All Posts in Industry Commentary

|In: Industry Commentary|Last Updated:

An epoch ago, when I worked at the daily newspaper, one of my jobs was pricing “we-prints” — commercial print jobs we ran on our presses for inclusion in the newspaper. By printing an advertiser’s material along with the rest of the newspaper, we saved them the cost of inserting their promotion into it later.

Our general counsel explained the ground rules. Our distribution system, he explained, was a de facto monopoly. Our monopoly position meant we had to cover all of our real costs plus a profit margin — selling below cost would have violated the antitrust laws.

Until now, I’ve avoided writing about Microsoft’s difficulties with the Department of Justice, since this issue doesn’t affect how you manage your IT department. However, it does concern all of us in the industry — and the amount of point-missing and red-herring chasing on the subject seems so excessive that I’ve changed my mind. So here are a few popular ideas about the subject, and why they’re just plain wrong. Caveat: I’m not a lawyer — these are informed, rather than authoritative, opinions.

Popular Idea #1: The only monopolies are created by legislation. Ironically, I’ve seen this printed in the daily newspaper, a de facto monopoly in many cities. Most airports are now dominated by a single carrier. Most desktops run some version of Windows.

This particular bit of silliness is based entirely on ignorance. The antitrust laws were, in fact, created to control the de facto monopolies of the day — big oil companies — and their favorite anti-competitive tactic. Big oil sold gas below cost to drive competitors out of business. Then it jacked prices way up.

Popular Idea #2: We should let the market, not the government, decide. The market has decided. It’s given Microsoft a monopoly in the desktop operating system market, and Justice isn’t trying to reverse that decision. Nothing in any Justice Department action tries to give an artificial advantage to alternative operating systems.

Antitrust laws kick in when significant competition doesn’t exist in a market. IBM has given up on OS/2, Macintosh sales have collapsed, and most software developers publish solely on Windows. The notion that the operating system marketplace is competitive is a fantasy. Antitrust laws apply to this situation.

Popular Idea #3: Microsoft should be free to decide what is part of the operating system. If Microsoft had waited, merging Internet Explorer and Windows Explorer into a single Windows 98 utility, I doubt Justice or anyone else would have taken action.

Internet Explorer isn’t part of Windows 95, though, any more than it’s part of the other operating systems you can get it for. Proof: As astute observers have pointed out, Microsoft categorizes Internet Explorer under Business Software on its Web site. You won’t find it listed under Operating Systems, even as a hypertext link.

Internet Explorer is an application, not an OS function. Microsoft bundled some OS kernel updates and some Internet Explorer functions into the same DLLs. That’s all.

Popular Idea #4: Since Netscape gives away its browser too, why shouldn’t Microsoft? Because of its desktop OS monopoly, Microsoft gets to bundle Internet Explorer into PCs as they ship. Netscape’s customers have to download it. A free market doesn’t ask consumers to make purchase decisions based on the greater good, only their own — and even free, Netscape costs more than Internet Explorer.

The parallel with our we-print situation is exact: in both cases a monopoly in distribution confers an unfair advantage and requires the company with the monopoly to sell its product at a profit.

Popular Idea #5: Microsoft shouldn’t be penalized for its success. Microsoft isn’t being penalized for its success. Should it lose in court, Microsoft will have been penalized for violating the consent decree it signed, and the antitrust laws of this country.

Microsoft’s existence depends on enforcement of intellectual property laws. Just like you and me, it has to obey the others, too — it doesn’t get to pick and choose.

Comments

|In: Industry Commentary|Last Updated:

Last week, as I paid for my lunch, the cashier asked me, “Didn’t you co-author a book on the Internet?”

Celebrity is where you find it. My cashier friend is in rarified company, since the marketing for Selling on the ‘Net (NTC, 1996) has been, shall we say, spotty.

Nonetheless, since I wrote a book I must be an expert, which means I’ve had occasion to talk to business and IT leaders about the Web. Although almost everyone has a Web presence by now, many tell me they “… need to develop an Internet strategy.”

Strategy is good. Substitute any other tool for “Internet,” though, and you’ll immediately spot the problem (“We need a circular saw strategy”). “We need a strategy” is a defensive statement. The last two words of this sentence – “I guess” – remain unvoiced, but they come through loud and clear.

Even though the World Wide Web has been visible to business for about five years — and has been the focus of an extraordinary outpouring of creative energy, not to mention some cash — business leaders still don’t understand how to think about it. And while few dispute the future success of Internet commerce, we have to survive until the future gets here.

Businesses succeed on the Internet the same way they succeed in any other area: By deciding to succeed and understanding what success means. It’s a matter of clear, realistic thinking and deliberate planning. And as with most aspects of business planning there’s no tensor calculus involved.

Creating a Web site has more in common with publishing than with any other mundane endeavor. Like any publication, successful Web sites start with a clear focus and purpose, because if you confuse visitors to your site they’ll leave. Creating clarity takes hard work.

You’ll be in the middle of this discussion, so be prepared to lead it if the conversation gets squishy. Here’s an approach you can use if you decide to take charge:

Step 1 – Establish your business model: A business model states a cause-and-effect relationship in specific terms. Right now, the most successful model is enhancing customer relationships by improving service. Another good model: Suggesting new uses for your products to increase consumption by current customers.

Step 2 – Profile your target audience: An audience profile describes who you want to attract and what they want when they visit. Reading Web demographics and figuring out how to attract “that kind of person” is a trap. You want prospects and customers, not visitors. If you sell office furniture, you may want to attract architects and facilities planners who want advice on office design – teenage surfers are a distraction. If you sell acne medicine, architects and facilities planners are the distraction, unless they have pimples.

Step 3 – Define measures of success: Good measures come from your business model. Although not every cause-and-effect relationship lends itself to direct measurement, avoid simply falling back on measuring what is convenient, such as hits. Measure what’s important, not what’s easy to measure. Anything that doesn’t test your business model is pointless.

Step 4 – Perform a reality check: Is your target audience really going to exhibit the behavior you need? This may come down to arguing or it may involve market research. Just watch out for the we’ve-reached-consensus-so-we-must-be-right fallacy. Automobile makers did this successfully, rejecting online purchasing and instead helping buyers research car purchases.

Now comes all the real work – these four steps are just the start, and don’t ensure success.

In a competitive marketplace, nothing can.

Comments