Is Longer Better?

Heard a commercial the other day for Hewlett Packard - they were offering one of their notebook computers. A single statement in the ad stood out to me:

"With an extended warranty longer than most everyone else"

Longer than most? My brain naturally wanted to find out who has the longest warranty.

If it isn't the longest warranty, why bother mentioning it?

Back in May, Seth Godin wrote about the challenge facing Fiorina while she was at HP:

The reason Carly had so much trouble at HP is that they were under too much pressure from Dell. If you're going to be the standard, you need to be boring. If you're boring, you've got to be cheap. Cheap and standard is what Dell does best, and I don't see how you can beat them at that game.

As the choices businesses and consumers become clear and easily comparable, you've got to either be different... or cheaper.

Why bother talking about how long your warranty is - especially if it isn't the longest? That is a feature - and everyones got them.

It seems that HP still lacks purpose & direction...

I think they have to do something different. As Seth said, different or cheap. As long as they fail to differentiate themselves, they'll have to compete on price because the PC industry, for the most part, is a commodity business.

There is a company - probably several now - that have built niche markets in the PC industry. One of my favorite examples is Alienware - they sell computers that are designed specifically for gaming. Do they really do something different? I've played computer games on my Dell as well as on my Toshiba, both worked fine. But it seems that they've got a nice little business going - charging fairly high prices for something that consumers can get anywhere.

Companies selling commodities - like computers - need to realize it isn't about the product, it's about the people who use the product.

If I were running HP, I'd sacrifice the broad home market and focus solely on first time computer owners - which is still a growing market. Every kid that doesn't have a computer will get one eventually, right?

ACTION ITEM: Figure out the Top 5 major uses for a computer - internet, schoolwork, gaming, etc. Cut the number of computers down to those 5 models. (I think some companies are doing this already).

ACTION ITEM: Write a "Picking The Perfect First Computer" booklet that people can download from their website or pick up at all stores that carry HP computers. This booklet has to focus on education, not influence. The goal here is to impart the wisdom of HP to the layperson. (NOTE: The goal of organizations isn't to sell stuff to people, it is to help those people grow)

ACTION ITEM: Load each computer with software that makes it easy to maintain and fix remotely. Put SPAM blockers in whatever email program comes loaded on the machine and include a "Top 10 Ways to Protect Computer From Hackers" type flyer. This, as well as all other documentation, should be written in an easy to understand manner - lots of pictures, links to get more detailed information, the number for customer service if they want more information or have questions... which leads us to...

ACTION ITEM: Open a call center stocked with warm & caring people. Friendly, knowledgeable voices that these new computer owners can speak to about anything computer related. Okay, probably easier said than done. However, the goal here is to make the computing experience as easy as enjoyable and "profitable" for the customer as possible.

ACTION ITEM: Load each computer with a second hard drive that is hidden from the user - and automatically back up all the users files, so not only can the computer be restored if something goes wrong, but the user won't lose any files. (is anyone doing anything like this today?)

ACTION ITEM: Print and mail weekly/monthly "Tip" postcards on getting the most from

I'm not sure all of these are good ideas - and I'm sure that there are probably dozens of others that I can't even think of (thoughts?). But when you're in the commodity business, and you aren't willing to change what you offer, the best thing you can do is focus on people first and product last.

Is all of this stuff expensive? Yes. Will it go a long way to making loyal customers who will buy their second, third and fourth computers from them? You bet. Over time, as people get more comfortable with their computers, the number of times they have to call customer service will go down, and that is when the profit from the relationship will go up. I'm not sure that most large companies are capable of looking past monthly or quarterly numbers, and that is why you get CEO turnover - because most are driven solely by the numbers, and aren't given time to think beyond the current quarter. Perhaps they could fund this type of program from the money they'll save buying out their current CEO when it is time for them to go.

It seems to me that most "First" computers are purchased by parents for their kids. Also, one of the things that parents would be looking for is not to be the helpdesk. As I'm sure is the case with most of you, I get calls and emails from friends & family all the time asking to help them buy a computer or someone wanting help with a computer problem. That is the business that HP needs to be in. They need to be more in the INFORMATION business and less in the TECHNOLOGY business.

So, how would you fix HP? What about other commodity businesses? How would you fix them?

Comments

[aleah]

Jon, my friend, with a title like this, you are really setting yourself up for some interesting traffic. I mean, not that I surfed in looking for, cough, er....good post! :-)

[Olivier Blanchard]

Cool ideas.

[Jon Strande]

Aleah - yeah, I thought about qualifying that title, but decided against it. So, what are you surfing for? ;-)

Olivier - thank you!

Jon

[christopher grove]

Jon,
your post made me think of 2 things:
1: what you're suggesting is to make HP more of a niche business: that means that you're heading away from commoditization. That's not a problem (I agree with your points on the Alienware business, but again if that works so well, it's because they've escaped the comidity trap) as such, but I think that the point needs to be made. Given that the HP tagline/slogan is Invent (a superbe slogan if there ever was one: even better that Think Different) HP should be moving away from comoditization and looking and all of the possibilities of the high end of the PC market. That implies that I don't think that HP's doing that at the moment;and I do think that they need to improve on that. At the moment they've got the full range, but their entry level PCs don't reflect the Invent image, and that doesn't help the brand/business.
2: While I like your idea about a first PC, which in theory is a very good one, there are pitfalls to be avoided. Packard Bell tried/tries that in Europe (I worked in their aftersales dept). Now I remember customers calling in saying that they've just bought an entry level PC that was marketed as a simple basic family PC, but that had been sold to them by salesmen who told the customer that of course it could play all of the latest games... Of course, when the customer had a problem with the games they bought they contacted us, and couldn't understand why their games didn't work. Any PC maker who goes into the first PC market will be confronted with this problem (through no fault of their own) and any amount of positioning will not enable you to avoid the pitfall of the salesman who simply wants to make his sale by any means possible. So, any first PC must be loaded with more tech than entry level people think that they need. Your idea about a second hidden hard drive is great, but you also need a good graphics card, sound card, CPU, etc, otherwise you'll get the same problem.

[fouroboros]

[re]invent, please.

Funny, but having been a user of HP laser and imaging prods for a while now, and not much of a fan of Epson's follow thru or consistency in that field, my belief is that HP is the digital Kodak, a new age Polaroid.

They seem to have been backing painfully, reluctantly, slowly, embarassedly into the realization when they should be charging into that terrain like an Edison on crack.

But that's just me.

[Nuthatch]

Well, here's what I think is stupid about that ad: It should be "longer than most everyone else's". As it reads, it means the warranty is longer than everybody else, implying a physical length comparison. I hate crap like that!