Peter has another great post today that lays to rest the question of how much he likes his Tablet PC. In detail, Peter gives suggestions on how to make Tablets better and spread the word.
Others are providing suggestions too. JupiterResearch Tablet Analyst Michael Gartenberg lays out his top three suggestions:
1. Raise Awareness
2. Evangelize the easiest markets
3. Get in the channel
Michael’s and Peter’s suggestions are terrific. I do have a couple slight twists I’d add to them. First, in terms of the higher ed market. I think visiting the universities is terrific. Not only can you reach the students with this approach, but at the same time you can also educate the faculty and staff–which are also ideal candidates for Tablets. However, I also believe that one of the best opportunities to gain enthusiastic Tablet users is during the transition from high school to college. It would be terrific if there were programs or incentives that targeted this market.
Also, in terms of getting products into the channel. The catch I’m guessing is that shelf space costs. It doesn’t come for free. The retailers often want you to buy your product’s way in. And as many have mentioned, even if you do get your product to BestBuy, for instance, few if any of the store employees know anything about the Tablet. It’s for these reasons, that some of us have been advocating strongly that working through the wider network of smaller retailers, VARs, system builders, and the like is a great simultaneous strategy that shouldn’t be overlooked anymore. This part of the channel is much different and has received little attention.
I can partly understand why this part of the channel hasn’t been thoroughly covered. One of the big reasons is that the OEMs often compete directly with them. They sell direct. So when margins are tight–as they are–and competition is fierce, the OEMs will work on their direct sales first. Makes sense. There are other issues at play here too. From a larger perspective it’s far easier to convince five or six mega-retailers to carry Tablets than 10,000 smaller VARs and resellers. This is a big deal when your organization has limited resources to promote the Tablet. But this strategy misses a big opportunity: That all of those VARs are potential Tablet customers themselves. These are highly fluid, small businesses often without rigid computerized systems. Lots of things are done by hand today. They are exactly the types of businesses where every employee should have a Tablet. But there is an issue with this approach–just like the big retails want you to show them the money–so do the little VARs and resellers. Often companies will provide significant discounts for early adopters on demo models. There’s been nothing like this to date. Well, some of the OEMs will give you some percentage off, but it isn’t much. A typical early adopter program might be buy one Tablet and get a second, demo-only unit for 50% off. Part of the problem is that the OEMs fear that if the discount is too great that the resellers will sell the demo unit and make money. Many do. But in the case of Tablets I’m betting many of these small businesses will see the value for themselves and keep them. Either way, the OEMs would have extra sales. Yeah, the times are tough and when you’re scraping for pennies programs like these don’t sound very good, but they are precisely the types of programs that would help the Tablet. In short order, you could have tens of thousands of happy Tablet resellers and their customers or possibly tens of thousands of resellers using the Tablets themselves.
But like other aspects of the Tablet market, the time to do this is getting late. Industry press–particularly in the channel–will continue to be mediocre–often because they don’t see much value in it for themselves. A channel program today would have to overcome this solidifying sentiment. It’s a pay now, pay more later issue.
Actually, there’s a whole other issue that system builders have with Tablets: they are pretty much closed boxes. System builders make money enhancing systems–putting in their own processors, hard-drives, memory and the like. But to date Tablets aren’t sold that way by the OEMs. Maybe things will change or maybe the system builders can be shown how to add other components, such as GPS, extra pens, and so on.
Anyway, that’s my two cents. Time to get back to coding.
Yes. You’re right. Layne and I taught you well 😉 hehehe Seriously, though. Gaining channel support is a major issue. It needs to be tackled. Previously, I suggested that whitebook Tablets be in the market by mid-September, journalists from CRN, RAM, and other trade mags get start sharing the information, and incentives be established for VARS to participate. Right now a VAR has to jump through hoops and sign silly legal documents to sell a Tablet PC. Way too protected. The distribution style is very 1992 style and not 2004. But it can change. Quickly, with a little effort, but it wouldn’t be too painful.
From a larger perspective it’s far easier to convince five or six mega-retailers to carry Tablets than 10,000 smaller VARs and resellers.
Many manufacturers who entered the US right around 1998 / 99 made this same mistake. The companies forgot who they were and who helped make them what they were – their partners. There were two popular decisions: 1) find a large OEM customer and 2) go to mass outlets like Wal-Mart, Best Buy, Circuit City, etc. Just like you said, it sounds good to sell 100,000 units to one company, keep that company happy, etc. That one major customer then wants lower prices, tons of attention, and the value of that outlet quickly becomes over inflated. And all the smaller customers you used to have, who were good cash flow, they start going to other companies. They promote and actively support the other product. So the old product goes into a crash cycle and the new hot product gets inflated, the manufacturer pulls support again, and it happens all over again. Then guess what happens when Wal-Mart returns $200million of Samsung LCD display TVs? (happened this week) Yikes!
“In the old days” of the early to middle 90s, VARs and their staff received incentives to move products. And guess what, they figured out ways to move products that resulted in them receiving incentives. Sometimes these incentives to sales people exceeded profits to the VAR. (One VAR owner fired the sales people for making too much money through incentives. Buyers didn’t complain; they liked the products. The VAR owner saw what was happening, and wanted to take the incentive rather than to share it. This really happened.)
Incentives – one aspect of selling anything, including Tablet PCs, other notebooks, and components, whatever they look like and do – acknowledge that commodities circulate in part because of self interest.
The formula for selling more Tablet PCs is simple, theoretically. It’s no secret to anyone who “played store” in kindergarten. Share the self interest. Make it worthwhile for VARs to sell these beautiful machines.
Someone in the supply chain is holding the self interest for Tablet PCs too close to his or her chest, either by default or intentionally. It doesn’t matter why. To sell more Tablet PCs, just share the self interest, or to borrow a phrase, use an open source distibution system of self interest :).