Of mistakes and price wars
Dear Vorticians,
For the first entry in the new Vortex blog I tried to think of a topic that would be dramatic and compelling, memorable to say the least. The result was more than a bit of the old writer's block. So many things on our collective minds these days. Which takes precedence? (By the way, years ago I wrote a rather unpleasant short story called Writer's Block which I'll be happy to email to you if you A) promise not to think less of me - you have to love horror - and B) promise to give me some feedback on. As always, you can reach me here or by emailing jgallant@vortex.net)
On greater reflection, it struck me that I was over thinking this blog launch. The mission of Vortex Digest hasn't changed, just the medium (and, no, the medium is not the message, unless you are blog crazy.). The blog is just the next phase of our ongoing dialogue, which began nearly five years ago when the weekly Vortex Digest was launched (that's nearly 250 Digests, if you're interested.) And what better way to celebrate that next phase than sharing some reader feedback. Over the years, I've been blessed with a constant stream of opinion and ideas from all y'all, and that has made this task very rewarding indeed.
So, let's begin with this query from Vortician Brigid Fuller, who wrote to suggest: "John, maybe you should offer a 'spot-the-error' contest, something to get us to spend hours poring over every word to find the difference between the two copies [of last week's Digest] you sent out. Make it a trip to Hawaii, and I'll get busy!"
Would that I had the resources to grant your wish, Vortician Fuller. But your idea is a fine one, nonetheless. Apologies for the double send last week, but some atavistic tendency took over and forced my hand and brain to collude on an error that made me look, well, dumb. I was writing about the concept of 'software appliances' but, having covered the applications industry for years, I wrote the term as 'software applications' a couple times, which made it look like I had discovered an idea as old as computing itself. Wow, have you heard about these software applications? An eagle-eyed reader spotted the mistake and alerted me literally within moments of sending the first version and I was able to fix it and send out a new version shortly thereafter.
In response to my piece two weeks ago hoping for a price war between broadband providers, Vortician Brian McManus advised me: "John, responding to your latest Vortex Digest comment about the absurd price Comcast charges for its broadband Internet and cable service combo, I thought I’d let you in a little secret – they’ll discount it for you. Last year, my wife was in home budget-crunching mode and said we had to cut the Comcast bill. That, in shorthand, meant that I’d have to part with my beloved broadband or get rid of my movie package – the horror! So I gambled. I called up Comcast and said, 'two people should just not have to pay $120 a month for your services…that’s absurd, I will be switching to DirecTV, so please turn off my service immediately.' I did it, I laid out my bluff; and to my surprise, it worked. The service representative’s response was sweet music to my ears: 'Sir, if we cut your monthly bill in half for the next year, will you keep the service on?' Umm, yeah, I guess so. That was a year and a half ago, and still happily writing that $60 check every month. Just passing on a little tip – it never hurts to ask."
Thanks Brian, good advice. I'd try to bluff but if they call it, I have no backup plan. In the big Texas Hold 'Em game of broadband, I got no red cards and there's four hearts to a flush on the board. Meaning, I've got no DSL in my little chunk of the world to fall back on if Comcast lays down even the 2 of hearts.
Vortician Angelo Santinelli wrote: "John, I‘ve been thinking about your comment regarding the price wars between cable and DSL. While price wars only benefit the consumer and not the companies, I too see this as a good and long overdue trend. The price-per-amount-of-bandwidth war will be the first step in a chain of events that should lead to the consumer actually getting something valuable to do with all that low cost bandwidth.
"The real sign of progress though will be when these carriers begin to hire real marketing executives who understand how to maximize the value of the brand and not simply destroy it. The winners will be the companies that can create 'binding' services for consumers. By that I mean services of high value, and high ARPU, that have high switching cost associated with them. You said it yourself that you’d switch to save a few bucks.
"A reasonable analogy would be to look at the long distance wars of the past. When AT&T first faced competition, they got consumers focused on quality and stability. Quality became the basis for competition. Remember the pin drop commercials? When it became clear that quality wasn’t as much of an issue the battle shifted to price per minute. Later MCI utilized the fact that they owned their billing process, as opposed to AT&T who outsourced it, and created Friends and Family – a binding application with real switching cost. I was consulting at AT&T at the time and I can tell you that they were in full panic as younger customers, with large LD bills, began abandoning AT&T for good.
"If the broadband price wars follow the same pattern, we should begin to see some interesting high value applications that make it more difficult for consumers to merely switch because of price. One critical thing that the service providers lack is the people who truly understand consumer marketing. Once they can attract and retain those types of people things will get interesting."
Vortician Santinelli is right on the mark. Using the cable industry as an example, people don't buy Comcast service or even cable television. They buy the Sopranos, Deadwood, ESPN, HGTV, SpongeBob etc. - they buy the brands they love that are delivered via cable. At first, cable was about picture quality and a wider array of channels. But now, the real money is hooking us into premium stuff that we just can't live without. If a price war forces the broadband providers to focus on the services/content delivered over the pipe, rather than simply the speed or robustness, we all win. (Although we could sure use more speed!)
Thanks Vorticians Fuller, McManus and Santinelli. Be proud to have authored the first Vortex blog entry. (I owe you all a beer for saving me the effort!).
Bye for now.
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Comments
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