Microsoft

Borenstein Group CEO Gal Borenstein authored a new white paper providing commentary and insight on recent technology marketing blunders by industry giants Microsoft, RIM and HP. The following is an excerpt from Gal Borenstein’s “Four Colossal Technology Marketing Blunders that Microsoft, RIM & HP Could Have Avoided.”

“General George S. Patton coined the phrase “If everyone is thinking alike, then somebody isn’t thinking.” If only the General could see how accurately his critique describes the colossal leadership failure at Microsoft, Research in Motion and HP. He’d recoil in disgust.

In every case, each of these technology titans who tout themselves as industry-leading “innovators” got caught “thinking alike.” They failed to drive innovation, take risks or dare to do things differently. They failed to truly listen to the actual needs of the competitive BYOD marketplace. New data from Strategy Analytics shows that tablets will likely outsell PCs by the second quarter of 2014, according to TechCrunch. Judging by the series of colossal product marketing flops – from Microsoft’s Surface RT Tablet to Blackberry’s rapid obsolescence, to HP’s Touchpad– one wonders: How did Apple and Samsung manage to achieve and own “Responsive Innovation” in technology marketing and branding, while bigger behemoths capable of more competitive production, costing, talent recruitment and trusted name recognition have failed to successfully launch.

Mid-2011, HP was forced to discontinue its next-generation WebOS and its new tablet Touchpad, as the products’ underwhelming sales failed to compete with the offerings of Apple and Samsung. Last week, according to PC World Magazine, “Microsoft reported revenues that came in nearly a billion dollars less than what analysts expected, thanks to a $900 million writedown of the Surface RT tablet,” Former technology giant RIM (Blackberry) has announced major layoffs of over 250 employees from its dwindling workforce. In 2012 alone, Blackberry has seen its smartphone market share slashed by more than half, according to IDG News.

So what’s behind these colossal blunders that cost billions of dollars and reputational equity to the most trusted brand names in technology? Simply put, with innovation comes risk. Rarely do risks equate to success. Innovation in marketing has to be grounded in both innate and learned intelligence of the target market, its desires, needs, psychological persona, as well as the intricate ability to connect these dots into actionable intelligence at real-time market speed.

At the heart of Amazon’s legendary success is the company’s ability to tap into and dominate ‘dead markets’. While Amazon now is the world’s largest marketplace for lifestyle products from e-books to groceries, the company got its start selling print books, a market which had been characterized by declining profits and an ever-diminishing audience for years. Starting a business within a dying market was undoubtedly an incredible risk, but Amazon’s thoughtful innovation, combined with the customer-centric functionality derived from the trusted customer product reviews, has singlehandedly created the new generation of informed buyers that has translated to virtually every other industry, from large technology purchases to consumers deciding where to go to dinner. Even with Amazon’s universally accepted role as the world’s e-commerce leader, the company continuously refines its business model by listening to their core audience and implementing unique, value-add functionality to the user experience.

This same principle is seen with eBay’s continual refinements of the e-bidding process, continuously updating the BYOD user-interface to ensure its core constituency can bid on any brand, anywhere, at any time, with convenient payment options. This responsiveness and level of customer understanding is what has allowed eBay to remain the online bidding industry leader since its explosive IPO in 1998.

In analyzing what went wrong with the Microsoft Surface RT, RIM’s Blackberry line, and HP’s Touchpad OS, I have identified four key marketing blunders that could have been avoided. In fact, avoiding any one these blunders could have changed the companies’ course from being “Top Flops” to offering a competitive solution to a market need.

1. FAILURE TO KEEP YOUR RAVING FAN BASE HAPPY. Windows 8 Operating System was launched as a dual-platform product that was supposed to provide a better user experience to mobile users while also act as an upgrade to desktop PCs and laptops in business settings. From personal experience, both my 15 year old son, my 21 year old intern, and my 50 year old accountant equally confirm that Windows 8 is a confusing, non intuitive, clumsy and difficult-to-use product. In fact, for both office and home usage, we had to install a free ‘shell’ utility to force Windows 8 to bring back Windows 7 classic functionality. This example shows that Microsoft neglected basic market research and user testing when both the youngest and the oldest in the user population achieve the same confounded consensus. Historically, Microsoft’s customer base largely consists of user over the age of 35, a demographic known to be less open to new software with steep learning curves. The real confusion here is how Microsoft managed to alienate and mar their brand with the loyal and committed Windows 7 customer base in a single software release.

2. FAILURE TO THINK OF R&D AND MARKETING AS UNIFIED DISCIPLINE & INNOVATION CONTINUUM: Reviewing the failures of RIM’s Blackberry, Windows Surface RT, and HP’s Touchpad, it’s as if the corporate decision makers interpreted Patton’s statement “when everyone thinks alike, someone isn’t thinking” in a reactionary way. Instead of evaluating the market and developing products to meet particular needs, it’s as if they reacted to Apple’s success by producing something different just for the sake of being different. What else could explain the reasoning for why neither HP, Microsoft, nor RIM, could connect the dots to find what consumers wanted. In the case of Windows 8, the market wanted simplicity, flexibility and performance, not another proprietary device that works only on proprietary software, with a dated interface resembling Windows Vista. No one wants to pay for a device with a steep learning curve. There is no doubt that original thoughts and data points existed in the marketing and branding departments of these companies and the Research & Development Laboratories Yet, none of these giants could get their internal CRM, Six Sigma, and CMMI teams together to deliver one agile solution to meet customers’ actual needs.

3. FAILURE TO REMOVE MARKET SHARE ARROGANCE FROM STRATEGIC PLANNING: From my experience observing market trends, innovation dies when you start believing that because you own the majority market share, someone could not disrupt your hegemony. One has only to think of Kodak, Xerox, or Blockbuster to understand this phenomenon. The complacent acceptance of their current market status blinded the corporate decision-makers from the ability to see where the market was going. Those pesky IPads were first seen unnecessary new toys, even though Bill Gates himself stated years-ago that the next generation of computing would be browser-based with no operating system. So why then, did HP, Dell, and Microsoft not lead the tablet revolution by recognizing that tablets would soon replace desktops and laptops at blazing speed? They were too focused on owning current market share to anticipate emerging trends.

4. FAILURE TO PRICE YOUR PRODUCT BASED ON COMPETITIVE FAIR MARKET VALUE: It was simply bewildering why a giant like Microsoft launched a Tablet that was supposed to compete with Apple’s iPad based on the premise of giving users an “Office Experience.” For the average middle-class American buyer, the core target audience of the product, the tablet was impractical and undifferentiated from other Microsoft products. For the price of the Microsoft Tablet, one could purchase a middle-of –the-line laptop or Netbook, already loaded with Microsoft Office and with more computing power. What the market needed was a high-powered tablet to answer Apple’s iPad, at a competitive price point and Microsoft failed to deliver to a market ripe for its products.

So how could Microsoft, RIM, HP and others can redeem themselves? Consider General Patton’s retort; “Good tactics can save even the worst strategy. Bad tactics will destroy even the best strategy.”

1. Listen to your current base of raving fans and recognize their needs and build something great for them. Don’t go chasing waterfalls without building a fan base first.
2. Never take your market share leadership for granted. No one is immune to disruption and innovation in any which form it may take place. If you rest of your laurels in technology marketing, you will surely become the winner of one sprint in a perpetual marathon.
3. Abolish and reorganize your “innovation dream team” to include target audience persona that isn’t just based on market stats about millennials and nerds. Combine strategic market research with real market focus groups (not online panels) to hear what your audience has to say before they say it by purchasing from your competitor.
4. Consider strategic pricing that aligns the ‘pulse’ of users, not just with Wall Street profit expectations, but as part of your overall marketing expense. If you are not gaining early adapters because of a price point, no amount of future ‘write-off’ will be justified when the product fails. Your real shareholders and stakeholders are your users. They will stick around long after your stock holders will short your stock.”

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