Archive for February, 2009
Technicians Are Standing By (the wayside)
It’s often said by people who ought to know that consumer electronics are becoming too complex for the humans they’re designed for. The truth in this observation isn’t lost on anyone who’s stared blankly at an owner’s manual, which is to say all of us, or kept a straight face while watching a sales associate bluff his or her way through a product explanation (“hey, you can always return it.”).
Mainstream consumers have already become resigned to self assistance when shopping for CE, which is why people now spend the equivalent of two full work days researching a TV online before buying one in the store. The cost of trained, commissioned salespeople has largely been eliminated from the mainstream CE retail market. One consequence of this shift has been somewhat lower prices for consumers. The other is that more than one in four CE products are returned to the store, most for the simple reason that consumers couldn’t get their purchase to work the way they expected.
Buying a complicated product without expert help may be frustrating, but it’s easy compared to setting one up correctly and figuring out how to use it.
Which begs the question: Is it possible for consumers to self-assist when it comes to product support? And another question: If not, where will they find the help they need?
Technical support as we know if for consumer electronics – not counting PCs, which are a different support animal altogether – is the one place left where consumers still have an expectation of knowledgeable help from a live person, whether on the phone or face to face. The role of the support technician in the “trouble ticket” is not only crucial to the frustrated consumer, but also to the manufacturer who made the product and the retailer that sold it. Historically speaking, the tech rep, whether based in Bangor or Bangalore, serves as the point of last resort between a misbehaving product and the returns window or trash can.
Because home electronics have become so complex, support technicians now come in two flavors. Type A is trained to support a single brand (think manufacturer help lines) and Type B attempts a more “system” oriented approach, like Geek Squad or one of the many independent specialists you can find through CEDIA or other trade organizations.
In today’s connected households, the value of support Type A is quickly becoming obsolete, almost quaint. A customer who buys a new Sony TV and connects it to a Toshiba DVD player, Samsung audio system, Comcast cable box, Linksys media sender and Sanyo VCR won’t find much help from a Sony help line when they aren’t able to get a picture. A manufacturer’s rep is only trained on the manufacturer’s own products. This model works fine for a camera; for a Blu-ray player, not so much.
Geek Squad would prefer you to replace, not fix. Surprised?
Support Type B – we do it all — is the direction that live support is moving toward. Unfortunately for consumers, it’s no longer free, in fact, far from it. Even the most basic in-home service call starts at around $100, a lot of scratch for the end user, and unfortunately, not profitable for the company that sent the technician. This is why a house call from Geek Squad, and until recently Firedog, quickly becomes less of a service visit and more of a sales pitch to buy more stuff.
Given that the average tech support rep with four years experience now makes around $15 per hour (though these wages are rising), it’s hard to visualize a national force of expert technicians that will be able to address the intricacies of HDMI handshakes, IP addressing and other mainstream tech nightmares. It takes time to become an expert with these skills, and it costs money to train these reps. Someone who’s genuinely good at it will eventually gravitate to better paying work.
The result of all this is that we’ve already arrived at the point where truly expert tech reps are in short supply, and the complexity of today’s typical systems may be over the head of today’s typical support representative.
To demonstrate, we’ll describe a recent service call from Cablevision, a major cable TV, Internet and telephone service provider which is theoretically able to put skilled technicians in the home as a matter or course.
A Wirewize user recently upgraded an HD cable box to a model with DVR functionality. Cablevision gave the customer the choice of picking up the new box in person at a service center for free (self-assistance), or having a tech rep install it at a cost of $35. Since the user was tech savvy, he opted to change the box himself for free, only to find that the new box produced a loud ground loop hum through the home theater speakers.
Ground loops are a fact of life in many A/V systems. Solving them is a bit of a black art, but in many, if not most cases, the cable or satellite box is a primary culprit. In this instance, the problem was immediately traced to the cable box. An in-home service call would be necessary.
The Cablevision rep showed up on time, armed with a new box. The new box produced the same loud hum as the old one, which befuddled the rep. Disconnecting and re-connecting wires only confirmed the box as the culprit. The rep, trained only to get picture and sound from his company’s product, tried his best, replacing the cable wire, the in-wall cable jack and the plugs at the end of each coax connection, all to no avail. Common ground loops were clearly beyond his training.
A call to his supervisor yielded the puzzling answer that the rep’s only responsibility was to get the Cablevision box to produce picture and sound through the TV, which would obviously negate the purpose of the surround sound system. The rep was ready to give up.
Because the customer was experienced in these matters, he showed the tech rep how a simple transformer (on hand) would isolate the grounding from the cable line.
Zip zip zip and the noise was gone, though this slap-dash solution (shown below) could not be used permanently, as changing from 75 ohms to 300 and back again would eliminate many of the user’s digital cable channels.
This simple trick solves the ground loop, but you'll lose some channels.
The service rep was impressed with this demonstration, but unable to solve the problem he came for. A request for a true isolation transformer – a small accessory costing around $30 at retail – was met with a blank look, as the rep had never heard of one, never mind having one in his truck.
The impotence of this service call was naturally followed by written complaints to Cablevision, which nearly a week later, have been given no response.
Since the Wirewize user knows where to find said problem-solving accessory, the question is not so much what to do as who should pay for it. But a less technical — read ordinary — consumer would now be faced with a major choice. Clearly a loud ground loop buzz is not acceptable, but the cable company won’t fix it. What to do? Switch to another provider?
An average cable TV bill might mean $100 or more per month to the cable company. If the customer switches to another provider, that’s $1,200 in recurring annual revenue that’s been lost. All for lack of a small accessory part and, more importantly, some additional training for the service rep.
Whether in the long run consumers will be willing to accept the idea of support as a paid premium, rather than a freebie that comes with the product, remains to be seen. But until those economics settle themselves, the supply of truly qualified tech support will continue to be wildly outstripped by demand, as is unfortunately the case today.
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2 comments February 26, 2009
Was “Better” Just A Moment?
Last week’s news that the maker of the best flat-screen TVs was getting out of the business came as no surprise to anyone living in the age of Wal Mart. Even before the economic downturn, the electronics industry was already well along the way to a new market reality where quantity, not quality, is the point.
Would anyone bother to say this anymore?
In general terms, producing something of “better” quality is about incurring cost, in both human and monetary capital. Higher quantity, as a rule, is based on saving cost wherever possible. In a world where a new DVD player is cheaper than a night out at the movies for the family, the disconnect between these two philosophies — and the near term future of the electronics landscape — becomes pretty obvious.
To demonstrate, let’s set the WABAC machine to a simpler time and place. If you don’t remember the first viable time-travel technology, we’ll wait.
There? Great. Take a look around and acclimate yourself. The president just resigned from office. Homer and Marge are thinking about high school graduation. There’s a wire between your remote control and your TV.
The home electronics boom is in full flower. Less than 20 years after Sony first broke into the American market, “Made in Japan” has stopped being shorthand for cheap, shoddy goods. Now it’s a mark of techno cool So cool in fact, that in just a handful of years, the US consumer electronics industry will basically sell out and be sold out to Japan.
The rising new stars of that technology era, companies like Sony, Sharp, Panasonic, Hitachi and Toshiba, were all begun by engineers, electrical repairmen, even telegraph makers. The kind of people we affectionately know today as geeks.
Having conquered the US market by fair means and foul, the Japanese companies competed with each other for this greatest of commercial prizes in exactly the way that engineering geeks would be expected to compete – by out-doing each other in feats of engineering.
Back then, companies would spend trillions of yen coming up with ways of making a TV’s color more accurate, and reducing an audio receiver’s distortion by a hundredth of a percent. Engineers care deeply about these kinds of things, and for a long while, it was assumed that consumers did too.
Correction: Was Outstanding
Coming back to the present day, we see that history does in fact repeat itself in the way that noted economist Karl Marx described; first as tragedy then as farce. Today’s Japanese economy is tumbling faster than its own pickled finance ministers, and the original stars of Japan’s export-driven economy – consumer electronics – are under siege by a new Chinese competitor that’s just as aggressive as Japan was a generation ago. And many times the size.
What’s more, China Inc. and its massive manufacturing economy doesn’t care much about foot lamberts and signal to noise ratio. It cares about making and selling as many things as possible to as many people as possible. The best way to sell a lot of things to a lot of people is to make them as cheap to buy as possible. The best way to make something cheaper is to cut corners – i.e., reduce the quality.
Which brings us back to the disconnect, or better put, the “problem” of high quality. And the bigger problem for the many manufacturers – most of them Japanese – that will have to face the changing reality, and find viable ways to live within it.
Now they don't even bother to do that
With consumers in America now voting with their pocketbooks or what’s left of them, it’s no wonder that $4,000 TVs aren’t competitive with $1,500 TVs, no matter how incrementally better they are. For the rising middle classes in China, India and other developing markets, cheaper will trump better any and every day, at least for the immediate future.
Which is bad news for every electronics company that owes its historical success to the idea of making better/cooler stuff than the other guys. Which is to say just about all of them. The bone yard of the electronics world is littered with brands and products long forgotten. Nobody but diehards and collectors remember Motorola TVs, Fisher stereos, Akai VCRs and DBX processors.
Pioneer just left the TV business. JVC just consolidated its US operations. Sony just announced serious layoffs, as did Panasonic. Yet at the same time, the TV market continues to grow. That means more people are buying new sets based on price, not performance. And not caring much about foot lamberts either.
Companies that used to be good at invention had better learn to be good at re-invention, and pronto. Otherwise they’ll find themselves alongside the same US electronics companies that they gleefully battered all those years ago — on the pages of eBay.
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Add comment February 18, 2009
And Then There Was One
Once upon a time, the lowly Pittsburgh Pirates were the champions of baseball. Once upon the same time, the Chevy Impala was the best selling car in America, year after year. And once upon a time not long ago at all, the dearly-departing Circuit City was the same size and had the same clout as Best Buy.
Today the Pirates exist to let Pittsburgh residents know when it’s not football season. Chevrolet has gone hat in hand for a government bailout. And Circuit City, in an effort to raise pennies on the dollar for the bankruptcy trustee, has begun selling off its remaining inventory at closeout prices that are still higher than the everyday online prices available from its still-living competitors.
The changing face of CE retailing
How this mess happened in the first place will keep observers busy for years. The fallout is what matters, and for almost everyone that doesn’t employ royal blue shirts under a big yellow sign or boast “low prices every day,” the demise of Circuit City is not happy news.
Where to begin? Let’s look at the situation through a few different eyes.
Consumers who never even shopped at Circuit City will be affected. Circuit served as a useful counterbalance to market dominance by any one or two retailers. Circuit City was competition that kept the other stores on their toes with pricing and policies, and made them try just a little harder to please customers. Circuit’s web site was arguably more effective than its brick and mortar competitors, and the company pioneered conveniences like “online purchase/in-store pickup” that are now taken for granted. When you’re number two you have to try harder. Now that number two is gone, how hard does number one have to try (whoever that turns out to be)?
Manufacturers who sold through Circuit City are even more unhappy. Not only have they lost a major retail presence, they now have even less clout with the remaining big box stores on what to carry and for how much. Venerable brands like Onkyo and Boston Acoustics just lost their biggest customer. Worse, the loss of Circuit City means that more people will buy their CE at discount megastores, where profit margins are so low that manufacturers are loathe to sell there. Look for fewer products from fewer brands from now on.
Now let’s take a few glances around the horn at the rest of the fallout. Obviously, Circuit City shareholders are left holding the bag. Commercial landlords across the country just lost a keystone tenant. Ad agencies just lost a major account. TV, newspapers and radio just lost a huge sponsor. Thousands of workers just joined the bread line.
In a culture that genuinely seems to believe in the Lombardi dictum, there isn’t much sympathy for companies that don’t “win,” especially if they’re not very good at playing their own game.
But if you think that Circuit City’s demise is just one more example of a lousy company meeting a just fate in a Darwinian marketplace, think again. Because if being number two is an untenable position, Circuit City won’t be the only major U.S. business failure of the year. Just the first.
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Add comment February 11, 2009
The Escalating Cost Of Free Content
Last week’s Super Bowl brought in a record $206 million in advertising revenue for NBC, which quickly congratulated itself for having sold most of the ads before the economy tanked. Artfully arranged around the paid spots were plenty of giveaway house ads for NBC shows, including one for the first major 3D television broadcast since the last one.
The commercials themselves were worth missing for a snack or potty break, probably topped (or bottomed) by GoDaddy’s witless plug for “enhancement”. But one particular commercial was more interesting in theory than in practice – the loooong spot for Hulu.com, which actor Alec Baldwin hammily described as “an evil plot to destroy the world”. Um, great tag line, guys.
Hulu is, among other things, a web site that lets you watch TV shows and movies for free through your PC and a broadband connection. The selection is limited to licensed content by several major content studios, including NBC, which essentially made the Hulu commercial a house ad, but never mind that. The point is that you can watch TV for free (and legally) on Hulu – as long as you watch the advertisements.
In fact, you don’t really have a choice other than to watch the advertisements. This isn’t live TV, where you can skip commercials by changing the channel. It’s also not your DVR which used to let you skip commercials altogether but now only lets you scan past them. This is TV with “limited interruption” that can pop a logo onscreen whenever it feels like it. Guess how often that’s going to be?
Would Comic Book Guy use a Blackberry?
For years now, we’ve been hearing entertainment companies bleat about the decline of the traditional revenue models in their industries. The sky has been falling everywhere, they say – people steal music rather than buy it, they listen to iPods not radio, they read web sites not magazines, they watch DVDs instead of going to the movies.
In this worldview, the consumer is the greedy one for expecting entertainment for free or near to, not the record or network executive trying to hold on to that second Maybach and wanting $20 for a re-packaged greatest hits CD or $40 for a Blu-ray disc of a public domain movie.
Some of this is certainly true; consumers really do expect a lot for just a little or in some cases, free. But what’s troubling about the concept of “free 2.0” is that there’s always a cost to someone, even if not always a direct one.
Let’s start with an easy example — think stealing music doesn’t hurt anyone except greedy record executives? How about the band that just lost a royalty check and some promotion or touring money, or the new artists that won’t get signed because of dropping revenue? How about the graphic artist that does the covers, the printing company that does the booklet, the distributor that ships to online and offline retailers?
The usual answer you’ll hear from the file thief sharer is that artists can now sell themselves directly on the web, without the greedy record company gouging everyone. So far we haven’t heard a good reason why consumers will suddenly become altruistic and spend money when it’s going to the band instead of the label, though it could happen.
The film and TV alibis are just as insulting, only this time the shoe is on the other foot. We’re not watching enough advertisements? Excuse us, but we now routinely sit through 10-30 minutes of commercials every time we go to a movie theater. If we watch the movie on TV, we have to have the station logo (advertisement) in our face throughout. Even if we buy the movie on DVD we’re still not safe; there are plenty of discs with commercials, many of which make it difficult and confusing to skip past the plugs.
This is why Hulu is both exciting and enraging. On the one hand, it’s nice that you can (theoretically) go online and check out that Sopranos episode that you missed whenever you want (not that HBO has signed on to Hulu). Frankly, it’s been a bit mind-blowing that it took so long for this obvious idea to hit the streets. We don’t even mind that you have to bear with the sponsorship intros, commercials and logo interruptions. Hey, it’s free, right?
On the other hand, consumers already do pay for content. Live TV? How about $40-100 per month in cable or satellite bills? Which doesn’t include pay per view or the fact that one third of every hour of “free” TV is taken up by advertisements.
We’re not sure Hulu is going to catch on. So far the content selection is pretty thin, and what’s up there doesn’t necessarily stay there – some shows are only available for a limited time. With DVR ownership having doubled in the past 2 years, viewers don’t need to go online to see shows they missed, they’re able to time shift them at their leisure.
But if you want a good look at the future of free TV content, look no further than your PC and Hulu.com.
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2 comments February 3, 2009
