Genii Weblog
When "easy money" has a steep price
Fri 6 May 2005, 02:45 PM
Tweetby Ben Langhinrichs
So, what do ABC and General Motors have in common? They have both learned the hard way (or should have learned but probably haven't) that relying on "giving the customer what they want" is not always a good long term strategy.
A few years ago, ABC discovered that the customers wanted "Who Wants to be a Millionaire?", and, boy, did they ever give it to them. ABC practically became the "Who Wants to be a Millionaire?" network, running episodes several times a day and replacing lots of other series. They did it because the show was cheap to produce and had a sure fire formula. No risk, lots of gain. Easy money. When the customers finally lost interest, ABC had nothing in the pipeline to back it up, and nowhere to go but the ratings cellar. A steep price.
General Motors has spent the past decade or so filling the American consumer's insatiable desire for gas guzzling SUV's. Very profitable and very popular. Easy money. When gas prices started going up and kept going up, customers started looking at the TCO, as the computer industry calls it, and SUV sales are dropping rapidly. General Motors finds itself with precious little else to sell, and nothing that is close to profitable enough to make up for SUV's, while Honda and Toyota have a practical corner on the increasingly lucrative hybrid market. General Motors watched its bonds drop to junk status this week, and they have nowhere to go and nobody to blame but themselves. A steep price.
In light of these, it should be pointed out that, whatever its other shortcomings or shortsightedness, IBM has been remarkably good at pushing ahead to where its customers will need to be, rather than just where they want to be right now. Microsoft has too often gone for the easy money, and is facing a lot of steep hurdles (granted, facing them with an enormous cash reserve) to get where the customers will want to be next. IBM has taken the harder road of pushing the customer's comfort zone, even to the point of scaring us IBM business partners half to death sometimes, but my gut tells me IBM is much better positioned than Microsoft to fill the needs of its customers over the next few years. Only time will tell of course, but always beware of the steep price that follows the easy money.
Copyright © 2005 Genii Software Ltd.
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