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Predicting winning products (first appeared in InfoWorld)

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Among the many careers I want to try before I die — televangelist, rock star, college bar owner, psychic — is founding an organization to help a neglected group I’m part of. I’ve been planning it for some time: Sarcastics Anonymous. I’ll start the meetings.

“Hello, my name is Bob and I’m sarcastic,” I can hear myself say.

“What else is new?” I hear the assembled group respond.

I’ll probably never get SA off the ground. I need a 12-step program, but I’m stuck at two: (1) Notice something; and (2) snicker at it.

I need to stop before I sneer again. I’m especially vulnerable to self-improvement books. I want to write The Three Habits of Somewhat Effective People, and a satire of Life’s Little Instruction Book written in the mangled English you find in the instruction manuals of some Japanese products.

Most of all, I want to write When Good Things Happen to Bad People and its sequel, When Good Marketshare Happens to Bad Products.

Ever wonder why bad products win? The quadrant charts beloved of expensive market research companies don’t explain it. Neither does product quality, except to break a tie, nor customer stupidity.

Three factors determine the success or failure of any new technology product: What it will do for its customers; its affordability or lack of it; and how much disruption it causes. Here’s how it works:

Customers: Customers make buying decisions, as opposed to consumers, who make use of products. The two are distinct. For a new product to succeed it must do something useful for the customer … in other words, the customer and consumer must be the same.

Think about the ill-fated OS/2 in this light. IBM defined the IS director as its customer, positioning OS/2 as a stable platform for client/server applications. The customer wasn’t the consumer. That was the end-user, for whom OS/2 provided negligible benefit.

Affordability: New products are risks. High prices make them riskier. Consider Lotus Notes, so expensive in its early, critical years that “Doing Nothing,” its only competitor, had about 50 times more market share.

Disruption: Disruptive products, those that don’t get along well with the installed base, are guaranteed losers. Bet against them.

There are two ways new products can be non-disruptive. One is to avoid touching the installed base. Early PCs were like this. Alone they sat on end-user desks (end-users were both customer and consumer for these affordable devices), connected to nothing.

The other way to be non-disruptive is to integrate smoothly into the existing environment, creating a smooth migration path. The early NetWare, for example, was invisible. F: behaved much as the C: end-users already knew; LPT1: simply went to a better printer.

Windows was another spectacularly successful example. Version 2.0 looked like a GUI toolkit to developers, saving them work. End-users didn’t even have to install it — it shipped as a run-time environment with Windows applications, loading and unloading with PageMaker, Word, and Excel. Version 3 remained non-disruptive but in a different way, running DOS applications transparently instead of only loading when needed.

Oh yeah, those versions logged onto NetWare just fine — mostly, they didn’t know it was there.

Compare Windows with the early OS/2, vying for control of the GUI operating system market space. OS/2 made you throw out your hardware. IBM told you so, hinting broadly that OS/2’s true power couldn’t be unleashed without Micro Channel. Your software? OS/2’s DOS “compatibility box” was useless, so you had to start over with a new OS/2-specific word processor and spreadsheet. Log onto NetWare? Sure, using a new, immature technology, not the tried-and-true drivers everyone already knew.

(IBM did a great job, though, compared with Next. Next had no identifiable customer or consumer, cost a ton, and integrated with nothing at all. It had “Market Failure Guaranteed” stamped on the side of every box.)

“What makes you the expert?” I hear some of you ask sarcastically.

Nothing. I’m applying a old, well-worn marketing principle: Make buying from you easy.

So don’t sneer at me — save it for the venture capitalists who squandered billions ignoring this simple rule.

A fool and his money, after all …