CES 2019: The end of the technology segment as we know it

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At this year’s CES I saw some amazing computers. Whether you’re into games or want something for work you’ll be able to buy something in a few weeks from a variety of vendors that will likely make your old box look like yesterday’s paperweights.

The OEMs at the show showcased some impressive design work. But one of the most interesting conversations I had was with Microsoft’s VP of Corporate Communications Frank Shaw. [Disclosure: Microsoft is a client of the author.] One of the global trends he’s observed has been the death of the technology segment. Now don’t go shorting all your technology stocks in a panic – this is a good thing.

What he argued was that if you look at most tech firms, they’ve stopped acting like the world revolved around them and started acting like it revolved around their customers – granted, you can likely name the exceptions. Increasingly, firms are understanding that to succeed, you need to listen and adapt to what your customers’ needs are or you not only won’t flourish, you won’t survive.

The irony for Shaw taking this position is that this isn’t the way Microsoft used to be. But a great deal of the reason they’re now so successful (and passed Apple in valuation) isn’t because they built a better smartphone. It’s because they’re doing a better job listening to and responding to their customers.

You see, the tech market was once convinced that they knew your business better than you did (which was almost never true).

Microsoft’s pivot deserves to be examined. It’s also now being emulated by most successful tech firms. Why is that the end of the technology market as we know it?

The hubris of youth

After IBM slipped, younger firms like Sun Microsystems, Apple and Microsoft came to market and quickly accumulated massive wealth. This wealth not only provided a substantial amount of power, it led to a segment gestalt that had each firm thinking the universe revolved around them. It wasn’t unusual to go into a vendor meeting and have the vendor completely disregard your wants and needs while exposing their own brilliance and how they alone could make you successful.

But the vendors didn’t listen and, for the most part, not only didn’t seem know the company’s unique advantages, disadvantages and personality, they didn’t care to get to know it. Some of the nasty mistakes included things like Auto PC in the car. Auto PC, while very feature-rich, had too much overhead to work well on the hardware Clarion supplied (I was part of the long-term trial). My wife, whose car I lovingly put it in, hated it so much that she was constantly threatening to yank the thing out and throw it out of the window. One example was that the GPS system was so slow it couldn’t keep up with the car’s speed so, rather than getting directions, you got a near-constant stream of “rerouting” alerts from the device.

However, one of the best examples of tech company hubris was the conversation I had with the Office team when they told me they had cut a very popular feature because customers had asked that it be cut. (The feature in question was that if you were a business user of Office you could have a second version to use at home.) This didn’t quite add up, so I asked why… I mean, who doesn’t like free perks?

Apparently, after they explained that if a customer pirated his or her “free” copy and Microsoft found out about it, they would sue them. Customers indicated they didn’t want to be sued – obviously – so therefore they didn’t want free Office. I remember insisting that it wasn’t the “free Office” they didn’t want, it was “being sued” they didn’t want to no avail.

But we can go down a huge list of companies in the 1990s that behaved this way. Most everyone was convinced that they were expert at everything and they’d walk into companies that had been around for decades and attempt to tell them how to deploy their technology without a  hint of a clue about how that company was run.

What changed?

Well the companies matured, and IT revolted. Or, more accurately, IT’s revolt forced companies to mature. Linux was largely created because IT concluded that they didn’t like being told to do things that ended badly. So they took back control and concepts like open source caught on while firms like Sun Microsystems and Netscape went under (and Microsoft stopped being the darling of tech).

Those that remained, like Microsoft, got new leadership, learned to embrace Linux and open source and prioritized listening over telling. The end result is that at the meeting where I met with Frank Shaw they weren’t focusing on the latest version of Windows or Office, they were talking about how they were helping supermarket chain Kroger and other stores improve yields by helping introduce concepts the stores helped define. Which dovetailed nicely with utilizing hardware, like security cameras, that the stores already had purchased to capture critical data on buyers.

Microsoft isn’t alone. At this year’s CES, on stage and in briefings, virtually every major vendor I met with or watched had tailored a significant part of their pitch to how they were working with customers to create unique, customer-defined solutions. They weren’t telling, they were listening.

The end of tech as we knew it

Tech firms have always been thought of like arrogant jerks that didn’t listen and spoke incessantly about things they knew nothing about. The world revolved around them and, to be fair, they were initially almost like magicians. But the magic, in way too many cases, often fell far short of the expectations they set.

Now the firms are embedding themselves in their customers’ efforts and the magic, such that it is, is co-created with these customers. The result is that – surprise! – it works much better because the company that knows what needs to be done is defining the result, not the firm suppling the technical part of the solution. Technology is a tool, it isn’t an end in and of itself. There are still companies that don’t get this. But most I’ve met with recently do get it, and that is a huge change for the industry.

Tech as we knew it is dead, and tech as it always should have been has been reborn. I thought this was a fascinating observation. I just wish it had been mine. Honestly, I think I was too near the trees to see the forest.

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