Integration and Expertise Matter More for SaaS

I recently had lunch with an executive one of the more successful SaaS startups in the Valley.  Our conversation ranged far and wide over many topics, but eventually I wanted to understand their product differentiation.  There are several players in the space, what had these guys been successful in emphasizing?

The answer was a surprise to me:  integration with other SaaS apps.  As he put it, “Our customers care a lot more about this than they used to when I worked for a perpetual software company in the same space selling to bigger enterprises.”

This was completely at odds with my logic before the lunch.  SOA and fancy integrations had seemed entirely a feature that catered to giant Enterprise IT that had to have things their own way and were willing to boil the ocean to get there.

After a bit of further questioning, it became obvious why the SaaS customers might care even more than their big company counterparts.  SaaS typical sells to SMB’s.  These smaller organizations have minimal IT staffs.  I once talked to a SaaS company whose professional services group had to deal with the CFO being the only IT staff that could answer questions and help get the software going.  That’s small!

When you have a large IT group, you can afford to, and indeed, may even want to dedicate some of them to building the integrations.  When you have a small group, if the vendor can’t do it for you, it probably won’t ever get done.  So it isn’t that the little guys care more, they’re just helpless to get any kind of solution if they care at all.

What does this mean for SaaS vendors?  In this case, having out-of-the-box tight integration with other SaaS vendors (or On-premises packages) was a big differentiator.  It lowered the deal friction (less to worry about on the custom install side) and increased customer satisfaction (hey, we could never get these two systems to talk before!).

Today, I read in one of Jeffrey Monaghan’s posts the following:

It is important to be viewed as the expert when you are selling a product…but it is imperative when selling a service. Customers are buying a promise from you. And an expert is perceived as someone who is most likely to deliver. Everything you do should scream “We’re experts!” Collateral material, websites, even the way your sales team dresses.

Jeffrey is making a slightly different point than the integration point, but it’s really the same story again, isn’t it?  Small businesses can’t afford to hire Accenture or somebody to come partner with their software or sevice vendor to help them out with “Best Practices” or “Business Process Re-engineering.”  The software itself had better have all that built in, and the vendor had better look like the experts, and be prepared to help educate the customer as much or as little as needed.  It can’t be an extra cost option.

This is just another thing I really liked about how Rally Development’s web site is set up.  There is that perfect mirepoix of product marketing, best practices (and in their University, clearly there’d be experts there!), and community.  Rally is just a site I came across by accident when two different people asked if I knew of them.  Their site really resonated with my idea of what a small company should be doing with the web to get the word out.

How about you, are you the experts in your area?  Shouldn’t you be?

Content Quality Matters (Enterprise 2.0 Take Note!)

No sooner did I pen Immediate Gratification Matters than I read Jason Menayan’s GigaOm post on 7 Things HubPages Did to Beat Squidoo.

HubPages and Squidoo are sites where people can write short articles about topics they care about.  Squidoo was founded by Seth Godin, a famous marketer whose blog I follow religiously.  Despite rapid initial growth, HubPages was languishing a year later, and trailed far behind Squidoo in terms of traffic as well as revenue generated for the company and its authors.

So what did HubPages do to beat Squidoo?  They list 7 things:

1. Remove all adjult content:  At the time they did it, adult content was 1/3 of all traffic.  Clearly they had to choose to get rid of one audience in order to encourage others to step up.  Would you company give up 1/3 of its sales for the promise of much larger sales later?  Something similar keeps a lot of companies from going SaaS.
2. Disallow spam:  No aggressively promotional articles were permited, and links to sites being promoted had to be toned down.  You couldn’t just publish your ads as pages.
3. Purely personal articles (like blogs) were eliminated:  The feeling was they were less likely to be useful to readers or to attract search engine traffic.
4. Copied content was penalized:  Ever come across content that is just a blatant republication of some other content?  Sometimes there is an issue of rights to use the content, but even if there is a right to republish it was felt that original content was more valuable.  Hence article scores were penalized though the article itself was not removed.
5. Articles Linking to Questionable Sites Were Flagged:  If they could see that a site might potentially phish, display obnoxious popups, or redirect to a different site immediately, the site is marked as such.  I just noticed Google doing a bit of this too, and appreciate it.  It’s never been a pleasant surprise to land on one of these obnoxious sites after clicking on an innocuous-looking search result.
6. Added a discussion forum:  This encourages real community and conversation, which was evidently lacking.  With a forum, users can help each other out, share advice, and socialize beyond simply publishing articles.
7. Up front payments for very high-quality articles:  Great articles attract significant traffic and create success stories that are a good example for others to emulate.  I’m not sure how those success stories are propogated, but I would make the propogation in some way very easy to make this more viral.

These are all ways of increasing the quality fo content and incenting people to build a quality-focused community around the content.  There is a lot to be learned from this for would be purveyors of content.  What is your strategy to increase your content quality?

Somehow I find this message to be strangely ironic.  As I mention, I follow Seth Godin religiously.  The idea to focus on content quality is definitely one of his core themes.  His book “Dip” is all about finding out what you can be the best person in the world at and focusing on that one area.  Yet, a competitor has gotten more focused about it than Squidoo.

Seth recently wrote:

In the face of infinity, many of us are panicking and searching less, going shallower, relying on bestseller lists and simple recommendations. The vast majority of Google searches are just one or two words, and obvious ones at that. The long tail gets a lot shorter when you don’t know what’s out there.

Organizations that can help us manage the infinite are facing a huge (can I say it? nearly infinite) opportunity.

To the issue of getting yourself hooked into “shallower” ways of finding content, one should add that when there is infinite content, it can be particularly differentiating to have better content.  This is something that has always bothered me about the crowd that says, “Content is a commodity.”  This has been such a popular meme lately, but it is so hollow. 

The next time you’re going through pages of Google search results just trying to find one good read about you topic, ask yourself, “Would getting to quality sooner have mattered to you on that search?”  I’ll bet the answer was “yes” for most searches.

P.S.  Why should Enterprise 2.0 take note?  Because these folks are going to be particularly sensitive to the kinds of content that HubPages eliminated.  Does your Enterprise 2.0 solution have a way to do that automatically, or are you going to leave it up to your customers to police their sites? 

Immediate Gratification Matters

When your users access your service on the web, how fast do you gratify them?  Do you think about response time, or is your view that so long as it gets there before “too long”, it’s not a problem?

Google has made a business case for slamming down latency.  They invest zillions of dollars and IQ points trying to make their service respond faster when you hit the search button.  Why?  Because they’ve found it matters for the user experience.  Here is a graph of their recent experience with latency:

Fred Wilson recently tried Slideshare.  He liked it, but his primary complaint was that it took 12 hours after he uploaded his .ppt file to convert the slideshow to Flash.  As he puts it, “I went to bed before it finished.”  I had the same reaction to Animoto.  Loved the service, but I made one slideshow and then forgot about it.

The debate on whether startups have any business focusing on scalability rages in the blogosphere in the wake of the Twitter shakeup as we speak.  People like Ted Dziuba say essentially, “Scalability is not your problem, getting people to care is.”  The trouble is, as the two examples above show, getting people to care is at least partially a function of delivering immediate gratification from the software.  Scaling does matter for that.

Immediate Gratification matters most of all when selling.  If prospects can try your application out online, make sure it responds blindingly fast so they can get as far as possible in the evaluation while they are in the mood to look.  If a site doesn’t perform well on the trial version, my expectation is that it will perform poorly in production too.  That’s not what you want. 

Process matters too.  How often have you gone to a site, seen a white paper or demo you wanted to get access to, and had to answer 20 questions before you could get in?  Worse, how often did you answer 20 questions and then get told they’d get back to you?

They’re protecting the ability of their sales staff to control the process and making sure they capture your lead info.  But it’s a mistake because it just kills the momentum of an interested viewer.  What kind of customer wants to be kept waiting before they can give you their money?  It’s one thing to be kept waiting because of overwhelming demand for a private beta, that’s exclusivity.  It’s quite another to do one of these hurry up and wait sales wonders.

Gather the least information you can (name, email, and company?) and then give immediate access.  What are you doing otherwise, preventing competition from seeing your app and sales materials?  Balooney.  They’ve already seen it.  Trust me on this one.  Every customer that winds up choosing them instead of you, every friend of a friend employee that moves on, and a hundred other potential sources has eventually given them access to the 411 on exactly what you have.  If your lead is so fragile that the information you give any qualified process can sink your ship in the competition’s hands, you’d better get going on some radical innovation or you’re not going to make it.

I recently came upon Rally Development’s site.  Rally makes a SaaS tool for Agile teams.  I loved the site because of all the Instant Gratification.  In fact, it may be the best non-consumer startup site I’ve seen in a long time.  They touch every base– traditional product + marketing, education/learning, and community/evangelism –with a well-organized low friction and content rich offering that tells me what I need to know.

In an age of real-time scalability with services like Amazon.com, there’s no good technical reason to keep your customers waiting.  At the very least you should run some tests to see if faster response times improve your sales.  Once the scaling and infrastructure side is handled, the rest of it is in your hands in terms of the processes you force your customers to follow.

Immediate gratification matters!

Google: Oh Ye Of Little Faith!

By now you must have heard about Google’s results. 

As I wrote right before they announced, quality matters.  It’s why they’re winning the ad wars.  They have an unfair advantage:

- They are often the last thing you look at before you go to the place you’ll make your purchase.

- You’ve told them what you want to purchase before they show you the ads.

- They know more than any other business on the planet about inferring meaning from words and links.  That’s what they do.  It’s their business.

They transfer that advantage to their advertisers who transfer to them profits.  Lots and lots of profits.

What’s your unfair advantage?

Ray Ozzie On Microsoft’s Expensive Rift With the Web…

No, of course Ray Ozzie isn’t admitting or even suggesting Microsoft has an “expensive rift with the web.”  That’s what I called it in my original post about their us-vs-them situation.  Despite the fact that Microsoft Loyalists take me to task for bringing this stuff up, I’m not the only one who notices it.  Coté over at RedMonk has described it very clearly too.  As he puts it:

Microsoft frameworks are plagued by lock-in fears. That is, you’re either a 100% Microsoft coder or a 0% Microsoft coder.

Now what Ozzie did do is remove all doubt (what’s that saying about opening your mouth and removing all doubt?) by saying this about Open Source:

My position toward open source generally is that it’s a part of the environment. It’s very useful for developers to be able to get the source code to certain things, to modify them. Microsoft fundamentally, as a whole, has changed dramatically as a result of open-source as people have been using it more and more. The nature of interoperability between our systems and other systems has increased. I can tell you from an inside perspective … when you build a new product, immediately you start thinking, how shall this product expose its APIs. … 

Open source is a reality. We have a software business that is based on proprietary software. We tactically or strategically, depending on how you look at it, will take certain aspects of what we do and we will open-source them where we believe there is a real benefit to the community and to the nature of the growth of that technology in open-sourcing it. … The bottom line is we believe very much in the quality of Microsoft products and we are an (intellectual-property) based business. But we live in a world together with open-source, and we have to make it possible for you to build solutions, or customers to build solutions, that incorporate aspects of that.

Can you make any sense of that? Doesn’t it seem so totally Microsoft?

I got this via the excellent Patrick Logan who had me laughing out loud at his post:

 

Ray Ozzie speaks, and he speaks about Open Source Software. I don’t even know what to quote from his statement. They’re just not in the right ballpark. The only thing Ozzie communicates here is that he just does not understand the open source community, which _is_ the community for building out the internets.

There’s more about Groove and Microsoft in general.  Go read it.  Patrick sees the Expensive Rift clearly.  This goes so well with the crazy video debacle, Yahoo, and the rest of what’s happening with the company. 

That link in the Patrick Logan quote, BTW, is on Techmeme right now.  It says no more than what I quoted.  Tells you lots of people see the Rift.  That’s part of what makes it an Expensive Rift.

Google’s Paid Click Rates: Google Needs the Best Clicks

More gnashing and moaning about Google’s paid clicks says Larry Dignan.  This is one of the factors that’s hammered Google’s stock prices as the world worries that Google is slowing down suddenly.  There’s been a lot of back and forth, and Google for its part say they triggered some of this by changing how things work to improve the quality of the click throughs for advertisers.  Tim Armstrong, Google’s president of advertising and commerce in North America has said:

“We have a clear drive that a consumer should see really good ads,” said Armstrong, speaking at a Bear Stearns media conference in Palm Beach, Fla. “The outside world looked at that change as not healthy for Google, (but) advertisers got increased conversion. For us we looked at that as a positive change.”

Google has also said they would compensate elsewhere, for instance by “dialing up” advertising on YouTube.  The latter remark is interesting in the wake of Marshall Kirkpatrick’s article that suggests YouTube dominates video even more than Google dominates search.

I’m not here to predict what results Google will turn in very shortly, but I am here to say that Google’s focus on increased conversion of the click-throughs is worthwhile. 

Why has Google been so successful?  As I noted in another post, MySpace reports $10M profit on $500M in revenues.  Google, by contrast, got there on $80M in revenues.  It was wildly more profitable in other words.

Profit is a sign of market inefficiency somewhere.  In this case, the inefficiency is the gap between how well advertising with Google works versus advertising on MySpace.  In fact, Google was onto a far better mousetrap almost from their beginning.  Being able to eliminate an inefficiency in the markets let’s a company play the spread between the status quo and the new higher level of efficiency that they can offer.

Google’s move here is aimed at preserving or perhaps even widening that gap in how well their advertising works versus how well other’s ads work.  It’s an interesting chess move.  There could be several outcomes:

-  The market doesn’t care.  Google just gave up a bunch of click throughs for no gain.

-  It is a competitive response.  We’re not privy to how big the efficiency “gap” still is.  Ohers may have made progress closing the gap and this is a defensive move by Google to keep it open.

-  It is a prelude to price increases.  If Google has made the gap even wider, they have earned the right to raise prices because the ads are more effective.  With a tough economy, the volume may be down, so it may be important to be able to increase prices.

Profitability is hugely important, and becomes the primary factor in many endgames (the other being strategic value if you are not profitable).  Being unreasonably profitable has always been a Google strength.  We shouldn’t be surprised if they try to manage for continued profitability even perhaps at some expense to raw growth.

Related Articles

Andrew Chen wants to know what it means when services like Alexa and Compete can be so wrong about Google and, “these same, somewhat flawed approaches are driving the decisions of media buyers in a $40B+ global advertising industry?”

As I told Andrew in a comment to the post, it means the quality of clicks really does matter.  Hence Google’s great results.  Hence their continued dominance.  Hence it’s hard to sell advertising if you don’t have an unfair click quality advantage.

 

What If The Chasm Has Moved?

The chasm I refer to is, of course, the one Geoffrey Moore invented to describe the idea that early adopters (the “left” side of the Chasm) may behave quite differently and even require a different offering than the “mainstream” market (the “right” side of the Chasm).

As I was thumbing through various blog entries this morning, this crazy idea about the Chasm moving popped into my head.  Let me see if I can retrace my steps and in so doing convey what I’m thinking.

First, there is a Jeff Jarvis piece on Yahoo (most of these articles are Yahoo motivated) where he says: 

I think a Microsoft-Yahoo combination made little sense. It was Microsoft’s attempt to buy audience — as if you can own audience today, as if we can be bought and sold. That is the old-media way of looking at the world: they controlled content, marketed to get people to come to you, showed them ads, then waved good-bye.

It has definitely become the accepted wisdom that audiences cannot be bought and sold.  But then, neither could the Early Adopters of the Moore world.  They were always on the lookout for the new-new thing, very fickle, and very hard to hold on to.  What if this New Think, that audiences cannot be bought and sold, still only applies to early adopters?  What if the Chasm moved to the right so that there are tremendously more Early Adopters around than there used to be, or so that we can more easily reach all of them than used to be the case?  What if the shape of the Long Tail has been changed in some fundamental way by the Internet? 

Hmmm, that’s an interesting thought.  It may mean that audiences can be bought and sold as they ever were, but just that they’ll be that “mainstream” crowd.  Frankly, when I look at the original analyses of the Microsoft Yahoo venture, and saw how they almost made sense when you look at the email share that would derive, it gives me pause to consider this new idea.  Why do these two have such commanding email share?

It works like this:

 

Look at all that share concentrated around Yahoo Mail and more interestingly Hotmail and (cough) AOL Email.  Are these really the mail platforms of choice for the hip “you can’t buy me” audiences?  No.  These are mail platforms that people got hooked up to a long time ago and stuck with.  This is mainstream.  This is not the Twitterati.  And guess what, if they’ve stuck with it so far, they will likely keep sticking too it until something turns out the lights on them, if that ever happens.

Next post was by Fred Wilson.  It’s an interesting post, and quite long by his standards as he admits at the end.  Fred says in this latest post:

The Internet is decomposing into a vast array of micro-services that we, the end user, stitches together to make our own unique web experience. It is the de-portalization of the Internet and it is very real. And yet, these large behemoths are trying to do their normal consolidation play on the Internet. First of all, it’s not going to work. They are destroying value with all of their M&A efforts and the bigger they get, the more value they will destroy, for them and their shareholders.

Shades of Jarvis:  you don’t own us, these services matter to us, and you’re just going to screw them up thinking you can buy and sell this stuff.  Of course many a founder has had the same view of VC’s, but let’s leave that tacky business aside.  Fred goes on to cite some examples of companies that were acquired and screwed up. 

BTW, one should just assume that most companies that are acquired will be “screwed up”.  In fact, all of them will be if the definition of “screwed up” is that their character will be radically changed in some way.  Despite all the M&A activity, and the great success of companies like Oracle doing this sort of thing, these companies all remain extremely centralized.  There are no Johnson and Johnson or GE analogs in our business.  The closest thing to it might be Cisco, but they’re a very isolated case.  Every other company is convinced that its management knows best, and usually knows best very high up (e.g. Jobs, Ellison, Balmer, Larry, or Sergei know best).  It’s a definite sign of immaturity in our world, and someone will figure out the virtues of decentralizing, but I digress.

Last related blog subject:  Twitter.  There’s a lot out on Twitter as usual.  The pendulum swings back and forth and today it is on the negative side.  This time around, mostly it is about how Blogger/Cartoonist/Ad Man Hugh McLeod has deleted his Twitter account.  Socialwrite.com talks about whole cliches along these lines:  declaring email bankruptcy, deleting your Facebook account, and so forth.  Even Scoble, in an unguarded moment, candidly admits that if you actually have to get something done, you need to turn off the Internet.

So what does it all mean and what am I trying to say?  There is a case that the Chasm has moved.  Whereas the space to the left of mainstream once was too small to make much of a business of, today it is much much larger.  In fact, one could argue that an awful lot of the Web 2.0 revolution, maybe even all of it, is founded on this much larger Chasm audience. 

How did it get bigger?  I think it is a function of the Internet’s ability to let us deal with more if we choose.  We can have more friends, albeit most of them even more shallow.  We can get through more email, read more blog posts, and yes, throw off more Tweets than ever before.  That let’s us participate in a lot more.  The buying power, as measured in the currency of Attention, has dramatically increased.

But, there is still a Chasm to cross.  Fred Wilson’s post is all about that.  The new Chasm is liquidity.  You can be quite successful, but the Chasm still looms before you are successful enough to go public, because that bar has moved too.  And the waters are quite choppy to the left of the Chasm.  Things move pretty slowly over in the land of AOL and (though they wouldn’t like to admit it) Yahoo.  Over in Google, Twitter, Facebook land, they’re pretty darned choppy.  Google has managed to get a leg in both camps, and genuinely benefits.  So has Apple, BTW.  You can tell such companies by whether they’re successfully public and hip at the same time.  Tough gig, but hugely valuable if you can get it together.

Will the Chasm keep moving?  I think it will.  The nature of the Internet has been to broaden us, broaden markets, and in general promote more change.  Can it move far enough to produce profitability and predictability?  That’s really what’s needed to resolve this liquidity issue.  That’s what’s needed to remove the fear that Web 2.0 might be just an interesting fad.  And that’s what’s needed so your favorite services can remain independent and keep doing what you like best.

Time will tell, but we’re not there yet.

Related Articles

Jeff Jarvis and I are following each other around.  No sooner did I pen this and go to lunch than I went back to find this post.  In it, Jeff discusses Berkshire Hathaway-like conglomerates.  Shades of my Johnson and Johns thoughts above.

What’s Apple Up To?

The most successful brand in the world is in the news quite a lot lately.

The latest startling statistic just in from a leaked memo is that Apple has officially passed Wal-Mart to become the world’s largest music retailler, and not by just a little bit.  Apple apparently has cornered 19% of the market while Wal-mart clocks in with 15%.  Despite offering DRM-free music, Amazon is a distant #4 at 6%.  There’s 28% still up for grabs from no-names.

What this tells us is that people will pay for a convenient user experience, which is what iTunes boils down to.  Not only that, but they will shift their behaviour very rapidly if they like the experience.  More alarming I’m sure for the music industry was that according to the same research in thememo, 48% of US teens didn’t buy a signle CD in 2007 compared to 38% in 2006.  I can’t remember the last time I bought one personally, but it was sometime shortly after I got my first iPod and there was only 1 or 2 and then I quit buying them altogether.  Music has moved into the clouds and off of discs.  Most of the rest of digital activity will eventually follow suit.

Here’s another couple of wild statistics on Apple from Larry Dignan based on a Rubicon survey.  First, one third of iPhone users carry two phones.  That’s kind of a toe stumper to me.  I know one iPhone user with multiple phones and that’s because he’s in the wireless business and has to demo multiple handsets.  The other phones include a Blackberry, a Windows Mobile device, and a Motorola.  I find myself relaly wondering what the survey said as these statistics are often misleading.  It is such a hassle to have multiple phones that I find it hard to believe.  FWIW, the survey said the alternates were for basic voice calling and composing e-mail.  The iPhone was being used largely as an e-mail reader.  Again, FWIW, the most common use for mine is web access followed by e-mail followed by voice.

Of the many interesting notes in the article, another that caught my eye is that 28% of respondents say they often carry the iPhone instead of notebook PC’s.  Ditto here.  It’s another reason I want my data in the clouds, BTW.  I had my iPhone with me on my recent Hawaiian trip and never missed the notebook.  Interestingly, it will increasingly be an Apple notebook that you may choose to leave behind.  Apple now sells 21% of consumer PC’s.  Certainly here in Silicon Valley, it’s cool to have fruit on your machine.  I was just at the Googleplex yesterday for lunch and didn’t see anything but Apple notebooks other than the PC I used to self-service a visitor badge.

Next up on the Apple front (sorry, this is a laundry list, but that’s how it comes to me) is their push into digital lifestryle fitness.  They’ve filed a bunch of patents accoding to AppleInsider that relate to an iTunes-like software application, hardware-based heart rate and physiological sensors, a rewards tracker, and a component to facilitate synchronous group activities.  It will be cool to have these toys from Apple (I love the idea of my phone tracking fitness info that I can use to get healthier), but I am troubled by the patents.  It’s SOP I know to patent it all, but these ideas are far from new.  My old mentor Philippe Kahn has a company called FullPower that’s been working in this area for years and no doubt has their own patents.  I’ve even got a note going back 10 years in my list of startup ideas to look at the idea of a “Sports Phone” that has calorie tracking, an accelerometer/pedometer, and a heart rate monitor.  Apple is pretty late where prior art is concerned it seems to me.

But the really BIG news is the iPhone shortage and what it means.  Folks like Om Malik and others have discovered Apple stores are basically out of stock on iPhones.  Initial speculation is that this means the 3G phones are imminent and Apple wanted to minimize the chance for obsolete inventory so they sold out.  This is not a bad guess.  I know my iPhone will be upgraded shortly after the 3G is available, and my wife will find herself suddenly with a slightly used “original flavor” iPhone.  That trickledown of the used but perfectly usable iPhones would make it tough to justify buying a new one for a while.  It will also likely mean good news for AT&T as I can’t imagine taking a working iPhone and sticking it in a desk drawer the same way I’ve done every other time I upgraded phones.  They’re just too cool to ignore like that.

Here’s an odd thing though.  Nearly all (well actually ALL that I read about in blogs) Apple stores have no iPhones in stock, but AT&T Wireless does have them.  Granted, Apple doesn’t control AT&T who may have decided to keep right on selling rather than follow Apple’s plan (if it exists).  While Piper Jaffray views the shortage as an indication there is an 80% likelihood of an imminent new model, other explanations are possible.  For example, there could be a component shortage or manufacturing hiccup.  In that case, accounting rules benefit Apple if they ship available supplies to partners instead of their own stores.  A phone sitting in an Apple store is inventory.  A phone shipped to a partner is revenue.

But there is another possibility I’m surprised none of these analysts have mentioned.  There was plenty of discussion about the economics of Apple locking up the iPhone.  They make more money when a partner like AT&T sell the phone than when someone buys the phone and hacks it to another unpartnered service provider.  Clearly if you buy the phone at AT&T, they will insist you buy their service.  So how do you get a phone without service?  Why you get it from an Apple store.  At least until they ran out.

Keep your fingers crossed on the 3G, but I don’t see the likelihood as 80%!

The Airlines Are An Incredible Mess

Even our kids were amazed at how poorly our recent vacation to Hawaii went when it came to air travel.  Aside from the usual airport conditions, United Airlines was a disaster. 

We were flying United from the mainland to Oahu, and then Aloha to Kona.  Despite being partners and having the whole thing booked as one, United and Aloha’s computers couldn’t talk to one another, so we had no boarding passes on Aloha.  We barely got our seats on United as they were way overbooked, so it was a mad scramble on the way over.

On the way back, we had two legs:  Kona to Honolulu and then Honolulu to San Francisco.  We got off in Honolulu an hour late and ran all the way to the connecting gate.  According to typical airport Murphy’s Law, when you’re late for a connection you’ll find you have to run the longest possible distance in the airport to make it.  So we ran.  But when we got to the gate, it was completely desserted.  This didn’t look right, and there was absolutely nobody there.  Our assumption was they’d changed the gate.  The reality was worse:  the United flight had been cancelled.  Why they couldn’t leave someone at the gate or at least provide a sign is a mystery. 

So we ran down to see some actual agents, and met our next disaster.  They had 3 agents dealing with it, there was more than one flight cancelled, there was a giant line, and it wasn’t moving.  As usual, those customers wanting to take advantage of the “screamer” policy to get themselves a better deal were monopolizing all available agents.  They argued for over an hour while everyone else waited.  There was one customer service person nominally in charge who was completely useless.  At one point she wanted everyone flying directly to SFO to come with here.  That turned out to be just us, but what the heck, we were being pulled from the back of the line to the front.  Trouble was, about the time we got out of the line and in the middle of nowhere, the screamers started screaming, literally.  So she forgot about us and went to calm them down.  Thirty minutes of limbo later where we asked another agent who became available to help and were told to wait on the customer service rep, and eventually I decided to become a screamer in order to get even a modicum of service.

The agent, of course, had been so long away from being an agent because of the new self-service kiosks, that they could barely remember how to run the UI on the computer to get our seat assignments.   The cryptic commands they were trading back and forth were truly scary.  Cutting edge of 1950’s COBOL would be my guess.

Eventually , we got vouchered into a hotel and booked on a flight late the next day, and left the scene in disgust.  We later heard some passengers were there upwards of three hours and that some were being told it would literally take them 3 days to get where they were going.  Note that this was spring break and people were trying to get their kids back to school.  Someone else said they worked for United and the flight was cancelled because United was short 30 or 40 planes as they were redoing maintenance procedures similar to what happened with Southwest recently.

I could go on about all the crazy ways United still screwed up the customer experience further (you’d think that wasn’t possible), but let me just end the story by saying the culmination was pulling the plane up to the gate, shutting off the engines, and waiting 15 minutes while the pilot plaintively called for someone to extend the jetway.  He finally got on the intercom, clearly disgusted himself, and said he’d called multiple times, assumed someone was on the way, but that there wasn’t much else he could do.

Meanwhile, back at the ranch, Aloha went bankrupt and cancelled all flights and ATA went bankrupt yesterday, cancelling all flights.  We have friends holding tickets on both airlines to go to Hawaii.  One will get their money back via credit card reversal, the other is out of luck.  At this rate, we’ll have to paddle a canoe to get to Hawaii the next time we go.

The airlines complain about fuel costs, but I see a different reality.  Despite every flight being overbooked, and no possibility for an upgrade on any flight I’ve been on recently, the airlines can’t seem to make a profit.  It’s the old, “We lose money on every transaction but we can make it up in volume.”  Meanwhile planes are full, families are scattered all over, flights are randomly cancelled due to maintenance issues, there is no communication, but most of all, nobody on the airline really seems in charge.  They’re all reacting, and reacting poorly.  Frankly, some of them need to go bankrupt and disappear for good because clearly these airlines need to raise their proces and get a grip on things. 

This all reminds me of Jeff Jarvis’s article in Business Week where he says:

Here’s some free advice: Go to Google, enter any of your company’s brands followed by the word “sucks,” and you will see the true consumers’ reports. Brace yourself, for it won’t be pretty. Wal-Mart’s unofficial Google Sucks Index turns up 165,000 results; Disney 530,000; Google 767,000. What’s yours?

United Airlines definitely sucks, but I’m not sure they are a standout in the lousy industry they’re a part of.

Amazon’s SMS Buying Service: Jam Cell Phones or Get Better Market Intelligence?

I read with interest in TechCrunch that Amazon is launching an SMS buying service.  If you have a cellphone, you’ll be able to text a name, a description, a UPC, or an ISBN (Library of Congress book number) and get back search results from Amazon.  If you like what you see, you can elect to purchase and get a callback from Amazon to complete the transaction.  As TechCrunch points out, the obvious application is comparison shopping when you see something you like.  Got a book at Barnes and Noble?  Check it on Amazon and order it there if the price is better.  I already use Amazon frequently to check prices when ordering online.  A certain percentage of the time, their price is better and I am diverted there instead.

It’s a clever idea, although I hate the SMS interface.  I suppose their assumption is if you have a phone capable of a more powerful UI platform you’ll just go to the web site.  It does make me wonder, though.  Retailers typically hate comparison shopping.  Those that are in the low cost provider niche may offer price guarantees, but that doesn’t mean they like to honor them.  The ubiquity of contact makes it almost a certainty customers can have access to the lowest price quotes wherever they go.  It makes me wonder whether some retailers won’t decide they want to jam cell phones ala some movie theaters to stop the practice.  After all, having paid for an expensive bricks and mortar presence which favors the spontaneity of browsing, now they have to suffer the indignity of having defeat snatched from the jaws of victory just as they’re about to make the sale. 

As pricing information becomes more available, the friction in the markets will reduce.  Retailers can find themselves less up to date on pricing than their customers, which is a dangerous place to be.  It will be absolutely essential for retailers to have great pricing intelligence that operates in real time.  Imagine what a great impression it would make if the service was tied into the point of sale terminal.  You walk up with your purchases and the clerk informs you with a smile that several of your items are being marked down on the spot in keeping with the retailer’s, “We bring you the best value,” policy.  It wouldn’t take much of that to make me loyal for life, how about you?  There are companies in this business of providing such pricing intelligence.  RivalWatch is one such and claims to have 12 of the top 15 online retailers as customers.  Such services are quite different than shopping bots because they’re providing intelligence to retailers and are focused on being accurate more than letting resellers buy placement or play other games with the integrity of the data.

It will be an interesting arms race to see whether outfits like RivalWatch can keep access to critical data they need to deliver the information.  After all, retailers are not incented to let such information out to a service like RivalWatch.  Many higher end markets go out of their way to limit the availability of pricing information.

Progress marches on.