Social gaming picks up momentum
Ellen Lee, Chronicle Staff Writer
Monday, March 31, 2008
Social Gaming. Chronicle graphic by Tracy Cox
Once a day or so, Marcus Segal will take a break from his job at a San Mateo technology company, nibble on a sandwich and fire up a three-minute online game of Scramble.
And because he's playing the word game on Facebook, he can connect and challenge his far-flung friends, including his friend's mother, who is in her 60s, and his former Boggle partner in New York.
"It allows me to stay in touch with friends all around the country through a simple game," said Segal, 36. Plus, he said, "It's better for your brain than watching 'Celebrity Fit Club' or whatever."
Online casual games like poker and puzzles have long drawn their share of fans. One study by Park Associates, a research firm, estimated that 34 percent of U.S. adult Internet users play online games weekly.
But as it has with other activities, the social-networking phenomenon is introducing a new layer to gaming.
The combination of social networking and games, known as social gaming, is presenting online games to users who have never bothered to play or were turned off from their earlier experiences. It is also opening doors to new kinds of games, building on the social and connected nature of sites such as MySpace and Facebook.
The momentum has been building since last year, when Palo Alto's Facebook started to allow outside developers to design programs for the popular social-networking site, kicking off a trend that has inspired thousands of applications, from photo slide shows to virtual gifts. Other social networks quickly followed suit, with Google, Yahoo, MySpace and others teaming up to form OpenSocial, a move to simplify the process for developers so they can create programs that run on multiple networks.
Games have become some of the most popular applications to be introduced. While some programs have quickly flamed out, games have drawn repeat users who keep coming back for more. And, games have steadily amassed new recruits as players invite their friends.
Unlike traditional online casual games, users playing inside a social network aren't competing against strangers who happen to be online at the same time, but against their friends. It's a significant distinction: Segal said he had tried playing backgammon online in the past, but didn't have a good experience. If he played well, his opponents sometimes would just abandon the game and disappear. That doesn't happen among his friends.
Social gaming has become yet another means to keep in touch.
"It delivers the message, 'I'm thinking about you' without having to think of something to say," said Jeremy Liew, a general partner at Lightspeed Venture Partners, who has blogged extensively about social gaming. "You can't always instant message (your friends) or write to them, but playing games with them is one way of expressing that they're important to you."
Buy a friend a drink
Some games are starting to take advantage of the network's inherent social element. Zynga Game Network, a San Francisco startup from entrepreneur Mark Pincus, introduced a feature in its Texas HoldEm Poker that lets players give chips to their friends and use their chips to buy their friends a virtual drink. On the first day two weeks ago, players sent drinks to each other 200,000 times, Pincus said.
San Francisco startup Serious Business, founded by 23-year-old Alexander Le and 24-year-old Siqi Chen, believes that a new genre of games could be mined from tapping into social networks.
In November, the duo created Friends for Sale, now one of Facebook's most popular games with nearly 700,000 daily players. Users buy, sell and own their friends, as though their friends were pets or stocks. Owners can control their acquisitions, forcing them to do or say things, as well as sell them and turn a profit. Those being bought and sold are also part of the game, going up and down in value.
The game has become especially popular among Facebook's crowd of users in their 20s.
People are game pieces
The idea, said Chen, is to develop games that make people the game pieces. Here, winning is not necessarily about developing the best aim or reflexes or driving the fastest car. "We can make games where the pieces are people instead of plastic, abstract things," said Chen. "You succeed at the game based on how good you are at social skills, like bluffing or negotiation."
One of the earliest successes, Scrabulous, a type of Scrabble game developed by two brothers in India, demonstrated that players did not need to take part in the game at the same time, a factor that has opened possibilities and freedom for online games.
That's a component that has become popular among other social games. In Ghost Racer, a simplified car racing game from Zynga much like Electronic Arts' Need for Speed, one person can race around the track and then challenge a friend. That person can race at a different time, chasing the ghost of the friend's car.
"My games are for people who don't have time for games," Pincus said. "I don't make games for gamers."
Many of the most popular social games have taken established games such as Scrabble, Risk, Boggle and Battleship and moved them inside the social networks. They also have been inspired by console, role-playing and massive multiplayer games such as World of Warcraft.
It hasn't been without controversy. Scrabulous, which has nearly 700,000 daily active users on Facebook, landed in hot water because of its close connection to Hasbro's Scrabble, which has a licensing agreement with EA. RJ Software, the company behind Scrabulous, is in discussions with Hasbro, said co-creator Jayant Agarwalla.
EA said it plans to introduce a free online social-network Scrabble game for North America in the near future and to tap into other Hasbro brands.
But not all games are copies. San Mateo's Rock You turned one of its early Facebook applications, Vampires, into a role-playing game as it added elements such as the ability to pit vampires against werewolves.
Social Gaming Network, whose games include War Book, spun off from Freewebs earlier this year and started operating in Palo Alto this month.
"We're in the Pong stages of social gaming," said Shervin Pishevar, CEO of Social Gaming. "In terms of building new ideas, you should expect to see innovation for what it means to be a game and tap into the social graph, the people you enjoy playing games with."
Make it exciting
The challenge for developers is that Facebook members are not necessarily looking to play games when they sign onto the site, said Jim Greer, CEO of Kongregate and the former technical director of EA's casual games site, Pogo. To draw them in, the games need to be easy to learn and start, but also exciting enough to encourage users to return.
If they're successful, it could also expose users to more intense or complicated games on other sites, he added.
Most social games, like other applications, depend on advertising for revenue. Agarwalla, for instance, said that Scrabulous draws about $20,000 a month in advertising. Some games are also branching out into other forms of payment. On Ghost Racer, users can spend $20 to upgrade their car so they can race faster.
"We're in the early phases," Liew said. "Companies have been formed in the last few months and there is a lot of innovation still to come."
Top 10 games on Facebook
-- Friends for Sale
-- Scrabulous
-- Texas HoldEm Poker
-- Compare People
-- (Lil) Green Patch
-- Speed Racing
-- CBSSports.com The Official Tournament Brackets
-- Who Has the Biggest Brain?
-- (fluff) Friends
-- Scramble
Source: Facebook
E-mail Ellen Lee at elee@sfchronicle.com.
We
all know by now that social networks aren't a passing fad. They're no
longer used solely by early adopters, young adults, or tech enthusiasts
- social networks are now mainstream. However, a recent UK study
conducted by media research company, Entertainment Media Research,
reports some figures that point toward the fact that social networks
could do even more. In fact, social networks have the potential to be
the content distribution platforms of tomorrow. See you later iTunes, I'm gonna sync with MySpace now...
The January 2008 findings come out of a large, 249-page survey,
where 1600 UK consumers were polled on everything from behavior, to
trends, preferences and attitudes to all forms digital entertainment
across the board.
Although the poll features UK users only, it's easy to extrapolate
some commonalities from the answers they provided. UK users are a
subset of networks in question, but just as digitally invested in their
social connections as any other demographic of users.
The survey shows the top five UK social networks to be, in order,
Facebook MySpace, Friends Reunited, YouTube, and Bebo. MSN Spaces falls
just behind Bebo, if you're not one to count YouTube as a social
network as they do because of its community element.
In the UK, social network usage does correlate with age, but even 1
in 8 of 45-54 year olds regularly use them, as do half of teenage males
and two thirds of teenage females. Looking at the younger demographic
(under 25 years old), 60% are using social networks.
Usage levels
This gain in popularity comes from the expense of other activities
and media. The main activities showing a decline in time spent doing
are doing work/homework, watching broadcast television (-12%), reading
print (books are -10%, magazines are -8%, newspapers are -7%), visiting
other web sites, and playing games. Among teens, the decline is even
more pronounced with -32% less time spent on homework/work, -21% less
time spent on TV, and -14% less time spent reading books. However,
female teens show a +19% increase in listening to music.
Other activities suffer
And while many of today's social network offer the ability to stream
content, the survey points towards their potential to become more
significant players in the media and content distribution business. In
fact, 1 out of every 4 users (27%) said social networks could be the
main way they would access video and music if these features became
available and the player was good. And for the under 25-year-olds,
acceptance was even higher: for example, 40% of males, 20-24, agreed
that the social networks could be the main way they would access
content if available.
Beyond just accessing music and video, the potential for other types
of content distribution is present as well. 26% of the social network
users (1031 out of the survey's 1600 respondents) are interested in the
ability to chat about the video streams, 23% are interested in using
the network as a "serious" media player to stream music, 22% are
interested in using the network as a serious media player to view TV
programs, 21% would stream movies, and even 13% would be interested in
using embedded online gambling. (Imagine if you could play Scrabulus
for money!).
Social networks currently excel in content discovery, with 30% of
users responding that they occasionally use them to search for new
music, and for teenage girls this figure was 1 in 2. Meanwhile, 1 in 4
said that they would find out about movies and TV shows via peer
recommendation within the network.
The telling figure is that 1 in 5 reported that they purchased music
based on peer recommendation and have searched a social network to find
new music to purchase.
If social networks chose to become more than content discovery tools
in this area, they would already have a built-in customer base ready to
buy, as long as the process from discovery to purchase remained easy
and intuitive.
This idea is something that MySpace seems to already be working on. Last month, news was leaked about the upcoming MySpace music service,
which may even be offering mp3 downloads and possibly via an Amazon
partnership. If that's the case, then it wouldn't take long for MySpace
to take over the media distribution game and become the number one
online music retailer, beating iTunes with ease by sheer number of
users.
MySpace the next iTunes? It's coming.
These days, designing a new mobile phone can seem like something out of an episode of “Dr. Phil.”
LG Electronics, the maker of the Chocolate and Voyager phones,
begins by asking focus groups to keep a journal, jotting down feelings
about features they like most. Participants can call a toll-free number
to share their emotions about the phone they are testing. And sometimes
they are asked to draw pictures that represent their mood when they
hold the phone.
“Our job is to be behaviorists and psychologists,” said Ehtisham
Rabbani, LG’s vice president for product strategy and marketing. “We
constantly have to be reminding ourselves that we tend to be geek types
and our customers are not.”
Executives and industry analysts say it has become more important
than ever to understand the psyche of consumers and why they pick one
phone over another. That’s because LG, Motorola, Nokia and others are in a fierce battle to please finicky customers as new entrants like Apple, with its popular iPhone, seek to upend the traditional mobile phone business.
At stake are millions of dollars in profits and the fortunes of
entire companies. Like fashion or entertainment, the cellphone industry
is increasingly hit-driven, and new models that do not fly off the
shelves within weeks of their debut are considered duds. The most
gadget-conscious shoppers buy new phones every nine months, twice as
fast as they did a few years ago. And teenagers, one of the
fastest-growing markets, are especially quick to dump a brand if it
loses popular appeal.
“The world has changed,” said Jeremy Dale, who is in charge of
marketing for mobile devices at Motorola, where fortunes tumbled with
the decline of its once popular Razr. “There is more relevance in what
other consumers say than what the company is saying.”
Cellphone company executives are so concerned about these trends
that, at the largest mobile phone trade show in Barcelona this month,
panelists debated how their industry could better understand how to
make customers happy, as Apple seems to do. One panelist suggested that
cellphone makers tap into consumers’ “neural networks”, while another
said they should understand their subliminal needs.
The speed of innovation — or rather, consumers’ appetite for it —
makes it harder for companies to compete. Ten years ago, wireless
carriers and mobile phone makers could thrive by offering consumers two
or three new options a year. But now, with nearly 80 percent of
Americans owning a mobile phone and hundreds of models available, a
company’s fate can turn as quickly as a teenage girl’s temperament.
Mr. Dale says companies like his are forced to give consumers what
they want even before they know they want it. Motorola was a market
leader in late 2004 when it introduced the ultraslim Razr. But when the
company failed to create a worthy successor, its stock plummeted and
investors revolted.
Motorola’s share of handset sales in the United States dropped to 30
percent by the fourth quarter of 2007, from 35 percent in the first
quarter, according to the NPD Group, which tracks sales. Now Motorola
is considering a breakup of the company.
Different companies, of course, take different approaches to
understanding consumer tastes. Along with extensive focus-group
testing, LG executives regularly attend home and design shows looking
for broader trends in popular culture.
Mr. Rabbani said that last year he and his colleagues noticed that
natural materials like wood, metal and leather were popular among
furniture and appliance makers. So when designing the Venus, which LG
introduced in late 2007, designers molded the plastic back to give it
the texture of grainy leather. Verizon and LG declined to give sales figures for the phone.
But whatever the cultural inspiration, if a new phone does not catch
on quickly, it is not likely to catch on at all. Even interesting
designs do not necessarily spell success. Helio, a joint venture of EarthLink
and SK Telecom of South Korea that developed the Ocean and other phones
for the youth market, is reported to be looking for a buyer for its
business, too.
“The strongest marketing tool is the first 20,000 people who buy the
device,” Mr. Dale of Motorola said. “If they like it, they will tell
their friends.”
The focus on the consumer mindset can be intense. Three weeks ago, a
small team of Nokia executives had their first gathering at a farmhouse
30 miles north of Santa Barbara, Calif., for a three-day retreat to
discuss consumer behavior.
The group is the first of its kind at Nokia, the world’s No. 1
seller of mobile phones, bringing together 14 designers and researchers
from California and Helsinki, where the company is headquartered. Their
charge is to tell Nokia’s top executives not only what consumers will
want next year, but 3 to 15 years from now.
“We have the ability to clarify the needs of real people,” said Rhys Newman, who heads the team.
A case in point: A few years ago one of Nokia’s designers visited
China and noticed that people there used the light from their mobile
phone screens to illuminate dark hallways so they could more easily
unlock their doors. After he discussed his observation with other Nokia
designers, Nokia added a penlight to some models.
“Design used to be inconsequential: just make it pretty, make it
sell,” said Mr. Newman, who, along with three members of his team, was
interviewed at Nokia’s design center near a strip mall in downtown
Calabasas, south of Los Angeles. Now, he said, “we have to think about
human fundamentals.”
Two and a half years ago, Nokia executives asked Mr. Newman and some
colleagues to explore what Nokia’s strategy should be as consumers
began to personalize their cellphones. Among those working on the
project were Jan Chipchase, a human behavior researcher for Nokia who
lives in Tokyo and travels the world studying culture and
communication, and Andrew Gartrell, a 14-year veteran designer.
On a trip to Ghana last year, a colleague of Mr. Chipchase took a
photograph of the crushed front panel of a Nokia 1100 mobile phone that
had been discarded in the middle of a dusty road.
Mr. Gartrell, who had helped design the 1100, was unnerved by the
image; the phone had just come out in 2003. Mr. Newman said Nokia’s
designers and researchers became fixated on the notion that the company
makes 16 mobile phones a second and that many of them end up in the
garbage heap.
So instead of examining the personalization of phones, Mr. Newman
and his fellow designers suggested that Nokia explore how to make more
environmentally sound products — or, as Mr. Gartrell put it, “How do we
turn waste into something beautiful?”
AT&T's proposed filtering policy is bad news
Why should we have to choose between blazing-fast Internet and privacy?
By Helen A.S. Popkin
updated 6:16 a.m. PT, Fri., Jan. 25, 2008
Joel Johnson, gadgets editor for the tech/science site boing boing, pulled a Harvey Pekar during his recent guest appearance on the online AT&T Tech Channel’s “Hugh Thompson Show.”
In 1988, Pekar, the “American Splendor” comic book writer, torpedoed his eighth (and final) appearance on NBC’s “Late Night with David Letterman” by criticizing General Electric (NBC’s parent company), for manufacturing weapons.
Johnson, exhibiting a politeness foreign to the notoriously-cranky Pekar, nonetheless used his guest shot on Thompson’s show to call attention to AT&T’s newly proposed (and very creepy) plan to filter user activity on the Internet.
“Do you guys want AT&T to read your e-mails?” Johnson asked the Thompson audience, when he should’ve been talking about gadgets. “Do you want AT&T to like, open up your instant message conversation and look and see if you maybe said something that they didn’t like or maybe the government didn’t like? Yeah? No. I don’t think anybody wants that.” A chorus of “Noooos!” echoed from the audience before producers shut him down.
Like Pekar’s final “Letterman,” the “Thompson” segment may never air. Johnson however, had the forethought to ask a colleague to video record his segment. He’s posted it on boing boing, along with a note describing the in-studio dust-up he caused and the importance of calling out AT&T. Go see it. You need to. This AT&T thing is a tiny story now, but it’s about to blow up huger and uglier than that Facebook’s Beacon mishagos. And it’s going to affect all of us.
AT&T’s big plan, which CEO Randall Stephenson shared this week at the World Economic Forum in Switzerland, is to monitor traffic over its online network in what he claims is an effort to stamp out theft of copyrighted material. He failed to mention that such a plan is also unethical, impractical, insane, and given the CEO’s explanation, probably more than a little dishonest.
"It's like being in a store and watching someone steal a DVD," CEO Stephenson said in his announcement. “Do you act?" Um, well … no. Not most people. Not unless you’re Tom Cruise or the store security guard who’s paid to interact with criminals. Not that the comparison is relevant to the proposal. Most likely, it has little or nothing to do with petty theft. Riddle me that.
When a business entity decides to do something that seems just stupid, you've got to start looking for the angle you're missing. Internet filtering is a bad business move because, well, most of us value our privacy.
We’ve also grown pretty fond of the freedom to explore cyberspace at a speed faster than dial-up. Taking time to scan every e-mail or forwarded LOLcat is going to slow things down considerably. Scanning also runs the risk of blocking perfectly legal content, such as home videos mistaken as, say, “Cloverfield” bootlegs.
Lack of privacy plus a bad connection divided by blocked service equals dissatisfied customers. These customers then dump AT&T en masse, leaving dissatisfied stockholders in their wake. With stakes this high, it ain’t about shoplifting.
Most likely, the purloined DVD comparison is a poorly thought-out distraction from the actual goal — driving a wedge in Net Neutrality. That’s the principle that allows you to surf the Net freely, without Internet providers “speeding up or slowing down Web content based on its source, ownership or destination,” as explained on SaveTheInternet.com.
Without Net Neutrality, Internet providers such as AT&T, as well as Comcast, Time Warner and Verizon, can “discriminate in favor of their own search engines, Internet phone services, and streaming video while slowing down or blocking their competitors,” the activist site points out.
Think of it as an invisible fence preventing you from leaving the front yard, while locking out smaller Web sites who aren’t allowed to visit you on account of they can’t pony up the dues. You get a pretty good picture of why cable and phone company lobbyists are pushing to block Net Neutrality legislation.
As this story balloons over the coming weeks, perhaps AT&T’s true motivation will be revealed. Maybe it’s not about controlling the Internet. Maybe AT&T is using this as a pump-fake to get out of the iPhone contract with Apple. One thing's for sure. Someone at AT&T needs an intro course on the fundamentals of the practical side of business ethics.
© 2008 MSNBC Interactive
URL: http://www.msnbc.msn.com/id/22829568/
Video's New Friends
Social-Networking Sites Ramp Up Original Online Series
To Lure Users, Advertisers and Compete With YouTube
By JESSICA E. VASCELLARO
February 28, 2008; Page B1
College student Zoey Colson joined social-networking Web site Bebo.com last summer for one reason -- to watch Bebo's hit video series "KateModern," a mystery show about an art student.
To promote the show, whose first season drew an average of 1.5 million video views per week, Bebo relies on the interaction among the Web site's users. It sends alerts to members to tell them when new episodes are posted. And it allows members to send messages to characters, like the one the 20-year-old Ms. Colson wrote telling Kate's roommate to cheer up when a plot twist didn't go her way.
SEE THE SHOWS
[Icon]
• "KateModern"
• "Roommates"
• "Special Delivery"
FROM ALL THINGS D
• A video interview with the producer of "Kate Modern."
• Kara Swisher visits Bebo's production facilities in London.
"You feel like you are part of their world," says Ms. Colson.
Bebo and other social-networking sites like News Corp.'s MySpace are taking the plunge into original Web series at a time when the popularity of online video is surging. The social sites hope to use the shows to attract advertising revenue. More importantly, they are banking on the original content to keep users from fleeing to popular Web sites such as Google Inc.'s YouTube that focus almost exclusively on video.
Now in its second season, "KateModern" became a sleeper hit for Bebo. Bebo's success with "KateModern," whose episodes are only a few minutes long, has prompted the closely held social-networking site to plan other series for later this year, including a reality show, "The Gap Year," and a drama, "Sophia's Diary." Meanwhile, Bebo has been exploring a possible sale and has had interest from companies such as CBS Corp., people familiar with the matter say. Bebo declined to comment on a possible sale.
Meanwhile, MySpace.com, the No. 1 social-networking site in the U.S. as measured by unique monthly visitors, this week launched a hidden-camera show, "Special Delivery," the second series co-created by the Web site. Its first co-created program, "Roommates," a reality show about college friends that launched at the end of last year, is currently drawing an average of 200,000 viewers per episode during its second season. MySpace, which has hired several former Hollywood executives to help its video effort, is owned by News Corp., which also owns The Wall Street Journal. Bebo, based in San Francisco, had 22 million unique visitors in January, compared with MySpace's 109 million, according to comScore Inc.
The social networkers' push into original video contrasts with other Web companies' move to scale back in the area. Yahoo Inc. retreated from plans to focus on creating original Web series more than a year ago after some early tries failed to take off. More recently, Time Warner Inc.'s AOL discontinued some original Web video projects but is still adding original video to sites such as AOL music and AOL home.
The growing popularity of YouTube poses a particular competitive threat to social-networking sites. Roughly a quarter of users who view videos on MySpace also watch shows on each of the major television networks' Web sites, while more than 80% watch them on YouTube, according to Nielsen Online.
What's more, the average MySpace visitor spent 10% less time on the site in January 2008 compared with January 2007, according to comScore Inc. The average YouTube user spent 57% more time on YouTube during the same period. To reverse the trend, social networks want to engage members with compelling shows they hope can generate the level of buzz of other Web video hits.
The new efforts come amid a broader evolution in the online-video landscape. Past efforts by Web companies to turn themselves into online versions of television networks have been hampered by the difficulty in changing ingrained consumer habits -- while people are happy to watch short video clips from time to time, few until recently saw the Web as a forum to follow regular episodes of series. For online-only shows, weak advertiser interest, subpar production quality and lack of promotional muscle were added hurdles.
But in the past year or so, online video-watching has surged, driven by a flood of new content. The major television networks have begun making many of their prime-time series available on the Web. At the same time, video advertising is exploding, held back only by the lack of shows around which to advertise -- something more Web-only video series can help solve.
Both Bebo and MySpace see opportunities in making their own video series by pursuing program ideas targeted to their members' interests and which can be adapted on the fly. Bebo killed off the main character of "KateModern" after users complained about the character on message boards and forums. "We want to engage viewers in the show," says Ziv Navoth, vice president of marketing and business development for Bebo.
The companies are investing cautiously, placing small bets before developing full series. Before green-lighting the entire 18-episode "Special Delivery," MySpace filmed a handful of episodes to run by advertisers. Both sites are keeping episodes to a Web-friendly few minutes in length.
The direct payoff from the series may be small. Bebo says the sponsors of "KateModern," which include major advertisers such as Procter & Gamble Co.'s Gillette and Microsoft Corp.'s MSN, paid an average of about $400,000 for six-month sponsorships. PepsiCo Inc.'s Cheetos, the sponsor behind "Special Delivery," calls its investment "minimal." But the costs aren't very large, either. MySpace estimates its shows cost about $1,000 a minute to film and produce. (In comparison, television episodes can cost $50,000 or more a minute.) And by getting involved in the writing themselves, the sites can offer advertisers premium product placements: Ford Motor Co. sponsored "Roommates," including arranging to have a scene filmed inside a Ford car.
Not every social-networking site is convinced video investments are worth the money. Facebook Inc., MySpace's close rival in the U.S., hasn't gotten involved in writing or producing original content.
But MySpace and Bebo are confident the nature of their sites can make a difference. Cristian Cussen, MySpace TV's director of marketing and content, says MySpace's original shows are built not only around plots but also around communities. For example, each show is anchored on a MySpace page from which users can pull videos to embed on their MySpace blogs. "Our play is creating a centralized hub...that really complements the content," he says.
MySpace also is luring video producers by highlighting the company's ties to the entertainment industry through parent News Corp. The site, which took off in part by promoting bands and comedians, is trying to build on its roots by offering more established writing and directing talent a chance to do more than a typical Web series. The idea helped MySpace connect with Avalon Television Ltd., a London-based company that specializes in comedy shows and helped create "Special Delivery."
Avalon Television President David Martin said he wanted to develop a relationship with MySpace that would eventually lead to opportunities in a bigger entertainment medium, noting that Internet-only series aren't usually economically beneficial. "The things that appeal to us," he says, "are the sort of the things that have potential to have life somewhere else."
Labels: social media and movies
These days, designing a new mobile phone can seem like something out of an episode of “Dr. Phil.”
LG Electronics, the maker of the Chocolate and Voyager phones,
begins by asking focus groups to keep a journal, jotting down feelings
about features they like most. Participants can call a toll-free number
to share their emotions about the phone they are testing. And sometimes
they are asked to draw pictures that represent their mood when they
hold the phone.
“Our job is to be behaviorists and psychologists,” said Ehtisham
Rabbani, LG’s vice president for product strategy and marketing. “We
constantly have to be reminding ourselves that we tend to be geek types
and our customers are not.”
Executives and industry analysts say it has become more important
than ever to understand the psyche of consumers and why they pick one
phone over another. That’s because LG, Motorola, Nokia and others are in a fierce battle to please finicky customers as new entrants like Apple, with its popular iPhone, seek to upend the traditional mobile phone business.
At stake are millions of dollars in profits and the fortunes of
entire companies. Like fashion or entertainment, the cellphone industry
is increasingly hit-driven, and new models that do not fly off the
shelves within weeks of their debut are considered duds. The most
gadget-conscious shoppers buy new phones every nine months, twice as
fast as they did a few years ago. And teenagers, one of the
fastest-growing markets, are especially quick to dump a brand if it
loses popular appeal.
“The world has changed,” said Jeremy Dale, who is in charge of
marketing for mobile devices at Motorola, where fortunes tumbled with
the decline of its once popular Razr. “There is more relevance in what
other consumers say than what the company is saying.”
Cellphone company executives are so concerned about these trends
that, at the largest mobile phone trade show in Barcelona this month,
panelists debated how their industry could better understand how to
make customers happy, as Apple seems to do. One panelist suggested that
cellphone makers tap into consumers’ “neural networks”, while another
said they should understand their subliminal needs.
The speed of innovation — or rather, consumers’ appetite for it —
makes it harder for companies to compete. Ten years ago, wireless
carriers and mobile phone makers could thrive by offering consumers two
or three new options a year. But now, with nearly 80 percent of
Americans owning a mobile phone and hundreds of models available, a
company’s fate can turn as quickly as a teenage girl’s temperament.
Mr. Dale says companies like his are forced to give consumers what
they want even before they know they want it. Motorola was a market
leader in late 2004 when it introduced the ultraslim Razr. But when the
company failed to create a worthy successor, its stock plummeted and
investors revolted.
Motorola’s share of handset sales in the United States dropped to 30
percent by the fourth quarter of 2007, from 35 percent in the first
quarter, according to the NPD Group, which tracks sales. Now Motorola
is considering a breakup of the company.
Different companies, of course, take different approaches to
understanding consumer tastes. Along with extensive focus-group
testing, LG executives regularly attend home and design shows looking
for broader trends in popular culture.
Mr. Rabbani said that last year he and his colleagues noticed that
natural materials like wood, metal and leather were popular among
furniture and appliance makers. So when designing the Venus, which LG
introduced in late 2007, designers molded the plastic back to give it
the texture of grainy leather. Verizon and LG declined to give sales figures for the phone.
But whatever the cultural inspiration, if a new phone does not catch
on quickly, it is not likely to catch on at all. Even interesting
designs do not necessarily spell success. Helio, a joint venture of EarthLink
and SK Telecom of South Korea that developed the Ocean and other phones
for the youth market, is reported to be looking for a buyer for its
business, too.
“The strongest marketing tool is the first 20,000 people who buy the
device,” Mr. Dale of Motorola said. “If they like it, they will tell
their friends.”
The focus on the consumer mindset can be intense. Three weeks ago, a
small team of Nokia executives had their first gathering at a farmhouse
30 miles north of Santa Barbara, Calif., for a three-day retreat to
discuss consumer behavior.
The group is the first of its kind at Nokia, the world’s No. 1
seller of mobile phones, bringing together 14 designers and researchers
from California and Helsinki, where the company is headquartered. Their
charge is to tell Nokia’s top executives not only what consumers will
want next year, but 3 to 15 years from now.
“We have the ability to clarify the needs of real people,” said Rhys Newman, who heads the team.
A case in point: A few years ago one of Nokia’s designers visited
China and noticed that people there used the light from their mobile
phone screens to illuminate dark hallways so they could more easily
unlock their doors. After he discussed his observation with other Nokia
designers, Nokia added a penlight to some models.
“Design used to be inconsequential: just make it pretty, make it
sell,” said Mr. Newman, who, along with three members of his team, was
interviewed at Nokia’s design center near a strip mall in downtown
Calabasas, south of Los Angeles. Now, he said, “we have to think about
human fundamentals.”
Two and a half years ago, Nokia executives asked Mr. Newman and some
colleagues to explore what Nokia’s strategy should be as consumers
began to personalize their cellphones. Among those working on the
project were Jan Chipchase, a human behavior researcher for Nokia who
lives in Tokyo and travels the world studying culture and
communication, and Andrew Gartrell, a 14-year veteran designer.
On a trip to Ghana last year, a colleague of Mr. Chipchase took a
photograph of the crushed front panel of a Nokia 1100 mobile phone that
had been discarded in the middle of a dusty road.
Mr. Gartrell, who had helped design the 1100, was unnerved by the
image; the phone had just come out in 2003. Mr. Newman said Nokia’s
designers and researchers became fixated on the notion that the company
makes 16 mobile phones a second and that many of them end up in the
garbage heap.
So instead of examining the personalization of phones, Mr. Newman
and his fellow designers suggested that Nokia explore how to make more
environmentally sound products — or, as Mr. Gartrell put it, “How do we
turn waste into something beautiful?”
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