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Monthly Archives: March 2015

Lessons From the Porn Industry

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What it is: The porn industry offers products for adults often at odds with governments and legal protection.

In most industries, companies can petition the government for legal protection from tariffs or request protective legislation. Just witness the near bankruptcy of General Motors that got a taxpayer-funded bailout to save a private corporation and its executives from their own failures.

The porn industry is different. The government not only doesn’t care about the porn industry, it’s often trying to shut them down. As a result, the porn industry can’t rely on government protection of any kind. That means the porn industry has to rely on their own wits to survive and stay ahead of the competition without any government aid whatsoever.

As streaming video piracy sites multiply across the Internet, the porn industry is in trouble. They used to make money selling DVDs of pornography, but with video piracy so easy to accomplish and the lack of government enforcement on pornography copyrights, the porn industry is losing money.

The lesson is clear. If your business model is under attack, you have to rely on innovation to save yourself, even if you aren’t in the adult entertainment business.

Throughout the years, that’s exactly what the porn industry has done. Back when websites were still an oddity, porn sites were already accepting credit card payments online and offering streaming video to customers. Follow the porn industry and you can see the latest business trends.

As the porn industry suffers from streaming video piracy, they’ve found two ways to survive. One is to target a niche. Two is to offer custom pornography.

It’s easy to find pornography on the Internet. However, if you’re looking for specific types of pornography such as gay sex, clowns having sex, or midgets having sex, that’s much harder to find. That’s why porn sites that offer this type of niche content can thrive.

If you’re selling what’s easily available, you don’t stand a chance because competition will eat you alive. If you’re selling what everyone else is selling, there’s no reason to buy anything from you.

In the computer world, that’s why commodity operating systems like Android have a huge market share but horrible profit margins. How can you make money selling Android phones when everyone else sells the exact same type of Android phone? If you don’t have a unique niche, you don’t have a business. It’s that simple.

The second lesson from the porn industry involves custom pornography through what’s known as webcam girls. That’s where you pay per minute to talk to a live woman who will take requests. Such custom pornography is valuable because it can never be pirated. What you like will rarely be what other people like and what you want to see will almost never be exactly what someone else wants to see.

This goes back to the lesson of niche markets. Not only do you want a niche market, but you also want to cater to your customers in a way that they can’t get from anyone else.

Look at how many computer and smartphone companies treat their customers. As soon as you buy a product from them, they don’t want to hear from you again because now you’re just costing them money. That’s why Dell Computers and other companies outsource their technical support overseas. That isn’t to provide better technical support. That’s to save money for the company, regardless of the effect it had on the customer.

Ever wonder why so many smartphones still run older versions of Android? That’s because smartphone manufacturers have zero incentive to update their operating systems. After they’ve made a profit selling you a phone, they don’t want to do anything more for you because that now eats into their profits.

One reason why Apple Stores are popular is because they offer customers a chance to talk to a live technical support person at a Genius Bar. Having live technical support costs Apple more, but they pass the costs on to the customer and the customer is happier. Companies that cut costs to protect themselves don’t care about the customer, so the customer has no reason to care for that particular company.

If the porn industry teaches us anything, it’s that niche markets and custom service sells. Commodity products that can be found elsewhere do not sell. That’s why all those Android smartphone manufacturers beat each other up for market share and wind up with little profit to show for their efforts.

On the other hand, Apple created their own niche market because if you want an iPhone, iPad, or Apple Watch, you have no choice but to buy it from Apple. Apple also strives to keep customers happy through live interaction with technical support people through the Genius Bar. You may never need their help but when you do, you’ll be glad to use it rather than go through the frustrating process of calling an outsourced technical support center in another country.

Learn from the lessons of the porn industry. The money lies in niche markets and customer service. Avoid niche markets and your product has nothing to differentiate itself from everything else. Avoid customer service and your customers have no reason to stay with you.

On the other hand, carve a niche market for yourself and you immediately have no direct competition. Please the customer and you further distance yourself from any competition.

The porn industry has to survive through its wits. By following the porn industry, you can see what could work in your own world as well. To learn more about how the adult entertainment industry uses marketing, take a look at “Uncensored Sales Strategies.”


About the porn industry.

The Importance of Backup Plans

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What it is: The PowerPC processor, designed by IBM, was the previous processor used by the Macintosh.

In the early 2000’s, the Macintosh used the PowerPC processor, which often gave superior performance over comparable Intel processors. Unfortunately as time went on, Intel processors got better and IBM spent less and less time developing and improving the PowerPC processor. Eventually it got to the point where Intel processors were clearly superior to PowerPC processors.

Since the Macintosh depended on the PowerPC processor, Apple was in a bind. If they stuck with PowerPC processors, they would fall further and further behind Windows PCs running Intel processors. So Apple did what nobody expected them to do, which was to switch to Intel processors.

Suddenly switching to a completely different processor meant that all previous Macintosh software, designed for the PowerPC processor, wouldn’t run on Intel processors. That meant OS X wouldn’t run on Intel processors.

Yet years earlier, Apple had secretly developed a version of OS X for both PowerPC and Intel processors. By the time PowerPC processors were clearly inferior to Intel processors, Apple had already developed and tested OS X for Intel processors, so switching OS X to Intel processors proved trivial.

Even more surprisingly, Apple also helped develop a PowerPC emulator called Rosetta. By using Rosetta, you could run PowerPC programs on Intel-based Macintosh computers. Amazingly, Rosetta worked flawlessly, making the transition from PowerPC processors to Intel processors seamless.

That’s only because Apple had had the foresight to plan ahead years in advance on a project that might never have been needed if IBM had simply kept improving PowerPC processors. By the time IBM had basically given up on the PowerPC processor, Apple could easily shift to Intel processors without sacrificing compatibility. Today, few people even remember that transition period because it went so smoothly.

Now compare Apple’s transition from PowerPC processors to Intel processors with Microsoft’s transition period Windows from Intel processors to ARM processors.

ARM processors are used in mobile computing devices like smartphones and tablets because they consume far less power than Intel processors. So when Microsoft decided they needed a tablet, they ported Windows from Intel to ARM processors and called this new operating system Windows RT.

Yet by the time Microsoft released Windows RT on their Surface tablets, they had relatively little software capable of running on Windows RT. Rather than make the transition seamless like Apple did with their Rosetta PowerPC emulator, Windows RT was completely incompatible with all existing Windows software.

As a result, users roundly rejected Windows RT on ARM processors and now Microsoft has basically let Windows RT die. In the mean time, because Apple planned years in advance for the possibility that they would need to shift to Intel processors, they could transition easily with no disruption to their customers.

Apple had a long-term plan. Microsoft did not and it showed in their sales results of Surface tablets running Windows RT.

Today, Macintosh sales continue to climb while PC sales decline (and Windows RT is basically dead). That’s the importance of having a backup plan for every possibility. You never know when you might need it but when you do, you’ll be glad you thought ahead. To see the results of not thinking ahead, just look at all the money and time Microsoft wasted developing Windows RT.

Would you rather be in Apple’s position with growing market share and increasing sales, or would you rather be in Microsoft’s position with shrinking market share and a soon-to-be-abandoned Windows RT operating system?

That’s the difference between thinking ahead and waiting for a crisis before reacting. Thinking ahead makes the future smooth. Reacting to a crisis does not.

About Apple’s transition to Intel processors.

Phablets vs. Tablets

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What it is: Phablets are large phones that combine the features of a smartphone with a screen size close to a tablet.

Samsung is largely credited with promoting the phablet market by making smartphones with large screens. Of course, other companies had tried marketing larger smartphone screens earlier, but for some reason, Samsung’s products seemed to catch the public’s attention. The Dell Streak was actually one of the earliest phablet designs but failed to gain many sales.

Phablets originally grew out of the inability of most manufacturers to cram smartphone features in a smaller package. So they just made a larger smartphone case to hold a bigger battery. As tablets exploded in popularity, led by the iPad, people started carrying two devices: a smartphone and a tablet.

When Samsung started marketing larger smartphones dubbed phablets, people suddenly saw less of a need for a separate tablet and more of a need for a phablet. When Apple introduced the larger screen iPhone 6 and iPhone 6 Plus, sales broke quarterly records. Some people who originally chose Samsung phablets switched to the iPhone 6. In the meantime, phablet sales cannibalized tablet sales, even smaller tablets like the iPad mini.

On one hand, you can look at declining tablet sales as a worrisome trend for Apple. On the other hand, greater sales of the iPhone more than makes up the difference. At one time, Apple sold tons of iPods, but when they introduced the iPhone, which was essentially an iPod with a phone, sales of iPods dropped and will never recover any time in the future.

The lesson is clear. When one product kills another product, there’s little hope for that other, less versatile product. Sales of the iPod can never compete against sales of the iPhone since anyone with an iPhone already has a built-in iPod.

Likewise sales of tablets will never grow dramatically again since anyone who has a phablet already has (to some extent) a tablet. Despite dropping sales of tablets (like dropping sales of iPods), increased sales of iPhones more than makes up the difference.

The growing popularity of phablets isn’t a problem for Apple, but for Microsoft. As Forbes explains, Microsoft missed the mobile trend so they don’t have a viable smartphone to sell and only a weak tablet (Surface Pro) to sell. The problem is, the Surface Pro has entered the tablet market just as the popularity of tablets has started to decline. What more people want nowadays aren’t tablets but phablets, but Microsoft doesn’t have a viable phablet to sell.

As Forbes points out, “Microsoft missed the trend to mobile.  They didn’t prepare for it in any of their major products, and they let new products, like music player Zune and Lumia phones, languish – and mostly die.  By the time Microsoft reacted Apple and Samsung had enormous leads.  Microsoft is still trying to play catch-up with its ‘core’ Windows product.

“But worse, because it is so far behind, Microsoft’s leaders are unable to forecast where the market will be in 3 years.  Consequently they develop products for today’s market, like tablets (and their hybrid products,) which we now see will be obsolete as the market shifts to new products (like phablets.)

“Lesson for everyone – be sure your business keeps its eyes on trends, and does not wait to react.  Waiting can turn out to be deadly.”

The trend is towards mobile and wearables. The trend is not back towards desktops and laptops. The Surface Pro, along with other 2 in 1 hybrids, attempts to bridge the gap between laptops and tablets, both of which are shrinking markets. The future is mobile led by the new hybrids that combine smartphones and tablets.

Apple is leading the trend towards mobile and wearable computers so worrying about declining iPad sales is like worrying about declining iPod sales. Ideally you want all your products to sell equally well and continue growing, but realistically that’s not always possible. If a product declines, you want to be selling something that’s killing your current product line like Apple is doing with the iPhone to make up for declining iPad sales.

Every product line will eventually die. There may come a time when the wearable computer market starts cannibalizing the mobile computer market. The Apple Watch will only get more powerful and could start replacing the iPhone, but at least Apple will still make money selling the Apple Watch just like they’re still making money selling the iPhone instead of the iPad.

Other companies, like Microsoft, are simply unable to sell products that follow the trend. Where Apple is fine, companies like Microsoft are not, and it’s all because Apple is leading the trend while companies like Microsoft react and follow too late.

About phablets.

The Purpose of Advertising

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What it is: Advertising is meant to sell a product or service as quickly as possible by explaining why potential customers might need it.

There are two schools of advertising. One school focuses on image advertising. This is the type of advertising that big corporations often use to present the company or product in a certain way to stir the public’s emotions in a favorable manner.

Watch ads for Coca-Cola and you’ll never see any ad mentioning the product ingredients or the benefits of drinking Coca-Cola (because there are none). Instead the ads highlight emotions such as showing a young couple sharing a Coke or a grandfather sharing a Coke with a grandson.

There’s nothing wrong with image advertising if you have the money to spend. The big problem with image advertising is that it never tells you why you should buy a particular product or service right away. If you don’t know why you would want that particular product or service, image advertising may make you feel good, but it won’t compel you to actually buy from that company.

That’s why image advertising is a waste of time and money. The purpose of advertising is to get people to buy. If you can make them feel emotionally happy before they buy, that’s fine, but you don’t want to just make people happy or else you’ll just waste your advertising money for nothing. The ultimate purpose of advertising is to get customers to spend money so that the cost of the advertising more than pays for itself through increased profits generated by the ad.

You can see how most companies waste money on image advertising. When Microsoft marketed their Surface tablets, they focused not on what the tablets could do for you, but that it looked good in a choreographed dance routine. Did that compel anyone to rush out and buy a Surface tablet? No, which meant that all the money Microsoft spent on advertising the Surface tablets were as good as flushed down the toilet.

Yet with few exceptions, Apple’s ads focus on what their products can do for you. By showing so many different ways their products work, Apple entices customers to line up outside their retail stores days in advance to get the latest products.

In their ad for the Apple Watch, the ad focuses exclusively on showing you what the Apple Watch can do. Chances are good one of those uses will appeal to you. In the process, the ad stirs your emotions by getting you excited about the product, not by getting you excited about the ad.

Once you know what a product can do for you, that will likely compel you to buy it. On the other hand, if an ad just makes you feel good, then you’ll be far less likely to rush out and buy that product. With many popular ads, people remember the ads but can’t recall what the ad was even trying to sell them.

Showing people features is far more enticing than getting them emotionally aroused. The purpose of advertising is to turn skeptics into paying customers as quickly as possible. Do that and the ad is a success. Fail to do that and the ad is a failure.

Focusing on features for the customers is a direct result of mail-order marketing. If you’ve ever gotten junk mail, you know that the printed ads have to capture your attention within seconds to compl you to keep reading. Then to decide to buy.

Direct mail marketers know that the bottom line of ads is that they have to sell products. They can be the ugliest ad possible, but if it sells products, then it’s a great ad no matter how horrible it might look.

Image advertising strives to win awards for creativity while totally ignoring actual sales results. That’s why image advertising is ultimately a failure.

Direct marketing strives to make sales as soon as possible whether it’s creative or not. That’s why direct marketing techniques are always superior.

Compare the ads for the Apple Watch and the Microsoft Surface tablet. Which ad shows what the product can do for you? Once you know which product might solve your needs, can you tell which ad is more effective in getting you closer to buying it?

About direct marketing.

The Vision of Steve Jobs

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What it is: A visionary sees what other people miss and works relentlessly to achieve that dream for the benefit of others.

In the biography, “Becoming Steve Jobs,” authors Brent Schlender and Rick Tetzeli quoted Steve Jobs as saying way back in 1977:

“Our whole company is founded on the principle that there is something very different that happens with one person, one computer … What we’re trying to do is remove the barrier of having to learn to use a computer.”

That pretty much sums up the rationale for Apple right there. While other computer companies look for ways to cut costs and make more money through outsourcing their technical support (despite inconveniencing the customer), making products with complexity that frustrates the user, or loading up their products with unnecessary software just because another company pays them to do it, Apple strives to keep the customer’s interests in mind.

Most companies in every field think of themselves first. Because of that, they lack a clear, long-term vision to guide the company. Instead of pursuing a goal for the good of their customers, most companies respond with knee-jerk anticipation to whatever the market around them is doing. By constantly following others, they’re never going to be leaders on their own. And then they wonder why they never become leaders because they’re too busy following and chasing after market share because they believe market share is the only goal. (Hint: Profitability is the only goal.)

Even worse than simply following others is ignoring the customer. In all fields you can see companies that exist solely to make money by cutting expenses, laying off workers, and producing cheap products and mediocre service so the CEO and other executives can walk away with massive bonuses. When you cease to care about the customer, don’t be surprised one day when the customer ceases to care about you.

What Steve Jobs did with Apple was keep it relentlessly focused on the customer. Computers have always been too hard to use, but most people simply accept it as the way life is, and then they use their hard-earned technical knowledge like a hazing process to keep others out and justify their own bloated sense of importance.

Strip away complexity in anything from legal documents to computers and you suddenly reveal the people who use complexity as a way to confuse customers and keep themselves rich by doing relatively little in return.

While most companies pursue profitability by confusing and frustrating the customer, Apple strives for profitability by delighting and surprising the customer. In the business world, it’s always easier to sell to repeat customers because such repeat customers already trust you. It’s always more time-consuming and expensive to constantly search for new customers, but if you’re constantly cheating and deceiving customers, that’s exactly what you have to do.

When you keep customers happy, they’ll keep coming back and buying from you, even if the price is a little higher than rivals. That’s because price is irrelevant. Initially you may be happy paying less, but if paying less means getting an inferior product with complicated products that don’t work the way you expect and hinders your productivity, no price can be too low.

While other computer people were reveling in the complexity of computers, Steve Jobs focused on bringing computers to the masses by eliminating the need to know how to use them. Ever notice why there were books on how to use MS-DOS, Windows, and Android, but you never see an “iOS For Dummies” book? That’s because using iOS devices are simple. You don’t need to learn how to use an operating system to use an iPhone. You just have to use your iPhone.

In comparison, learning to use a Windows PC meant first learning how to use Windows, then learning how to do what you wanted to do in the first place. This two-step process made computers harder and more frustrating to use. When people are frustrated, they likely won’t be loyal, repeat customers.

Apple’s goal, defined by Steve Jobs, is actually just smart business sense. Keep the customers happy by providing superior service and profits will come naturally. Other computer companies try to cut back on everything that reduces the customers’ experience, which guarantees that profits won’t come easily.

Steve Jobs is no different than other visionaries who focused on delighting the customer such as Walt Disney. When you focus on the customer, you can’t go wrong. When you focus only on your own bottom line to the detriment of your customers, you will always go wrong. That’s the lesson that Apple’s rivals have yet to copy from Apple.

About Steve Jobs.

The Killer App for the Apple Watch

Posted on by Posted in Medical, Software Leave a comment

What it is: A killer app is defined as a must-have program that drives sales of the hardware that runs it.

Inertia means that people often resist anything new. People avoided using shopping carts because people thought it looked like a baby carriage. It was only after the shopping cart inventor hired people to show others the advantages did shopping carts finally become popular.

This same level of resistance and inertia occurs in the computer field as well. Given advanced technology, the majority of people will actively avoid and resist using it because they resist change and change threatens their current way of life. That’s why every new computing platform needs a killer app to overcome this initial resistance and reluctance to use the latest technology.

In the early days of the Apple II, the killer app was VisiCalc, the world’s first spreadsheet. Businesses bought Apple II computers just to use VisiCalc. When the IBM PC appeared running MS-DOS, the next killer app was Lotus 1-2-3, a much improved spreadsheet. When Apple introduced the Macintosh, the next killer app was desktop publishing. Businesses bought Macintosh computers with laser printers just to do desktop publishing. When Microsoft introduced Windows, the next killer app was Excel, an improved spreadsheet over Lotus 1-2-3.

When Apple introduced the iPhone, smartphones had been around for years, but the iPhone made it easy to access the Internet. The iPhone’s killer app was its combination of Internet apps such as Maps (for driving directions), Safari (for mobile browsing), Messages (for text messaging), and the ability to make phone calls all in one easy to use package.

The iPad’s killer app was probably games. Video games were always popular on the iPhone, but with its larger screen, video games became so much more immersive to play on the iPad, which drew people away from dedicated video game consoles.

So what’s the killer app for the Apple Watch that will make people want one? It’s real-time health monitoring though HealthKit (to store health data), ResearchKit (to collect health data from volunteers doing medical research), and the health sensors on the Apple Watch to detect heart rate and blood pressure.

Other fitness bands and smart watches already offer heart rate sensors, but hardware alone isn’t enough. It’s the combination of the software frame kits that make that hardware useful.

Real-time health monitoring allows medical researchers to collect data constantly from volunteers wearing an Apple Watch. Nursing homes and hospitals can put Apple Watches on patients to detect immediately when there’s a problem such as a heart rate change or a sudden drop in motion, signaling that the person fell.

In the old days if someone fell, they had to hope someone else would be nearby to get help. With an Apple Watch using real-time health monitoring, the Apple Watch can signal for help right away. The less time needed to get help, the greater the chances of saving lives.

Real-time health monitoring is the killer app for the Apple Watch. Forget about the many uses for athletes. Saving lives and monitoring health is what people will really want the Apple Watch to do for themselves and their loved ones. In the past, technology made life easier. With the Apple Watch, technology can literally save your life.

Everyone is concerned about their lives, so that’s the ultimate killer app for the Apple Watch. Rival smart watches are either focusing on making smart watches duplicate the functions of a smartphone or focusing on fitness activities. The Apple Watch can do all that but it’s real killer app is monitoring your health to improve it and preserve it.

The real killer app for the Apple Watch is literally concern for your own life, and that means the Apple Watch will appeal to everyone.

About killer apps.

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