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Spillikins №159. There is a buyer for any merchandise

The last week was rather quiet: Sony closed the Sony Ericsson deal which is now fully incorporated into Sony, Google approved of Motorola Mobility acquisition.

Last week I kept thinking about a conversation I had with a friend of mine who tried to convince me that one of the new products of a major company is doomed to fail. Who was saying that while playing with an iPhone 4s in his hands he previously had given the same prognosis. That conversation gave me a topic of discussion:

The Buyer Always Chooses The Best

If you spend just one day in any consumer electronics store you will understand how different all buyers are and how much their views differ on what's good and what's not. In my work I come across all sorts of opinions. Opinions you may come across on the web differ slightly from ones you might hear in a store due to life style differences and other factors. But those differences have been evening out lately because more and more people browse goods on the web first. Everyone has got an opinion and interests that is why even a smallest comment may cause a 'holy war' i.e. the situation where everyone keeps defending his opinion and never listens to what other people may have to say. People don't try to find the truth in such discussions, they merely try to protect their life styles and views. The truth in this case stands for a person's arbitrary choice. It is meaningless trying to assess a choice without a proper context. For example, John Citizen spent a certain amount of money on a phone under a certain brand. But what is Mr Citizen? What does he do? How many phones has he got? For what purpose did he buy this particular phone: phone calls, web browsing or something else? Does he use phones to show his social status or is it completely irrelevant for him? There are many factors that affect his choice and there is never a single answer to why he purchased that phone.

Fortunately, every person is different as well as his knowledge and skills. Unfortunately for manufacturers, there is no secret formula that would make people buy only one brand of goods. A few years back Apple dominated the music player market in the US its share reaching 80% but this example only proves that it is impossible to completely corner the market. There is always place for alternatives and there are always different opinions.

These speculations might be trite and most people understand very well what I am trying to say. But when it comes to the actual choice people are no longer consistent and make different conclusions and thus different choices. I want to give a typical example of a logical chain: manufacturer 'A' is releasing a new version 'X2' of a popular product 'X'. the manufacturer also needs to replace 'X' on the market and releases 'SX' the purpose of which is to be very affordable and attract new customers.

Users of 'X' begin to discuss the new product and make very similar comments: most of them do not want to switch from their 'good X' to 'bad X2'. Because they see that the specs are mostly the same or worse and the price at the release time is going to be the same (few remember that since 'X' has been out for a year it is now cheaper than 'X2'). Most 'X' users say that they don't like 'X2' but when they begin to talk to 'X2' users who also voice their discontent for their new purchase they fall into a logic lapse because they notice similar interests, common goals, myths and life styles. The only logical corollary they can make is that 'X2' is unsuccessful and doomed to fail due to its lack of certain specs, unusual design (or too much the same design) or just a bad name. They name thousands of reasons for its failure. Apple iphone3Gs and Apple iPhone 4s were among products that caused an avalanche of critique and failure forecasts 'because they brought nothing new'. But we know very well that these two proved to be very successful and popular.

Another example are Fly phones. This brand is well known in Russia and not so well in other countries. It is a minor manufacturer with a great variety of phones with a good price to quality ratio in the low and mid price ranges. According to the logic of people I communicate with these phone simply cannot be sold. None of my friends owns a Fly phone and even if they have heard of this brand they do not understand why someone would buy a Fly phone. As far as my social circle is concerned the Fly brand does not exist. However, it is number three manufacturer on the Russian market with 8% of total market sales behind only Samsung and Nokia.

As you understand, the context of a purchase is of utmost importance when it comes to assessing the future success of a product. Back in my X/XS/X2 example the logical lapse follows the media. Users of X who actively discuss it and are loyal to the manufacturer are the first to learn about X2 release. They don't like X2 for objective reasons – they compare the quoted specs and see its no better than than X. In such cases people rarely consider the price – it seems apparent that users of X will never buy X2 and in 99% of cases it is true.

Manufacturers are wrong when they think that a merchandise will sell just because it's new. However, proper marketing can allow you to sell all kinds of goods. For example, Samsung sell Android and Bada smartphones and many models are very similar except Bada phones are about 10% cheaper and both kinds are popular. There is a buyer for any merchandise. And every buyer has got valid reasons to back his choice.

I hear a lot arguments pro every operating system and they are all right in a certain context or for a certain social group – we are all very different. It is very hard to understand desires of a man who lives an entirely different life from mine. For example, in the south of Russia Nokia phones are very popular and the reason for this is not just the tech specs but also the fact that Nokia phone trials (360 panel) take place in the Russian south. Every participant receives 1000 RUB ($35) every six months for using a Nokia phone. It drives many people to try a Nokia phone to get those $70 a year. I talked to participants and learned that many use these Nokia phones as a second or even third phones. As a result polling these people cannot give you adequate information on users as the survey itself affects results.

A modern merchandise is not just specs and price. For many users the popularity of a brand as well as its reliability, familiarity with it and the social status of its users are also very important. These are the main reasons why HTC that manufacturers very good smartphones has not been able to hit the mass market. HTC's main problem is their inflated model range. In the beginning of their expansion to the mass market HTC managed to appeal to hi-tech pioneers but failed to cross the bridge to average users and other social groups. Then they had a humble attempt to attract people with a music solution but it was not much good. HTC's main problem in 2012 are the wrong positioning and PR their failures have nothing to do with technical faults. The company understand it and they are trying to create new positioning plans and new naming and promotion strategies as the recent leaks reveal.

Let's now look at this from another angle and consider Samsung Galaxy S2, Galaxy nexus and Samsung Galaxy Note. Among these three Galaxy S2 is by far the most successful and in terms of sales it is only behind Apple iPhone. With its excellent price to quality ratio it is a really good purchase. This considered the question arises: why Galaxy nexus and Galaxy note are also very popular? The fact that Nexus is the first phone with Android 4 on board adds to its popularity (in Russia there is also Huawei honor with Android 4 OS available and it costs twice less but very few know about its existence). Galaxy Note has a number of technical differences from S2: the big screen, a bigger battery and a pen that allows you to draw. However, the big screen is a disadvantage for many users.

These three also represent a classic case of info distribution: Galaxy S2 users are the first to learn about Nexus and Note and pay attention to the news about them. They see that Galaxy Nexus is not as good as their S2 (e.g. the camera) so they start asking the manufacturer about when they are going to receive the OS update. They see no point in buying Nexus as the update will give them all the advantages of Android 4 and they are ready to wait for it. And although a very small group of S2 users switched to Nexus the logical strategy for S2 owners is to wait.

It is a different story with Galaxy Note and a very considerable group of S2 owners switched to Note. Why? My guess is the big screen of Note and a bigger battery with all the specs of S2. The pen input was an insignificant but a pleasant bonus. This group were already familiar with the product they merely switched to its enhanced version even though the switch was rather pricy. These people usually leave very positive comments about Note.

A very small number of people buy Note because of its pen and the ability to draw. And usually these people never owned an S2. It is for them Samsung is paying for all the ads focusing on this drawing feature. Once again, it is all about the context and positioning, how well the manufacturer can promote the strong sides of their products. This topic deserves a separate article and I can remember a few stories when the right positioning made all the difference while the wrong one resulted in poor sales. Mu advice for Nokia and their marketing experts before the N8 release was to position this phone as the ultimate and unprecedented photo solution instead of focusing attention on the fact that it is the Symbian flagship and the future of the company. They certainly mentioned the phone's photo qualities but as a minor advantage telling about it after saying it was a Symbian^3, that it had a unibody, a good screen and only then they were getting to the camera. So instead of focusing on the mass market they were addressing Symbian fans. Only six months after the release and a 30% price cut Nokia changed the positioning and began promoting N8 as a photo solution. But it was too late as they had already filled consumers with all sorts of promo noise and they were not paying attention to this phone anymore.

It is all about the context. Just as the saying goes about the right place and the right time: the context is what guarantees success. Any man can do a lot better in the right place and in the right time. The market context is created by users and manufacturers (by means of marketing and positioning). Before saying that product 'A' is bad we should think about situations in which it can work for some people. Can an ad campaign help it? Or may be price dumping? What happens if a minor manufacturer releases something similar? And so on. Always think in context and never underestimate it. Context determines success. Never assess a product's market future based on your arbitrary opinion. A product is bad when it fails to compete with similar solutions of other manufacturers. I remind you that a buyer always chooses the best. The best for his life style and his understanding of what is a good product. There is no universal formula to make a popular product as well as there are no perfect products but there are those who strive to make one.

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Android 4 Update: Motorola Version

Representatives of Motorola decided to share their vision of Android 4 update process and the news is not very positive as some devices will get an update in spring (no sooner than April, but it will probably take more time). Interestingly, the manufacturer published the graphic image describing the whole process. It gives an excellent insight into the market situation.

During Evaluation & Planning a decision is made if the software update is required and if it has any flaws. The blueprint from Motorola lacks the key factor of time when decisions are taken. This stage takes up to a fortnight and consists of feedback from engineers (possibility of update and technical limitations) and marketologists (impact on current and future products). Two weeks is an optimistic scenario and usually the decision is passed on several months after.

Then comes development. Here everything depends upon the amount of work required (more add-ons need special solutions, which takes longer to accomplish). Traditionally this process continues for 1.5-3 months, but it also depends upon the project priority level and other related factors.

Stage three is testing. As far as every handset has different carrier versions each partner needs to test its version, which requires from 2 to 4 weeks. Stage four is making the firmware available for download.

As we see the timeline is present only for the second stage and it can be influenced by technical issues and carrier test time. It is the best explanation why Android 4 unveiled in November will appear in devices only in March and April of 2012. This time was needed for development and testing. The only exception is Huawei, which did its best to deliver the latest Android version to Honor several weeks ago. It is the second company in the world to offer Android 4.0 now, so it is more of an exception.

Every time you see a bug in the OS, which you think takes a developer 5 minutes to solve it is necessary to understand that on a corporate level decisions take longer time. Five minutes can often be transformed into five months. Changing the keypad languages on Symbian with one touch needed three years and a half. Moreover it was a high priority task, so the issue is very complicated and time consuming.

ОзнYou can get the full list of updates for Motorola products together with the appropriate timeline here.

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MediaTek Makes Android 4 More Affordable

Google planned Android 4 to run on high-tech solutions, especially as the interface uses a graphic accelerator for animation. MediaTek decided differently though, because secondtier manufacturers like Android 4 too, but suffer from the lack of cheaper offerings. In order not to give the entire market to Qualcomm MediaTek managed to come up with MT6575 chipset. A one core A9 (ARM) processor of 1 GHZ is complemented with the Power VRTM SGX Series 5 video accelerator. Among other features we have the support of screens of up to 960х540, 8 MP cameras, dual SIM cards and video playback of up to 720p. In March phone manufacturers will get the chipset for models priced between 200 and 300 dollars.

In fact by September we will get many accessible phones on Android 4 and each will have strong points. The second part of the year will be dominated by this version of the OS. The development time is growing though, because Android 4 was first shown in last October, but will hit shelves only in spring and will gather strength by the end of 2012. The period of time between announcements of new OS versions and first models is growing for every one, but iPhone. Leading manufacturers have both advantages and downsides. On one hand by the time consumers snap up first models they are well informed, but unfortunately second tier manufacturers can prepare their answer too, which boosts competition among Android handsets (it is good news for Google, but not everyone can keep pace with the competition).

This week we heard about Android 5, which allegedly should be tablet oriented, which is not logical. Android 3 HoneyComb was a necessity and led to a serious fragmentation. All next versions will be universal both for tablets and phones. At the same time Android 5 will have many standard features geared to tablets and phones with dock stations. Gossip about Windows tablets capable of double start and instant switch to Android is too far fetched at the moment. Android 5 will have many ideas implemented by Motorola in the first Atrix, when during the connection to the dock station with a large screen the browser will move into the full screen mode. Subsequently, there will be more apps combining user data with different capabilities depending on the size of a gadget/screen. Insert your phone in the dock station and the desktop software becomes available. Use a stand alone phone and you go back to the mobile software version.

This is why some say that Windows tablets will have Android (in fact these are apps available today, but not united in one shell). Such an approach is hardly ground breaking, because Apple attacked Microsoft with iTunes first and Google will probably follow suit.

What we can say now is that new Google software will require 6 to 7 months to move from announcement to implementation in commercial handsets. That is why a new approach will be introduced: an announcement of a model 2-4 weeks prior to shipments internationally. HTC, Samsung and LG will do that, but Huawei will show Ascend D1 only in December of 2012. It is a nice statement of intent for Huawei, especially because dual core solutions offer value for money and will appear pretty soon.

P.S. Have a nice week! I will be away during the next seven days and am not sure the Internet connection will be reliable, but I will try to end several important articles, so stay tuned!

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Spillikins №159. There is a buyer for any merchandise

Contents:

The Buyer Always Chooses The Best

Android 4 Update: Motorola Version

MediaTek Makes Android 4 More Affordable

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