Preface: My viewpoint below is not always from the perspective of Gemstar. Long-run, even if this product launch fails, I don't think its any reason not to own Gemstar stock. I do think Gemstar will succeed in the end with the ebook. I just think they are starting out very badly with a poorly conceived product launch. So now on to the main diatribe:
NY Stew,
I know all the ebook arguments inside and out. Perhaps I am daff as I spent the entire summer working on strategies such as these, and trying to convince an entire company (somewhat successfully) as to the correctness of my viewpoint. And I fully admit my take, although very strongly held and in complete agreement with Geoffrey Moore and many other theorists on the subject, could be wrong. I have also seen consumer studies et al. (I think early adopters will take to the product). I also know why the ebook is priced at $299. As a Gemstar shareholder I would not be happy with this reason. This is not the same thing as launching a DVD player or the VCR.
What Gemstar needs to do is establish its content as the standard. Only when enormous amounts of content is available will ebooks really take off. A few big authors is nothing. You need to get ubiquitous publications to Gemstar's standard. Whose standard will proliferate is the end-game. I will honestly tell you, that I have used Thomson ebooks and my Handspring Visor to read paperback novels on this summer. To tell you the truth for a paperback I actually enjoyed my visor better (note the 1200 model is much superior but pricey as well). I still fail to see the compelling value of the ebook in the consumer market for anything but the "cool" factor. In such a commodity type product being first with the most content and critical mass of readers is imperative. Microsoft would never be where it is today if it did not push its first mover advantage to the mat; its product was crappy, but the network effect it was able to solidify with its first mover advantage meant everything.
Also, have you tried downloading a book with the Gemstar ebook. It isn't as simple as going to Barnes & Noble, picking your title, and uploading it. It is a two step, two web-site process. I got so pissed the first time I tried it I sent a nasty note to Barnes & Noble stating I'll never buy here again (but, if I can get the big Bs in sci-fi like David Brin, or Doctor Who novels, or top historical works only in Gemstar format, then yes, I will recharge my 1100 model ebook and put it to good use, frustrations with the download or no frustrations).
Look, I understand the need to develop a new product. Heck, I own 3100 shares of Globalstar for god sakes and that was and continues to be the worse initial product launch in the history of the world. I understand this and am very patient - I see the greatness. But what Gemstar is trying to do is kick start a consumer electronic product into a mainstream audience and sell several million copies within the next year. At least this is the claim. The current strategy does not fit that claim. I see the folly! Neither does it fit the more traditional "razor-and-blade" strategy of getting the razors out there so you can sell the blades.
I'm not saying Gemstar is doomed. IMHO (which of course I can be very wrong since I don't see everything from Gemstar's point of view, and yes I am aware of some of the reasons Henry is pursuing this strategy and ways he has planned to overcome some of the difficulty, and I'm still not too impressed) that Gemstar is making a fundamental high-technology marketing error in the way it is launching the product.
But we shall have to see. I will happily be proven wrong come this time next year and Gemstar;s ebooks format takes the publishing world by storm, over one million sold, etc.
I just don't think it will be that pretty. I do think that the the 1100 model will probably sell in the 100-300 thousand range in the next year, maybe this will be enough. But the take the juggler strategy is certainly not in evidence.
Tinker
P.S. the only distinguishing, non-easily imitable feature of the ebook is the absolute security system. We shall have to see how important this becomes. IF it becomes imperative, then no worries. The initial launch may be botched, but as long as no one else develops similar technology, then GMST will have time to correct its mistakes Microsoft, Adobe, Peanut Reader and all the others will just be plain out of luck in such case.
In regard to making the ebooks a simple reading device, I understand the merits of this argument. But this does not stop me from thinking it is erroneous. Gemstar's purpose for keeping the books simple is not to create a better reading experience or lower cost product, instead it is to insure that all content that can get to the ebook gets there exclusively and only through a Gemstar server. History has proven such closed strategies to be flawed. But maybe this will be one of the exceptions, I mean no sarcasm here, it could be. I just personally, and humbly, have severe problems with the strategy Henry is pursuing. I think it ill-conceived, rushed, under-funded, and a lot of other things.
But as I reiterated, it didn't stop me from picking-up some Gemstar in the 50s on Thursday. IPG will make or break Gemstar whether or not Gemstar succeeds with the ebook. Long-term, I'm sure Gemstar probably will succeed with the ebook.
But as with many things, who are you going to take business advice from: Henry Yuen or TinkerShaw? I stand by my opinion, but if I were me (which I am), I wouldn't be taking my business strategy over Henry Yuens. So take my opinion as it is. Just a strongly worded, well thought-out, but possibly erroneous, contrarian thought on the strategy which should be used for launching the ebooks.
I think that a study of how this launch takes off will be an excellent real world example of the principles of Crossing the Chasm, as well as watching the battle for becoming the standard. It will be fun and educational to watch it unfold in real time. Since I intend to run a company like this some day (well, not many companies like Gemstar, but you get the point), I will watch with much anticipation and enjoy every moment, whether I'm right or not. Lets keep our eyes open. |
