The sad (but respectable) demise of Microsoft Spot

Microsoft announced last week that it's discontinuing its Spot data watch program.

The trouble with predicting the future is that it's always easy to do in retrospect. Looking back, it's obvious that Microsoft's Spot products were a dumb idea. The concept was that Microsoft would send small bits of wireless data -- weather forecasts, stock prices, etc -- to specially-equipped watches and other small devices like refrigerator magnets, which would display the information. On the face of that, it sounds kind of appealing. There are definitely people who want information like that when they're on the go, and Microsoft had a clever plan to use some unused FM radio bandwidth to deliver the information to the devices. You'd use your PC to pick which data feeds you wanted, and Microsoft would take care of blasting it onto your watch or other device.

The problem, of course, is mobile phones. Five years ago, when Spot was announced, the handset vendors and operators were already getting hot on delivering small bits of data to mobile phones. The market for Spot, rather than being everyone who wanted data on the go, turned out to be everyone who wanted data on the go who didn't carry a mobile phone.

In other words, almost no one.

Like I said, it's easy to point out that problem in retrospect. But Spot was probably in development for a couple of years before it was announced, meaning it was probably started in about 2001 -- before the real rise of wireless data in the US. I think someone who was paying close attention to the mobile market could have predicted Spot's troubles. But it was much less obvious then than it is now.

Once you as a manager put people on a project and spent some money on it, it's very easy to talk yourself into ignoring emerging signs that the product might fail. You want the thing to succeed, so you have an incentive to rationalize away any concerns. Besides, business history is full of stories about products that succeeded despite adversity and critics. How can you tell the difference between a "normal" pothole in the road, and an impassable rift?

Lessons from Spot's demise

In the early 1990s, a number of companies developed specialized wireless modems and private wireless services for delivering data to personal computers. Internet connectivity at the time meant slow dial-up connections for most people, which could not be left active at all times. The idea of blasting data to PCs in real time seemed very attractive, and indeed the products sold well for a few years -- until Internet connections became faster and didn't require dialing out on a phone. Spot ran into the same basic process in the mobile space.

So one lesson is that when you're potentially competing with other sorts of networks is to look very carefully at where they'll be in three or four years.

How to manage convergence. It's very hard to predict how "convergence" will affect a product category. Fifteen years ago many people thought it was obvious that printers would soon be built into every PC, but it never happened. Convergence seems to happen only when there is absolutely no downside to it. So you can combine a printer and scanner -- or a mobile phone and a Spot watch -- because there is no loss of functionality in the resulting product. But put a printer in a PC and you have to sacrifice too many things (or the PC gets too darned big).

Because a mobile phone has a larger screen than a watch, it's actually a better data device than a watch. That should have alerted Microsoft to the danger.

Solve real problems. I've mentioned this before, but it's worth repeating: Products have a much better chance of succeeding when they solve major problems for customers. Spot was cool and convenient, not life-changing. That made it much easier to absorb into some other product.

Microsoft often gets criticized by people in the tech industry for failing to innovate. According to this perspective, all Microsoft does is copy things that others have already proven. But initiatives like Spot are an exception to that rule. I wish Microsoft had chosen its battle a bit more carefully, but I respect that fact that it tried. I wish it would take more chances like this, rather than just focusing on ways to imitate the iPod and copy Google's advertising business.

Some other commentary on Spot:
An early discussion of the technology, from InfoWorld (link)
Engadget's article (link)
Watches vs. mobile phones (link)
Enthusiastic review in 2004 of the Tissot $750(!) Spot watch (link)
An obituary in 2006 for the discontinued Tissot Spot watch (link)


By the way, I apologize for being away from the blog for so long. Family and work issues have to be my top priority, and the blog is in line after that.

Some other things you didn't know about iPhone users

Earlier today I told you about the survey of US iPhone users that Rubicon Consulting just conducted (link). When you publish a big study like this, there are always a few secondary data points that don't fit into the whitepaper -- kind of like outtakes in a movie.

I thought you might be interested in seeing the outtakes. So, here are some other interesting factoids about iPhone users...

How do you carry your iPhone?

To me, one of the most interesting findings of the study was that half of iPhone users are under age 30. I had expected them to be older, because PDA and smartphone users have traditionally been in their 30s and 40s.

With the younger age of iPhone users comes some other differences, including how they choose to carry their iPhones...

"How do you carry your iPhone?"

What was your primary motivation for buying an iPhone?

People usually have multiple reasons for buying a product, some of which they won't even admit to themselves. But when we asked iPhone users why they bought the product, I found their answers to be refreshingly candid...

"When you obtained your iPhone, what was your number one motivation?"

The iPhone is a babe (or guy) magnet

One of the benefits of a popular new technology product is its ability to attract members of the opposite sex when displayed at a party or bar. We assumed that the iPhone would have such an effect, and more almost 70% of iPhone users agreed.

"Does the iPhone help you meet members of the opposite sex?"

Which websites do iPhone users visit?

In our whitepaper on the survey, we reported that most iPhone users say they browse on the iPhone a lot more than they did on their previous mobile device. But we didn't have enough space to report which websites they visit on the iPhone most often...

"Which websites do you visit on your iPhone, and how often?"

I was very surprised that the new social communication service Spitr (link) didn't make the list.

What other devices did the iPhone replace?

About a quarter of iPhone users said it is replacing use of a notebook computer. But given the enthusiasm of iPhone users, it's not surprising that they are also using it to replace some other technology products:

"What else did the iPhone replace?"

What other features do you want in the iPhone?

In the whitepaper, we listed some of the most desired iPhone features. We didn't have room to list other features that people also asked for. Here they are...

"What other features would you like to see added to the iPhone?"

Eight point scale: Strongly interested = 7 or 8, mildly interested = 5 or 6,
mildly disinterested = 3 or 4, strongly disinterested = 1 or 2.

Personally, I was disappointed that Strategic Conquest (link) wasn't listed higher.

When and where do you use the iPhone?

An advantage of a mobile device is that it can go with you anywhere. This leads to some unusual usage patterns that the industry doesn't like to acknowledge. I think it's important to report them.

"When and where do you use your iPhone?"

So now you have the full picture of iPhone users. As you can imagine, these usage patterns are having a profound effect on the thinking and behavior of companies in the mobile industry. I think they probably had a lot to do with Google's decision to buy Sprint (link).

I should add one other piece of information -- as I said in my earlier post on the iPhone user study, the study is definitely not an April Fools joke. However, I can't make that same assurance about the post you're reading now.

Announcing a new survey of iPhone users

I think it's safe to say that the iPhone is the most publicized new mobile product of the last several years, especially in the United States. But although there has been endless commentary on the iPhone, there hasn't been much solid data on how it's being used, and what impact it's having on the industry.

At Rubicon, we set out to fix that by conducting a quantitative study of US iPhone users last month. We released the results today at CTIA. You can read the full results on the Rubicon website (link). Here are a few highlights:

--iPhone users we surveyed are very satisfied overall with the product, and report that they're making heavy use of features like e-mail and browsing. This is driving higher mobile phone bills, producing about $2 billion a year in additional revenue for AT&T.

--Users are not universally satisfied with everything about the device -- about 40% report that it can't display all the websites they want to visit, and many also said they would like to see physical changes to the product, such as the addition of a bigger screen or a thumb keyboard.

--Users are young Apple veterans. Half of US iPhone users are under 30, and 75% are prior Apple customers.

--The iPhone is expanding the smartphone market. About 50% of iPhone users replaced conventional mobile phones, while 40% replaced other smartphones. The Motorola Razr was the conventional phone most often replaced, while Microsoft Windows Mobile devices and the RIM Blackberry were the smartphones most often replaced.

--Email is the #1 function. The most used data function on the iPhone is reading (but not writing) email, with about 70% of users doing that at least once a day. About 60% said they browse the web on the iPhone daily.

--The iPhone increases mobile browsing. Over 75% of iPhone users say they do a lot more mobile browsing on it than they did with their previous mobile phone.

--The iPhone drives carrier switching. About half of iPhone users switched carriers to AT&T when they obtained the iPhone.

Please note that although I usually post an April Fool's message today, this ain't it. The timing at CTIA made today the best day to release the study. It's completely genuine.