It's all about the benjamins

I'm preparing presentations for all kinds of sectors on social media strategies and I'm currently looking at market dynamics.  For many years I've said that good marketing on mediocre products always beats good products with mediocre marketing.  I still believe that.  Today, however, I've come to realize something else while watching a Microsoft commercial about why people should buy a Windows-based machine:

A product will succeed in the market because it's cheaper, even if it is technologically inferior, especially in today's economy.

That's the entire message of the commercial and, in the end, it's why Windows-based machines continue to outsell Apple.  And in this current economy, that is the trump card.

In World War II, Germany had superior tank technology.  The were better armed, had better targeting optics, had better armor, better drive trains... they outclassed all opponents.  But when a tank crew got their assigned tank, they were told they had the better machine, but it was the only one they would ever have.  If they lost it, they should die in the process, or expect to get transferred to infantry.

On the other hand, the US had the Sherman tank.  It was OK.  It couldn't beat most of the German tanks one-on-one, but it could handle a 5-1 confrontation, so the US manufactured thousands.  And they made them safe enough that the crews could abandon a damaged tank quickly, go back to supply and pick up another.  Tank crews would always be tank crews.  The US won the tank war through a cheap and plentiful strategy.

In the technology world today, and going back to the beginning of the computer industry, the same strategy is prevailing.  Windows-based computers are buggy, maintenance intensive, require significant tech support... but they are cheap and easy to replace.  Most technology niches have captured most of the concept of the computer industry by creating buggy, maintenance intensive products that require significant tech support.  What they miss however is keeping them cheap.

That's what is killing the semiconductor design and manufacturing industry.  Jacques Benkoski wrote on this issue this week in EE Times where he pointed out that FPGA design starts are beating the crap out of ASIC design.  I understand Rajeev Madahavan of Magma will be making a counterpoint on that position at EE Times Virtual Conference on September 16 and from the description of his keynote seems to agree with my position.  I'm looking forward to hearing what he has to say.

The point is that the hard cost of technology has to be brought down, while increasing profitability.  The soft costs of increasing efficiency, reducing respins and reducing time to market are only valuable when money is flowing.  If that were not true, we'd all be working on Macs.

But what do I know? I prefer technology excellence and efficiency to cost. That's I've been working on Macs since 1989.