As was the case for the previous part, I have only edited the content for formatting sake.

Q: Let’s switch gear to the unit replacement program: The Palm website seems to have difficulties recognizing existing accounts. Part of the frustration of my own experience was that, having bought a device from the Palm website in early 2007, I was unable to get to the information online because the site did not recognize the email address I used to register (even though I have some emails sent by palm to that email address). This resulted in my being unable to get the exact date of my purchase. When I talked to the customer service representative, I was told that we could not move forward with any replacement without that information. Considering the device hadn’t been in the marketplace for a year, I thought that it would be considered under warranty no matter what. Why is it that customers still need to provide a purchase date for devices that are less than a year old?

A: They shouldn’t have to, you are right. Unfortunately, since we primarily sell through the carrier channel, determination of an in-warranty vs. out-of-warranty device is not a perfect science. Our practice is to systematically derive the purchase date from the manufacture date, based on the serial number.

We have very reliable data on how long a product takes to move through distribution and sales channels that helps us ensure we offer all of our customers a minimum of 12 month warranty, as stated in our contract with the customer (i.e. the warranty). If an agent believes the product may fall outside of the 12 month period, we request proof-of-purchase (POP), which is not unusual in the consumer electronics industry. That being said, an agent must use their best judgment and always handle these discussions in a professional and courteous manner with the customer.

To better serve our customers, we’re currently exploring instituting a policy that will not require agents to check purchase dates for products that have been newly released (i.e. less than a year old). This should help eliminate unnecessary questioning and allow our agents to proceed directly to getting a customer’s issue resolved.

Q: If customers are not able to supply a date, why is it that there is no way for a call center operator to look up information for devices bought from Palm’s online store?

A: We do aspire to have all of our customers’ transactional information available to our service agents. However, this is not the case for a variety of reasons. First, there is some information that will never be available or kept; carrier sales information and information protected by privacy laws, for instance. But, for the rest, specifically any transactional information Palm is exposed to and legally able to maintain, we are making huge investments in a CRM program that is bringing this information all together in a master customer database. Just this past year, we integrated most of our direct sales transactions (e.g. from our online store) into our service application, loading both customers and assets. As for Tristan’s case, unfortunately the purchase last winter was prior to this integration going into effect, so the purchase record was not there.

Q: Forced to supply a date, I gave a date at random in order to push the call further. I was then told that it was the exact date of my purchase (a dubious claim at best since the date happened to be, after I checked, before the date of the press release announcing the release of the Treo 680). When I contested the possibility of this being the date at a later time, I was told that you are tracking devices dates by serial numbers. If that’s the case, why is that information not being used initially? (It’s generally easier to find a device’s serial number than its purchase date since the serial number (and incidentally, IMEI) is on the device)

A: I suspect that in this case, and what is probably routine behavior by agents, is to request the date of purchase from the customer, and to take their word for it — which is the proper thing to do. Now when a customer is not confident about the purchase date or does not have any recollection, then an agent is going to check out the serial number to get a good idea of the purchase timing — it’s only then that we are going to call into question the warranty, and perhaps seek proof of purchase.

Q: Vendors like Apple and RIM track their device purchase date by IMEI. Why isn’t Palm doing the same? And if it is, why isn’t that information available to call center personnel?

A: IMEI and ESN are two industry relevant codes for mobile devices. The serial number is a Palm-specific number generated at time of manufacture. Because it is consistent across all Palm products — where it is not for IMEI and ESN — we tend to rely on serial numbers as our default tracking method.

Q: The retail price for an unlocked Treo 680 is $379, the street price for an unlocked Treo 680 is around $250. In either of those cases, the device would come with a one year warranty. The replacement price for a Treo 680 is $199. Why is the replacement price so high?

A: The primary drivers of repair and replacement cost are parts and labor, and hence can’t be directly compared to the product. The wireless industry subsidizes phone purchase prices, making the total cost much lower than the actual cost of hardware and labor.

Q: Looking at the prices listed on your site, it appears that all your phones have the same replacement price ($169 by web, $199 by phone) However, prices for the unlocked devices listed in the Palm store range from $379 (for an unlocked Treo 680) to $669 (for an Alltel Treo 700p). Does that mean that the repair cost for all units is the same? Why isn’t there variable pricing on the repair costs?

A: The actual cost of repair may vary across units, but this variance is much less than you’d think. The process steps that all units go through for diagnostics, component replacement, cosmetic refurbishment, and logistics are identical. The only real difference is the value of the parts required for a given repair.

While variable pricing seems like the best thing for the customer, we actually provide fixed pricing to deliver a better customer experience. This is because we want to quote a price upfront and quickly process the replacement without having to come back to the customer and explain that their fix was different or more costly than what was expected at the outset. This would create unnecessary tension and delays when a customer needs their phone back to them in working order as soon as possible. We don’t really know what parts will be required until we open the device, and a call center agent would not be able to accurately estimate the costs.

Q: A year ago, the replacement cost for a Palm 600 was $100 (I unfortunately broke 4 screens on Palm 600s through the years so I’m familiar with that price). Today, such a replacement would cost $169. Why the price increase?

A: As products get older, our cost to service that product normally increases. It reflects the growing cost of acquiring parts, maintaining inventory, expertise and training for repair events that become more and more infrequent.

Q: Apple has made it a practice to sell special contracts (called AppleCare) on their devices that provide extended warranty. This includes selling AppleCare for iPhones (for $69). The program includes replacement of defective units at no extra charge and extends warranty from 1 year to 2 years. Why isn’t Palm offering a similar program?

A: With the first line of smartphone product support at multiple carriers, including warranty processing, an extended warranty program has been a challenge for Palm to offer — mostly because of channel complexities. We are presently working through the challenges that have made this difficult, and hope to offer this service feature to our smartphone consumers in the future.

Apple has a unique relationship with AT&T that may make these programs a bit easier to provide.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Palm responds, Part 2. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

At the time, I figured that this was a nice and convenient answer that really acted as more of a way to stonewall me. So it was with great surprise that I was contacted with a follow-up by John Moses, the VP of customer relations worldwide for Palm.

Not only did John apologize for my own experience but he was considerate enough to provide me with a lot of answers to questions I asked (and, in a closing to my encounter with Palm, he also provided me with a replacement unit for my Treo 680). While my faith in Palm hasn’t been restored yet, I think there is a lot to ponder in the questions and answers John provided me. Because there is a lot to digest, I am breaking this Q&A into two parts: The first one, which follows, addresses general issues around customer support and around my own experience. The second part talks about the unit replacement program and some of the decisions made there.

So without further ado, here is the Q&A, which is not edited in any way, save for light formatting to increase readability .

Q: First of all, thanks for taking the time to do this interview and alleviate some of the fears people may have after I posted my experience with Palm. The Treo 680 has been out for about a year now. As the head of Customer Relations, have you seen particularly high levels of calls relating to it as opposed to other palm devices?

A: Because of a special program we implemented and highly marketed this past year called 1–800 Free Setup Help, we have had a higher volume of calls related to the Treo 680. This Palm sponsored program — where we have also gained the support of our major carrier partners — encourages customers to call us at no charge within the first 90 days of purchase for dedicated device setup assistance. The results have been highly encouraging and we are continuing to evaluate additional programs that increase the number of interactions we have with customers so they get more out of their device.

We also strongly recommend that customers take advantage of the Treo 680 software updaters, as they do make a noticeable improvement to the performance of our devices. Customers can find these
on our website.

Q: It is my understanding that Palm works largely on second line of support for mobile phone companies they have partnerships with and works as first line of support for unlocked devices they sell. As a result, I would suspect that the number of calls for unlocked devices is probably higher. Is that the case?

A: You are right that for the majority of our phones — all of those sold through the carrier channel — we are the second level of support. Our carrier partners have extensive support capabilities and are interested in maintaining a connection with their subscriber customers — and we respect that. As a general rule, these customers are encouraged to begin support with their wireless service provider, and they will in turn escalate to us at Palm if the issue warrants additional device expertise.

There are exceptions to this, however, and customers frequently contact us directly; this most often is because they are taking advantage of our special programs including our Free Setup Help, which I mentioned before, or our MyPalm Membership, where customers can receive special benefits including a dedicated member assistance line.

For those customers who have bought unlocked devices directly from us on our website or in our stores, we certainly are committed to be their first line of support. In terms of call volume, we receive more for carrier-locked devices than unlocked ones, partly because there are just more sold, but equally so because we have a close relationship with our carrier partners which involves regular collaboration and warm transfers.

Q: Are calls for unlocked devices routed to different call centers than calls for locked (or carrier specific) devices? If that’s the case, could you explain some of the logic behind it?

A: No, support for both types of devices is provided by the same call centers, and with the same agents. Our support agents are trained on all Palm products and all customers are treated the same.

Q: Palm recently started to move phone support to a pay model (I believe it’s $19.95 per call unless it results in an exchange). Does Palm look to its phone support as a potential profit center?

A: First, customers transferred from a wireless carrier or a call with a basic inquiry will not be charged. Also, if a call results in a repair or if an agent cannot solve the issue, we would waive the fee.

Palm has always charged for phone-based technical support beyond 90 days of purchase, based on our standard support policy and warranty — this is standard industry practice for many consumer electronics manufacturers. We have just reduced (in December) the cost of post 90-day technical support (from $25 to $14.95), and when we do charge customers, the funds are used to subsidize the costs of the support infrastructure we provide.

Palm regards the relationship with its customers and support specifically, as an investment in the future, not as a profit center. We try to make Palm support valuable and affordable to customers by offering various options, including several options that are free of charge (e.g. Online Chat).

Q: Has reaction among customers to the move of phone support to a pay model been negative or positive?

A: As I mentioned before, Palm has always charged for certain phone-based support services. We have seen a positive response to our new “Expert” pay services, which certainly is evidence that customers don’t mind paying a fee for a service that they deem important and that is well executed.

Q: The level of expectations for a service one pays for is generally different than the level of expectation for something that is free. What has Palm done to ensure that the experience around paid calls is better than the previous (free) experience for customers?

A: Palm still provides many free service options, so a customer is never forced to pay for support. We also strive for and expect the best level of service for both types of calls — paid and free — as the same customer may experience both types of support options during the time they own their product and we want their interactions to always be consistent and of the highest quality.

Q: I am sure there are studies about user satisfaction across the industry as a whole. Do you have information about Palm’s standing, compared to its competitors, in terms of customer experience? Is it better? Worse? What are the main issues around it and what is Palm doing to address them?

A: I can tell you that our case satisfaction scores — those scores that rate the quality of the support given by an agent for a given service request — is either at the top or very close to the top of any comparative set you will find for true technical support on complex consumer electronics. Of course we always believe we can do better.

We have a number of teams that continually analyze everything from call center activity, to web searches, to satisfaction surveys in order to find ways we can support our customers more effectively. Thankfully, our customers take the time to give us feedback, and we take that very seriously, and we listen and apply it.

Q: Has Palm outsourced its call centers or are the overseas call center employees also Palm employees?

A: Yes, we have chosen to outsource and offshore a majority of our technical support. The technical aptitude and average tenure of the agent pools we use offshore are very high. We also supplement offshore service with onshore escalations (which should have been leveraged by the agents in your case). Interestingly, our customer and case satisfaction data over the past year show that the actual difference between our onshore and offshore agent service is marginal — a fraction of a point — so we believe that we are not compromising quality in any real way.

Q: What kind of training does a Palm call center employee customarily receive?

A: All of our agents get an average of three weeks of classroom training per year. This includes technical support training, operating system (Palm OS and WinMo) training, language and cultural skills training, customer service skills training, new product training, product refresher training, and Palm systems, procedure, and policy training. In addition, agents regularly receive intensive one-on-one coaching and mentoring using call recordings, quality monitoring and customer satisfaction surveys.

Q: In my own experience, as well as in other experiences documented online, it appears there have been many instances of Palm call center employees lying to customers. Just for the record, though I suspect the answer will be no, are Palm call center employees asked to lie to customers?

A: We invest a lot of time and energy in providing official scripts, bulletins, knowledge bases, and training that help agents to respond swiftly, professionally, and accurately to the myriad of consumer inquiries that they face each day. They are also encouraged to use our hierarchy of support to escalate calls and questions when they are not informed or positioned to answer — so there is no reason an agent should provide inaccurate information at any time.

In your case, the agent lost control of the conversation, and things were said that shouldn’t have been. These types of cases result in an investigation, and oftentimes interviews with those agents or managers involved.

Q: What would happen to an employee that is found to have lied to a customer?

A: We conduct an investigation — perhaps reading call notes, listening to calls if they’ve been recorded, interviewing agents, and so forth — to get a better idea of what really transpired. We would then follow our established guidelines for discipline, performance improvement, or dismissal.

Q: Also for the record, though I also suspect the answer will be no, does Palm CEO Ed Colligan take call center calls?

A: Ed is one of the most passionate and participatory executives you will ever come across. While I don’t believe he has ever taken a technical support call per se, he certainly will contact a customer directly, and does so all the time. He has a dedicated voicemail box where he receives customer messages that I don’t even have access to. He routinely is responding to not just voicemails but emails, faxes, and letters that come across his desk. And Ed knows the names of these customers, and he looks to me for status updates on how we have handled these cases and whether or not we have restored their trust in the Palm brand. He is zealous about this — and so am I.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Palm responds, Part 1. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

I was first walked through the script by employee C13763, who balked when I told her that I didn’t know the exact date of purchase of my device. Having purchased the device from the palm US store, I thought they could look that up but I discovered that it wasn’t the case. Keeping her on the line while I tried to login in the store, I discovered that palm no longer had any trace of any accounts of mine on their site. With 4 palm devices bought over the last 3 years, I was surprised by that fact, especially after checking the address on the welcome email (palm has a tradition of sending you a welcome note to their world every time you buy another device) and asking for a password to be reset for the email address I had received emails at from Palm.

But at that point, I could say it was all basically my fault for not keeping good records. I asked for forgiveness and gave a date based on my rough rememberance. It was around the end of the year and the Treo 680 has been introduced at a show in New York only a few days before. So I looked up the rough timeline (device introduced late November 2006 and released around December 2006) and gave a date (January 1, 2007). I knew the date was wrong as I had gotten the device later than that but figured I needed to give them a date that was within the range of warranty and on the outside of the date I bought the device.

After doing so, I was told that I needed to do a hard reset (I had already walked through that) and indulged the call center person (I figure they get enough abuse as is). That, of course, did not solve the problem since it was a hardware issue (speaker blown off due to the fact that the volume setting on the palm, if set too high blows off the speakers and the fact that the volume setting buttons do not lock with the rest of the buttons on the device, ensuring that any type of shaking in pockets or bags will ensure that your volume is either set to the top or bottom setting most of the time). After another 15 minutes of walking through the scenario, I was told that the replacement unit would cost me $299.

$299 would not be much of an issue, with one possible exception: the retail price for a brand new, unlocked, Treo 680 is $379. The street price ranges from $200 to $300. A new unit comes with a one year warranty on all parts. A replacement unit does not.

The message this sends to customers is that once you’re a customer, you’re hooked and therefore the company is going to try to milk any profit it can out of you. As a shareholder, I thought this was the wrong message so I asked employee C13763 to transfer me to her superior. After some going back and forth, I was finally transfered to employee C11329, a “senior technician” to whom I referred my case number (case number 1–511-464–84488) before continuing the discussion.

I first voiced my concern about the fact that there was a problem in terms of locating sales data from their own servers. Since I had bought the device from Palm’s website and I had given my serial number while on the previous call, I thought it odd that they could not locate the date of purchase of the device (especially since they consider it such vital data for customer service) . I was told that since my device was sold on January 1, 2007, the date I had given only a few minutes earlier to the previous call center person, it was out of warranty. I’m writing this on December 27, 2007 and, the last time I checked, a one year warranty generally extends 365 days from the date of purchase. My concern as a shareholder now turned to anger and frustration. With 3 other broken palm devices in front of me (2 of them my own fault so I won’t even bother talking to Palm about those), I thought that I could be considered a solid customer. But now I was told that warranties were not real and paying $199 (a drop in price of $100 in only a few minutes since talking to the previous person) was going to solve my problem. In the past, broken devices were repaired for $100 so this was getting closer to reality but I wanted to talk to someone more senior about two problems: first, it seemed that one can give any date and it won’t be checked (or maybe it will) and two, if it is checked, warranty terms do not apply for a full year.

So I asked employee C11329 to be transfered to her manager. She told me she was the most senior person at Palm. I asked her again politely to transfer me to her manager. She told me she had none. I asked to be transfered to the person that was reviewing her work, giving her assignments, etc.. I was told she had none. I told her I felt that was odd as, apart from the chairman and CEO, I didn’t know of anyone in a company not having a manager. She told me she was the CEO.

For a second, I paused. “You’re the CEO of Palm, Inc.?” I asked again, not really believing what I was hearing. “Yes, I am” she replied, now with a defiant tone. “So you’re telling me you’re Ed Colligan?” I asked. “I am the CEO and that’s all you need to know.”

Well, turns out I was now in a very odd situation. I had been at several industry events where Ed Colligan spoke (including a number of product launches from Palm) and, as far as my memory was concerned, his voice was neither feminine nor did it sound south-Asian in its inflection. My memory might have been playing games on me but I was pretty sure I was not talking to the CEO of Palm.

“Do you mind if I start recording this call? I’d like to get your answer to my question about being CEO on an audio record as I’m having a hard time believing it” I asked. The first part of this question is a standard I was taught in journalism school: if you’re going to record a call, first ask if it’s OK to do so. Laws applying to phone taping are a complex mess of regulations with little overlap between different jurisdictions: however, if both parties to a conversation agree to the taping of that conversation, it is generally recognized as OK to do so.

Obviously, I was dealing with someone who knew (or guessed) that I would not legally be allowed to record the conversation so she replied that “no, that would be illegal”. I was stuck so I asked her to transfer me to her manager again. She said no. I asked again with the same result. After another 15 minutes of back and forth, I finally figured that she being CEO, she could transfer me to anyone in the company so I asked to be transfered to the company’s general counsel. The call dropped. I let the line run for another few minutes figuring that maybe it was taking time for the transfer to occur but no, the line went dead.

After a few hours, I realized that while my experience had been horrible, I may have found a great story: PALM, the stock, is not doing so hot. Palm, the company is having its own issues, as are Palm the devices. In the past, the saving grace in all this was that the customer support was very good and decent. So the question is whether tech support (or other forms of horrible customer interactions) could be the straw that breaks Palm’s back. I called Palm’s PR agency to ask some questions about this but most of the people are on vacation. One of their agency’s PR people told me that she’d pass the message on so we’ll see what happens.

On a personal note, I’m joining the many others who are abandoning palm the device. I am also, like Mary Hodder, regretting all the recommendations I made. I’m now shopping for another device and would welcome any recommendation. I also wouldn’t mind getting some information about how other people feel about tech support not only at Palm but also at other unlocked devices sellers. Is unlocked a category of the market that most vendors dismiss, reserving their best services for 3rd party mobile providers and is it something that might change in the future? I don’t know but what I do know is that I am now part of the group of people who must say: “Don’t ever buy a Palm device.”

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Could Tech Support Undo Palm?. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

That, to me, is amazing customer service. In a world where I, as a consumer, usually find myself wondering why companies are not putting more emphasis on servicing their existing customers, I am extremely impressed with the level of customer service I’ve received from T-mobile. As a result, I would highly recommend them to anyone who is in their coverage area. I don’t usually do so but considering how much they’ve done, it’s the least I can do to repay them.

I would like to applaud this level of customer service and prompt other companies (either in technology or other fields) to take this as an example of how to do business. Customer service is very expensive but taking care of your existing customers is how you can reduce churn and ensure that your customers become your marketers. To me, T-mobile is a clued-in company.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Impressive customer service. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

• try to increase your level of customer satisfaction ? or
• fight any provision that would increase competition in your industry?

If you are the wireless phone industry, you will go for the latter.

The issue at hand is number portability.

What is number portability?

Well, put quite simply, it is a way to be able to use the same phone number regardless of which service provider you are using. It is essentially what now allows us to change long distance service or local service carriers from our incumbent bell operating company (for example, Verizon in New York) to another service provider (following the same example, one could now go to AT&T or RCN for phone service).

Technically, and from the consumer standpoint, it’s a really great idea that fosters choice and increases competition. To the existing phone monopolies, it’s a nightmare because it means that they now must be offering better service or face losing their customers to the competition.

The history

In 1996, under section 251(b)(2) of the Telecommunications Reform Act, the US government specified that all phone carriers, whether they were offering wired lines or wireless services, should offer to their customers a chance to change providers without having to change their phone numbers. The FCC later reiterated the government’s position to increase competition in the wireless space by requiring number portability to be completed in the wireless industry by 1998. A later report by the FCC pushed that date back to 2000. After some further lobbying, providers like Verizon managed to get that date pushed to a later time.

So far, no problems. A little delay seem to be OK but that wasn’t enough for the industry. Now that there has been a change of administration, Verizon is trying to get rid of the wireless number portability requirement altogether.

The arguments

Maybe they have a point. Today, we look at the arguments they are making and will see if any of them makes sense or whether it is just FUD that will allow them to hang on to otherwise unhappy customers.

The industry says

: Customers don’t care. It is a service they do not really want.

Customers reply

: One of the arguments the wireless industry is making is that customers don’t really care much about being able to keep their phone number. Yet, it seems that every story on the subject shows that a number of people want to be able to change providers without changing their number. Every day, a lot of people are forced to send messages to their contact list about their new phone number.

The industry says

: It’s too expensive to provide this service. Customers would not be willing to pay for it.

Customers reply

: Cell phone services already have a number of extra charges tacked on to this. As a result of this being implemented, competition in the wireless space would increase even more, putting further pressure on the overall price of packages that the wireless providers would offer. Nowadays, most wireless providers offer plans for $30–40 to most customers. Tacking on an extra dollar to support this feature (along with supporting the E911 initiative that also needs to be implemented to allow 911 operators to pinpoint cell-phone users) would not represent a tremendous leap in the overall bill given to a customer. When you spread the cost across several hundreds of millions of customers, the initial investment to implement number portability would end up costing the customers about $2 a year, or an average of less than twenty cent per monthly bill. Hard to say but does it look too expensive to you? To me, it looks like something I would be willing to pay if it gave me a chance to switch provider when they fail to deliver on overall customer support.

Furthermore, if such thing is too expensive, why are wireless phone companies in that business in the first place and why are they rolling out new services like 3G (high speed access) when the business model behind such service has yet to be proven. It seems that the industry is using the price issue only when it is convenient.

The phone companies say that the requirement is unnecessary, will distract them from improving service and will raise prices. Analysts and consumers say that the carriers want to keep subscribers.

The industry says:

It can’t be done on the existing time line.

Customers reply

: Since 1996, the FCC has issued technical guidelines and requirements as to what the providers would have to do in order to comply. The guidelines are very clear as to what needs to be done in order to accomplish this. Several providers are already offering the capability as part of the telecom equipment they sell. And, unless the American market is extremely different from any other, it seems that the argument is disingenuous at best as other people have already proven that it is doable.

So when all is said and done, there doesn’t seem to be a single argument made by the wireless industry that holds any water. The bottom line is that this provision was presented as a fact of law in 1996 (now 6 years ago) and the industry has dragged its feet on it. Why did it do so? Because, quite simply, it is not in ITS best economic interest to let customers have choice.

Outraged yet? Here’s what you can do.

This is not an issue that the wireless industry want to make very public. However, the FCC is here to protect consumers and as such, must hold formal request for comments when the industry wants to quash something like this. While it has not be widely reported in the mainstream press, the best way to deal with this is to make oneself heard on this issue.

You can first contact your congressman or congresswoman and tell them that you believe that wireless number portability is an important issue and that you are in favor of it. This will start generating a debate on the Congressional end of things.

Moving beyond that, you can contact the FCC wireless telecommunications bureau and tell them that you are in favor of wireless number portability. If enough of us do it, we may yet prove to the wireless companies that there are customers out there who watch out for the customers’ best interest and won’t stand for tricky moves to subvert existing laws.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title A Number Game. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

As many of you already know, the game station is a small box that attaches to your TV and on which you can play video games. However, the firepower of new generation boxes now on the market is now equivalent or higher than that of most computers. The main logic behind this was that gamers wanted a more realistic experience and crunching 3D representation in an ever-changing environment required more and more processing power.

Playstation 2 opens the gate

Last year, Sony introduced the Sony Playstation 2, a new gaming system that included a built-in DVD player and a 3D graphic engine that made computer video card look ridiculously outdated. At that time, Sony admitted that their goal was to go beyond games and control the digital living room. Recent partnerships with Macromedia, AOL, and Real Networks seem to show that Sony has established a clear roadmap as to how it would get into the online market. And with a growing installed base of (8 million so far, and an expected 34 million by 2004), Sony could become a major online player.

Microsoft unveils the Xbox

Having survived the browser wars with Netscape (Internet Explorer now controls 80% of the market), Microsoft is starting to worry. If one could download music and exchange videos via a gaming station, as well as play video games, where would the home PC go? And where would that leave Microsoft’s ambitious .net strategy?

As a result, Microsoft had to play in that field and to do so, it went to game developers. After much discussion, the result is here for everyone to test: it’s called the Xbox, and is essentially a PC packaged as a gaming station. If you read the documentation, the Xbox becomes more difficult to classify as simply a gaming box. For starters, there is a DVD player, which was added just to match Sony’s Playstation 2 DVD player. But Microsoft goes further by building a Dolby decoder within the system as well as adding parental controls to the box.

The second thing they added to the box is the ability to put in a CD, play it, and burn it onto the built-in hard drive (through what they call a music manager). All of a sudden, the Xbox becomes a music stereo box.

Going further is the matter of the Ethernet port and the mysterious broadband network touted by Microsoft. Early inside reports point to the first broadband gaming network that might go beyond gaming. At the current time, there are rumors of a network that would also allow for Internet browsing, email, and instant messaging, as well as gaming.

The messaging portion is an interesting one since it would include and optional plug-in for the box called the communicator, a headphones and microphone device people would use to communicate either via IM, or while playing online games. The unit includes a wireless headset with microphone, which could easily be used to make phone calls if Microsoft uses some of the technology it is currently building into the Microsoft Messenger. Long term, the Xbox could become another entry point into MSN, and into the web as a whole.

Moving forward: the Playstation 3

Sony, however, is not resting on its laurels. Now that Microsoft is entering its turf, the company is seeing its dominance on the digital living room being challenged.

With the PS3, originally slated for mid 2003 but possibly being released earlier, Sony plans to integrate offerings from its music and movie divisions into the system.

Considering the fact that the company already offers a suite of MP3 players, it is easy to see that the company will build that functionality into the next box.

Rumors are that the company will build a large hard drive within the box, which would make it a perfect storage area for an MP3 collection.

But going beyond music, the company is also looking at packaging a digital TV recorder within the unit, turning it into a device that would compete with Tivo and Replay in the market for customized television.

Also built into the box would be a TV tuner, and rumors has it that the system would also include a satellite TV decoder. In order to counter the online capabilities of the Xbox, Sony will release an online pack for the PS2 but will build that functionality directly into the PS3 box.

The unit would be offered in two different version: a light version, which would focus on gaming and be sold for around $250-$300 and a more expensive full featured convergence version which would retail for $400-$500.

Games Only: The Game Cube

Meanwhile, Nintendo believes that games and only games is what consumers want out of their boxes. As a result, the GameCube is a smaller, less pricey gaming box. However, this does not mean that it is offering less performance. It’s just that it’s a different take on the world. As far as Nintendo seems to see the world, gamers will want to pay no more than $200 for a gaming box but may be willing to pay extra for new features.

In a concession to Microsoft and Sony, the box will soon sport two different modem adapters: a 56k module for people who use a phone line and a faster broadband module for people who have a network at home. Rumor has it that Nintendo is preparing a membership network with services like online video game, full Internet access, and the distribution of music data. Since the GameBoy advance can interface with the GameCube, it seems that Nintendo is working on a hardware strategy that will make the gamecube a connecting station into the home, while the GameBoy will become a roaming device that can get updates from that box.

Convergence is here

Based on those recent developments, it seems pretty clear that hybrid boxes are now starting to pop up and that we will soon see more applications (initially in the gaming world but eventually in other areas) become the norm. I would strongly recommend that TNL.net readers who are involved in developing online consumer applications pay attention to the gaming space as it is the next arena for which we might have to format our outputs. Based on early showing, I would say that Playstation 2 will keep its predominant position for the next year or so but may be getting some competition from the new underdog in this arena: Microsoft.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title The Convergence Game. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Wired is the first publication to test it out and there are ample benefits to the advertisers. First of all, they can track what publication has prompted someone to go to their site and second they can target readers of those pubs with different messages. Interesting concept but what’s the advantage to the customer?

Unfortunately, Digimarc’s approach is not that uncommon in our industry. Designers build sites that are beautiful eye candy requiring tons of plug-ins and then wonder why more people are not using them. The answer is quite simple: customers do not like to download plug-ins and a recent study showed that customers do not even care that much for graphics on a page.

In a reversal of what is happening in the print world, Internet consumers want text. So why do more and more sites insist on having such things as slow flash movies at their entrance? Quite simply because they do not pay attention to what their customer want. In a recent editorial on his Flash weblog Flazoom, Chris McGregor is calling on all Flash developers to focus on the customers.

At the same time, Jakob Nielsen, “the guru of web page usability”, is talking about using Customers as Designers. The message here is simple: Focus on your customers and they will focus on you.

This may sound like a rant on my part but it’s something that’s been brewing over time. Too many companies have taken their customers for granted (the “if you build it, they will come” phenomenon) and have then wondered why their projected growth was not happening. In a word: Not enough work on usability and too much focus on design.

The genesis

But in a way, this is not an unusual phenomenon. Back in the mid eighties, when desktop publishing tools became available, people at the forefront of that revolution felt the need to use most of the tools. As a result, many publications would come out with different fonts for headlines, story, sub-heads, etc… often making the newsletter or magazine almost unreadable. To a large extent, the apotheosis of this phenomenon was the rise of Wired as a publication, and their almost unreadable Mind Grenades. Yes, they were pretty to look at but they were low on content and high on graphical treatments.

Over the years, Wired has become more conservative in its layout but the damage didn’t stop in print. Taking what they had learned about badly communicating in print, Wired pushed the envelope further on the web by using a number of icons and less than obvious names for their sections. It was fine in the name of experimentation and the folks at hotwired eventually pulled back from their to create more understandable sections but many took it as the reason for creating over-bloated pages with bad navigation.

However, I have to admit that most of us back in those days were checking out Hotwired to see how far the medium could be pushed. It was exciting and since few of us had had many years of experience, we spent countless hours dissecting what was working and what wasn’t.

One step forward and one step back

Hotwired went back to a more traditional look (at least by their standards) in 1995–1996 and started organizing its content around sections that made a little more sense. In the meantime, plug-ins came out, Java came out and we all felt a need to implement the latest technologies on our sites. What we didn’t realize at the time was that while we were putting Java Tickers and 2.0 features on the sites, we were closing the door for a few more people who did not have the technology to look at our sites. With each iteration of a new browser, there was a mad race as to who would implement the latest and greatest extensions and we ended up with sites that were, for the most part, unusable by a lot of people.

This is when the split started between two schools of web page creation: the interface designers, who were arguing that the web was more like a software application and that the role of a web page was similar to that of software and should have a clean design that was transparent to the user (I remember arguing that we should never be happy when a user talked about our design because it meant he or she had noticed it) and the graphic designer group, who believed that the beauty of design was more important than its functionality.

On the interface side, people started looking at whether a site scaled back gracefully, all the way to the lynx text browser. As a result, somewhat more boring-looking pages were born but users were coming in, getting the information they wanted, and getting out.

On the designer side, people continued to look at ways to enhance the experience, adding all kinds of sounds and plug-ins to create more interactive sites. Those sites looked great but needed users to keep up with the latest technologies in order to use those features.

A middle group started looking at templatization and automatic browser identification (the smart way to do things but I didn’t realize it back then) and serving different pages based on what platform the consumer was using. Ultimately, that last group was right in that it can now go on and implement new presentation schemes offering the same content in different format.

Why this diatribe?

Ultimately, this issue is one of customer focus. Back in those days, we didn’t have many customers to cater to (the web was not as mainstream as it is now) so we were afforded the chance to make mistakes. However, now, there is little room for those mistakes and there is an established body or work (and a few corpses) to look at when making decision. Ultimately, however, it’s about the customers.

Another example

I used to love Kozmo for their quick delivery and their clean interface. Then they decided to redesign the site to create more space for them to sell other product. From the inside, I’m sure it made sense: try to sell more products to each customer coming in the door. The problem, though, is that this redesign slowed down their system to a crawl. When I was happy with Kozmo, I didn’t care much about UrbanFetch, Kozmo’s biggest competitor in New York. However, the long time it took to load a single page on Kozmo’s site convinced me to take a look at UrbanFetch. I did, their site reacted faster and I started ordering more from UrbanFetch than I do from Kozmo. Why is this relevant? Quite simply because I am now putting my dollars somewhere else because a redesign pushed Kozmo one step back. As a result, their attempt to sell me more resulted in my buying less from them. Not a good trend and I hope for them that I am more of the exception rather than the rule. But somehow, I doubt it.

Back to the end-user

I’d like to propose a somewhat radical idea: take everything your company is doing and explain, for each of those components, the benefits to your customers. For example, why is a cookie for your ad important? Answer: it allows us to better target customers, hence providing them with ads that may appeal to them and be related to what they are interested in. It’s a bit of a stretch but the customer derives value from being presented with something that is more along the lines of their interest.

So what about Digimarc?

In the case of Digimarc, who’s the end user? It’s the reader of a magazine. Why should that reader use such a technology? Because it enhances the magazine. Just keeping the technology as a way to bridge paper ads to web promotions doesn’t really enhance the customer experience but how about using it as a web to link to more info. For example, if you were a subscriber, you would get a version that allows you to delve deeper in a story. I would scan the page, it would send me to the publication’s web site, where I would find such things as links to the companies mentioned, links to other articles about the subject in this magazine’s archives, etc (furthermore, the publication can sell advertising on these online pages to advertisers that are already using the technology in the print edition)… This would add real value to the experience, truly creating a bridge between the print content and the online one. The concept is good but the implementation right now needs that kind of tweak. If you’re an advertiser using that technology, try to push the magazines to follow that concept through, hence unlocking extra value for you.

Conclusion

Of course, focusing on the customer is no guarantee of complete success but it goes a long way in taking you there. Technology is always intrusive, the question is how do we make it less so and therefore increase usage of that technology. Of course, there will always been a few people out there trying out everything new (I am one of those people) but those of us who do are already favorably predisposed toward technology. In other words, we are not the right kind of focus group. If you are a technologist or a techophiliac, you are not the right person to judge whether this will work with the mass public. Ask someone around you who doesn’t use technology as much as you do (parents, friends, people at the corner store) about how they feel about a particular concept and start aligning your thoughts with theirs. Look at what you’re doing critically (does this make sense to someone with average or low computer skills?) and focus on your customer. It’s a tough practice and it’s often a frustrating one, as you will find that what may have seemed obvious to you isn’t to other people. But the end result will be that your customers will love you for it and will keep coming back.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title It’s About the Customer. You can follow him on twitter here or receive his weekly newsletter by subscribing here.