State of the Media

Why things don't work...anymore

I just got off my fourth phone call in the past week from someone asking my to help them get some media attention on another partner release.  I've told them the same thing I've been telling everyone for three years: Unless it is a painfully slow news month the chances are virtually zero.  Here's why:

 First, there are 5,000 private technology companies in early to mid stage funding in the US at any given time, according to Dow Jones,

Second, All 5,000 of those companies are negotiating with at least on Fortune 500 company on some sort of partnership/joint agreement.  All of those companies will issue at least one news release about the agreement and will be seeking media coverage.  That means the technology press are dealing with, on average 13 partnership announcements every week.

Third, none of these agreements will mention what specific customers are being served by these agreements, nor what products will be made available to customers as a result of this collaboration, nor will they contain anything more than a very general, high-level and superficial endorsement of the private tech company's involvement.

Finally, the target audience for these announcements is always a very limited part of the entire market, possibly 10-50 people total who are directly affected by the relationship between the two companies.

The press are part of what is called mass media.  Their goal is to produce information that is valuable to the largest possible number of people in a given industry.  10-50 people does not meet that requirement.  On top of that, the press is given the responsibility of finding out information that is out of the ordinary and 13 announcements a week that virtually say the very same thing, with changes only in the players and the names of the products, do not constitute what is callled "news."

Partnership announcements are good for three things: filling out space on websites, keeping the name of your company active on the web, and for salesmen to hand out to the 10-50 people that really care.

Of hubris and market share

A tweet from Brian Fuller led me to a new blogger that had a great post on why FPGA start-ups fail.  Not only was it a good review of the basic problem from a technology it also gave a good overview of the business challenges.  Oliver Coudert, who has been banging around the EDA world for quite a while, including chief technologist at the infamous Monterey Design (arguably the most spectacular flame-out in the EDA industry) pointed out that no FPGA start-up provides a significant enough advance in FPGA technology that Xilinx and Altera can't overcome it at the next process node.  He also points out that with those two holding 87 percent of the market, it's tough for any company to get a serious toehold against the giants.

One thing is missing though.

Neither Altera nor Xilinx really compete directly against each other as much as they do against the ASIC world.  In every presentation I have seen from either company, neither ever mentions the other.  What they do talk about are the misconceptions about the limitations of FPGAs vs ASICs, and the inherent advantages of FPGA design.  On the other hand, every FPGA start-up pitch I've ever heard target both the market leaders.  The cost of developing a new ASIC is killing SoC startups, even when they provide a giant leap forward in performance, while the cost of developing an FPGA system is fractional by comparison.  Both Xilinx and Altera attack that market and are successful. 

What seems to be a constant in the FPGA start-ups is a preponderance of EDA marketing acumen.  EDA start-ups target the market share of of established EDA companies, not the unserved market segments of the semiconductor and electronic systems world.  The underlying belief of this practice is that they can be successful by stealing away just a few customers of the market leaders.  On the other side, the EDA leaders work very hard at undercutting the startups, so they don't grow their own market either.

So the basic failure I've seen in both EDA and FPGA start-ups is more of hubris than of technology or market share.  

It's a start...

    Just finished  the launch of a social media program for a public company in the electronics sector and it was a great experience.  We had a packed room with about 50 people live and around another 10-20 on line around the US.  Got a few pointed questions and answered pointedly with several stepping up and say they want to learn more... even in marketing!

    That's an important statement.  In 2007 Time magazine reported a study that 55 percent of technology customers used social media to decide what to buy but only 34 percent of marketers in technology companies were using social media to reach their customer base.  Last week, PR Week put out a study showing that decisions makers are only increasing  their dependence on social media, yet marketers in tech are at best, still holding at 34 percent.  In fact, the survey showed on 6 percent of companies using social media are incorporating input from customers on social media into customer service efforts.  So when marketers step up to adopt social media in an electronics company, that's big news.

    I'm particularly encouraged.  This was the first of several projects I'm planning to help companies create effective social media efforts, all of them with companies that might be considered in financial distress or, in the least, with very little market visibility.  The marketing chief of the company I just started with said he thinks we are entering a period where sociologists and communication experts will be doing important studies on the effect of social media on the economy and business that will be rewriting how business is done on our world.  In a couple of years, certain segments of the electronics industry will have new leadership and it looks like social media will have a real impact on who those leaders will be.

    Like I've said before.  It is a brave new world...

The view from the boys in the press room

I did a boatload of podcast interviews with EDA companies at DAC in July and on my last day I got together with Dylan McGrath and Nic Mokhoff of EE Times regarding the issue of how the industry is communicating with its customer base. I think it’s interesting to note that while Dylan kinda agrees with me that he doesn’t see the evidence that engineers get all the information they need by talking to each other amd getting it off press releases, Nic generally agrees that engineers can get all the information they need off the web now, and will be able to do it even better in the future. What that means for traditional media, they aren’t sure. Note: The sound level on this is a bit wonky because my computer was trying to balance my big mouth with Nic’s soft basso. You’ll probably have to turn up the sound to hear Nic.

Learning to communicate better

It's been one of those really intense weeks.  So to save some time, I decided to do an podcast on this issue, rather than write it up.

My activity in European startups looking for funding brought me into contact with Irish entrepreneur Anton Mannering in 2008 and we had a pretty good connection at the time.  He popped up again this week with a new venture in New York called, The Audience Conference.  Considering I was talking earlier this week about how engineering-based companies need to learn how to communicate better with their audience, I thought the reconnect with Anton was providential.  Here's the interview.

Proctor and Gamble Raises the stakes in advertising

New Media Age reported that in the UK Proctor and Gamble is going to start paying publications based on how well people respond to advertising and promotional efforts.  It's called "pay for engagement" as opposed to pay for clicks or visits.  If a reader plays a game, downloads information, signs up for newsletters, they get paid for it.

This is a very new approach and some publications are balking, but it makes a lot of sense to me.  The real value of any media now is not that it reaches a lot of people, but that people respond in a positive manner by engaging with the sponsor.  This plays well into the social media world, especially when you offer materials that can be downloaded for later review, including podcasts.

Something to think about.

Not in the whirlwind, but in the still small voice

So I spent a great deal of my morning trying to get into the EE Times Virtual Conference on SoCs.  I was able to get into the exhibit hall to see really bad demos and webinars,  I could get into the resource center and download a lot of badly written marketing material and a few good articles.  But the meat of the conference... the panels and keynotes ... was unavailable to me.  Even Tech support couldn't figure it out.

So I wandered into the chat room and found a half dozen people with the same problem.  And since they were all engineers I figured they weren't using a Mac like me, so my tech couldn't be the problem.  We all had a lovely chat about the conference as it was shaping up and learned something very interesting:

Engineers don't like marketing materials (who does?), they don't like presentations, and they don't like webinars.  

Webinars?  I thought webinars were the be-all and end-all of marketing.  That's where engineers talk to engineers, virtually. 

The knock on webinars were that they were too long and too filled with marketing BS, which is really interesting since most webinars are written up and produced by engineers, not marketers.  Marketers get to make suggestions in content, but it's the engineer that is the editor in chief.  So if the engineers are in charge of the vehicle that is supposed to be the most popular way of reaching engineers, can engineers really talk to each other?

Well, yes, but not in a controlled environment.  What the engineers in the chat room said was the most valuable part of the exhibit hall was the chat room with other engineers, not all the controlled messaging of the virtual booth.

Hence the title of this post.  There is a great deal of time and money spent on trade shows, virtual and otherwise, that all goes for naught.  The only thing that matters is the personal interaction.  That's what makes the sale.  The most valuable tool in a company's marketing arsenal is anything that creates a conversation, not a blind blasting out of information and noise.

Think about it.

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.

Advertising needs a hand

Guy Kawasaki did a post in Open Forum this week on "Is Advertising is Dead" reporting on a panel of advertising experts from Facebook, Yahoo and Microsoft.  The purpose of the panel was to discuss the benefits and pitfalls of using advertising to support a web-based business.  There were some good points, but like every other discussion I have seen on advertising it missed an important point:  How do you make it work?

Advertising does not create sales.  It improves them, but  it doesn't create them.  It reinforces opinions and impressions that have already been established.  For advertising to work, the initial sale has to have been already made; the first impression established.  The panel got close tot he subject with the statement: The key starting point is great content. When you have great content, you’re more likely to attract audiences, and audiences are what advertisers are looking for."  

The content is what establishes opinion and creates the initial openness to a sale, but that content has to have at least the appearance of objectivity to do its job.  If the content in the online publication is obviously biased in favor of a particular vendor, it doesn't meet the definition of "great content" that the panel says you have to have.

This is the key component missing from social media programs in corporate America and what needs to be addressed before they will become valuable to the market.

Getting back to doing well in a recovered economy

I recently discovered Jim Collins' latest book,  How the Mighty Fall, and like all his stuff, it both depresses and encourages me.  Collins has made a bunch of money showing companies how to be great, but this book takes a look at why they fail and he wraps it up pretty succinctly in five stages.

1. Hubris born of success
2. Undisciplined pursuit of more
3. Denial of risk and peril
4. Grasping for salvation
5. Capitulation to irrelevance or death

The depressing part of what he describes is that many sectors of the technology industry is firmly in stage 4 with many entering into stage 5.  The encouraging thing is that Collins says you can escape the cycle by simply going back to what made you successful in the first place.

And I'm further encouraged by seeing several companies figure that last part out all by themselves.  There is no magic to our recovery.  We just have to learn a little humility; learn that engineering, marketing, sales or charismatic leadership in themselves cannot guarantee success, but need to be in proper balance.  Everyone has to contribute and everyone has to be taken seriously.

We're not out of the woods yet.  At the Design Automation Conference was over, I talked to two dozen companies. Half said they won't make it past DATE "if the economy doesn't turn around."  All of those companies are firmly in stage 5 and I don't see them changing direction.  But the other 12 seemed to be figuring something out.  If that percentage holds. I think we might see the end of this economic nightmare by next year.