Thursday, March 31, 2011

No. 21: Hardware or Software? No, it is Marketing (April 1, 2011)

Electronic books attracted wide attention worldwide, but they are far from being successful at this time. In Japan, the year of 2010 was dubbed the first year of e-books, but every publisher that launched the e-book business has found the e-book business in a sorry plight. The same is true of e-magazine and e-newspaper. Neither of them succeeds in creating impressive profits. Presumably, the situation is almost the same in other countries. Manufacturers of apparatus attribute the slow business to shortage of software, while publishers blame them for slow-moving apparatus. Another dispute over hardware and software has arisen.

You can store more than 1,000 books even in a small USB memory. However, owning 1,000 books is one thing, and reading and utilizing them is quite another. You can find information and conduct analyses using the 1,000 books. However, you can get necessary information and conduct analyses faster and more easily on the Internet for free. A publisher offered an e-magazine that allows the user to read a total of more than 30 newspapers and magazines for a monthly subscription fee of 300-400 yen, but it is still unsuccessful in getting a good number of subscribers. Who can read as many as 30 media every month? Such smart people who wish to read 30 media every month are small in number. Human is not a computer. You can increase the capacity of your PC by replacing it with a new powerful PC. However, no human brain is replaceable.

You can easily find disputes over hardware and software in business. Think about the dispute between VHS and Beta in the videocassette format. Some say that VHS achieved success because it offered a far larger number of software titles than Beta. But the difference in the number of software titles is not the problem but the result. The real problem is that Sony made a mistake in positioning Beat. Unquestionably, Beta was higher in performance than VHS, but VHS was enough for the home market in terms of performance. Beta was more suitable for the industrial market than the home market.

The same is true of Panasonic’s 3D Real video game machines that ended in a disaster. Panasonic tried to cover various age groups by incorporating several functions in the 3D Real. Accordingly, it was initially introduced for more than 50,000 yen (US$500). Back then, the largest customers of video game machines were children up to 15 years old, and the purchasers were their parents, to be specific, their mothers. Which mother can buy a game machine priced at more than 50,000 yen for her children? Panasonic made a mistake in positioning the 3D Real. History repeats itself. 

The Japanese e-book market was about 60 billion yen in 2009. Surprisingly enough, however, 80% of the sales came from comics for teens. Believe it or not, they are mostly love affair comics, meaning that love affair comics for teenage girls dominate the market. Who could have imagined this situation? Product positioning in marketing is very important. No product can be evenly accepted by all consumers. Unless you position your product precisely beforehand, your product will fly to the direction that you never imagine.

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