Wednesday, 27 April 2011


YOU REMEMBER THE SONG: "Delta Dawn whats that flower you have on? Could it be a faded rose from days gone by?".....A story of a heartbroken and abandoned woman so shattered that she lost her mind then wandered aimlessly around town with a suitcase---waiting in vain for her lover to come. WELL----I MET A REAL LIVE DELTA DAWN ---BUT WITH A VERY DIFFERENT ENDING----THAT LIFTED MY HEART AND MADE ME CHEER.
I drifted a few days ago into a small New Mexico town--- settled into this empty lot---and walked around with my senses alert. I make it my destiny to detect useful drama----and I soon catch wind of a powerful story: Of a tiny uneducated mexican lady married 20 years to a man she made wealthy with her dilligent labor--- then was tricked into signing away her legal rights-- kicked into the streets with only a pick-up truck to live in. Worse yet, the stress brought on a debilitating stroke and for a long time she just barely clings to life and sanity on the mean streets of this small town. As with Delta Dawn---everybody knew! AND THEN----AND THEN-- She physically and mentally improved a bit....noticed a junker house selling for a song----made a deal to buy it---got a job cleaning toilets---and soon had a place to live. Working 2 jobs, she slowly renovated the place and leveraged it to buy a junker 4 plex. Life began to have purpose again. And Then a whole half block of abandoned store buildings came up for sale-----and she bought them with almost nothing down and a promise to pay. I will go find this lady and hopefully catch her spirit.

I found the old stores--4 of them--now conglomerated into one.

With minimal exterior fixing---

and this more-than-appropriate name. (I smiled at the misspelled word )

Meet Rosie---a heroine of hope and self healing---a bootstrap visionary, entrepeneur and even (as you will see) an empire builder.

She stocked an empty store with 300,000 items---all these screws and bolts.

Used items--tires wheels--household items

Row upon row of hardware ---she put every single piece in place.

one whole wing is a thrift store.

Next door a truck and lumber yard.

It had no roof---till she built it---personally rebuilding trusses, nailing down roof panels----THEN covering it all with tar paper and roofing-----it doesn't leak.

She poses with me----so tiny a bundle of indefatigable energy---and WILL. By comparison I am a lazy lazy bum unworthy of the hug she gave me.

BUT WAIT----THERE IS MORE--- I went home -- pondered this blythe spirit---decided I needed to know more. Next day, I tracked her down at her Motel----HER MOTEL??? Yes she bought a delapidated 51 room motel and began restoring it----painting, carpeting, tiles, tvs etc. 21 of the rooms are functional. She showed me the whole thing---a staggering project for one person to undertake. She is undaunted. She serves me tea while I ask the deeper questions.

She has never told her story she said--when I had finished. She wept once relating painful

details. What I want to know is the secret to her will, vision and energy. Later I will sumarize the story and share my guesses.

A glory shot-----she celebrates her motel. Now she can houses the "team" she is assembling-to help her in the next phase of her empire. (Several workers--including her son)

She has plans for this old swimming pool-----to roof it and make a sunken tea room with fountain.
Here's her background: Born in Mexican town near Chihuahua; 2nd of 8 kids --given to her aunt to raise--then returned to a stern mother when the aunt died. As a child she sold ice cream then operated a horse and buggy transporting stuff and helped her father build an adobe house. At about 15 she slipped into the US at Douglas, Az and made her way to Benson where she got a job with her husband-to-be. Eventually they were married for 28 yrs producing one son. She worked unceasing for her husband and they got rich---perhaps a half million--sold out, moved to this town where the wretched husband played his dirty trick and absconded with the money, putting her on the street.

RANDY PHILOSOPHIZES: I don't know why some people sink and some swim. I'm betting it's a long string of cumulative accidents that shaped our character. I'm convinced, however, that it's easier than we suspect to facilitate great personal strength in kids and in adults---that we can "catch" admirable qualities from our intrepid friends. I think Religion and other cultural forces often intefere. I was saddened that this lady avoids love interest and seemingly never plays. I was touched by her undefensiveness.

Saturday, 23 April 2011


DEEP DEEP IN THE BOONDOCKS---LEGEND HAS IT---THERE EXIST A REAL LIVE TOWN WITH ALL THE QUALITIES OF MYSTICAL BRIGADOON--(Lerner and Lowe's Broadway Musical.) I will go find it---but count me skeptical at the outset---Why should the remotes foster better people or a richer life than big town USA.

There it is---out there in the bushes---a bare handfull of houses---what could possibly be so special about this dot on the map--that would give rise to a national reputation--(among the underground cognoscenti)

Arriving on its outskirts---I'm hoping you cannot read its name----I will not reveal the state or approximate location---like so many small and exquisite things its essence is somewhat fragile---I hope to describe it without injuring it.

Already, it is a weekend destination for those fleeing conventionality.

Seen from west to east----nothing special so far---a store, post office, bar and taco stand.

A one stop sign town---some old adobe ranch houses from last century. What---I say--What--- is all the hubub about?

I stop and walk around town----saunter through an art store and get my first clue---It's filled with beautiful things, locally made ----Not least of which is the beautiful personality of its keeper---A JOYFUL AND UNDEFENSIVE individual. In mere seconds she celebrates something we have in common (I won't say what)

Across the street on a weathering adobe wall I find my second clue. And of course I got the story.

Backing away (can you still see the 86 sign ) You get a fuller picture of the 86 club---an amazing impromptu institution ----a place for those individuals who've been eighty-sixed (expelled) from the bar to gather with other expellees--and commiserate with their kind. Tomorrow their sins are erased and they can go back. Later in the evening as I passed ---all the chairs were filled with sodden but not sullen souls---bantering away.

But all I'd seen thus far paled to insignificance when I was invited to a dinner party with these three long-time denizens of the town. Surely one of the great dinner conversations of my life---very much like the movie--MY DINNER WITH ANDRE. Unlike most of my interviews---these inquisitive folks probed MY mind as much as I probed theirs. What great humor and insight. I had found the secret to "Brigadoon's" reputation----UNFETTERED. POLISHED PERSONALITIES.

RANDY PHILOSOPHIZES: Like Brigadoon---this town is a momentary materialization of something--"non material". More specifically, it is a critical-mass of evolved personalities. Just two polished souls will attract a third and the three will draw--with increasing pull--a fourth---and so on till critical mass is achieved and like a collected ball of hydrogen will begin to glow--star-like. Towns come alive like stars by the process of fusion---creative connection. Put yourself in such a town and (if you let yourself ) you will catch the glow and add to it.

In a later interview with one of those three I learned more: One creative soul generated a terrific town library---another spearheaded a community garden--still another initiated a film festival---another teaches the world to build inexpensive cob houses---another donated land for a sizable back-to-the-land community---another arranged internet service for the community--others lead meditation sessions, book discussions and art projects.

Interestingly, the town has no law enforcement officers---the odd misbehaver is subject to community pressure---which usually suffices.

The overriding truth I leave with is that we need not search for Brigadoon---we can build one anywhere.

Friday, 22 April 2011

Goodbye, IBM. Seriously.

For those of us who worked at Apple in earlier days, the company's current success is sometimes surreal.  I had one of those moments today.  Back in the mid 1990s, we were struggling to get to $10 billion in revenue per year, a figure that seemed ridiculously high.  This week, Apple reported quarterly revenue of $27 billion.  Apple is almost certainly now a $100 billion a year company.

To put that in perspective, Apple is now larger than companies like Honda, Sony, Deutsche Telekom, Procter & Gamble, Vodafone -- and IBM.  Apple is very close to passing Samsung and HP, which would make it the world's largest computing company.

In 1981, when IBM entered the PC business, Apple ran a big ad in the Wall Street Journal saying "Welcome, IBM. Seriously."  At the time, everyone thought it was a very cheeky move by a tiny upstart company.  No one -- and I mean absolutely no one -- would have believed that 30 years later Apple would be looking at IBM in the rear view mirror.

The spookiest thing is that Apple may still have a lot of room to grow in both mobile phones and tablets.  There's no way the company can keep growing like this indefinitely, but it's very hard to predict exactly when it'll slow down.

Thursday, 21 April 2011

Quick Takes: The RIM Tragedy, Lame Market Research, Ebooks Closer to Tipping, Flip vs. Cisco, Google as Microsoft, Nokia and the Word "Primary"

Short thoughts on recent tech news...

RIM as Greek tragedy

I wrote last fall that I was worried about RIM's financial stability (link), but I never expected the company to start inflicting damage on itself.  RIM has always come across as a calm, dependable company.  Maybe not as flashy as some other firms, but reliable and smart.  But as we approached the PlayBook launch, the company has started to look like its own worst enemy.

It's clear that the PlayBook was designed initially as a companion device for people who have BlackBerry phones, and only those people.  That's an interesting choice -- not one I would have made, but I can see RIM's logic.  But apparently RIM decided late in the game that it needed to market the tablet to a broader range of customers.  It started talking up the features those users would need, without making clear that the features would not be included in the device at launch.  Many of the things the company has been touting -- such as Android app compatibility and the ability to check e-mail messages independently of a BlackBerry -- were not available when the device shipped.  RIM has been marketing vaporware.  That guarantees disappointed reviews that focus on what the device doesn't do, rather than what it does.  Check out Walt Mossberg's write-up (link).

While this has been going on, RIM co-CEO Mike Lazaridis has been compounding the problem by creating a personal reputation as a loose cannon.  His latest escapade was ending a TV interview with BBC when they asked about security issues.  The use of the word "security" was mildly provocative, but if you've ever dealt with the British press, you know they specialize in goading people to get an interesting reaction.  The more senior your title, the more they'll poke at you, to see if you can take the heat.

The way this game works, there are several techniques you can use to deal with an aggressive question.  You can laugh at it, you can calmly point out the flaw in the question, you can answer it earnestly and patiently, and you can even pretend not to understand it (I did that once on a UK TV show and it drove the interviewer crazy because he didn't have time to rephrase the question).  But the one thing you can't do is stop the interview.  If you do that, the BBC will post a clip of you online that makes you look like a gimlet-eyed prima donna (link).

The fact that Lazaridis did this means either he's losing personal control under pressure, or not being properly briefed by his press people, or both.  Whatever the cause, it is unprofessional, and it's making RIM's challenges harder.

If you want to understand the damage being done, you can read the forward-looking obituary of RIM that Slate just ran (link).  Or check out this column by Rob Pegoraro of the Washington Post (link). Rob's a very fair-minded, professional journalist who isn't given to hyperbole.  But he called Lazaridis' actions "profoundly foolish from any sane marketing perspective...Seriously, does RIM not realize whom it’s competing with? The company is all but begging to get crushed by Apple."

I haven't written off RIM by any means.  They have a huge customer base, a great brand, and a long history of overcoming skepticism from people like me.  I hope they can do it again.  But at a minimum, RIM's management needs to recognize that they do not have the marketing skills needed to play in the world of increased smartphone competition.  They need professional help, immediately.  And I worry that the marketing problems are actually symptoms of much deeper disorder within the company.

The lamest market research study of the year

It's still early in the year, but I think someone's going to have to work pretty hard to do a lamer market research study than Harris Interactive's EquiTrends survey of mobile phone brands in the US.  Harris says the survey indicated that Motorola has the most "brand equity" of mobile phone brands in the US, followed by HTC, Sony Ericsson, Nokia, and Apple.  Harris also provided a nice chart of the results (link):

There are a couple of problems here.  The first is that the reportedly best-selling mobile phone brand in the US, Samsung, was not included in the results (link).  Oops.

The second problem is that Harris doesn't directly measure brand equity (which is a pretty fuzzy concept anyway).  What it measures is "Familiarity, Quality, and Purchase Consideration."  Those three ratings were combined into an overall brand equity score.

So this is a made-up rating created through a mathematical formula that Harris hasn't shared with the public, as far as I can tell.  But Harris assures us that it's meaningful: "Those companies with high brand equity are able to avoid switching behaviors of those brands that lack brand equity."  (link).  So, according to Harris's research, people in the US should be switching from other phone brands to Motorola.

But in the real world, the exact opposite has been happening.  Motorola has been losing share.  The number three rated brand, Sony Ericsson, has barely any distribution in the US, so it doesn't have much share to lose.  The number four brand, Nokia, has lost most of its US share.

Harris argues that Apple's mediocre score is driven by the sophistication of the iPhone:  "There is still a large audience of consumers that aren’t interested in a smartphone running their life, and Apple doesn’t have a product to meet that need."  I think that's correct, but HTC also sells only smartphones, and it was ranked number two.

And oh by the way, what's the margin of error in Harris's survey?  I can't find it disclosed anywhere, but my guess is that it's several points plus or minus, in which case everyone except Motorola is in a statistical tie.  That wouldn't have made for a cool looking marketing chart, though.

It's been distressing to see websites pick up the Harris story and repeat it without questioning the results.  PC Magazine swallowed it whole (link), as did MocoNews (link).  A lot of other sites reprinted the Harris press release verbatim.  Even if you didn't dig into the flaws, the study ought to fail the basic sniff test of credibility -- does anyone really believe that HTC has a stronger brand in the US than Apple?

When I worked at Apple and Palm, we hated synthetic brand rating studies like this one (and the JD Power ratings, which are similar) because the results depend more on the secret formula used by the polling company than on the actual behavior of customers.  The polling companies construct these special methodologies because they can then sell long reports to the companies surveyed explaining the results, and also charge the winners for the right to quote the results in their marketing.  Check out the fine print at the bottom of the Harris press release: "The EquiTrend® study results disclosed in this release may not be used for advertising, marketing or promotional purposes without the prior written consent of Harris Interactive."  I don't know for sure that Harris charges to quote the survey, but that's the usual procedure.

The lesson for all of us is that you should never accept any market research study without looking into its background, even if it comes from a famous research company.

Ebooks: Here comes the tipping point

The continued strong sales of iPad, Kindle, and Nook in the US are bringing us steadily closer to the tipping point where it will pay an author to bypass paper publishing and sell direct to ebooks.  The latest evidence is from the Association of American Publishers, which reported that ebooks made up 27% of all book revenue in the US in January-February 2011 (link).  AAP correctly pointed out that the ebooks share was raised temporarily by people buying ebooks to read on all of the e-readers they got for Christmas.  The share will go down later in the year.

Still, at any share over about 20%, it will be more economical for an established author to self-publish through ebooks (where they can retain 70% of sales revenue) rather than working through a paper publisher (where they get at most 15% of revenue).  When we hit that point on a sustained basis, I expect that a lot of authors will move to electronic publishing quickly.

It looks like we'll hit that point sometime this year or next.

Flip aftershocks

Silicon Valley has the attention span of a toddler in a candy store, but it was interesting to see how people around here lingered on the story of Flip's demise several days after the announcement.  There were dark suggestions of ulterior motives at Cisco -- that they had bought the company to strip it of its intellectual property (link) or that they shut it down a viable company only so they could look decisive to Wall Street (link).  And that was just the stuff in the press.  I've heard even more pointed speculation from people working in Silicon Valley.

My guess is the real story is a lot more complicated and nuanced, but at this point it doesn't matter.  Killing Flip may have helped Cisco with Wall Street analysts, but the sequence of buying Flip and then shutting it down has seriously damaged the company's image in Silicon Valley as a leader and a partner.  Silicon Valley is a very forgiving place.  You can make huge strategic mistakes, and waste billions of dollars, and still you'll be forgiven as long as you did it in sincere pursuit of a reasonable business idea.  But Cisco's senior management is now viewed as either overconfident to the point of stupidity, or as the deliberate torture-murderer of a beloved consumer brand.  I've rarely seen this level of hostility toward a management team, and I don't think they will be forgiven anytime soon, if ever.

Does that have any practical impact on Cisco's business?  Not immediately; business is business.  But it will probably be a little harder for Cisco to make alliances and hire ambitious people in the future.

Google 2011 = Microsoft 2000?

It's spooky how Google is sometimes starting to remind me of Microsoft circa 2000.

The latest incident was a quote from a Google executive saying that the company wants iPhone to grow because Google makes a lot of money from it (link).  Microsoft used to say the same sort of thing about Apple, claiming that it made more when a Mac was sold rather than a Windows PC (link).  (The idea was that many Microsoft apps were bundled with Windows at low cost, whereas Mac customers bought Microsoft apps at retail.)
In both cases, the statements may be technically true, but what they really point out is that the company has deep internal conflicts between its various business units.  Yes, part of Microsoft wanted to make Macintosh successful, but another part of Microsoft wanted to kill Macintosh.  Microsoft as a whole wanted to do both at the same time, which created internal confusion.  Add in antitrust lawsuits by governments and Wall Street pressure for quarterly growth, and Microsoft quickly became distracted, inwardly focused, and slow-moving.

Parts of Google, I'm sure, think iPhone is great and want it to grow.  But I guarantee that the Android team is trying to kill iPhone (and Nokia, and HP/Palm).  Google has its own set of government distractions, plus a big old lawsuit from Oracle, plus legal action by Microsoft and Apple against Android licensees. 

There are huge differences between Google and Microsoft, of course.  Google is not under the same sort of Wall Street pressure that was applied to Microsoft, and Google's founders have not lost interest in running the company. 

But it's disturbing to see how quickly some of Microsoft's symptoms are showing up at Google.

Hey Nokia, how do you define "primary"?

Microsoft and Nokia said they have finalized the contract for their alliance.  There were a couple of interesting tidbits in the announcement:

--Both companies said they completed the negotiations sooner than they expected.  Usually that sort of statement is hype, but for an agreement of this size, it actually was a pretty fast turnaround.

--They went out of their way to say that Nokia will be paying royalties for Windows Phone similar to what other companies pay.  That's important legally and for regulators, so companies like Samsung can't complain that Microsoft is giving discriminatory pricing.  At the same time, the announcement also made it clear that Microsoft will be passing a ton of money to Nokia for various services and IP, which Nokia wanted on the record to help with its investors.  I think the net effect will be that Nokia gets a free Windows Phone license for a long time.  That will not please Samsung, HTC, and the other Windows Phone licensees, because it puts them as a price disadvantage.

--The companies are apparently cross-licensing a lot of patents.  I wonder if this will help Nokia with its IP warfare against Apple.

--In an interview with AllThingsD (link), Microsoft and Google Nokia said Windows Phone was Nokia's "primary smartphone operating system." That leaves open the door for Nokia to play with other smartphone operating systems, and it leaves completely unanswered the question of tablets.  I'm sure the Symbian/Meego fans will be all over that as a ray of hope for their platforms, but to me it just leaves some prudent wiggle room for Nokia in the future.  I'd love to know how the agreement defines the words "smartphone" and "primary" -- or if it even has definitions for them.

(Note: Edited on April 22 to fix an embarrassing typo.)

Friday, 15 April 2011


EPIPHANY: A SUDDEN REALIZATION---OFTEN TRANSFORMATIVE OF CHARACTER OR PERSPECTIVE. -----MEET A GUY WHO HAD ONE. The story starts here---I'm on my way to experience a legendary town in southern Az --late evening catches me here and I camp for the night in this vacant lot of a tiny tiny town. I've traveled 50 miles today---about as much as I care to drive in a single day. ( stopped 5 times to investigate stuff)
Across the way is a familiar looking bar----and suddenly I realize that I've been here before. (I remind my readers that on average I camp in 110 different places per year) Tonight---when things get hopping---I will go have a beer and engage some locals.
But AAAHH---A surprise awaited me. When I walked in--a voice rang out---LOOK---ITS THE KODGER MAN. Someone had been reading my blog---and recognized me from a year ago. He told me that my description of the town and the bar scene dynamics in particular were spot on accurate and created a few laughs.
The bar maid is different, however,---but no less friendly---as I quizzed her about the nightly drama of having to "cut someone off." Turns out that the very person who had been "cut off" last year had already been "cut off" tonight. I marvel that such a fragile looking lady could muster the gumption to handle liquored-up men. Consider how difficult the decision as to when someone has had enough---yet she seemingly had no problem discerning that fine line or making her decision stick.
I engaged this gentleman briefly---a regular it seems --- longtime resident and worker---as friendly and open as I could ask. It struck me that communities of two cultures (e.g. Blythe California) often have separate bars. But in this towns' cultures mix in this one bar enjoying each other.
I'll get back to the Epiphany subject--but I wanted to show two changes I noticed from my last visit. This teetering house that I photographed then--has now collaapsed. ( check the post of 3/21/10---A Night in a Dead Zone Town )
I took a photo of this church then and there's no sign of this huge century plant. The largest I have ever seen---maybe a world record--I estimate its height at 32 feet. We "westerners" know the dramatic story of a century plant in bloom ---It stores up energy for 15 to 20 years and then spends it all in a matter of weeks---thrusting up that stalk at a terrific rate---as much as an inch an hour---then blooms and makes seeds----AND THEN DIES. A great metaphor here about parents sacrificing their lives for their kids. (punch up century plant and read the brief Time article--good stuff can be made from this plant)
Now back to my Epiphany story. I meet people fairly often who have been "seized" in a mysterious moment----turned their lives around---and then boldly proclaim their convictions to the world---like this truck driver.
And the Dutch couple traveling in this rig. (more about them in a future blog)

RANDY PHILOSOPHIZES: The guy shaking hands with me in the bar---had such an epiphany--and he told me all about it as he drove me about the area. He suddenly "saw himself" as "off the path"! And then and there decided to get back on it----And he is doing it---for some months now he is keeping true to his vision. He still goes to the Bar---that's where his friends are---but he has stopped drinking. Most notable about him, he is not trying to evangelize his friends. They seemingly are still his friends --- accepting him along with his new manner and morality---not teasing or disparaging his experience. I speculated that in a very small town we are more likely to hold on to our limited number of friends---even as-- they make left,right and u turns in life.

Tuesday, 12 April 2011

The Real Lesson of Cisco's Billion-Dollar Flip Debacle

Cisco announced that it's closing down the Flip camera business and revisiting its other consumer products.  With a purchase cost for Pure Digital (maker of Flip) of over $600 million, and now restructuring charges of $300 million (link), the total cost of Cisco's failed consumer experiment is probably north of a billion dollars, making it one of the larger business debacles in Silicon Valley in the last few years.

Most online analysis of the announcement doesn't really explain what happened.  The consensus is that Flip was doomed by competition with smartphones, but that says more about the mindset of the tech media than it does about Cisco's actual decisions.  I think the reality is that Cisco just doesn't know how to manage a consumer business.

There are important lessons in that for all tech companies.

Here are some samples from today's online commentary:

Gizmodo (link):  "The Flip Camera Is Finally Dead—Your Smartphone’s Got Blood on Its Hands."

Engadget (link):  "Cisco CEO John Chambers says the brand is being dispatched as the company refocuses, done in by the proliferation of high-definition sensors into smartphones and PMPs and the like."

ReadWriteWeb (link): "Single-purpose gadgetry has no place in today's smartphone-obsessed world."

ArsTechnica (link):  "Flip can't be faring well against the growing number of smartphones with built-in HD cameras. The quality of your typical smartphone video camera is comparable to the Flip, and people have their phones on them all the time."

Computerworld (link):  "More and more people are using their smartphones to take lower-quality video...the market for low-cost small video cameras that produce quick-and-easy videos is dead."

There's an old saying that when all you have is a hammer, every problem looks like a nail.  We need a similar proverb for news analysis -- when you're obsessed with smartphones, every market change looks like it was caused by them.

But did smartphones alone kill Pure Digital?  Two years ago, it was the most promising consumer hardware startup in Silicon Valley.  It had excellent products and a rabid customer base.  Two years later, it's completely dead.  That's a lot to blame on phones.  Plus, Cisco appears to be moving away from driving consumer markets in general.  The Umi videoconferencing system is being refocused on business, and Cisco CEO John Chambers said, "our consumer efforts will focus on how we help our enterprise and service provider customers optimize and expand their offerings for consumers, and help ensure the network's ability to deliver on those offerings."  In other words, we'll be working through partners rather than creating demand on our own (link).

Smartphones didn't cause all of that.  But they did play a supporting role in the drama.  They commoditized Flip's original features, putting the onus on Cisco to give it new features and innovations.  As Rachel King at ZDNet pointed out (link), Cisco failed to respond:

"The technology of Flip never really evolved since then, making it a very stale gadget. Sure, even once Cisco picked up Flip, new models continued to come out each year. Yet Cisco dropped the ball by never pushing further with Flip. It never moved beyond 720p HD video quality, and it never got HDMI connectivity."

Presenting a stationary target is enough to doom any consumer electronics product.  For example, what would have happened if Apple had stopped evolving the iPhone after version 1?  You'd have no app store, no 3G.  Today we'd be talking about iPhone as a cute idea that was fated to be crushed by commodity competition from Android. 

Just the way we're talking about Flip.

The important question is why Cisco failed to rise to the challenge.  Why didn't it innovate faster?  I don't know, because I wasn't there, but I'm sure the transition to Cisco ownership didn't help.  It was not a simple acquisition.  Cisco didn't just buy Pure Digital and keep it intact, it merged the company into its existing consumer business unit, which was populated by consumer people Cisco had picked up from various Valley companies in the previous few years.   Some of the key Flip managers were given new roles reaching beyond cameras, and there must have been intense politics as the various players jockeyed for influence.

Then there was the matter of Cisco's culture.  I had a great meeting at Pure Digital several years ago, prior to the merger.  They were housed above a department store in San Francisco, in a weird funky space with lots of consumer atmosphere.  The office was surrounded by restaurants and shops.

In contrast, visiting Cisco is like visiting a factory.  Every building on their massive campus looks the same, with an abstract fountain out front, the walls painted in muted tans and other muddy colors.  The buildings are surrounded by an ocean of cars.  The lobbies are lined with plaques of the company's patents, and the corridors inside have blown-up photographs of Cisco microprocessors.  In the stairwells you'll usually see a couple of crates of networking equipment, shoved under the stairs.  And all of the cubicles look the same.

The Cisco campus.

A typical Cisco building.

Cisco is an outstanding company, and an excellent place to work.  But it screams respectable enterprise hardware supplier.  To someone from a funky consumer company, going there would feel like having your heart ripped out and replaced with a brick.

Then there were the business practices to contend with.  As an enterprise company, Cisco is used to long product development cycles, direct sales, and high margins to support all of its infrastructure.  A consumer business thrives on fast product cycles, sales through retailers, and low margins used to drive volume.  Almost nothing in Cisco's existing business practices maps well to a consumer company.  But it's not clear that Cisco understood any of that.

The transition to Cisco management happened at a terrible time for Flip.  Just when the company's best people should have been focused obsessively on their next generation of camera goodness, their management was given new responsibilities, and Cisco started "helping out" with ideas like using Flip cameras for videoconferencing -- something that had nothing to do with Flip's original customers and mission.

If Pure Digital had remained independent, would it have innovated quickly enough?  Maybe not; it's very hard for a young company to think beyond the product that made it successful.  But merging with Cisco, and going through all of the associated disruptions, probably made the task almost impossible.

I'm sure that as the Flip team members get their layoff notices, we'll start to hear a lot more inside scoop.  But in the meantime, this announcement by Cisco looks like a classic case of an enterprise company that thought it knew how to make consumer products, and turned out to be utterly wrong.

That's not an unusual story.  It's almost impossible for any enterprise company to be successful in consumer, just as successful consumer companies usually fail in enterprise.  The habits and business practices that make them a winner in one market doom them in the other.

The lesson in all of this: If you're at an enterprise company that wants to enter the consumer market, or vice-versa, you need to wall off the new business completely from your existing company.  Different management, different financial model, different HR and legal.

You might ask, if the businesses need to be separated so thoroughly, why even try to mix them?  Which is the real point.

The other lesson of the Flip failure is that we should all be very skeptical when a big enterprise company says it's going consumer.  Hey Intel, do you really think you can design phones? (link)  Have you already forgotten Intel Play? (link)

I'll give the final word to Harry McCracken (link):  "You can be one of the most successful maker of enterprise technology products the world has ever known, but that doesn’t mean your instincts will carry over to the consumer market. They’re really different, and few companies have ever been successful in both."

Right on.

Tuesday, 5 April 2011


WHERE COYOTES HOWL----AND PROWL. I've been invited to the deep hinterlands of Arizona's border area with Mexico. I'll go---I've learned to say yes when new experiences beckon. Directions given me: South of Tucson---find the giant Steer head at Amado and turn West.

Drive about 30 miles into the boondocks--the road will turn to gravel--but keep driving.
Drive past the billiondollar "electronic fence" ---motion detector designed to pinpoint the location of illegals moving up the valley so that the border patrol can go scoop them up. Well what could go wrong with such a well-thought-out plan? HOW ABOUT COYOTES--THE FOUR LEGGED KIND SETTING OFF A HUNDRED FALSE POSITIVES---CRYING WOLF, WOLF--(was told they just turned it off---another billion down the drain)
There's where I'm going---that ranch house in the distance. It's an old ranch--from last century. A popular novel was written in it. Can you imagine living there?
Gotta get across this arroya---it's worse than it looks and would stop large motor homes---likely twist their frames and break a windshields. Those contemplating the RV lifestyle should factor in where the assorted rigs can and cannot go. I like my 21 footer---
Got across with no real problem.
And there's my destination.
No electricity out here---everything is solar powered---lights---water system--fridge. A bank of deep cycle batteries stores up power from these panels.
My host takes me on a long walk as soon as I am settled.
An old fashioned corral made of desert debris. Actually a cool inviting place---enjoyed poking around--feeling its history.
That's a lot of water---still services the cows and horses that wander about. Can you read the message on the tank? It says "PLEASE DO NOT SHOOT AT THE TANK".
Here's where the water comes from.
A very surprising sign---only in spanish--directed at the illegals--requesting that they turn off the faucet after drinking---and that they not damage the pump because others' lives may depend on it.

Then this comes by---The Border Patrol---they were everywhere down here.
Their horses are saddled--ready to go roundup humans.
A major route for border crossers. My host points to that old abandoned trailer down there--we will investigate.
A tiny surprise is barely visible between the tree and the trailer---I'll go closer.
There---clearly visible---and re filled frequently I am told---a gallon of good water--placed conspicuously----by sincere humanitarians. Many many others dot the entire route----I wondered if the infiltrators grasped the irony and the ambivalence of us Americans---sympathetic and caring all the while we are hunting them down and sending them back. On another occasion I watched the interaction of Captors and Captives---a group of eight--rounded up by horsemen----There was no shouting or abuse--each was searched, given water, seated in the shade till a truck came to transport them. I detected an easy familiarity and even some humor exchanged. Seemed to be a game---the rules understood by all.
Inside the trailer---some furniture--a bed--and this sleeping bag.
RANDY PHILOSOPHIZES: I'm chiding myself: ENOUGH ALREADY with the illegal immigration thing. What interest me more in this setting are my feelings as we wander for some days up the mountains and down the washes. Normally a chatterbox--I begin to calm down---speaking less often. The silence out here really is golden. We watched from the back porch as the super moon rose from the mountains. Great moment. Tomorrow I hope to share with you an incredible dinner party my host arranged---drawing in extraordinary intellects from as far away as Alaska.