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When Bad Product Trumps Good Strategy

I like reading Umair Haque’s blog occasionally, and find much of his thinking provocative.

I suspect this analysis is wrong, though:

Glancing at TechDirt, I see response to Google Video is mixed. Interesting.

Though the product may suck, the strategy is still dominant: leveraging cheap coordination to utilize a market to allocate resources more efficiently than TV stations, Hollywood, etc, can.

At the same time, if you’re worrying about DRM…don’t. This is the real test of DRM. Google’s market, if it’s efficient, should show the DRMafia that the marginal cost is far (far) greater than the marginal benefit.

See, the problem is that “dominant strategies” in the abstract don’t matter when products outright suck, and the products don’t solve real world consumer problems.  Because the market — in this case, the market of consumers — ultimately ignores and discards the product, despite the fact it might be powered by a clever, well-thought through economic and business strategy.

Consumers will ignore the current Google product because it fails to understand what they (consumers) want: content that is portable to another device (preferably an iPod or a TV) coupled with a large catalog of programming that they can’t get through cable, satellite. Google’s use of DRM cuts them off from satisfying this consumer need, media companies in the main will gravitate to a DRM solution as long as one is offered, and so I fear (and would bet) we won’t get that market efficiency test Umair wants. Plus, to repeat, you don’t even get to the test stage where the market decides what is efficient, or isn’t when they don’t use the product at all because it stinks.

What is ironic about Google Video is that Google’s heritage is first and foremost as a great product company — their search won because it offered more relevant results, from more pages, with far greater speed and less clutter, than anyone else. They then coupled their great product several years later with a great, first class business strategy with Adsense and Adwords. Seems to me they have inverted the model with Google video, by starting perhaps with a sound strategy, but without a very good or serviceable product in place.

(Conversely, inferior strategies coupled with great consumer experience and product can sometimes trump dominant strategies — iPod and iTunes, instoppable for the foreseable future, are surely Exhibit A for this argument. Microsoft, on paper, probably had a better market efficiency model, but consumers just don’t care because the end-consumer experience is not as compelling as Apple’s. Maybe that will change this year as Umair and others argue).

I would guess we won’t see Google’s dominant strategy trumping, say, Apple iTunes’ video plans anytime soon.

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