Customers aren't so stupid after all

Customers aren't so stupid after all

Summary: James Coplien said some rather dramatic things at last week's ACCU conference, among them the following: There's a pressure that unless you're one of the first three players in the market you don't have a chance," said Coplien. "Quality is suffering for time--people pay money for the first, not the best.

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TOPICS: Security
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James Coplien said some rather dramatic things at last week's ACCU conference, among them the following:

There's a pressure that unless you're one of the first three players in the market you don't have a chance," said Coplien. "Quality is suffering for time--people pay money for the first, not the best. It comes down to the fact that consumers are willing to put up with crap systems that crash all the time.

On the one hand, he's partly right. The first mover in a market dominated by network effects (which the software market clearly is) has the best chance of staying the course, as the value of a product in such a market is based on the number of people using it, which favors the first-to-market. I wouldn't say second or third movers don't have a chance (Linux seems to be doing fine, and it wasn't a first mover), but it's certainly harder than if I were to sell oranges at the local farmers market.

I object to the implicit value judgment made in the second part, though. Consumers wouldn't bother to buy a first-mover product if they didn't decide they needed it. What if they can't afford to wait? Should victims of a natural disaster turn down the prepackaged emergency rations until someone managed to ship in fine cuisine from restaurants in Paris? Is there simply no value in getting a product early? Year one of a new car line often has more problems than year three or four. Should consumers refuse to buy until later years? Furthermore, wouldn't that cause year three or four of said car line never to appear?

Consumers aren't stupid. They buy the "best" in the sense that a particular product best meets their needs. Betamax was best from a technical standpoint, but that ignored the network effects of easy access to movies, compatibility across product lines and better range of options. That made Betamax worse in a holistic sense. Betamax might appear best to those who consider technical features of paramount importance, but worse in terms of all the things that matter to regular consumers, many of which have little to do with the technology used by a product.

Security is certainly important, though, and consumers appeared late to realize that. Then again, the market did change, and the reason for that change was the Internet. Non-networked systems have less risk from security issues. Not zero risk, mind you, as anyone who ever caught a virus from a floppy disk in the early 1990s can attest to, but a low enough risk threshold as to make security less important.

Today, Microsoft spends billions on security, even to the point where they yank developers off of the critical Longhorn project in order to release an update for Windows XP. Consumers made them do that, because security has become important to them.

See, consumers aren't so stupid after all.

Topic: Security

John Carroll

About John Carroll

John Carroll has delivered his opinion on ZDNet since the last millennium. Since May 2008, he is no longer a Microsoft employee. He is currently working at a unified messaging-related startup.

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Talkback

9 comments
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  • Companies buying first to market software...

    ... are usually not being victimized. After the first few buyers they have a good idea of what weaknesses they are getting, and they can compare the costs to the benefits.

    The popularity of first to market software shows the benefits frequently outweigh the costs.



    John, I think you deserve a blog to yourself.
    Anton Philidor
    • His own blog? We agree

      Yes, we think John deserves his own blog, too. Look for it in the next few weeks.
      David Grober
  • Consumers realized security was important too late

    because in general it does take more than one security problem to bring down a system. Indeed, you could run a Win98 system unprotected for two years (at least when it came out) before it came to a point when you simply couldn't run it anymore. I used to see that all the time. It wasn't until you had to wipe the hard drives to get rid of all the junk in their computers that people realized that their computers were compromised and that security is an important issue.

    That doesn't mean that they are dumb, but they see what they see. They saw their computers slow down gradually over those two years, but they just assumed that was because they were buying new software and the computers were getting older, or at least too old for the software they were buying. Now through experience they know it had more to do with trojans and adware than anything else. Of course nowadays people know that you need a decent system with decent memory simply to keep up with their security software running in the background. No doubt, XP SP2 has come a long way from the old Win98 days, and it does a lot to inform the uninformed on how to protect themselves, but it still requires third party software to safely protect a system. But at least one has the ability run a Windows system safely these days, if one is vigilant and heeds SP2's warning system.
    Michael Kelly
  • Google wasn't first

    Nor was it second, or third, in the search engine market. In fact, that market had moved on, with sites calling themselves "portals," then "media companies," before Google even got going.

    First mover advantage is real, but it's far from permanent. It costs more to come in late. But if you concentrate intently on what you are doing you can succeed.
    DanaBlankenhorn
    • Good Point

      Third and fourth (or more) movers overthrow first movers all the time. It's not easy, but then again, it would be hard for me to compete with GM, even though GM cars are terrible from a quality standpoint.
      John Carroll
    • Good Point 2

      Hit enter too fast. To complete...

      Third and fourth (or more) movers overthrow first movers all the time. It's not easy, but then again, it would be hard for me to compete with GM, even though GM cars are terrible from a quality standpoint. Still, people compete with GM, and succeed in doing so.

      I would say that its even possible to overthrow Microsoft. Somebody hasn't figured out a good way to do that, but it doesn't mean its impossible. People thought it was impossible to overthrow IBM, too.
      John Carroll
  • There's the concept of Total Cost of Ownership...

    ...that companies like to tout. What they don't get is that consumers make use of a concept, too. It's Total Value of Offering (TVO). This includes not only the product itself, but other factors like a company's reputation, does the product have after-market support and supplies, etc?

    You're right, the customer is not stupid. But companies want them to be. Because it's easier for them.
    ordaj@...
  • Show me the expenditures

    CNET's foremost Microsoft apologist finds independent opinion he can spin! Film at 11!

    Darned if I know how this is relevant to anything, especially if you're talking about consumer purchases, as opposed to corporate IT spending. But in both cases, look where the money is going.

    First, way over 90% of it is going to Intel-based systems that run Windows. The largest portion of that cost is the hardware, second is productivity software (read: Office), and third is the OS.

    Where in this process did the consumer get to make a real decision? XP Home vs. Pro? Office Standard vs. Pro? Nowhere.

    Where in this process was security enough of an issue to affect the decison? Nowhere. If Microsoft had chosen to spend $0 on security, how would the decision have been affected? Not at all, I think, because when you need a new computer and you're married to Windows (as nearly all the consumer marketplace is) you have no choice.

    Certainly I am pleased that Microsoft is spending money on making their software less buggy, which will by definition make it more secure. And they are making cautious moves (by acquisition, as usual) into the real security software space with anti-virus and anti-spyware offerings. Maybe someday they will have something mature enough to compete with the established vendors in this space and "the consumer" might be able to make the choice not to purchase 3rd-party protection.

    My apologies for writing what appears to be a simple MS-bashing talkback. It isn't about Microsoft, it's about John's continued defense of them. By all means give him his own blog. Then I can choose not to subscribe to it.
    GDF
    • It'll never happen

      I am not a player hater. But I wish that Player (MS) would step up! It's hard to believe that the second most most valued company in the world which banks a Billion dollars a month in cash can't afford to fix the code. But there there is always this played out quote from Bill Gates:
      "The reason we come up with new versions is not to fix bugs. It's absolutely not. It's the stupidest reason to buy a new version that I ever heard..... And so, in no sense, is stability a reason to move to a new version. It's never a reason. You won't get a single person to say they'd buy a new version because of bugs."

      When the leader of the company has views like thie, how can we expect to get it fixed? The only way to do that is to stop upgrading. This of course will never happen. When a new version of the OS comes out it will be sold on ever new PC. With Microsoft's new licensing schemes for Big Business they don't really care if they upgrade since the get the money anyways.

      I am afraid that we won't see stable Operating System as the Market Leader in our Life Time.

      Vince
      brittonv