Train Wreck

During the back half of the 1990s, I was in charge of corporate marketing at Cyrix, a Texas-based microprocessor company, and at National Semiconductor, the company that bought Cyrix.

Today, I looked at some of the CNET news stories I was quoted in back then. I couldn't believe some of the blustery crap that spewed effortlessly out of my mouth.

Everything we did was the fastest, most powerful, most highly integrated, lowest cost, blah, blah, blah. The processor gods blessed everything we designed. Customers were lining up around the block. Intel was the devil incarnate. Advanced Micro Devices was just a lowly also-ran, doomed to forever live in Intel's shadow.

As the story turns out, Cyrix imploded and National Semiconductor blew I-don't-know-how-many-billion dollars cleaning up the mess. Intel's still the world's largest semiconductor company, and AMD--well, AMD at least survived. ... Read more

I was working on this when I read this CNET News.com post. Apparently, Bill Gates believes that a strong technology sector will help keep America's economy healthy. I couldn't agree more. But I have a somewhat different take on the role tech has played in the U.S. economy.

Over the past few decades, the U.S. technology industry has had a number of "the sky is falling" moments, and every time we've managed to work through it and come out stronger than before.

For example, when I entered the job market in 1980, my employer--Texas Instruments--was the world's leading semiconductor maker. But in 1986, NEC and Fujitsu took the top two spots. By 1998, Japanese companies held the top 3 and 6 of the top 9 positions and TI had slipped to No. 5. Intel was the only bright spot, climbing the charts from 10th to 7th place.

Fast forward to 2006, when U.S. companies occupied 4 of the top 10 positions, including No. 1 (Intel) and No. 3 (TI). Rounding out the top 10 were two companies each from Japan, Korea, and Europe. That's certainly more balanced. What changed?

(Credit: Microsoft)

Well, U.S. technology companies and their employees seem to have a knack for innovating. But we don't just invent technology; we also create and dominate markets. We don't just rise to the occasion when our economy is threatened; technology innovation and marketing seem to be innate strengths of our culture.

For example, Intel, Microsoft, and IBM together created the personal computer. Contributions from Apple, Compaq, Dell, Hewlett-Packard, and others helped to make personal computing the most important product category in tech history.

Nokia may be the dominant cell phone company, but U.S. companies like TI dominate the chips inside, and Qualcomm invented CDMA--the competitor of Europe's GSM standard.

U.S. companies invented and dominate networking and the Internet. American companies invented the Palm Pilot, Tivo, and of course the iPod and iPhone. Except for Vizio, we don't make TVs, but TI invented DLP technology--the core of a new generation of HDTVs and video projectors.

It's surprising that we occasionally manage to out-innovate and out-market Asian and European consumer electronics giants like Sony, Samsung, Panasonic, and Philips.

First manufacturing moved offshore, followed by outsourcing of data and call-centers and even software and hardware development. But our unemployment rate has averaged just below 5 percent for the past 10 years, and it's not expected to change anytime soon.

When we're confronted with a challenge, we retool, innovate, create, and market. As an industry and with the occasional help of the government we also protect our intellectual property rights--one of the biggest challenges we've faced, and continue to face, since the early '80s.

At the end of the day, it's imperative that we continue to develop, nurture, and protect our human capital, our intellectual capital, and our venture capital. And not just in traditional electronics, but in biotech, nanotech, green tech, and energy tech.

Just as they say in the stock market, past performance is not a guarantee of future results. Technology is a treadmill that never stops or even slows; we can't either.

Note: a prior version listed Blackberry as an American invention. Research In Motion is a Canadian company. Thanks to Neal and sorry to all you Canadians out there.

Once upon a time there were no iPods, iPhones, Xboxes, Blackberrys, or Tivos. Really, I'm not kidding. There were PCs, though. And they were really expensive. But we didn't have anything else to spend our money on, so that was OK. We paid $2,000 for our PCs and liked it.

Back in those days, there were three microprocessor companies--Intel, AMD, and a little Texas (it's an oxymoron, I know) company named Cyrix. If you don't recognize the name, that's because Intel had such a lock on PC makers back then that Cyrix's processors were sold primarily through the third-party reseller channel.

It's a popular misconception that Cyrix "cloned" Intel's processors. Cyrix's processors were actually all original designs. In fact, Cyrix's manufacturing partners--initially Texas Instruments, later IBM and ST Microelectronics--licensed Cyrix's designs for their own branded processors.

Last week, I explained why high tech isn't known for its stellar marketing. Well, if you'll permit me to continue to throw stones from the comfort of my glass house, I'd say its branding isn't worth a damn, either.

Mothers should love their children, right? Then why do high-tech mother companies give their spin-offs such stupid names? Do they hate their offspring? It's not that far-fetched. They already saddle them with tons of debt and other baggage. Maybe a stupid name is just their way of saying, "Don't let the door hit you in the butt on your way out"?

Or maybe they're just trying to toughen the company up for the real world, as in Johnny Cash's A Boy Named Sue? I seriously doubt it.

Let's face it, high-tech is not known for its stellar marketing.

Sure, there's Dennis Carter's Intel Inside branding campaign, Steve Jobs' iMac, iPod, iPhone, iWhatever, and Michael Dell's direct-marketing concept. Aside from the obvious characters, even folks in the business--like me--have a hard time naming great high-tech marketers.

That's because much of high-tech marketing happens behind the scenes. Like Broadcom somehow managing to nail almost every market it enters, Google turning a great search engine into virtually limitless ad revenue, or Intel defining a next-generation microprocessor four years in advance of its launch.

That's a whole lot different from coming up with an ad campaign to sell beer or batteries.

You see, high-tech marketing is so interwoven with the technology that it's often unclear where the technology ends and the marketing begins. As we discussed in a prior post, marketing's job is to turn technology into successful products. But that statement doesn't imply or require that the transition from technology to product is either distinct or simple. Therein lies the rub. ... Read more

A few years back I wrote a monthly letter on marketing and business strategy, but there was a section at the end called Tobak's Great Wine for Techies. I think that was the only part anyone read. It had tutorials on wine varietals, regions, aging and storage, plus monthly wine pics, on-line resources, all kinds of stuff to help folks enjoy great wine without breaking the bank or taking a class.

You can check out the archives here.

I'm only bringing this up because 26 days ago I decided to go sober for a month. I've gone a week or two before but never a month. I don't know what I was thinking, but it seemed like a good idea at the time.

About two week in I recalled reading about dealcoholized wine. I got on-line and found a handful of wineries in the business of making wine without the buzz.

They all use roughly the same process. They make the wine using typical fermentation techniques, then employ a filtering process to remove virtually all the liquid, including the alcohol. This produces a kind of dealcoholized wine syrup. Then they add water back in and bottle it.

Ariel Vineyards, owned by J. Lohr, claims to have won a gold medal in a blind tasting against wines with alcohol. The website also listed about 20 awards. This got my attention. ... Read more

Way back in the dark ages--before cell phones, reality TV, or social networks--there was big iron. In those archaic times, computers were actually used for computing, as opposed to watching porn or idiotic video clips. The computing giants of the day included IBM, Digital Equipment, Unisys (the marriage of Sperry and Burroughs), Data General, and Wang Laboratories.

The transition to personal computing and networking changed all that. IBM and Unisys survived by refocusing on services. The others didn't fair so well. Markets change. Companies that change with them survive. Those that anticipate change do better still. Those that resist change or change too slowly go the way of the dinosaur.

So, in the '90s, Cisco Systems, Compaq, Dell, Hewlett-Packard and Sun Microsystems became the new system powerhouses. IBM was still very much in the game. And of course there was Microsoft and Intel, owners of much of the PC's intellectual property.

In recent years, we've seen personal communications and consumer electronics overtake computers to grab the high-tech limelight. Cool devices like TiVo, PlayStation, BlackBerry, Treo, Razr, iPod, Slingbox, and iPhone have taken center stage.

Waiting in the wings are robotics, nanotechnology, and virtual reality--technologies with the potential to really change the way we live, down the road.

So why the history lesson? Because, it helps me set the stage for what's next. We're clearly in the midst of another big transition. As an industry, we've been talking about convergence for so long the word has become almost meaningless. Nevertheless, convergence--whatever that means--is upon us.

The big question on my mind is this: which companies will be the new power brokers of the post-computing era of digital convergence?

First, let's look at today's market leaders. We've already discussed computing; now add consumer electronics, mobile-handset technology, video gaming, Internet software, and various odds and ends. That gives us a laundry list of companies that looks something like this:

Amazon, Apple, Cisco, Compaq, Dell, eBay, Google, HP, IBM, Intel, LG Electronics, Matsushita Electric Industrial, Microsoft, Motorola, Nintendo, Nokia, Palm, Qualcomm, Research In Motion, Samsung Electronics, Sharp, Sony, Sun, Texas Instruments, Yahoo.

Now we determine the key criteria for leadership in the new digital age. Here's my stab at that:

Intellectual capital. That includes a broad range of technologies and design expertise, plus the ability to integrate those diverse technologies into innovative platforms.

Breakthrough marketing. That includes powerful brand loyalty and recognition, coupled with innovative promotion and market development for groundbreaking products and services.

Content delivery. This is about the ability to develop creative relationships with leading media content companies, and deliver that content through a spectrum of consumer channels, worldwide.

Then we take all those companies, their market leadership positions, their capabilities with respect to the three criteria, add some intangibles, and voila, we have our answer. In my opinion, these five companies are best positioned to be the giants of the post-computing era of digital convergence:

Sony
Sony has a leadership position in more markets than any other company. It also meets all three criteria, despite an inspirational drought as of late. The entertainment business and an early lead in robotics certainly don't hurt, either. Sony is in the best position of the five.

Apple
Not so apparent from the data, but Apple has several leadership products and a demonstrated ability to create new markets and category killers. The company that Jobs built also meets all three criteria and nobody can claim better marketing. Apple's on a roll, what more can I say.

Samsung
This company has come a long way and now boasts a powerful brand and leadership in several key categories. Samsung also meets two key criteria and is working on the last one. The Korean giant is certainly firing on all cylinders as it continues on its blistering trajectory.

Microsoft
While Microsoft has been struggling for a foothold in convergence products, the game is far from over. With a powerful brand, a huge installed base, $40 billion in cash, leadership in several key markets, and moderate strength in all three criteria, I wouldn't rule out the software giant.

Google
Here's where intangibles come into play. Although the company has never developed or marketed a product per se, it has the brand, the channel, and the cash-generating machine to make a serious go of it. It all depends on where Google, the youngest and the long shot of the five, goes from here and how well it executes.

Of course, there is a big caveat to all this. The leaders of tomorrow may not even exist today. Back in the days of big iron, nobody could have predicted that you'd be reading this post on a Web site with your eyes glued to a flat-panel display on your networked PC.

If history repeats itself, there's a high probability that a new market, category, or product will set the consumer world on fire. If digital convergence ends up in the virtual reality domain, for example, then the next Sony might develop in Second Life. Stranger things have happened.

The point, of course, is that your start-up may challenge Sony, Apple or Samsung for the title of 800-pound gorilla of digital convergence.

Most start-ups fail. There are lots of reasons, but in my experience, the most common cause is that they develop technology and not products. Lots of people confuse the two terms, but the distinction is critical in start-ups. Here's why.

According to the book Marketing High Technology by the field's godfather, Bill Davidow, "Marketing must invent complete products and drive them to commanding positions in defensible market segments." Bill called this the Strategic Principle.

Bill Davidow

(Credit: Mohr Davidow Ventures)

In case you've never heard of him, Bill Davidow was senior vice president of marketing and sales at Intel, where he helped the Santa Clara company to become the chip goliath it is today. Later, he founded Mohr Davidow Ventures, a prominent Silicon Valley venture capital firm. The man has credibility.

Let's break down the Strategic Principle.

The first part means this: it's one thing to develop technology that does something cool, perhaps even something that's never been done before. It's another matter to deliver a complete product that meets a critical market need better than the competition. And by "complete product," I mean hardware, software, infrastructure, sales channel, promotion, customer service--the whole nine yards.

The second part means that if your product does not have what it takes to be a market leader, then you might consider segmenting the market more narrowly. Perhaps the product will then have a chance at sustainable market leadership. The catch is that the narrower segment still has to be big enough to be of interest from a business standpoint.

Now tell me, who can argue with Bill's logic? What company, start-up or otherwise, doesn't need marketing? ... Read more

Back in 1990, my wife and I went to Europe to explore the land of our forefathers (and foremothers) by car. The first thing I noticed when we got in our Audi rental was that it didn't have air conditioning. It was August; what were these people, barbarians?

Then I turned on the radio. The display had all this text information that identified songs and other stuff. Now that was cool. I was sure that, before long, American broadcasters would adopt similar technology.

Seventeen years later, I'm still waiting.

Last year I was asked to do a minuscule amount of consulting for iBiquity, the developer and exclusive licensor of digital radio technology in the U.S. I was dying to find out what had delayed my ability to identify a Jane's Addiction song on the radio, not to mention hear it in CD quality. Here's what I learned, but first, some background.

In 1991 CBS, Gannett (publisher of USA Today), and Westinghouse (which is now owned by Toshiba, in case you didn't know) formed USA Digital Radio Partners. I'm guessing it was some sort of joint venture. In 1998, a Westinghouse executive and former McKinsey consultant named Bob Struble led the company's spinoff with backing from a horde of broadcasting companies. Two years later, the company merged with Lucent Digital Radio and iBiquity Digital was born.

iBiquity calls its product "HD Radio." No, HD doesn't stand for high definition. It originally meant hybrid digital, but the company now claims that HD doesn't stand for anything. That's probably because it's easier to get a trade mark if the term is a name as opposed to a generic term. Intel did the same thing with MMX technology, which originally stood for multimedia extensions, although you couldn't get anyone at Intel to admit that now. ... Read more