Channel Collaboration Brings Wireless Innovation to Market

Sometimes real news isn’t new. Sometimes it’s enough to discover that something you barely noticed has subsequently blossomed.

In today’s New York Times, David Pogue reminds us of a market-making collaboration between two companies more than two years ago. But back in 2007 it was hard to tell how big the collaboration’s payoff would be. Now we know.

The two companies are Apple, maker of iPhones, and Cingular Wireless, a network provider later rebranded AT&T Mobility. Apple had developed “Visual Voicemail,” which would let people check their incoming voice messages by glancing at a list on their phone screen and chosing the order instead of being tied to sequential listening to each message one at a time. No doubt, phone users would love this feature. Problem was, big wireless networks at the time weren’t designed to link with software that converted voice data into visible readouts.

For both engineering and business reasons collaboration was key, and in this case an exclusive relationship between supplier and carrier probably proved indispensible. As Mr. Pogue points out, the engineering costs were too high for Cingular, or any carrier, to absorb without relaible assurances about adequate product sales. In this situation, that was done by gaining sole rights to iPhone’s sales. An exclusive also benefited Apple, which could then concentrate on perfecting a single phone for use on a single network, an approach very much in keeping with Apple’s preference to wait for its pitch then swing for the fences.

Was Visual Voicemail either company’s only reason to go exclusive? I doubt it. But VV probably helped focus executives on both sides to get past the head-to-head negotiation mentality and accent the value for each party of focusing on new solutions and usage experiences for end consumers.

Working together like Apple and Cingular apparently did remains the exception. But intensifying competition in all industries is going to make it the rule. Where relationship exclusivity helped both companies win big, tomorrow’s collaborations will be essential simply to win small.

Microsoft Jumps in to Customer Experience Revolution

Competition in consumer markets is restructuring in daring new ways right now. The more familiar battleground of product against product or retailer against retailer is being trumped by larger contests between coordinated systems.

This new go-to-market landscape has product manufacturers and retail partners collaborating to create new business models that win over consumers from other combinations of players. To beat competitors and gain share, companies are starting to see they must create tighter and more strategic system wide alliances to drive differentiated new experiences for consumers.

And now, we find Microsoft the latest branded product maker to jump head first into this new customer experience revolution. While pundits debate the merits of an idiosyncratic ad campaign, we are very impressed with the company's early forays into go-to-market system thinking.

As part of its new $300 million marketing campaign and image makeover, Microsoft Corp. plans to deploy its own customer-service representatives at retailers such as Best Buy and Circuit City to help people with their PC purchases.
The world's largest software company plans to have 155 "Microsoft Gurus" in U.S. stores by the end of the year, and expand based on the project's success, said Tom Pilla, Microsoft's general manager of corporate communication.

The experts will answer questions about PCs and Microsoft products and demonstrate how the company's products work together -- help designed to get customers "thinking Microsoft."

"Think of that as borrowing a page from Nordstrom, with that retail customer experience," Pilla said, referring to the upscale department-store chain known for customer service...." (Rachel Metz, Associated Press)

I have for some time lamented the absence of branded product manufacturer leadership in growing consumer markets. And their abscence is not only bizarre, it’s the norm. Branded product manufacturers long ago ceded customer experience responsibility and retail system influence to downstream players, helping to fuel these retailers growing power.

So I applaud the company's strategic direction and predict that if they follow up these initial marketplace moves with more, it will fuel what is at best today a brush fire of change in the consumer electronics and software marketplace.

Sears Lays Groundwork for Second Life Investment

Sears has announced plans for an initiative that lays the groundwork for the creation of first major hybrid retail channel that marrys an online fantasy-based marketplace with brick and mortar retailing. And for good reason: NEW RESEARCH FROM MICROSOFT reveals that in-game ads have a positive impact on metrics like brand familiarity, ad recall and ad rating--increasing purchase consideration by an average of 41%.

First, some context. If you're a branded consumer products maker and not familiar with the online "gaming" phenom Second Life you should be; and quickly. We predict a new wave of retailing reinvention as these new social networking and "webreation" (web recreation) sites become more mainstream retailing channels.

Second Life is a 3-D virtual world entirely built and owned by its Residents. Since opening to the public in 2003, it has grown explosively and today is inhabited by a total of 8,679,536 residents from around the globe. The Marketplace currently supports millions of US dollars in monthly transactions. This commerce is handled with the in-world unit-of-trade, the Linden dollar, which can be converted to US dollars at several thriving online Linden Dollar exchanges.

Take a look at an important, low-profile new Sears retailing initiative that is being developed with the Second Life channel option in mind.

Sears has launched a new E-Me online shopping experience for its younger
customers. After creating a personalized E-Me, or avatar, a site visitor can dress it in a wide selection of Sears apparel and shoes, and save the selections in his or her
closet. The Sears E-Me is all about making back-to-school shopping easier for mom and a lot more fun for kids," said Paul Miller, SVP of Direct Commerce for Sears Holdings. "The site also shows moms and kids that Sears has great looks for back-to-school, from The Cheetah Girls exclusive line and colourful camo skorts to hot jean looks and hoodies."

The strategic payoff of Sear's new hybrid retailing initiative will be significant as it builds momentum and acceptance:

"By printing the E-Me and closet and bringing a copy into the store, parents will not only know which clothing items their children want, but they will receive a 10% discount on those items." Hybrid retailing at its best. Anyone who has seen their daughter emerge from an American Gilr store with dolls, doll clothes and matchging child outfits (for 1,000s of dollars of course) knows the power of linking brick-and-mortar retailing to fantasy and imagination.

Software Industry Not Immune to Private Label Threats

While much attention has been given to the acceleration of Private Label strategies by dominant retail companies, the moves have historically been focused on packaged and durables consumer goods. Now there's evidence that branded players should take note of house brand threats in the software business.

Tesco in the UK now offers an astonishingly broad line of house brand consumer software products in six key categories: Antivirus & Antispyware, Internet Security, PhotoRestyle, Personal Finance, Complete Office , and Easy Record.

Planet Retail posts that in the UK, Tesco is rolling out its Tesco Software range with more than 200 new Tesco stores scheduled to have the product on the shelves by yesterday. Launched in October 2006, the Tesco Software range was initially introduced in 150 stores around the UK. Since then 25,000 titles have been sold, and in response to demand, Tesco has increased the total number of stores to 365. The software has been developed for Tesco by Formjet, a specialist in alternative software solutions, who also provide a comprehensive support service. Commenting on the software range Tesco buyer Daniel Cook said "Demand for home computing equipment is bigger than ever, which is why we decided to launch a choice of great value Tesco own range software equipment. We're delighted that the range has proved such a hit, and in response to this demand we're increasing the total number of stores where customers can pick up the popular software."