and what is my goal for next year? Who do I sell to? SOM is calculated based on your SAM, but it should be compared to the TAM so you can tell if you should shift your product to a different SAM.

One of the interesting things about the cellcam market is that the companies that sell the most cellcams are not the ones selling the most handsets. The reason for this is the graph above showing the high penetration rates in Japan and Korea versus the rest of the world. This factor should be interesting to watch as cellcams increase penetration worldwide since it has the potential to change worldwide cellphone market share.




This last step also starts you on going through the "3 Cs", or Customers, Company and Competition.

Friday, January 23, 2004

Keeping the Door Open

Director (now President) Mike and I had our "follow-up" conversation after I gave notice on Wednesday. This is the fourth time I have given notice at a medium to large company and the response is always the same: stick around, things will change. We have big plans for you, etc.

As noted before, Mike was just promoted to his position, so I can't blame him for the situation here, and I DO think changes will be made in the U.S. division. The problem is this will solve only half the problem. A lot of my frustration is at HQ, which seems slow to change.

Mike asked me to stick around a year to see what happens. I turned it around: "How about I leave for a year and then we look at where we both are." Mike seemed to like that. In addition, my new office is just two miles away from my current office, so I told Mike we would do lunch every month or so. I even offered to provide marketing insight from time to time if he thought it would be helpful (he didn't respond, maybe since I didn't say if I meant for pay or not).

The bottom line is that Mike, the president of this U.S. division, and I are going to stay in touch. This keeps the door open should things not work at my new company and provides a valuable networking contact for other opportunities.

Tuesday, January 20, 2004

Fan Mail Marketing Questions

One reader sends in the following:

In a role as Strat Mktg Director, how much customer interaction do you have? Do you meet key customers and quarterback big sales, and handle PR and media engagements?

Or are you mostly concerned with position, strategic direction, partnerships, etc?



The short answer is: depends on the size of your company. I have been in "strategic marketing" roles that did every single activity you have listed, plus lots of others. This would be typical in smaller companies where the marketing team has ownership of figuring out the market, defining the product, doing business development and getting it rolled out and sold to customers. In this "cradle to grave" scenario, the marketing team owns the product from concept to obsolescence and overseas each part of the process including development, sales, business development, PR, etc. Perhaps there are specific departments what specialize in these areas (design, salespeople, marcomm, etc.), but the Marketing Manager owns the product and thus rides heard over the process and each team.

Currently, my "strategic marketing" role is almost exclusively the latter listing of responsibilities: positioning and strategic direction. It is almost an "Ivory Tower" sort of position, figuring out what is on the chess board and what it's going to look like in the future. I send suggestions on where to move the pieces to the Powers That Be. Sometimes they listen, usually they don't.

The job I verbally accepted today - while a marketing role - will be almost 40% sales focused, and I am expected to go out and close big design wins and key customers. There will be less input on product development and more focus on customer development.

This really branches into a whole discussion of "What is Marketing?", and I recommend you read the discussion over at Brand Mantra which goes into this topic at length.

Monday, January 19, 2004

You Can't Die In The Air

One of the many things I learned when I dated a stewardess (ahem) was that you "can't die in the air". That is, if you die on a plane (i.e. of something while you are flying, not obviously a crash), you are not "officially" dead until the plane lands somewhere. This way your death certificate will list a place of death as an actual location and not in the air over some random body of land.

I just remembered this when I was reading the Drudge link to several people dying this weekend while on airplanes.

Monday, January 12, 2004

CES Followup Questions

In the comment section in the post below, Jim Carson asks some good followup questions about consumer electronics.

1. Why do HDTVs typically NOT have a tuner built in? (I'm just looking at the armada of personal electronics in my entertainment center, and the last thing I need is another frickin thing to plug in.)

For the record, Samsung and others did announce and have on display HDTVs with built-in tuners, but the main reason for the separate box strategy is the fact that HDTV and flat panel TV buyers are overwhelmingly cable and satellite users.

The hope from the TV manufacturers was that the "set top box" provided by the satellite and cable companies would provide the HDTV decoding and output to your TV, essentially turning your TV into a "dumb display" that would require fewer electronics, thus making it cheaper. This is happening slower than expected from the HDTV manufacturers, so you need a "tuner" that takes your cable or satellite signal and then decodes it (over-the-air reception is a separate can of worms I won't go into here).

Of course the satellite and cable guys will EVENTUALLY provide HDTV ready signals, at which point you can ditch your tuner. Or if you spend extra for the set with the built-in tuner, and when you get a HDTV set-top box, you can figure out how to bypass the internal decoder (I assume a bypass is included with these sets, but am not sure).

I think this brings up the whole HDTV transition issue. Besides cable/satellite decoding, I would need to have an HDTV Tivo before I upgraded to HDTV. Then I would have to upgrade my DVD player to HDTV (or have a bimodal one so I can keep my current DVD library). Like every other format conversion, making the switch will mean a significant investment (which is why I alluded below to this being a strategy of the consumer electronics market in general).


2. Will the blue light DVDs have a coherent standard, e.g., none of this +R, -R, -RAM nonsense?

Hey, this is the consumer electronic industry, so there MUST be two competing standards for companies to fight for domination. It's just the VHS/Beta battle being fought over and over again. The two standards coming out of the lab are:

AOD - Advanced Optical Disk - This is the Samsung/Toshiba entry for the battle

BD - BlueRay Disk - This is the Sony/Phillips side of the battle

Keep in mind that - at this time - blue laser readers are NOT backward compatible with your current red laser DVDs, so you would have to replace your whole library (more upgrading!). I assume, however, that one or more of the companies above is working on a "bimodal" player that will have two lasers in it so that it is backward and forward compatible.


3. Are there any interesting advances in read-write storage (e.g,. hard drives)?

I didn't notice this at the show, but I wasn't looking for it. Like the semiconductor industry, however, the diskdrive industry has followed its own "Moore's Law" of increasing integration at smaller formats, but at a MUCH faster rate than computer chips. The multimedia players below were 80G, and I assume they were with 1.5" or 2" drives, so I would assume that the integration curve for hard drives hasn't flattened yet.


Update: I have confirmed that at least two companies are working on "red/blue" DVD players that will have both a blue laser for new DVDs and a red one for legacy DVDs. They will, however, use a single lens, so a the blue laser will simply be added to the existing optical pick-up.

Friday, January 09, 2004

CES Overview

I spent a day wandering the floor at the Consumer Electronics Show. There are a variety of other sites and blogs that go into all sorts of detail about the show, and with over 2,000 exhibitors and 100,000 attendees, it would take a lot of web pages to cover, so I will just post some quick impressions here.

Coolest New Product - For me, it was the new "Multimedia Players" that were introduced from Creative Labs and Archos. These are going to be the Next Big Thing for consumers, essentially adding video and pictures to MP3 players.



These products essentially add an LCD screen to an Apple iPod (Apple, where is yours?), so you can download movies, pictures and the like to enjoy with your music. The Creative guy in the booth claimed if you download movies using the Windows standard, you could get three full-length movies on the 80GB drive, so this could become THE thing to have for long-distance travelers. When queried about battery life, he admitted that it would be a little weak, so you would want an extra. Estimated retail price is ~$600-700. These products are not yet ready, but are being slated for mass production in the middle of the year.

These products must have the Motion Picture industry sweating. I believe swapping/downloading of movies hasn't been a big deal since most people don't watch movies on their PC, but with the introduction of a small portable device with a small, low-quality screen, I think on-line movie swapping will take off.


Most Unique Products

TV Mirror - It's a TV! It's a Mirror! It's Two Things in One! If turned off, an ordinary mirror is displayed by the LCD display (you can't tell it's an LCD), but if turned on, it becomes a TV. The main market is going to be hotel rooms and the like, although it will probably make it into a small share of people's homes.




3D, No Glasses - Sharp's 3D displays were also pretty neat (no pics). You get a 3D view without the need for special glasses, although, for me, it only worked with still pictures and not video. The main market seems to be technical and scientific, although Sharp hopes to get it into consumers' hands with PC games and the like.

A Real, Virtual Keyboard - I had the chance to play with a virtual keyboard in the Panasonic booth. It is REALLY neat. The "feedback" I wondered about in this post is provided by a soft "clicking" noise. Typing on the countertop, I found I could type nearly as fast as on a keyboard. No commitment to when this will be on the market.




Man's New Best Friend - Sony's QRIO robot is only a demo for trade shows (they call him their "ambassador"), but it is quite impressive. He walks on two feet and has very fluid motion of his arms and legs, thanks to the help of 38 motors (he's about 18" high). Obviously this could eventually become a product, but with their AIBO robot dogs currently $1500, I don't think we will see the QRIO on the market any time soon since it is much more advanced (meaning MUCH more expensive).





Trends

The main overlying themes I noticed at the show could be grouped as follows:

The Usual: More Capacity, Smaller, Cheaper, Faster - This is the main drive of this industry and a part of my Immutable Laws of Consumer Electronics. One specific item I will point out is the move to replace the red laser in your CD and DVD players with a blue laser. Several of the major OEMs are getting their Blue Light products out of the lab, and these will hold 4x-10x the capacity of existing CDs and DVDs. Expect these to hit the market in the next year.

Flat Panel - EVERYTHING was flat panel. The tubed TV will be going the way of the black-and-white TV in the next decade. LCD's still haven't made it to the size of Plasma, but hopefully will get there soon.

Digital Broadcasting and HDTV - There was a big push by both cable and satellite providers for direct digital broadcast. And if you do that, you will need a (flat panel) High Definition TV (HDTV). And if you do that, your DVD will need to be upgraded to a High Definition DVD (HD-DVD). And if you do that, you might as well upgrade your camcorder to HD format as well. So this whole movement goes with the strategy of changing format so consumers will need to upgrade everything they have (similar things happened with tapes to CD, VHS to DVD, etc.).

Wireless Connectivity - WIFI for your PC is old news. Connecting your TV set-top box and stereo wirelessly to your PC is relatively new. I thought this would be a big push of this year's show, and while present, it was not as big as I thought it would be, so wireless consumer products are going get a slow roll-out rather than a big one.

Automotive Electronics - I am sure there were some new items in this area, but this area of the show had other man-made silicon silicone items on display. (There were about 8 automotive "models" signing posters all around this area, so it was a bit distracting).




Update: Master of None has a link to a video of the QRIO robot dancing, giving a good idea of its capabilities.

Tuesday, January 06, 2004

Kewel - but $100 too Expensive

Jobs (head of Apple, not two of the guy from the Old Testament) announced the new "mini-iPod". This could be a real killer to the MP3 players down in the $100 range, like the Rio, but at $250, this is barely less than the "full sized" iPod. Hopefully Apple will slide the price down over time.

The "Old" iPod on the left, new one on the right




The pic links to Apple's site, or see more at Gizmodo.

Friday, January 02, 2004

Virtual Consulting (Continued)

I posted recently about being invited and signing up at a virtual consulting company.

Today I had my first consultation, and it went quite well. I talked to an analyst at a investment company and we ended up just chatting for an hour about the state of the overall tech market (good) and about several segments and companies in particular. I confirmed some things he has already seen as well as gave him some additional areas to look into.

After the conversation I billed the consulting company, which sent me an email confirmation that payment is in process. I should note they asked for my SS#, so I don't know if they are going to withhold (unlikely) or send me a 1099-MISC next year (more likely). For this reason, I will keep track of certain expenses (internet connection?) to write off against this income so it doesn't get taxed (i.e. I will count this income as outside business income and create a schedule of expenses to write off against it).

In addition, the analyst asked for me to be set up on his permanent "panel of advisors", so he can call me direct again in the future, in which case I will bill the company again. PLUS, the consulting company asked me to put days I can be "on call" in order to increase my call/client volume.

Overall, I would say it has been a very positive experience. I am not going to get rich doing this (my billing rate isn't very high), but it looks like a good way to pull in a few bucks on the side while also creating new business contacts and keeping my mind limber about different aspects of the market.

If you wish to join you can sign up on their web site. There is no guarantee you will be accepted, but if you have an area they are interested in and have some time, this seems like a good idea.