The Problem with Bundling
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On Friday I spoke with two product executives from a major OEM about some forthcoming new PCs and notebooks. During the conversation, I asked about their Windows Media Center strategy. The OEM no longer has one, and Vista integration is the reason. |
The response is surprising, because Media Center integration into Vista was supposed to benefit Microsoft, its customers and partners. But that's not how this OEM sees it. The reasoning? The distinct SKU's disappearance makes Media Center differentiation more difficult among OEMs, so there is no real competitive advantage. The product executives expressed concern that Media Center promotion for the OEM's products might benefit competitors.
The conversation was a broad indictment of Microsoft's whole Vista SKU strategy. Rather than differentiate products around Vista SKUs, the OEM has instead returned to emphasizing performance metrics and made product design a greater priority. That's opposite the intention of Microsoft's Vista SKU strategy, which was supposed to encourage greater differentiation around operating system capabilities.
Before Microsoft finalized its Vista SKU strategy, I recommended going out with one version. At the time, I was working as an analyst and Microsoft product managers sought my advice. My thinking: Consumers buying at retail could get the one Vista version and even businesses could do likewise but through volume licensing. OEMs could license blind SKUs and even mix or match them, so that they could differentiate based on functionality. OEM pricing would be based on the features picked from the Vista menu, so to speak.
So, an OEM could release a Tablet/DVR hybrid with Tablet PC, Windows Media Center and even Windows SideShow functions for one price from Microsoft, but pay something less for the core operating system without these functions. The idea is to spur innovation in design and functionality around the operating system while creating more differentiation among PCs.
Microsoft chose a different approach, one that essentially made Media Center and Tablet PC functions invisible within the operating system. So, Vista Business has Tablet PC functions, which are wonderful for tablet users but useless code for anyone else. Maybe a different SKU strategy would have worked better. But who can say?
The invisibility of these functions also highlights major shortcomings of Microsoft's bundling strategy: Too many functions are too hard to find and they're even tougher to sell. Media Center had identity as a separate SKU; it's now lost within Vista Home Premium or Ultimate. Separate rather than integrated is the better way, or, if integrated, then branded is a necessity.
Apple has found better balance than Microsoft. Apple's major digital applications ship with new Macs, but as a separate suite rather than integrated features. Apple also brands some Mac OS X features, which are then more easily marketed than comparable Vista functions. Apple's search feature is Spotlight and Vista's is, well, Search. Mac OS X backup function is Time Machine while Vista's main counterpart is Backup and Restore Center. And so on.
Microsoft's approach is to integrate into Windows a bunch of nondescript features. But the approach gives them little distinct identity and makes them more difficult for customers to find. That said, there are signs of life with, eh, Live. Through Windows Live, features such as mail, messaging, photos and some others now have distinct identities and even some branding. I say some because Windows Live won't win any branding awards. From a marketing potential perspective, Windows Live is death. It's a tough sell, short of the "Windows" brand connection.
Some Microsoft partners are much better at marketing integrated products than is the software giant. For example, from one perspective, printers are integrated products. From a brand and revenue perspective, the essential component is the ink. Printers are increasingly more capable while costing less. But the ink costs a whole lot more, because manufacturers have adopted a kind of razor and blades model. Companies like Gillette charge more for and make more from the blades than the razors. The same could be said about printers and printer ink.
I recently bought an Epson RX680 all-in-one printer, scanner and copier for $150 at the local Fry's Electronics. Six replacement cartridges cost more than 80 bucks, or more than half the printer's cost. For some printers selling for under $80, replacing the entire printer would cost less than buying more branded ink.
To differentiate and to compete against cheaper, third-party inks, some printer manufacturers brand their inks—Claria for Epson and Vivera for HP. Epson and HP give their inks brand identity and emphasize the value of their inks for providing vibrant color photo prints.
The point: Integration doesn't need to be a problem, but Microsoft has made it one by the way it bundles features into Windows. A year ago, Media Center was a clearly identifiable Windows sub brand. Now, it's nearly invisible. That's too bad, because Vista Media Center is a great improvement over its predecessors.
Comments (19)
Completely agree with your view on bundling their functionality, however I am a tablet user (currently on XP) and I was always a little bummed that I couldn't also have media center- I assume that if your strategy had been used there still wouldn't be a solution for people like me who want a tablet and media center solution in one.... however having said that I just went and bought a new media center PC (that's what I am calling it in my head, it has scart, component, HMDI, Bluray, HDDVD etc for 600 sterling) which runs Vista. This computer alone is proof enough for me that *SOME* OEMs are pushing the newer features, companies like Dell are taking longer but I think this being Vista's first holiday is why we're only seeing it now. Dell XPS One? The new lattitude tablets with multi-touch? HP's media smart TVs with built in media center extenders? The manufacturers will get there... hopefully.
Posted by northerngeek | December 10, 2007 5:25 AM
The discreet SKU's disappearance makes Media Center differentiation more difficult...
Shouldn't that be discrete as in "distinct, unique" rather than "restrained, non-obtrusive"?
Posted by SyntaxNazi | December 10, 2007 6:56 AM
XP MCE was a visible "brand" when OEM's replaced XP Home with it as the default SKU. However, the majority of those buyers didn't know they had a "Media Center" application or that it is anything special.
The problem is not bundling, it is the lack of marketing and overall direction.
Creation of any type of bundled will just alienate those who did purchase Vista with the expectation of using the bundled applications. Bad idea all around.
Posted by Chris Lanier | December 10, 2007 8:24 AM
Shouldn't "discreet" be "discrete"; that is, not "unobtrusive" SKUs but "separate" SKUs?
Posted by Arthur Norton | December 10, 2007 9:11 AM
Microsoft needed to do things with the Tablet functionality
1) Make the basics available across all Windows SKUs ie reading and basic editing of ink. Creation of ink in a useful sense requires higher end hardware such as a digitiser that captures at a high enough rate for sketches and writing to be feasible.
2) Drive home the understanding that the Tablet features are an underpinning to making PCs more widely useful in places other than the edge of a desk. 5 years after Tablet launch I should NOT be reading reviews that assume PCs are glorified typewriters, and that handwriting is meant to compete with typing long documents. As much as any analyst writing such reviews should be fired for belonging in a 19th century mindset, Microsoft and the OEMs are failing to take advantage of the lead they have over Apple in this space.
Posted by Mike | December 10, 2007 11:28 AM
True or False: E-Waste
http://www.cnn.com/2007/WORLD/asiapcf/12/03/eco.myth.ewaste/index.html
(CNN) -- True or False: Switching from a Windows-operated computer to a Linux-operated one could slash computer-generated e-waste levels by 50%.
The answer is: TRUE
A UK government study in late 2004 reported that there were substantial green benefits to running a Linux open source operating system (OS) on computers instead of the ubiquitous Windows OS, owned by Microsoft. The main problem with Windows users was that they had to change their computer twice as many times as Linux users, on average, thereby effectively creating twice as much computer-generated e-waste.
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Which also means that a Linux computer has a usefull lifetime twice as long as a Windows one. A real savings in dollars on hardware, time, and software costs.
Posted by chips | December 10, 2007 12:35 PM
And no discussion of Windows is complete without this:
Top 10 Worst Computer Worms of All Time
http://encyclopedia2.thefreedictionary.com/Top%2010%20Worst%20Computer%20Worms%20of%20All%20Time
And yes, only Windows can run these!
Posted by chips | December 10, 2007 12:40 PM
I'm surprised chips isn't on that list. His mindless spewing runs on all platforms.
Posted by Mike | December 10, 2007 4:36 PM
Chips:
Did you notice the worst worm on that list was on UNIX only?
1. Morris Worm (also known as the Great Worm)
....... The result was increased load averages on over 6,000 UNIX machines across the country which caused between $10,000,000 and $100,000,000 of damage.
Posted by Mike | December 10, 2007 4:39 PM
Chips
I think that you will have actually "read" all of your links mate !!
And Mike ...good on ya mate !!
He "actually" read it !!
Now what was that you were saying about how secure Linux was compared to Windows Chips ???
That Windows is a magnet to Viruses.
I said it before that I did not believe viruses, etc. were just a Windows problem, now you have done yourself in Chips with your "OWN" research. And what I can't get over is that the NUMBER ONE worm affected "UNIX" and you still put the link in here.
Like I said you either didn't read your own story or your an idiot, most likely it is both !!
First it was the "Skype Me" article here where you lied, now this. You are becoming more and more discredited ... and by your own hand !!
Posted by Neil | December 10, 2007 6:00 PM
Chips
I noticed that under the heading of "Microsoft plays for the third screen" you actually acknowledged that you were caught by Mike, too bad that you didn't acknowledge under the proper subject (This Page inotherwords).
And besides that you never acknowleged that you lied on the "Skype Me" article that Joe did, did you !!??
Posted by Neil | December 11, 2007 12:38 AM
Bundling, there's nothing that spells failure for the new operating system than this article;
Toshiba Satellite offers both XP and Vista at once
http://www.electronista.com/articles/07/12/11/toshiba.satellite.t31/
Quote from the link:
"Toshiba today made an unusual concession to anxious business travelers with the Satellite T31. The 15.4-inch Japanese system is one of the few computers from a large manufacturer to ship with both Windows Vista and its XP Professional ancestor in the box; while only one is installed by default, owners can either choose to keep the newer OS or revert back to XP should their work software or personal preferences keep them from running the new code."
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Simple translation, if (most likely) Vi$ta isn't compatable with your old software, you can downgrade. Now this has been an option for business Vista version before this. So is this now an option that we will see soon for the consumers? What a deal, buy a Vi$ta computer and we will let you downgrade to XP.
This is a clear admission that Vi$ta is a train wreck.
Posted by chips | December 11, 2007 4:11 PM
What Are Viruses and Worms, and Why You May Be At Risk, Even If You Think You're Safe
http://ezinearticles.com/?What-Are-Viruses-and-Worms,-and-Why-You-May-Be-At-Risk,-Even-If-You-Think-Youre-Safe&id=684776
Quote from the link:
"By some estimates, there are over 100,000 viruses which specifically infect Windows PCs. These specific viruses cannot infect Linux or Unix machines, or Macs. There is literally one virus (at the time I'm recording this) which can infect some Macs running OS X, but it is pretty much what they call a "concept virus" which isn't likely to spread "in the wild."
So if you use a Mac, you are a lot safer than your friends who use Windows. But just because there aren't any Mac viruses now, doesn't mean someone won't develop one in the future. It is harder to do this for a Mac than it is to do for a Windows machine, because of the way the Mac software is designed, but it's hardly impossible.
On the other hand, Symantec (who makes Norton Antivirus) estimates that 91% (yes, that's ninty-one percent) of Windows computers are infected with some malicious software. Although this estimate includes adware and spyware (which I cover in a different chapter of this report) that's still an incredibly high number."
Posted by chips | December 11, 2007 4:53 PM
Chips
You just won't give up will you ???
Already you are wrong in your statements ...or should I say YET AGAIN !!!
On the hand you state "These specific viruses cannot infect Linux or Unix machines, or Macs."
THEN YOU SAY
"There is literally one virus (at the time I'm recording this) which can infect some Macs running OS X"
MAKE UP YOUR MIND CHIPS !!!
This is really fun to see you making mistakes left, right and centre when you are trying to get out of what you have already said ! Let alone these statements now.
As for your Symantec part, I am sure that Symantec are not saying that pc with Norton installed still have malicious software running on them. If they did it wouldn't say much for Norton would it.
No ... these pc's are totally "unprotected" and so they get malicious software on them.
It doesn't matter whether you have a Mac, Windows or even Linux computer there will always be the reality of virus writers ready to damage / takeover your computer for their own ends.
And for people like Chips to say "Na ..you don't need protection" is really head in the sand stuff for these days. There is an old (but still very relevant) saying "You can never be too careful".
As Chips himself states on the first line of his comment "What Are Viruses and Worms, and Why You May Be At Risk, Even If You Think You're Safe"
Posted by Neil | December 11, 2007 5:39 PM
Chips,
I think it's a risky argument to say Windows is at fault for the number of viruses. While i have no figures and no idea what the ratio is, i'd be interested to see how many of these malicious applications require user-input.
Ie. if something malicious can execute completely silently without being deliberately run then sure the vendor of the environment (OS, web-browser, email client, etc) should be to blame.
But if it's just a gator-esque spyware program that someone knowingly (but uninformedly) installed, the how the hell could it be the environment vendor's fault??
As for the first category of malware, i think microsoft is no saint but also no worse than many others - Apple with it's endless Quicktime exploits as a random example.
Also let's not forget that quite a few (not all, quite a few...) of these slient-but-deadly exploits and holes are due to Microsoft targetting it's Windows also to coporate customers with a big emphasis on remote management and thus having to make trade-offs to facilitate that...
Posted by whatever | December 11, 2007 7:38 PM
Quoting Neil;
Neil :
Chips
You just won't give up will you ???
Already you are wrong in your statements ...or should I say YET AGAIN !!!
On the hand you state "These specific viruses cannot infect Linux or Unix machines, or Macs."
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read the comment again, its a quote from the link. When will you ever get anything right? No wonder you love Microsoft, the company as disfunctional as you are. learn how to read the links, I thought english was required down there. Agrue with the link, as those quotes are from the links.
guess you just want me to post more links for your enjoyment, as its pointless to try to talk to you, since you insist on twisting all my statements, and promoting M$ above all else in life.
Posted by chips | December 11, 2007 8:02 PM
You know, it was refreshing to have, albeit briefly, people making comments relevant to the article's thesis. It actually added to the article as people discussed the question at hand. Sadly, the usual suspects returned and as usual started spamming the site in support of or against Linux. Nonsense like that does not make people more inclined to consider Linux. Nonsense like that only makes people inclined to either rapidly scroll down past the bickering and the arguing, or away from the site as a whole.
Posted by Wes | December 12, 2007 5:45 AM
I use a Mac for 90% of my work. It is fine, speedy, pretty trouble free.
I use a Dell with Vista for the other 10%. Wanting to knee-cap the perpetrators of the new OS from Gates might express my displeasure.
Posted by sohbet odaları | January 4, 2008 2:25 PM
I use a Mac for 90% of my work. It is fine, speedy, pretty trouble free.
I use a Dell with Vista for the other 10%. Wanting to knee-cap the perpetrators of the new OS from Gates might express my displeasure.
Posted by türkçe mirc | January 4, 2008 2:27 PM