Office 2010 Will Continue To Succeed With Consumers

Many product strategists are, like me, old enough to remember software stores like Egghead. Those days are gone. Today, consumer packaged software represents a very limited market – the software aisle has shrunk, like the half-empty one at the Best Buy in Cambridge, MA (pictured).

 

Only a few packaged software categories still exist: Games. Utilities and security software. And Microsoft Office – which constitutes a category unto itself. Some 67% of US online consumers regularly use Office at home, according to Forrester’s Consumer Technographics PC And Gaming Online Survey, Q4 2009 (US). Office is the most ubiquitous – and therefore successful – consumer client program aside from Windows OS.

Office 2010, Microsoft’s latest release, will continue to succeed with consumers. On the shoulders of Office 2010 rests nothing less than the defense of packaged software in general. It’s also the most tangible example of Microsoft’s Software Plus Services approach to the cloud – a term that Microsoft seems to be de-emphasizing lately, but which captures the essence of the Office 2010 business goal:

To sell packaged client software and offer Web-based services to augment the experience.

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Why Windows 7 Needs A Hit Tablet

Sarah Rotman Epps and I have just published a new report: “The Windows 7 Tablet Imperative.” Dell gained some publicity this week with its release of the 5-inch, Android-based Dell Streak device – but that device has more in common with mobile Smartphones (or even the iPod Touch) than it does with the iPad.

What we’re watching closely is the next generation of tablet PCs – larger form factor devices that make up a fourth PC form factor. Regardless of OS – the iPad itself runs iPhone OS, but we see it as a PC – these tablets will be used by consumers for media, gaming, light communications, and casual computing in new rooms in the home.   

To compete with the iPad, these devices must embrace Curated Computing as their design approach – tablets that work exactly like laptops don’t make sense.  Without Curated Computing, a tablet would take away features (keyboard, mouse) while not fundamentally tailoring the user experience to the tablet form factor.

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Why Will Consumers Pay More (For A Mac)?

Product strategists struggle with the issue of value all the time: What constitutes a revenue-maximizing price for my product, given the audience I’m targeting, the competition I’m trying to beat, the channel for purchase, and the product’s overall value proposition?

There are tools like conjoint analysis that can help product strategists test price directly via consumer research. However, there’s a bigger strategic question in the background: How can companies create and sustain consistently higher prices than their key competitors over the long term?

The Mac represents a good case study for this business problem. Macs have long earned a premium over comparable Windows PCs. Though prices for Macs have come down over time, they remain relatively more expensive, on average, than Windows-based PCs. In fact, they’ve successfully cornered the market on higher-end PCs: According to companies that track the supply side, perhaps 90% of PCs that sold for over $1,000 in Q4, 2009 were Macs.

Macs share common characteristics with Windows PCs on the hardware front – ever since Apple switched to Intel processors about four years ago, they’ve had comparable physical elements. But the relative pricing for Macs has remained advantageous to Apple. At the same time, the Mac has gained market share and is bringing new consumers into the Mac family – for example, about half of consumers who bought their Mac in an Apple Store in Q1, 2010 were new to the Mac platform. So Apple is doing something right here – providing value to consumers to make them willing to pay more.

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Windows 7 Early Adopters Were Satisfied Upgraders

We've just published two new reports concerning Windows 7 adoption and satisfaction, leveraging Forrester's Consumer Technographics(R) data. 

The reports show that Windows 7 penetrated the consciousness of the market by the end of 2009, with a strong majority of US consumers aware of the product.  We also found that consumers who adopted Windows 7 in Q4 were generally very satisfied with their Windows 7 PCs. 

Perhaps the most interesting finding of the reports involves upgrade behaviors. Historically, most consumers have not upgraded their PCs with new OSes -- though Mac users and some technophile consumers have been an exception on this count.  Instead, the majority of consumers have acquired new OSes when they purchase their new PC.  These are known as "replacement cycle upgrades." 

With Windows 7, however, upgrade behavior was much stronger.  Why?  In short, Windows 7 is a thinner client program than was Windows Vista, meaning that it works well on older hardware configurations.  In the past, OSes were designed with Moore's Law as an underlying assumption -- that is, that newer PC hardware would be significantly faster and more powerful than the previous generation's hardware. Windows 7, however, is a less burdensome OS than Windows Vista.  The rise of Netbooks, the physical assets of multi-PC households, and an attachment by many consumers to their Windows XP machines all contributed to the need for a sleeker, thinner Windows OS, which Windows 7 delivered. 

Among early adopters of Windows 7, in Q4, for the first time upgrading behavior matched replacement cycle purchasing, as this Figure shows:

 

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The Future Of Online Customer Experiences

My colleague on our Customer Experience team, Vice President Moira Dorsey, has written a major piece of research that I think consumer product strategists should read. 

The report, "The Future of Online Customer Experience," has huge ramifications for how not just customer experiences will work, but indeed predicts the future of most consumer computing experiences.  I urge clients to read the report itself.  Moira has blogged about her report here.

Product strategists should take away (at minimum) the core of her model, called CARS: Online (and computing experiences in general) will be Customized, Aggregated, Relevant, and Social.  Let Moira know what you think!

Why Mobile Is Hot!

Why Mobile Is Hot

We’ve been talking about mobile for 13 years, but it’s finally found its true promise in 2009. Here’s why. (Links refer to Forrester reports, which may be read by clients; non-clients can still access the Executive Summaries).


1. Devices and Networks are up to speed in an unprecedented way.

  Most US/EU consumers have the ability today to engage in mobile data activities because of:

·     Smarter phones - “The Smartphone is dead,” because most handsets in EU/US have smart characteristics like cameras, music, and video. (See The Smartphone Is Dead).

·       Faster Networks – High-speed 3G wireless capability is growing rapidly: In the US, from 32% in 2008 to 46% in 2009 and 57% in 2010. Including 2.5G, 98% of phones in 2009 and 99% in 2010 have data capabilities. (See US Mobile Forecast 2009-2014).

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Acer is now #2 PC maker, surpassing Dell

According to recent shipment data (which Forrester doesn't track), Acer has overtaken Dell to become the #2 PC company in the world behind HP.

This achievement wasn't unexpected -- in August, 2007, we predicted that Acer would become a formidable industry titan: "Acer's announcement that it will acquire Gateway is a clever plan, as Acer simultaneously improves its brand recognition, channel reach, and opportunity for gains in margin. Like IBM Deep Blue, Acer strategists calculated several moves ahead in the global PC chess game. If the execution is solid, this deal will create a powerful third-place PC competitor that will challenge HP and Dell by 2009, and it portends the rise of non-Japanese Asian PC superpowers."

Acer has proven shrewd in product strategy over the past few years. (Indeed, we declared that "even war strategist Sun-Tzu" couldn't have done better!). Acer's work with Ferarri was a masterstroke in branding (from an unexpected company, at the time). Acer's excellence in netbooks has ridden the wave of the market at the right time. More fundamentally, Acer's cost structure benefits from its proximity to Asian-based factories and original design manufacturers (ODMs). Dell, once the king of cost structure, isn't in as privileged a position.  And Acer's access to retail channel (including Gateway's) and experience in SKU management in retail is currently superior to Dell's. (Dell re-entered retail after a long hiatus).

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Experience The Data at Forrester's Consumer Forum 2009 Chicago

Forrester's Consumer Forum Theater Presentations highlight Forrester’s extensive data capabilities. Data is critical to the Consumer Product Strategy teams, and we work closely with our colleagues on the data team to produce our research. Forrester analysts will share highlights from our global benchmark survey data, as well as our forecast data, examining technology-driven trends in consumer behavior. These demonstrations will be hosted in the International Ballroom at The Fairmont Chicago.

Theater Presentations

Tuesday, October 27, 2009: 1:15–1:35 p.m.

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Adaptive Brand Marketing and Consumer Product Strategy

You should check out Forrester analyst Lisa Bradner's post today over at our Marketing Leadership Blog. Her concept of adaptive brand marketing helps companies re-think their approach to brand management in a world where brand messages are no longer a one-way push, but in fact are shaped by consumers as they interact with and react to brands.

CPS pros should take away the point that marketers and consumer product teams (which might have marketers of their own, or not) need to coordinate their efforts in lockstep to make sure the brand and the organization are prepared for instant feedback from consumers. Because, right now, most organizations are ill-equipped to handle this new world of "always-on" marketing.

Major League Laptops Continue Dell's Age of Style Product Strategy

In June, 2007, Forrester declared the beginning of the Age of Style. The Age of Style thesis posited that style and visual design would become critical vectors of competition in consumer electronics. We started our coverage of this trend with consumer PCs predicting that form factor innovations, increased aesthetic diversity, and consumer choice and personalization would become central tenets of competition for consumer PCs.

The baseline of comparison, of course was grim: For many years, consumers' home PCs and work PCs looked rather the same. Mostly bland and functional PCs reigned, aside from the products offered by a few trailblazers like Apple and Sony. But the growth of multi-PC households transformed PCs from "digital hearths" for the entire household into personal devices. Next, laptops moved the PC from the den out into the world -- making PCs devices that are public in nature.

Personal, public devices lend themselves to personalization and customization. Consumers wish to self-express through their choices: The color I like, a theme I enjoy, an association (with an organization or another brand), or even my personal beliefs -- as with the PRODUCT (RED) PC we wrote about when it was released. Self-actualization through the PC I carry with me is often, now, a goal for many consumers.

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