The wonderful world of redundancy

When I began working in large law firm a few years back, I was struck by the surfeit of communications technology. There were all manner of gadgets and software applications to spirit away my Very Important Messages to the waiting ears of my colleagues. There was, of course, the telephone, for starters, that obsolescent piece of 20th century technology. There was my cell phone. There was e-mail (both company and personal accounts). There was the Blackberry, from which I could read and send email, regardless of my location; otherwise, I’d have to use the PC, and what a drag that would be. But to spice things up, there is the instant messaging software that enables you to send text messages to people who are likewise chained to their PCs, unless, of course, you wanted to use the Blackberry anyway, or perhaps the cell phone’s text messaging capability. But why not start off by just picking up the telephone. Ah, so many options, so little time!

You can see my quandary. By the time I would figure out which gadget to use to send my message, I often forgot what the message was.

Large business organizations like my old firm are veritable laboratories of gadget-usage behavior. For example, some folks used their Blackberries almost exclusively; others loathed the very sight of a Blackberry. Some folks would telephone me with an important message, but rather than leave it on my voicemail, they would then hang up and send an email instead. It was strange, the comforts and habits that would form around certain ways of hearing and being heard. Some people became known as ‘e-mail people’, that is, if you really want to get in touch with them, leave them an email. Conversely, others were telephone people; if you need to get through to them, it’s best to call their assistants and leave a message. And still others were incommunicadoes, despite being located a mere ten flights above or below you. These folks would banish all communication from their everyday lives—almost as an act of self-preservation—and required a face-to-face appointment, or as luck sometimes would have it, an accidental meeting in the hallway or cafeteria.

So many gadgets, so many habits to contend with. And if such a state is enough to create confusion in the workplace, imagine the difficulties for the marketer who is tasked with selling and promoting new gadgets or improvements to old gadgets.

In the world of gadget-makers, it is conventional wisdom to believe that consumers want an all-in-one device that will, for example, retrieve email, make phone calls, browse the internet, play digital music, and maybe even serve as a small personal computer with stripped down software applications (word processor, spreadsheet, etc.). And don’t forget a few corny games for that long commute. In-Stat, a company that bills itself as “the leading provider of actionable research, market analysis and forecasts of advanced communications services, infrastructure, end-user devices and semiconductors,” recently produced an interesting study that challenges this notion of convergence. For example, the study notes that 15% of those surveyed carried more than one cell phone.

I suppose, once upon a time, that I was one of these people. When I carried a firm-issued Blackberry, I technically had two cell phones (Blackberries double as cell phones); however, I never did activate the cell service on the Blackberry. I can’t imagine that I am the type of person who would carry around two cell phones (it took years of self-cajoling just to purchase one phone).

I did know of such a person, however, a publicist who purportedly had such a high volume of work-related phone calls that he decided to carry a ‘personal’ phone and a ‘work’ phone. It always struck me as overkill (can’t you get two numbers wired to the same phone with different user profiles so that each number would emit a different ring tone?), but so it goes. After all, he’s the publicist, and if two phones make him comfortable…. In any event, such an example would seem to be Strike One against the notion of convergence.

Another piece of data from the In-Stat survey claims that 80% of those surveyed who carry so-called camera phones also regularly carry around a digital camera as well. Why? Maybe it’s an issue of quality; maybe digital cameras interface more easily with other components needed for storage and such. Or maybe it’s next to impossible to buy a cell phone these days without the camera attached to it.

I’m in the market for a cell phone, having had mine now for three years or so. My first thought was to see if my service provider would give me a free upgrade, you know, for being such a loyal and valued customer of six or seven years. Then I started thumbing through the new models…very fancy. My thoughts wandered to buying one those expensive phones, the ones with Bluetooth wireless capability, keyboard, so on and so forth. After all, I like gadgets.

But I’m not a camera person. I don’t care for pictures, yet every upscale phone had a camera. The statistic above would seem to confirm that, even though cameras are not a highly utilized cell-phone feature in the US, the phone manufacturers will keep putting cameras on their phones.

And then it hit me. The cameras are there not because of any great market need, but because of the cell-phone makers’ need to keep unit-price margins high. One of the greatest dangers for manufacturers of consumer electronics is in reaching that tipping point beyond which prices fall like rocks due to market saturation or product obsolescence.

A great recent example of this is the market for cathode-ray tube (CRT) televisions and computer monitors. Take the Sony Trinitron. Before the advent of liquid-crystal display and plasma, the Trinitron was the gold standard in video display and was widely licensed to the entire consumer-electronics industry, resulting in a virtual stranglehold for Sony on the video-display segment. Today, you can go to Walmart and snag the best 24-inch CRT television on the shelf for less than $180.

The relative slowness with which Sony reacted to the rise of new technologies in the late 1990s finally caught up with the company in 2003, as the company was rocked by poor results. In May 2002, Sony’s NYSE listing approached $60 per share; less than one year later, it bottomed out at $23.92. Restructurings and layoffs followed the company’s fall from grace, and while the company quickly expanded its market share of higher-margin products, it took 2½ years for the stock to reach the $50 mark again.

Such a quick and startling tumble surely made other market leaders queasy, especially as the digital revolution quickly unraveled business models across several broad product categories, including compact-disc players and cameras.

At root, that is why I can’t buy a reasonably upscale cell phone without a camera. Whether I use the camera or not, the Nokias of the world are going to make the camera phone and charge me for it out of a deep fear of experiencing ‘Sony Shock,’ which is what inevitably happens to companies that are laggards in consumer-electronic technology.

Redundancy, it would seem, is a small price to pay for manufacturers who worry about missing out on the next iPod or RAZR phone. In this light, the so-called movement toward convergence is not so much lead by consumers clamoring for such devices, but rather led by the manufacturers who fear the ultimate decline of existing product lines. For them, convergence means fatter margins and, ultimately, fatter profits. For the consumer, it translates into a ton of choices—always a good thing—but choices among devices that are nearly indistinguishable from one another.

There seems to be an element of Greek tragedy in marketing consumer electronics. No matter how hard you labor to avoid becoming stale, old, yesterday’s news, it seems that every frantic act leads you closer to such an outcome. Sony’s great mistake was attempting to milk a few blockbuster franchises for all they were worth, which necessarily siphoned off talent, resources, and focus from inventing new ones. Maybe that’s the curse of being a market leader in consumer electronics. There’s a reason Apple Computer invented the iPod and its associated business model rather than, say, Dell or Hewlett Packard. As a mere computer manufacturer, Apple was small potatoes. It wasn’t so much interested in building a moat around its PC business because, frankly, the castle wasn’t big enough. It needed to think about taking the business in a whole new direction, and digital music provided that opportunity. Meanwhile, Mr. Dell was busy squeezing more blood from his turnips; Ms. Fiorina was patting herself on the back for buying Compaq.

To date, cell-phone makers have attempted mightily to prevent cell phones from becoming mere cheap commodities, like the old CRT televisions, but one gets the sense that their efforts would be better directed at rethinking the entire business model, particularly here in the US, where, it seems, a phone is just a phone.