“Japan has long been famous for its advanced cellphones with sci-fi features like location tracking, mobile credit card payment and live TV. These handsets have been the envy of consumers in the United States, where cell technology has trailed an estimated five years or more.” - Wired

With the announcement of the new iPhone, Apple has once again set the technology news world buzzing with talk.  Some claim that the new iPhone will kill older smartphone companies while others claim it will generate interest in the whole segment and encourage people to switch from basic cellphones to Web-enabled ones.  One thing seems pretty clear; Apple is going to lead the charge.

The biggest markets for cellphones are in Europe, Asia, and North America; the iPhone is currently competing in the U.S. and in select Western European markets.  The planned expansion includes Australia, and more significantly, Japan.  This will mark the iPhone’s first major effort in a market dominated by a culture not derived from Western Europe.

Over the past 50 years it has become clear that most consumer goods and services need to be designed and marketed in ways distinct to each culture.  Various thinkers have tried to peg the exact number of cultures at anywhere from three to more than sixty based on an even wider range of variables.  It would be a disservice to try to cover them all here but a start can be made by reading up on Geert Hofstede.  For the record, his work concentrates on five cultural dimensions that affect organizational culture and, unfortunately, his school of thought often views national boundaries as cultural ones.

However, in the technology world, it is often assumed that the same attributes are desirable across all cultures.  For instance, companies assume that we all want ease-of-use, that we desire to share where we are and what we are doing with our friends, and that we want seamless connectivity throughout all the environments we inhabit throughout the day.

Most of you are thinking, “Sounds like a good assumption.”  However, do you really want eight-year olds using the same forums as you? Do you want your friends to always know exactly where you are? Do you ever want to be unavailable and unreachable by your coworkers or boss?  There’s also the deeply-entrenched concept that others are basically like us and want the same things we do.

The technology industry should spend time trying to understand if users really are such a homogeneous group or if there is a need for more tailoring, customizing, or segmenting.  The Wired article quoted above (yes, I was going to get to it) points out just one of the cultural gaps that inhibits technology adoption rates.

According to the article, Japanese cellphone buyers are more interested in the number of features included on a phone than whether or not those features are well-executed, easily-accessible, or even useful on a daily basis.  The iPhone’s real claim to fame is the ease-of-use; a variety of technologies and user interface design elements contribute to making it easier to write e-mails, use map directions, send text message, and browse the web.  Conversely, the article’s author notes, “Japan is a culture of spec sheets” and the iPhone’s core message will likely fall on deaf ears.

Someone at Apple must have figured this out, right?  So how will Apple differentiate the iPhone from other product offerings in Japan?  Simply being easier to use isn’t going to work though perhaps the Apple brand will attract consumers.  One nugget of data-driven gold hidden at the bottom of the article is that:

“A survey conducted by Japan Railways showed that just more than half of those polled were interested in buying the iPhone, but that less than one-fifth really knew what the iPhone was.”

Wow. I’m glad I’m not in charge of rolling out the iPhone in Japan in a month.

Technology companies, even those outside the cellphone industry, should be watching carefully to see how Apple builds awareness, how they market the iPhone, and what they do if the initial buy-rate is low.  Technological culture, like organizational culture, has many flavors and the industry would do well to take the potential divides into consideration.  One problem is that, unlike organizational culture, little research has been done on different technological cultures.

Nathan Bell recently argued that OpenID is too obtrusive for users and, while I agree, I don’t think this is the primary obstacle that OpenID faces. Before I go further, a disclaimer: I am not a techie and will therefore approach this as an MBA (boo, hiss).

Huh? What’s OpenID? OpenID is basically a single login (think username and password, though these are not the only ones) that works across a variety of sites. Unlike other previous attempts to standardize logins, OpenID does not rely on a single central server beholden to a single firm. Instead, it is a decentralized network allowing users to choose from several different identity providers. Further basic information can be found here, courtesy of Wikipedia (though I am sure many techies could nitpick the details on this description.)

What did Nathan Bell suggest? Bell suggests integrating the login as a browser utility. When visiting an OpenID-enabled site, the browser would ask you to confirm that you want to use your OpenID identity. Bell also notes that you would probably need to login to your identity provider once per session.

Sounds good… What’s wrong? While making OpenID easier to use is certainly a laudable goal, the real obstacle facing OpenID is the lack of perceived market need. Having gone through the stress and jumped through the hoops to get my own OpenID identity, I think it is a very useful tool. However, I believe the average internet user does not perceive a need for this tool

OpenID supporters tend to tout two major selling points for OpenID:

1. Decentralized providers (you choose which one you trust most).
2. Single login for many sites.

The average internet user, inasmuch as such a person exists, does not care about the ethical arguments regarding a centralized identity provider versus a decentralized one. They are busy people (as are we all) and simply want a solution to remove the irritation caused by trying to remember all the different usernames and passwords he or she uses.

Many of these users have found such a solution; Mac OSX’s Keychain utility and/or the built-in password memory on many browsers. From a security standpoint, these are less than ideal. Keychain-type solutions pool your collection of passwords on a single computer but are not easily shareable across your desktop, laptop, work computer, library terminal, etc. Browser password memory functions are dangerous because they allow anyone using your computer to log into your sites. Finally, both of these solutions store passwords locally (usually considered a security no-no.)

So what do you suggest? I believe that in order to grow the OpenID userbase, OpenID providers need to offer a seamless product with a coordinated message that appeals to potential users.  In other words, show them something that can be explained in a single phrase that immediately improves their lives.  For example:

1. Add a keychain function that stores passwords for all their sites (not just OpenID enabled ones).  This plugin should store the passwords in a protected file with their OpenID provider.
2. Allow users to access this keychain from any computer they use via their OpenID identity.
3. “One login to rule them all” or, less ominously, “Login once. Use everywhere.”

This avoids the problems associated with network externalities.  It provides users an immediate gain rather than one that really only takes effect once OpenID is supported by the corporate internet.  The corporations aren’t going to replace their proprietary login systems with OpenID for a number of reasons.  So bypass them and let them keep their systems; OpenID shouldn’t play the same us-or-the-highway game as the corporate giants (Google, Yahoo, MSN, etc.).  Instead, make logins easier for the users because, at the end of the day, they’ll decide who wins.

And Bell’s idea? Use it as the first step. It makes sense to incorporate the login into a browser utility or plugin.  But it should go further; have that plugin collect (by asking, of course) username/password combinations for non-OpenID sites and store them with the identity provider.

I think the winning combination will be a two-way browser plugin that confirms the user identity once per session then collects and distributes the necessary identity credentials to each site, regardless of whether they are OpenID-enabled or not.

The rate of technological innovation has traditionally acted like ocean waves. The rate of growth rises and falls in waves and, occasionally, several waves amplify each other causing a period of particularly strong technological growth. In the aggregate, innovation until the end of the 20th century was a simple linear model, rather like this:

In this graphic, the solid line represents the level of technology extant while the dashed line shows how a typical user will adopt the technology. One of the central assumptions is that an average user (not an early-adopter, maven, geek, or Luddite) will avoid continual adoption of new technology. Instead, they will wait for a critical user base, trendiness, or external requirement to be associated with the cutting edge technology before investing the time/effort/money into upgrading

John Seely Brown argues that this rate can no longer be accurately modeled in a linear fashion. Instead, he proposes that the rate is an exponential function, like so:

If this is true, average technology users face a developing problem similar to that which plagues inventory management specialists. Is it better to upgrade (or restock) when a determined distance between the lines exists or only to do so after a determined period of time? Imagine that the user is a firm and the technology is the operating system on their computers. Upgrading to the latest version once a year is equivalent to the periodic method. As the technology curve rises, the distance between the dotted line (representing the deployed operating system) and the latest version will increase as time goes on. This means that the firm will have to expend ever-increasing amounts of time and money on training their employees since the gap between what those employees are comfortable with and what the company wants to use widens.

On the other hand, if the firm decides to upgrade each time the distance between the lines is the same, they will find themselves having to retrain those employees with increasing frequency. Again, this is not sustainable as it entails spending a larger fraction of company time and money on training (due to frequency rather than intensity now).

However, for an individual piece of technology, the development curve is rather different. As the idea becomes more refined, the rate of technological growth slows. For example, early automobiles differed widely in all aspects of their layout, engineering, and design while the functional base of current automobiles remains fairly similar for all major brands. The development curve would look something like this:

As I said earlier, adopters of technology are rarely willing to continuously upgrade. Therefore, an ambitious adoption curve like the dashed line here is highly unlikely (and cannot be recommended as efficient.) This past weekend I had the fortune to talk to Mitchell Savage who explained how the company he works for is approaching the idea of selling a continuously evolving technology.

Essentially, if I understand the strategy correctly, one wing of the company will develop technologies in a natural, unconstrained manner. This is approximated by the solid development curve in the graph below:

The marketing/sales division will then concentrate on selling given releases of the technology. In this graph, each release is represented by the round dots. As technology is developed, stable versions are produced and sold to customers. The horizontal dotted lines between the development curve and the adoption “steps” represent time that can be spent on marketing campaigns and sales pushes while the horizontal dashed lines show the time customers can use for deployment and use. Note the concurrent dotted lines; it is possible to have a closing campaign for version 2.0 while the campaign for version 3.0 is ramping up. Note also that the versions adopted by customers (the circles) follow a more steady time/tech level growth rate.

The benefits here are many. First, the revenue flows are more evenly distributed since revenues are not directly tied to tech development . Second, customers can schedule around planned technological upgrades due the more regular length of periods. Third, marketing/sales forces have time to conceive, launch, execute, and wrap-up campaigns without worrying that a new version might be released halfway through. Finally, marketing/sales divisions have a reduced motivation to hound the developers which allows developers to concentrate on features and stability rather than appraising salespeople of the latest ideas in the pipeline.

All in all, this model seems best suited to maintaining the primacy of technology developers over the “suits-and-ties” of the enterprise. Will this become the standard for all R&D type businesses?

Ephemera: Organ donor programs often use the slogan, “The life you save may be your own.”  It turns out that these programs may have been more correct than they could have ever guessed.  Val Thomas had no brain activity for 17 hours and rigor mortis had set in.  Doctors kept her on a respirator to figure out who to donate her organs to when she suddenly woke up and started talking.  - MSNBC

A follow up to my earlier post: Microsoft has announced that it will shut down its program to scan and upload millions of books and journal articles.  The nonprofit organization that Microsoft was sponsoring to do the work is now looking for other sources of support.  This might be a sign that Microsoft intends to focus on a few core internet technologies, rather than competing with Google and others on seemingly every possible battlefield. - NYT

A few months ago Pudding Media was in the news for their ad-based phone service plan. Their basic idea is to use computers with voice-recognition software to listen in on their users phone calls in exchange for giving those users free VoIP phone service.

Once the voice-recognition software catches an important keyword, the software loads an appropriate ad to the computer’s screen. Pudding Media (founded by two brothers who previously worked for the Israeli military intelligence) plans to extend this model to mobile phones as well.

Obviously with such a technology, there are serious privacy and legal issues. Under U.S. law, phone calls may not be recorded without the knowledge of both parties. Pudding Media skirts this issue by only buffering the recording for mere seconds before erasing it. However, this may still be considered illegal recording (courts have not yet ruled on the issue.)

Aside from the moral/legal/ethical framework, the fact that such an enterprise exists shows the strength of the 2.0 model extending backwards into more traditional technologies. One of the tenets of the 2.0 model is the dynamic, two-way flow of information. Users of a service also create content for that service. This content is then turned around and offered to other users in a never-ending, turtles-all-the-way-down cycle.

The two people sharing a phone call with this new technology will constitute the “user” while the content is the ad chosen by the software for them to view. The keystone to this 2.0 story is that the company has found that people change their conversations based on the ads they are shown. Thus, the users help generate content which then influences the users as they create a second generation of content and so forth.

Semi-infinite recursion has the ability to strongly influence marketing tactics. Ads are traditionally seen as either a set-piece or a set-story. In the first group, ads simply stand alone. Most magazine ads are of this style. All the information the advertiser wants to communicate to the consumer is contained within this single piece. In a set-story, an advertiser chooses a progression of ads to lead the consumer to a certain conclusion. An example are the dying breed of highway ads where each successive billboard ads another piece of information to the story.

The set-story is less common currently because advertisers have no easy way to make sure that you start at the beginning and proceed forward in a linear manner. Obviously, with the viewer-tracking made possible in current internet models, there may be a renaissance of such advertising.

Pudding Media’s technology may lead to a third marketing method. Depending on how much influence the ads have on the conversation, we could see model where the advertiser develops several distinct storylines that lead to their object. (A story-web may be a more appropriate word than storylines.)

Set-piece ads are like a static picture. Set-story ads are like a novel. What Pudding Media may develop into is the equivalent of the choose-your-own-adventure novel.

“In an attempt to undercut Goodle’s standing as the most popular guide to the Web, Microsoft announced yesterday that it was offering cash incentives for people who use the company’s often-overlooked search engine.” - Washington Post

Microsoft is really starting to embarrass itself as it attempts to enter non-core markets. Who remembers Microsoft’s Cordless Phone? Who uses a .NET passport? How many of you own a Zune? Microsoft seems to have an awful lot of also-ran products. Why does this matter? Because of brands.

Brand power is recognized as a major influence in the average customer purchase decision. A well-constructed brand conveys security, quality, value, and/or other qualities that a single product simply doesn’t have. A brand alone, even without the products, can be worth hundreds of millions of dollars.

Microsoft understands this. Despite the hate-Microsoft bandwagon that seems to trundle round every few months, the Microsoft brand name has real power. That’s why Microsoft thinks it has the ability to march into any profitable computing-related market and claim a piece of the pie. What they don’t seem to realize is exactly how much they are risking.

Each new product Microsoft launches, whether it be a search engine, a gaming console, a phone, an authentication protocol, or MP3 player, has a launch campaign designed to use the Microsoft brand. This should help the new product gain traction with consumers thus increasing the product’s market share growth.

However, brand power is a dynamic beast. Each time a product fails to gain momentum (e.g. the phone) or encounters significant resistance (e.g. the Zune), Microsoft looks like an also-ran. The aggregate effect of browser wars, search engine wars, MP3 player wars, console wars, etc. is to slowly tarnish the Microsoft brand image. Obviously, each of these conflicts is driven by Microsoft’s brand. Equally, each of these conflicts contributes to Microsoft’s brand image.

In the eyes of consumers, Microsoft is becoming a reminder of a greedy latecomer who wants to barge into a party and then claim they threw it themselves.

Furthermore, these activities create a lot of enemies during a time when the internet is focused heavily on alliances, cooperation, and shared technologies. Other companies with new and innovative ideas don’t look to Microsoft as a collaborator or partner. Instead, they try to “Microsoft-proof” their concepts to head Goliath off at the pass.

Rather than attempt to find a battle on every front, Microsoft needs to pick a core business platform and one or two related markets. By focusing on these, Microsoft can win enough to burnish the brand and build a bridge to other markets. The hydra’s heads need to work together and go after a single target.

(Of course, there is one market where Microsoft has really succeeded in going from an also-ran to a leader. Console manufacturers have really had to cede ground to the Xbox series. Perhaps Microsoft can accelerate some of the learning in that division to its next big target?)

(People might point to Google as a similarly multi-focused entity. However, Google enters markets much earlier, either through acquisition or direct competition, and tends not to fight multiple major companies at the same time. This helps Google avoid a bullying brand message for the average consumer. It also confines itself to web technologies for the most part.)