The downside to fragmentation (1 Viewer)

[RobertR]

Google stood up and said they were going to make a customer focused open garden. They pussed out and caved to the carriers in exchange for marketshare which they get VERY low returns on.
Great, you get zero percent return on a multi-billion dolllar business you built from scratch based on lies. Where's your crown king nothing?

I have trouble understanding why I should favor or disfavor a company depending on what returns it's getting. Usually the complaint is that it's making "too much" profit", but "too little"? Really, all I'm concerned about is "do I like what's offered at the price asked for?" Also, I'm not sure what you mean by "pussing out" to the carriers. Do you mean that some features are unique to a given carrier or carriers? Why should that bother me? Why the concern with uniformity? My phone has HTC Sense, which isn't on other phones. Is that a problem? Not for me--I don't even use it. I installed Zeam Launcher. Works for me. Whether it works for Google or HTC or some guy who might be confused if he borrowed my phone isn't my concern.

 

[Sam Posten]

Because the promise of Android was that the consumer would have choice not just of phones but of carriers, and that 3rd parties like Google could provide alternatives like ad supported free phones that consumers could take to their carrier of choice and the carriers would be dumb pipes that got out of your way. That was all bullshit. The carriers now still impose their rigid control and lock you in and put their shitty software and spyware on top of most of the crappy phones they push.

 

[RobertR]

I wasn't aware of such a promise. I never expected a free phone. I am happy that I have a high end no-contract phone. Such an alternative is the best thing about android to me. I think everyone would like to buy a phone and use it on any carrier, but it doesn't look like it'll happen.

 

[Sam Posten]

I can pull discussions with Google from that era if you'd like, but it is all an alternate history now....
Anyway, fragmentation isn't just an issue with phones, it's goods across the line.
Fight the future says Topolski:
http://www.theverge.com/2012/1/20/2713165/gadget-sales-consumer-demand-samsung-apple-acer-motorola

 

[RobertR]

The difference between us is that you seem to view things from a company perspective, and I view things from a consumer perspective. If I was with a manufacturer, I'd worry about how many models/how much differentiation/how often I introduce new models. But as a consumer, I don't. There's no such thing as "too many choices". Choice is GOOD. Choice is what allows me to pay only 30 bucks a month for lots of no-contract smartphone goodness, instead of being STUCK with some "you'll do it OUR way and like it" attitude (my supervisor is pissed off at Verizon because he'd have to pay a big premium to trade in his POS Motorola, while he looks enviously at my HTC.). It just isn't that hard to make choices. In my case, all I had to do was look at those Android phones that would work with Tmobile's no-contract plan. That meant looking at 20 phones. A quick look at the specs narrowed it down to two--the Galaxy S2 and the Sensation. A more detailed look at the specs, price, and a comparison on Youtube made the choice easy. I just don't see people running around in a befuddled fog about what to choose with smart phones or laptops, any more than what amplifier or subwoofer or printer or refrigerator, etc. to choose.

 

[Sam Posten]

I don't see it from a company point of view at all. I think from a consumer point of view too much choice IS a bad thing no matter what the conventional wisdom might say.
And that article seems to say that these companies are starting to come around to that way of seeing things.
Good, better, best is all you really need. NOBODY needs 27 different permutations of a cell phone, camera or computer. Go look at all the digicams that Nikon and Canon announce each year and tell me how the average consumer picks between any of them EVEN IF they have settled on a brand already. If they haven't it's impossible to comparte these permutations across brands.
It sucks and it its not fun to try to sort through all these bullshit variations.

 

[RobertR]

It may be too many choices for YOU, but the ultimate determiner is the Market. If 27 varieties of a cell phone are profitable, then it's NOT too many, by definition. All that matters is what sells. If enough people decide "I'd buy that product if it had a certain feature" (variation), then the variation will be provided. There is no "objective", external determinant of these things. It's perfectly natural to try to distinguish products from the competition.

 

[Sam Posten]

We'll have to agree to disagree here. There is still considerable debate on whether you are are are correct but I think that the markets are coming around to how I see it, given the comments in the article above.
http://www.ted.com/talks/barry_schwartz_on_the_paradox_of_choice.html
http://en.wikipedia.org/wiki/The_Paradox_of_Choice:_Why_More_Is_Less
http://en.wikipedia.org/wiki/Decision_theory
http://www.freakonomics.com/2009/12/02/is-the-paradox-of-choice-not-so-paradoxical-after-all/

 

[RobertR]

I think Schwartz is full of it. He generalizes from his own experiences and attitudes. It's apparent to me that he's another critic of Free Market Capitalism searching for an angle of attack on it. The "the Market makes us TOO affluent and gives us TOO many choices" line is nothing new; John Kenneth Galbraith (who coined the phrase "the conventional wisdom") made the same charge in The Affluent Society, where he railed against the "evils" of things such as tail fins on cars (of course, what Galbraith was really complaining about was that people weren't make the choices he thought they should, such as sitting around reading his books and spending more on Government projects). The funny thing is that those same critics will often criticize the Market for making people too poor!
I quote from an article on consumerism:

We want better heating and cooling in our homes and businesses. We want more varieties of food, wine, cleaning products, toothpaste, and razors. We want access to a full range of styles in our home furnishing. If something is broken, we want the materials made available to repair it. We want fresh flowers, fresh fish, fresh bread, and new cars with more features. We want overnight delivery, good tech support, and the newest fashions from all over the world.
The libraries are going online, as is the world's art. Commerce has made the shift. New worlds are opening to us by the day. We find that phone calls are free. We can link with anyone in the world through instant messaging, and email has become the medium that makes all communication possible. We are abandoning our tube-televisions and landline telephones – staples of 20th-century life – for far superior modes of information technology.
We want speed. We want wireless. We want access. And improvements. Clean and filtered water must flow from our refrigerators. We want energy drinks, sports drinks, bubbly drinks, juicy drinks and underground spring water from Fiji. We want homes. We want safety and security. We want service. We want choice....are people buying superfluous things that they can do without? Certainly. But who is to say for sure what is a need as versus a mere want? A dictator who knows all? How can we know that his desires will accord with my needs and yours? In any case, in a market economy, wants and needs are linked, so that one person's necessities are met precisely because other people's wants are met.

Schwartz CONCEDES that the huge variety of jeans available resulted in him getting a pair that fit perfectly, but says that such an obvious BENEFIT of so many choices is somehow "bad", because if our needs are always being better met, we expect more. Yes, we want and expect more than we did 50, 75, 100, 1000 years ago (can you imagine the astonishment of someone from the Middle Ages at the idea of having and EXPECTING central heating and air conditioning, non spoiled food in tremendous variety and abundance, hot and cold running water, fantastic medical care, instant access to the world's knowledge in his pocket, etc etc etc?) . That's called PROGRESS. I can't even begin to imagine that having fewer choices made people happier (I'm trying to picture some caveman in a constant state of ecstasy because the only choices he has for the day are hunting game all day or looking for nuts and berries, and he sure as hell won't be picky about what KIND of game or nuts and berries). I prefer to think about the wonderful scene in Moscow on the Hudson, where Robin Williams' character is joyfully chanting "coffee, coffee...", when he sees the overwhelming variety and quantity available in an American supermarket, instead of having ONE lousy choice after having to stand in line interminably.
Each of us is free to limit our choices, but artificially restricting them is a BAD idea. As one commenter stated, Barry Schwartz's head would explode if he walked into this store . He'd obviously be much happier with this situation.

 

[Sam Posten]

OK, try to buy a compact camera. Pick the best one. Think you can do it?
via bythom.com (he doesn't put permanent links until they are archived):

More on More
Feb 1 (commentary)--After getting a few comments on this morning's earlier article, I decided to do a bit of SKU snooping on B&H. Here's what I found in the compact camera range (including the latest announcements, which are already live; I took out the X100 and any B&H "kits"):
Olympus: 37 compacts
Canon: 54 compacts
Fujifilm: 59 compacts (I took out the X100)
Sony: 60 compacts
Panasonic: 62 compacts
Nikon: 71 compacts
Put another way, if you were looking for a compact camera you'd have a choice of 343 camera/color combinations, most of them in the US$200-400 price range. Moreover, you can find fault with any of these cameras. Oh, yeah, that one over there has a faster lens, but this one has GPS, yet that one has more focal range, and yet another one has more (or better [BSI]) pixels... The list goes on and on.
So if you asked a camera salesperson "which one is best" you're going to get a random answer at best, too. More than likely, you'll get sold on the one that's in stock ("The XYZ is the best of the bunch, but we only have it in black").
Someone suggested that all this was just a way to get rid of dealers and push everything through Amazon and a few big boxes. Maybe, but Amazon wants bigger discounts than dealers, so on top of all the other woes the compact camera makers have, they'd be getting pressed for lower product margins, too.
Yet in browsing through all these 300+ cameras I was struck by one thing: almost none of them (it might actually be none) actually do what I would want of an entry level camera. That's: let me put my image where I want it. Not on a card in the camera, but on a Web site, in an email, onto my digital picture frame, over onto my phone or tablet. Instead, they include ridiculous things like an HDMI connector, so that I can trip over expensive cords while I manually thumb through my images on my TV only to discover that the battery goes dead in the middle of showing them off. Are you kidding me? That's part of what constitutes a correct entry level design? (Go ahead, try it with yours. I'll wait for you to find the right cable [there are three possibilities], find an open HDMI In on the back of your TV, and start up your slide show. I might be waiting awhile, though ;~)
It's as if the camera makers either have no imagination about what a user might want, or are afraid to try making something that meets those wants. Maybe both. And then they wonder why compact camera sales are getting pummelled by camera phones.
How about this as a design goal: Design a US$400 product that takes far better pictures than a camera phone, has more flexible user control/options (that are photographically motivated), and offers all the programmability and workflow (communications) capabilities that make getting a picture to where you want it easy? Is it really that hard to do? Or will we get another 300+ iterated compact camera designs before someone stumbles on getting it partially right?

So if you asked a camera salesperson "which one is best" you're going to get a random answer at best, too.
Good luck with that.

 

[RobertR]

The quoted article complains that there are a lot of camera designs with permutations that don’t precisely fit his needs (wants). But how would only having, say 34 (instead of 343) choices solve his problem? What he really seems to be complaining about is a lack of design creativity and/or market research to identify consumer wants (that’s assuming there are many more people like him who want the kind of camera he says he wants) rather than the number of choices per se. If several dozen camera designs were more along the lines of his expressed wants, would he continue to complain about the 343 number? Of course not. There would be no reason for him to.
As for “asking a salesman”, I would say it makes much more sense to:
a. Identify your wants (needs)
b. Do an Internet survey of available products to see which products come closest to meeting your needs
c. Read what others have to say about the products
It isn’t at all difficult to do this in the Internet age. This forum and others have LOADS of discussion about the merits of various products. It takes time, but if someone’s going to have an “I can’t be bothered with the research, just spoon feed me something” attitude, I think he deserves what he gets. As I said in an earlier post, I used this process to choose a cell phone, and it didn’t take much effort at all. “Asking a salesman” was the LAST thing I thought of.

 

[Sam Posten]

Like i said we are not going to agree here. Just because you are smart and motivated enough to do pre sales research doesnt mean the good majority of buyers will be.
Most will bug people like you and me to try to help them winnow down their choices instead and will be unsatisfied with any answer given

 

[RobertR]

The smart guys like you and me are also the guys who are the pickiest about what they want. The "I'll just ask a salesman" (or someone knowledgeable) people aren't the kind who worry much over this or that feature. They'll answer a few questions asked by the salesman, buy what he recommends, and go away happy. If a person is happy, there's no problem, even if it's an "ignorance is bliss" situation. The article you quoted is unrealistic in that it was written by a guy who's obviously knowledgeable and picky. He simply wouldn't be the type who'd be content to ask a salesman.

 

[Sam Posten]

I don't agree on that. Especially where it's concerned with big ticket items like Cameras, TVs, Stereos and even Phones.
People want to feel confident they are making smart decisions but they don't want to be a rabid spec geek to get there. And worse they want the best product at the best price so they do stupid things like buying from disreputable places. And being someone who IS savvy on the latest trends on that they always want my input but they don't understand that I'm often buying products that meet vastly different needs and desires than what tthey have....

 

[DaveF]

Quote:

Originally Posted by RobertR /t/311159/the-downside-to-fragmentation#post_3889797
It may be too many choices for YOU, but the ultimate determiner is the Market. If 27 varieties of a cell phone are profitable, then it's NOT too many, by definition..


They aren't, it seems.

http://www.asymco.com/2012/02/03/first-apples-rank-in-mobile-phone-profitability-and-revenues/



So does that mean that a large number of marginally differentiated products, by definition, are too many?

 

[RobertR]

They aren't, it seems.
http://www.asymco.com/2012/02/03/first-apples-rank-in-mobile-phone-profitability-and-revenues/
 
So does that mean that a large number of marginally differentiated products, by definition, are too many?
 

I don't understand what that graph is supposed to prove. Is Apple very profitable? Yes. Does that therefore mean that various Android products are insufficiently profitable to continue making them? Where does that follow?

 

[Hanson]

What it means is that Apple cheerleaders are so brainwashed that they can't see that they are being charged more than necessary for their iDevices. They are more than happy to be overcharged -- it's their privilege to fill their coffers and trumpet loudly about how much they're being fleeced.

 

[DaveF]

HTC reports losses.
http://www.bloomberg.com/news/2012-01-06/htc-has-first-profit-drop-in-two-years.html

Motorola Mobility lost money (even accounting for being bought by Google, it's down year to year)
http://www.wgnradio.com/business/breaking/chi-motorola-mobility-reports-4q-net-loss-20120126,0,2455602.story

Nokia sees 73% drop in profits.
http://www.huffingtonpost.com/2012/01/26/nokia-q4-2011_n_1233280.html

RIM is dying
http://www.nytimes.com/2011/09/16/technology/research-in-motion-posts-disappointing-results-and-its-shares-fall.html?_r=1&pagewanted=all

Samsung is doing well, with strong profit growth
http://www.reuters.com/article/2012/01/26/us-samsung-idUSTRE80P1KY20120126

Apple, with a portfolio of nine phones (all colors, storage sizes, generations), has the largest marketshare, profitshare, and is first or second in US market-cap.



You posed a test:


Quote:

Originally Posted by RobertR /t/311159/the-downside-to-fragmentation#post_3889797
It may be too many choices for YOU, but the ultimate determiner is the Market. If 27 varieties of a cell phone are profitable, then it's NOT too many, by definition..


Has your test been performed? If so, what's the answer? If not, what more data is required?

 

[RobertR]

HTC reports losses. 
http://www.bloomberg.com/news/2012-01-06/htc-has-first-profit-drop-in-two-years.html
Motorola Mobility lost money (even accounting for being bought by Google, it's down year to year)
http://www.wgnradio.com/business/breaking/chi-motorola-mobility-reports-4q-net-loss-20120126,0,2455602.story
Nokia sees 73% drop in profits.
http://www.huffingtonpost.com/2012/01/26/nokia-q4-2011_n_1233280.html
RIM is dying
http://www.nytimes.com/2011/09/16/technology/research-in-motion-posts-disappointing-results-and-its-shares-fall.html?_r=1&pagewanted=all
Samsung is doing well, with strong profit growth
http://www.reuters.com/article/2012/01/26/us-samsung-idUSTRE80P1KY20120126
Apple, with a portfolio of nine phones (all colors, storage sizes, generations), has the largest marketshare

No it doesn't, as I pointed out to you.

You posed a test:
what's the answer?

There is no ONE answer, and it would be silly to attribute profitability solely to the number of models.

 

[DaveF]

/t/311159/the-downside-to-fragmentation#post_3889797
... the ultimate determiner is the Market. If 27 varieties of a cell phone are profitable, then it's NOT too many, by definition..

(*) You're right of course that it's impossible to attribute the decline in profits to number of models per se. But then you shouldn't have made posed such a simple-minded test knowing it wouldn't lead to any truth with available data.

But you're not wrong. As Hanson observes, Apple's profit dominance is due to the subliminal brainwashing signals in their advertising.