consumers

Steve Jobs, Gary Vaynerchuk & Paradigm Shifts

by Travis Ketchum · 0 comments

While some lucky bastards people have been getting their iPhone 4 early thanks to a FedEx slip-up, the rest of the United States will be getting their new iPhones tomorrow (myself included). But what is most interesting about this new iPhone launch is that is going to finally popularize a high quality camera in consumer devices. Yes, other phones have had high-end camera components.. and yes, Flip HD cams have been an affordable option for many to start producing 720p video clips for YouTube. However, one of the single best selling hand held cameras continues to be the Apple iPhone.

So, you understand why I mentioned Steve Jobs in the title (CEO & Co-Founder of Apple); but what the hell does Gary Vaynerchuk have to do with a hardware release? Gary’s first book “Crush It!”, a #2 NYT best-seller, talks about the paradigm shift we are seeing in our culture thanks to technology. The new and vastly affordable technology that allows us to connect is also changing the way we consume. Where do you watch your news clips now? Likely online if you are reading this blog, and having a quality 720p camera in your pocket and on a device that can directly upload to YouTube is MASSIVE for the Internet as a platform. As Steve Jobs said when the Apple TV was introduced in 2007 (along the same timeline as the original iPhone) was that YouTube is great, but the consumer source devices were the biggest hold up in the platform for a great user experience.

Paradigm Shifts

As with nearly everything technology based, it feels like the rate of innovation is accelerating at a break neck speed. This has never been more true however than it is currently in the smart phone innovation cycle. We are getting faster chips, better screens and vastly better cameras. Google is outpacing everyone in the past 5-7 months though, ever since the introduction of Android 2.0 with the Motorla Droid. This new combination of feature rich, and capable handsets has helped throw fuel on the competitive fire and pushed every partner in the value chain produce better products at lower price. This is a huge win for consumers and software platform developers, nothing proves this more than the over 220,000 Apps for the iPhone App store at the time of this writing.

The consumer is now a creator, the developer is now an artist and every industry that has been stagnant for centuries (read: news, media etc) is being turned upside down. The people in control of those industries hate it because they are afraid of change, afraid of new models, and afraid of letting consumers have the collective power they have always been on the brink of realizing. However, if these organizations do not realize that ‘resistance is futile’ i.e. RIAA & MPAA, and that consumers are ultimately in control but that we are a) willing to pay for great content & great services; as well as b) if these content & service providers don’t give the market what they want, the market simply navigates around the obstacles to consume how they want.

If these content and service organizations realized that on the flip-side of locking down their content and sticking to their old business models; that in fact going for affordable, mass consumption not only relates to higher revenues, more profit and better business than they might actually wake up to the shift that is already in full swing.

How do you see these new devices changing the way you create, consume or manipulate content? I for one, am very excited at the potential of these devices and can’t wait to get my paws on the new iPhone bright and early tomorrow!

Anticipating Consumer Emotion

by Travis Ketchum · 0 comments

iPad

If there is one thing Apple has been phenomenal at over the at last 3 to 4 years it has been anticipating the needs of the average consumer before they really understand that the need exists. Much like Starbucks did with a premium coffee experience, Apple has been able to take a market that was in a race to the bottom and instead of purely going for the lowest price of entry they decided to change the way we use technology through out our daily lives.

This is more significant than it first appears because what Apple is really doing here is catering to the human emotional needs of computing, and not purely the functional need and for technology that completely changes everything. By having such a strong push and obsession around content, experience and quality they are simultaneously hitting consumers from directions they didn’t even know existed. These emotional pulls not only help Apple sell impressive units at even more impressive margins, but they have raised the bar for consumer expectations to mind boggling heights. Have you seen the wireless data consumption of AT&T? 4932% growth over 12 quarters! That is INSANE for a company that was the largest wireless carrier during part of that time (however is currently eclipsed by Verzion due to VW’s aggressive acquisitions).

AT&T Growth

The same kind of massive shift in the way consumer interact with their devices, and additionally what they have come to expect from them was seen in the portable music player category which seemed to have the secret sauce for an ecosystem that generated a better, and more reliable experience than what users had at their disposal before. iPod + iTunes has certainly proved to be a winning combination that is still paying off to this day, granted through a much more expanded form than what was originally conceptualized I am sure.

So what’s next?

Steve Jobs has described the iPad as possibly being the “most important thing [he] has ever worked on”. Bold words coming from a man who has had a fair hand in turning the music industry upside down, but what makes this device so important to the Apple lineup and how will it shift the way we expect our devices to perform for us?

Near 100% reliability

While many would argue that devices with offerings such as Android provide a ‘superior’ experience because of their limitless functions and features that can be added at any point (Flash anyone?). However, while competition is fantastic and I strongly believe that every market segment needs bold innovation to push the boundaries in order to understand what works, for mass adoption to take place the devices need to provide a stable foundation that users can depend on to carry out their tasks. If this element is missing, all of the emotional bonuses that come along with the Apple ecosystem are quickly discounted.

Masked price point

This one is kind of tricky with Apple, especially for those who are not drinking the Kool aid because there is most certainly an upfront premium that has been put on Apple products and the accompanying culture, buying habits etc that come with living in an Apple/Mac world. What IS interesting however is how Apple has clearly hinted at the iPad as a “sign of things to come” (Jonathan Ive) and while at first this devices seems like an over-sized iPod Touch; it is really going after the entry computing market. Think about the type of accessories and ways that a user can interact with this device, consider its price point and then think about what kind of computing experience you can get elsewhere for the same dollar.

For $500-900 can you get an industry best (IPS) display? Multitouch? 10 hour batter life? What about a seamless experience between the content you truly care about and the ability to quickly access information that you need? The Google Chrome OS will be a very interesting challenger to this type of experience game changer but until they are both out in their second generation, it is anybodies guess.

Dead simple usability

One thing I always found interesting as I went through High School and I am not finishing up College throughout the “iPod Generation” is the big draw that people had through word of mouth marketing, and the perceived ease of use. One of the people that I really look up to is Gary Vaynerchuk due to his ability to capture the essence of what is driving the market and understand that the key fundamentals haven’t really changed, only the delivery. People were buying iPods for two very simple reasons.

1. They were extremely good at doing what they were built to do

2. Everybody else had them, so everyone already KNEW how to use it

When you combing those two factors you have a potent recipe for buying decisions to stem directly from word of mouth marketing, where even better yet prospective buyers were able to hold a “sample” product in their hands and experience the ecosystem before buying. The trial-ability for the Apple brand, ecosystem and value proposition was phenomenal.

Developer community

This is a huge competitive advantage that Apple has with their ecosystem right now, and ironically is something they were openly against at first and ever since opening up their doors they have been slammed ever harder for not being more open (regardless of the fact that being at least semi closed is what makes the user experience so amazing). What Apple really gets at this point though is that by taking an agency approach to 3rd party software development with a 30% cut from all App sales they are directly profiting off of the innovation, marketing and value that their community is coming up with.

This last part is what I really want to drive home as to why I am bullish on these entire product line and ecosystem: Apple is no longer in the passenger seat when it comes to understanding the pulse of the consumer and even being a few steps ahead. It took them a few hard punches in the early rounds of computing to polish what they have wanted to perfect all along; content and the user experience. With the introduction of the iPad and the realization that Apple is now a “mobile company”, the firm is very much firing on all cylinders regardless of what type of traction this first generation iPad produces.

[polldaddy poll=2978868]

Your Trust Arbitrage

by Travis Ketchum · 0 comments

Think about the last time you purchased something based on a recommendation. Who suggested that you buy it? Was it a friend, a co-worker, an online persona? How did they solve your problem and what made you respect what they had to say to the point that you actually made your final decisions? These are all things that you probably don’t think about while you are in pursuit of a purchase (or often times, you weren’t actively looking to start with) but ultimately separate you from your dollars in exchange for a product or service.

Before we go any deeper, lets take a look at what the word “arbitrage” means. Arbitrage is simply the difference between two markets, or the under/over valuation that someone has over resources that are currently at a different value somewhere else. The most simplistic form of arbitrage is often found on auction sites like eBay where we see the effects of supply and demand between markets. Remember the red hot items like when the PS3 first came out? It was selling for 2-3x the retail price that customers were paying in stores.

Online Marketing

No one understands the value of arbitrage more than online marketers (such as Jeremy Schoemaker or John Chow), and because of that they were quick to realize the power of building trust with their readers and what financial value that represents. The personality that is involved with marketing products online is really in the business of building relationships with an audience so that you will trust them and act upon their ‘suggestions’ so they then don’t have to take in the advertising costs of reaching you on a transactional basis, or suffer the accompanying dismal conversion rates associated with what I refer to as ‘first encounter’ sales (where the consumer has no awareness of you prior to the landing page).

Your Business

So how does this apply to your startup, or even fortune 500 companies? As you start to understand the value of your relationship with customers and the trust that they subsequently have with your brand; it is only then that you can put a value on what people are willing to pay (and therefore help you profit) simply because they TRUST who you are and what you are doing. You then only need to keep a channel of communication open between you and your customers (typically one way, but listening is a separate but important aspect of success) through e-mail lists, social media and websites. Thankfully technology has opened up all of these avenues to facilitate this relationship.

The Impact

So how is this going to change the landscape of how business is done? It is widely accepted that an online presence is a necessity for any business in operation within the United States today, so how is the process of acquiring users going to change with our new found knowledge? As Gary Vaynerchuk has clearly pointed out, the future will require us to build brands not only around businesses but around ourselves. Society can no longer hide things from each other (at least for very long) so it is very important that we establish ourselves based on tangible qualities that resonate with our audience.

Only after you have developed a relationship centered around trust can you then start to ‘suggest’ relevant products and services to your audience that will expand your verticals while continuing to offer value. This is very do-able for anyone with an online presence, and if you take the approach of building relationships you will see your conversion rates, prosperity and acceptance go through the roof.