2004 has been a year of new products from Apple’s mini-iPod, to Gateway’s competitor which beat Apple to market with a mini and a color screen, to the third generation Media Center PC and all of its accessories, to the launch of portable gaming systems from Sony and Nintendo. However there were a number of opportunities that were missed which suggests that 2005 should be even more interesting.

Smart Phone Bundle

The most capable smart phone on the market is the PalmOne Treo 600 series which launched its latest version the 650 in the 4th quarter of 2004. However even though it is the most capable in a market that sells tens of millions of products every year the total number of Treos remains well under 1 million sold. The most common reason is that users simply can’t get used to a phone the size of a Handheld Computer or a Handheld Computer the size of a cell phone.

Users have, for some time, indicated they want their phones to be small and relatively simple while they need their email device to be large enough to use for messaging and other things. This would suggest a two device bundle would be the most successful in the segment. A specialized Handheld Computer for email and other PC like things and a small cell phone that would handle the communication tasks. Yet the two device trials by Dell and HP haven’t been as successful as either vendor would like.

This is because Bluetooth, as a device connecting technology, simply is not consistent enough to provide the ease of use the segment demands. First, on phones, it doesn’t yet support multiple devices which means you have to choose, manually, between peripherals. For instance it won’t work with a wireless headset and a Handheld Computer at the same time, and, when you first start in the morning the connection between the devices must be manually set up otherwise mail will not flow through the phone to the Handheld Computer.

A single vendor solution could address this because they could work to insure the connection between the devices was permanent and persistent. The user may want two devices but they want them to work as one and, currently, no one vendor makes both so this can’t effectively happen until that changes. The vendor who figures this out could use one device to pull the other and own this emerging segment.

What Happened to Marketing?

What is the big difference between the iPod and technically stronger offerings from iRiver, Creative Labs and Rio? Marketing budget and execution. Apple has continually showcased the power of marketing by focusing on the core benefits of their products they have maintained a premium priced non-compliant PC platform for decades after the arguably superior Commodore, Atari and IBM platforms in their times crashed and burned.

If you realize that the iPod alone is providing much of Apple’s favorable financial performance and a huge boost to their market value as a company you should conclude that effective, high budget, marketing is the ticket to success in this segment but, no other vendor is marketing to the same level.

Dell is doing a great job with product placements and IBM, in the corporate space has significantly stepped up PC marketing. Even HP is pushing printers with the closest thing to an Apple like ad campaign but the industry in general is simply ignoring that simply building a good product is not enough to insure that lots of buyers will come.

Until the vendors fully understand that a strong marketing campaign is just as critical as a strong product it is unlikely we will see any vendor benefit to the level that Apple is benefiting and not marketing effectively, specifically forgetting to do demand generation, continues to be a significant drag on the entire high-technology segment.

Digital Camera Mistake

What most seem to forget, including Sony interestingly enough, is that the most successful digital camera historically was the Sony Mavica floppy disk camera. Consumers easily understood that simply pulling the disk from the camera and putting into their PC was the easiest way to transfer pictures. Since then vendors have completely ignored this experience and instead focused on complex docking, cabling, and email solutions that often do more to scare the consumer away from their products then they do to entice consumers to purchase them.

This is particularly amazing given the flash memory virtually every one of these cameras uses is removable and functions in current generation PCs much like floppies have traditionally functioned. Simply showcasing that the memory card can be used as easily as a floppy drive should go a long way to removing the concerns surrounding a new digital camera and reduce the incidence of people filling up memory cards and putting them on shelves as an expensive long term repository for their pictures.

Often the high tech industry gets so excited about the “extras” and the “technology” it forgets that this stuff can scare away buyers who simply want a new product to work like the old one. This perception that digital cameras are difficult to use forms an unnecessary barrier for buyers who likely would now find that the new cameras are as easy to use as the old ones.

Holes in the Home Digital Hub

While the Microsoft Media Center is the most comprehensive attempt to build a digital hub for the home it is far from complete. The idea of having a PC, that could be used for other things, as the digital hub in and of itself is questionable given the risks associated with its roll as a PC. Ideally, the concept of a hub is closer to a server than it is to a client in terms of requirements. It needs to run seven days a week 24 hours a day and it needs to run at a near consistent level during this time while it is downloading or recording content. The closest thing we currently have to a server is the HP offering that is designed to look like a high end piece of stereo equipment but it is a fully functional client device as well which suggests it will be used in ways that could attract Spyware and other performance robbing applications. A true server is the first missing link in the long term digital hub strategy.

The second is Automotive. Although OmniFi, which makes a powerful wireless networked automotive solution was part of the product launch for the Media Center, their automotive offering was not and moving digital MP3 players into the car to address this problem is inelegant. There are 4 places people traditionally use music, on their person (portable radios and boom boxes), in their stereo cabinet (receivers etc.), on their PC, and in their car. Of the 4 the car is one of the most common and this is the one place that continues to lack sufficient focus.

Finally an overarching service is still missing. The consumer wants a solution that is as easy to use and as trouble free as their set top box today. However, should they lose a hard drive or not be able to get the components to work together, in many areas; they are faced with troubleshooting the entire system themselves which is not consistent with their skill set. A service that provided this kind of help to initially fix problems remotely, or if remote problem resolution wasn’t possible, could dispatch a technician to resolve the product should be well received and critical to the satisfaction the user has with their new Media Center purchase.

While a cottage industry has sprung up of out of work technicians working to solve problems like this there is no comprehensive program yet on the market to insure that the result of an installation will function and function properly. This suggests that there may be a lot of unhappy customers out there struggling with solving the networking and installation problems surrounding any new technology around the holiday season and a lot of overworked local gurus trying to address these problems.

In addition there will be patches and fixes to this platform that should be applied timely but few things in the personal entertainment segment today require this kind of care. In the end the consumer just wants to plug in and watch or listen to their media and the proper service could insure this something I doubt is truly missed by many making the fix very likely, even from companies like Radio Shack, in 2005.

Wrapping Up

There is no shortage of opportunities out there for creative ways to address consumer problems. And often it is more about product positioning and marketing then anything else. 2005 will be the year we see if the companies can step up and drive the Hi-Tech market again and trend towards the kind of growth we used to expect from this segment. If they can plug some of these wholes, that will go a long way to insuring this growth.