Wii R Number One!

Today I spent an hour shuttling between two Best Buy stores in hopes of scoring a $250 Wii console for my niece and nephew. Not having bought a videogame console before, it didn’t occur to me to show up at 8 a.m. for a store that opened at 10 a.m. At both stores we were too far back in line to get one of the allocated units (125 and 80, respectively).

My 9-year-old wanted to know why a year-old console was in short supply, and I couldn’t answer — other than the Wii is obviously this year’s hottest Christmas gift. Reporters are writing stories about the shortage while consoles are going for twice the asking price online. Unlike in college football, it’s very clear who’s number one in the latest round of the videogame platform wars. (Even if Sony beat Nintendo for one month in one country).

The customary lesson from the VCR wars and various generations of videogame platform battles is that time to market and software are everything. The conventional wisdom is: line up content, and the customers will follow. But wandering through Best Buy (while my wife waited in line), it was obvious that there was more than enough content for Xbox 360 and a fair amount for PS3; in contrast, the Wii content was selling out. And some of the most important content is available for all platforms, like the Guitar Hero that my young relatives don’t know they’re getting to go with the Wii they don’t know they’re getting.

Instead, the Wii was the surprise winner against two behemoths fighting each other over gigahertz and polygon rendering frame rates. The Xbox was even first to market this time. Maybe price was part of Wii’s success, but my sense is that the motion-sensitive controller and fun games — i.e. innovation — were what made the difference.

So the next time someone assumes that network effects are the be-all and end-all, they should remember the Wii and the idea that (as Liebowitz and Margolis reminded us) sometimes the better mousetrap actually does win.

Would-be iPhone killers

While I’ve generally been bullish on the iPhone, the one part of Apple’s strategy I've questioned is the decision to grant AT&T an exclusive in the US (and other carriers overseas). Sure, the exclusive guarantees Apple a piece of the ongoing revenues in the US and Europe.

But excluding three-fourths of the US market (less in Germany or the UK) guarantees that competing carriers will be aggressively promoting competing products rather than selling more iPhones (as has happened for Motorola, Nokia and others when they had a hot product available across all carriers).

The Christmas season ads seem to be highlighting which phones AT&T’s rivals see as “iPhone killers.” What’s the lineup?

• AT&T (ca. 27% market share) has the iPhone, although the ads seem to be designed (and paid?) by Apple, not AT&T.
• Verizon Wireless (ca. 26%) had been promoting the LG Chocolate (as a music phone) and now is promoting LG’s Env as a web-browsing and messaging device.
• Sprint (falling towards 20%) is now promoting the HTC Touch, a Windows Mobile device from Taiwan (originally in GSM) with its supporters and detractors.
• T-Mobile (11%) is today promoting the HTC Shadow — yet another Windows Mobile phone, but of course has the various Sidekick models to appeal to the teen/twentysomething demographic.

What I find interesting is the carriers are hoping to dethrone the iPhone with wannabes — Microsoft, the Taiwanese and Koreans — not Nokia or Motorola. Yes, LG and Samsung are top 5 manufacturers, but they have been known for their manufacturing and not their software.

While Palm or RIM fans might disagree, overall Nokia seems to have the deepest and most consistent software operation of any handset vendor in the world. Cognoscenti talk about the N95 as the best multimedia phone not made by Apple, but it’s nowhere to be found. Of course, it doesn’t help that Nokia gave up on the CDMA (cdma2000) market and with it Verizon, Sprint and the various smaller carriers who comprise a slight majority of the US market. Since AT&T has no need for an iPhone killer, Nokia doesn’t have a lot of options here — foreclosing most of the market to LG, Samsung and Motorola.

So is this the list of best competitors to the iPhone? Or is it the list of vendors who want to buy market share through co-marketing dollars, price cuts and other incentives to AT&T’s rivals?

End of an oxymoron

Of three doctoral students visiting SJSU to apply for our strategy job, two have presented talks about Motorola: one on the entry of a Motorola battery division into China, and the other on corporate entrepreneurship at Motorola (their internal incubator).

For these two Motorola job talks, at least one wrote in the corresponding research paper

under the leadership of Motorola CEO Ed Zander …

to which I asked “Isn’t that an oxymoron?” On Friday, investors finally forced an end to the oxymoron, i.e. Zander’s four years of leadership in Schaumberg.

Now I’ll be the first to admit that Zander got a bad hand, following in the footsteps of failing nepotism, er, family control and many years of drift in the industry they created (handheld cellphones). But still, in drafting passed-over former Sun Microsystems executives, Google got the better deal. (Perversely, Wikipedia didn’t even list the Sun affiliation of the current Google CEO, so I had to add it).

Will Motorola be able to turn it around? I sure hope so. I got to know their history and their impact upon both U.S. and telecom innovation when researching my dissertation in the late 1990s. It is tragic to see how far they’ve fallen. But, on the other hand, I thought HP had been destroyed forever (through a combination of acts of omission and commission) but Mark Hurd seems determined to prove me wrong.

One last Motorola tidbit. At one point, Motorola had a project to port Skype to its phones. The project was a technical success, but for some reason none of the operators wanted to buy a phone with Skype pre-installed so the project was cancelled. To quote the former project manager (via our visiting scholar who shall remain nameless):

“I went to our own management and they said, no way in hell would we let you do this because our customers would kill us. The operators are fighting tooth and nail from becoming a bit pipe. Imagine one megabye of code, which is what Skype is, destroying a multibillion dollar industry. I was on one call with an operator and he says, ‘We're going to save you time and money. Don't develop Skype.’ ”

Put a Leopard in your tank

All but my fellow Mac bigots can skip the rest of this post. I upgraded my Mac to OS X 10.5 today and had a few observations.

One is that the branding of the software package says “Leopard” with “10.5” in smaller print. I didn’t get the sense that this was true with Tiger (10.4), so I guess Apple has concluded that using the code name to build buzz beforehand creates a brand that’s worth using after launch.

10.5 has brought some fawning reviews but also a few noting the key omissions (notably Classic). Today’s immediate problem was the loss of NetInfo Manager.

Without NetInfo Manager, I had to solve two problems:

• Enabling root access, using the new “Directory Utility” program.
• Moving my home directory — I have multiple System partitions on different volumes, but share the same user directory across these systems. The answer is to use the dscl command to map the user directories.

In our printer driver days, we used to have multiple system configurations installed (it was much easier under OS 7.x-9.x). Still, my former coworkers thought I was nuts to set up multiple configurations on my laptop — in this case, two versions of OS X and one with OS 9.

It turns out it’s already paid for itself. When my 10.4 partition died 6 weeks ago en route to the airport, I switched my 5-year-old laptop back to OS 9.2.2 and then 10.2.8. Rather than drop everything to salvage the 10.4 partition, I decided to wait until I could do a clean install of 10.5, which turned out to be painless (other than the $70 purchase price).

Much as I like Apple’s stuff, they can’t make the hard disk more reliable. And this little episode had a good side-effect: I bought an up-to-date copy of Disk Warrior, which worked like a charm. Even my wife (Palomar’s then project manager and procurement officer) remembered how the product bailed us out of jams in the pre-OS X days. It’s a good insurance policy to have on hand.

Walt says: wait for Kindle 2.0

Thursday the WSJ’s Walt Mossberg reviewed the Amazon Kindle in his main column. (15 years ago, when I was in the computer industry, this was the most influential computer column in the country).

His conclusions: Amazon knows how to sell books and has good partnerships, but doesn’t know how to make hardware.

Amazon has nailed the electronic-book shopping experience. But it has a lot to learn about designing electronic devices.

And, in addition to the dubious idea of charging for free online content (like magazines and blogs), it doesn’t work very well.

Microsoft and some other companies have done very well by selling a lousy 1.0 and a much better 2.0 or 3.0. (Remember, Windows wasn’t usable for anything until Windows 3.1, and the mass adoption started with 4.0 i.e. Windows 95).

Will Amazon get better? Will it stick it out (rather than give up)? I suppose if your business is selling dead tree information goods, you have to do anything in your power to prepare for the day (due to cost or convenience or environmental consciousness) that people stop wanting to kill trees. This would be unlike the (US) railroads, which never prepared for the era when people would decide to spend 6 hours crossing the country instead of 72 hours.