Encouraging Innovation

I wrote this article for the latest CPU Magazine. Partners like ATI, AMD, Microsoft, Intel, and Nvidia are very important to our industry. Without their push to enable innovation we would live in a very boring place. I think it helps us view a different perspective of our industry if we view them as enablers of innovation rather than the creators of our own innovations.

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Over the years, I have enjoyed watching how the competitive landscape in our industry has changed based on various dynamics and customer needs. We have seen consolidation in some segments, and certain companies have vanished into thin air. We have also seen small, new companies become giants in very little time, including Apple, which at one point was in some rather dire straits and now has a market cap that is much higher than a certain company that doubted them a decade ago. (Hint: this company used to be the No.1 PC maker.)

If there’s anything I’ve learned in this business, it’s that consumers are much smarter than they used to be. In the case of the consumer electronics industry, there is a noticeable difference between the technical knowledge exhibited by today’s consumer and that of five years ago.

Take, for instance, TVs. I remember a time when walking into a Sony store was like a walk into the future, but these days it’s like a blast from the past. In the past, shoppers often largely based their buying decisions on which brands they trusted, but now we see customers basing their decisions on their technological needs and wants. Sony’s executives got a little too comfortable with the power of their own brand, assuming that it would carry the company forward no matter what the competition had to offer—boy, were they wrong! Looking at some of the offerings from Pioneer, Sharp, Samsung, and HP, it seems obvious that the TV market is highly competitive, and only companies who truly understand their customers will know what to do in order to grow their business. Brand is important, but it’s not sustainable unless you continually revisit your brand promise and make adjustments as the market demands them.

As more vendors jump into the PC market, more commoditization takes place. Instead of focusing on the customer, they are focused on “speeds and feeds,” and instead of working to differentiate their products, they depend on partner companies like ATI, AMD, Intel, Microsoft, and Nvidia to innovate for them. The end result of that is what you see in stores every day: rows and rows of boxes with “sticker marketing” and price tags. Sticker marketing is when retail PCs come festooned with branding stickers from Microsoft, ATI, Nvidia, Intel, and AMD.

I understand the purpose of sticker marketing; it helps send dollars back to OEMs so they can offer lower prices and be more attractive at retail. But I believe in the end these programs are actually a disservice both to consumers and to the companies that participate in them. Sticker marketing promotes commoditization and devalues innovation from an OEM standpoint. Instead of focusing on such programs, component companies should probably think about working with OEMs on cool platform innovations so PC buyers can benefit from them.

Don’t get me wrong, these partners are key to our industry, but it’s unfortunate that we depend on these “enablers of innovation” to become “creators of innovation.” After all, these companies are not as intimate with our customers as we are; working with people who buy our products on a daily basis puts OEMs in the best position to know what they really need.

Things seem somewhat dire in certain segments of the market. People are shifting from desktops to notebooks for reasons that have little to do with specs. The best many companies can do to differentiate is to offer higher levels of service or faster shipping, but still something is missing; perhaps the total experience.

I believe, as do many of my colleagues, that the desktop space has tons of room for growth. People talk about “customer experience” without actually thinking about what it means. By simply asking 20 of your customers what they wan.t, studying their habits, and understanding what people complain about, you’ll soon start to remove the clouds that hamper innovation. I also believe that the notebook market will continue to be a major growth segment, but that shouldn’t come at the expense of desktops.

If you’re a regular visitor to this page, you’ll probably see that this all ties together. The PC industry isn’t where it should be today as a whole, but there are small pockets of change at work today, and we’re glad to have been a part of affecting such change.