Complexity Is Probably Not The Right Way To Lock In Customers

Thomas Gryta writes in The WSJ that US cell phone carriers have a surfeit of options and plans:

The four major carriers offer a total of nearly 700 combinations of smartphone plans—a family of five alone would have more than 250 options to choose from, according to a Wall Street Journal analysis of smartphone plans offered by the four biggest U.S. carriers.

Which is fine in one sense – there are, after all, many regions, phones, add-ons, bundles, etc. But what does this mean for consumers that want to easily do an apples-to-apples comparison and decide what’s best for their wallets?

“If it really was just one number for consumers to compare, no one would ever voluntarily pay the higher price,” said Michael Grubb, an assistant professor of economics at Boston College who has researched wireless pricing and consumer behavior. “But when there is a number of gigabytes, the overage charge, the monthly fee and a little bit of math to do, suddenly it is not so easy to pick the contract that is a better value.”

T-Mobile’s defection from its peers’ practices and its simplified pricing plans (and subsequent growth) may well spur changes in pricing and messaging across the industry in the near future…but I wonder this kind of complexity and opaqueness is exactly what invites entry from the likes of Amazon (if not for regulation and the fixed supply of wireless spectrum) in this day and age. 

Imagine, for a second, that Amazon offered a US-wide wireless plan.

Can you imagine how simple their pricing might be, and how delightful their post-sign-up customer experience would be?  

Yet Another Move By Amazon To Weaken Other Publishers

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Every few weeks, the Amazon juggernaut rolls forward, one step at a time, towards its unstated goal of dominating the entire book industry value chain. 

The progress to date:

Author sign-ups? Check.

Self-publishing? Check.

Publishing? Check.

Selling paper books? Check – various paper book publishers have been acquired. 

Selling eBooks? Check.

A platform for “consuming” the books? Mail oui. Check.

Recommendations? Check and check.

Short of actually robo-reading books (entrepreneurs, I am patenting that idea right now), it has forward and backward-integrated into almost every aspect of the book value chain. 

But one of the key reasons it succeeds so brilliantly is that it continuously makes it easier for book creators and book consumers to each get what they want: Money. Audience. Low-cost books.

And in that process, it has disrupted the publishing industry like few things have, in the past.  

Consider what it did with author royalties recently, as an example


Smaller Connector Causes Big Pain?



A smaller connector on the next iPhone may cause a lot of pain to existing Apple device owners and fanboys (full disclosure: I love my Mac Book Air and my iPad, but I just can’t see myself with an iPhone).

Since the familiar 30-pin connector remained unchanged starting with the iPod (does anyone still remember what that is…was?), gazillions of Apple accessories have been built and sold that work with the connector.

So in fell swoop Apple might imperil millions, nay, billions of dollars (this report from ABI research estimates the global aftermarket handset accessories to be worth $36B, out of which $20B is specific to smartphones; it then follows that if Apple’s iOS has a ~ 23% global market share, Apple device owners may be responsible for 10% (~ $2B) to 20% (~ $4B) of that spend) worth of accessories. 

But because of exactly that reason ($2B to $4B of Apple accessory spend just this year) I doubt if Apple will switch gears on its fans just like that.

Likely some kind of el-cheapo converter or adapter will be included so chargers and such still work – but that will be the extent of it. But of course, the worse Apple treats its customers, the more they like it – so I doubt if we will see a huge hue and cry either. So what’s the take-away? One way would be to declare that you’ve had it with Apple’s proprietary eco-system (which greatly increases your switching costs) and jump ship to a more standardized world. The other way might be to consider investments in bluetooth-based accessories that might help you adapt more easily to Apple’s eventual adoption of micro-USB (which the rest of the civilized world currently uses).

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