Consultant Al Ries is not a big fan of convergence, the process by which high-tech marketers keep trying to jam every possible function under the sun into one (preferably small) device. Al sent me an item out of USA Today with a note, "Convergence strikes again." The article reported National Semi-conductor's Origami prototype stole the Comdex Show with a gizmo, the size of a large paperback book, that is a "video camera/still camera/e-mail terminal/-handheld computer/video confer- encing device that twists and turns like a Rubik's Cube."
Most consumers don't want the combinations of stuff marketers want to sell them; they'd rather put together what they want the way they want it. For instance, PC users this year don't feel the need to upgrade to a more powerful computer. Instead, they are "tempted to spend money on new ways to use the computers they already own: digital music players and rewritable CD drivers," The New York Times reports.
That's why AOL Time Warner's new CEO has his work cut out. AOL is basing many of its growth projections on selling its customer all kinds of fancy upgrades, such as broadband, entertainment systems and financial transaction hookups. Its strategy, in the words of Chief Operating Officer Bob Pittman, is one of "blurring the lines between AOL and cable to offer more and more services to generate maximum income."
The only issue, a stock analyst told us, "is how do you make sure you integrate all the various operating businesses, figure out how to cross-promote and drive AOL to the promise of integrating all the business in this new converged age?"
That, of course, is the $64 question. I'm equally skeptical of financial companies that think they can sell people a whole smorgasbord of financial services once they've gotten their foot in the door. I don't know about you but I resent some guy trying to sell me a life insurance policy or mutual fund just because I might have a checking account at that institution.
The key here is whether to even expect such cross selling as a rationale for mergers. Such synergies most times never take place and all that's left are two companies trying desperately to sell stuff to each other's customers-who are extremely reluctant to buy. What's often overlooked is that consumers and business-to-business customers are perfectly able to put together combinations from various vendors all by themselves. They don't need to be prodded to do so by piling one service on top of another. Wouldn't it be more productive to concentrate on making products that people want, and that aren't forced down their throats?
Al Ries has an interesting take on all this. "Why is much advertising so deadly dull?" he asked. "Perhaps it's the lack of real product innovation-products that are new and different and serve a real need. One culprit, in our opinion, is the concept of convergence. Instead of trying to create exciting new products, companies are spending billions of dollars trying to combine existing products." Al recommends a return to "divergency thinking-thinking that built new markets, new brands and exciting advertising."
My friend Bernice Kanner contends that just because high tech companies can combine all sorts of exotic features doesn't mean they should. "This is `build-it-and-they-will-come' thinking," Bernice told me. "But they won't." She's just written a book called, "Are You Normal About Money?" She said one of the lessons from the book is that the same sort of company-centric thinking applies to how companies perceive how we value money. For instance, marketers like to conjure up the joy of spending money. But Bernice said her research found most people find it more pleasurable to make it than spend it.
Also, marketers may like to believe money can buy happiness but just 13% of people believe it can, with men slightly more likely to subscribe to this notion than women.
The moral of the story is that marketers need to take a more realistic view of what their customers want. Just because they have the capability to make it or combine it with other things doesn't mean that consumers will beat a path to their doors.