The computer world is all about manufacturing personalized, high-end desktop PC’s – and that’s the marketing message that HP (Hewlett Packard) is touting in the release of their first gaming PC. In an effort to reinvent their brand and to gain important insight into a market that’s been dominated by other gaming PC manufacturers like Alienware (which was acquired by Dell in early 2006), HP is releasing a specialty desktop PC called the Blackbird 002. This elite PC costs about $5500 without a monitor, which is more than 7 times higher than the average desktop price (according to IDC; 2005). This hefty price tag clearly demands a unique buzz-generating strategy and that’s exactly what HP trying to achieve.

Why the Gaming PC Market Means “Cha-Ching” for HP

The gaming market is a unique, yet financially lucrative niche for computer manufacturers. PC gamers like to “mod” (that’s lingo for modify) their computers by installing ultra-high end processors and video cards, scribing or cutting intricate designs into the sides of the PC case, and adding neon lights to show off the components. Since PC gamers spend a considerable amount of time in front of these machines, they typically splurge on multiple, large-screen LCD monitors, high-end keyboards, and mice that can execute a sequence of keystrokes at the click of a button, allowing gamers to easily slay their virtual enemies. These add-ons make gaming machines more expensive than a standard home PC – these machines regularly cost $3500 or more (normally MUCH more) which translates to higher profits for shops that build these PC’s.

While HP is using the standard microsite with cool Flash to show off and sell the Blackbird, they are also leveraging non-traditional advertising vehicles to attract gamers. The marketing campaign includes:

• Tapping personalities that gamers identify with, including Kevin Rose, front-man for the web 2.0 site Digg, and Morgan Webb, a co-host of the popular a gaming show X-Play.
• Promoting the Blackbird using video podcasts. Both Rose and Webb used their independent podcasts to discuss the pending release of the Blackbird via a short “advertising” segment.
• Setting up a wiki and driving user generated content (feedback) using the podcast segments. In the spots, viewers are challenged to visit the wiki and weigh in on what they want in a gaming PC.
• Further leveraging the wiki by giving away 3 Blackbird desktops to visitors who write an article on the wiki.

As a backup, HP is also relying on essential gadget-focused and computer news sites to get the word out, including engadget, pcmag.com, joystiq.com et al.

Where’s the Payoff for HP?

While this has the makings of great marketing campaign, it appears that the execution strategy didn’t work for the podcasts and wiki. For instance:

• The videos on the wiki do not promote the Blackbird. For example, Joi Ito talks about using his MacBook Pro to play World of Warcraft. While he mentions that he had folks that use a Windows-based PC, like the Blackbird, he says that he “doesn’t really feel like learning.”
• The user generated feedback in non-existent. There are a limited number of comments on the wiki to the segments that Rose and Morgan produced. The comments that do exist are primarily focused on the high price tag of the Blackbird (no surprise).
• Users are not creating worth-while articles for the Blackbird giveaway. Most of the article posts are composed of two to three lines of absolute gibberish, including my favorite “it would be freaking sweet to win a blackbird!!! I really need a new desktop!”

And since reviews at traditional websites couldn’t justify the purchase of such high end machine, the early buzz for the HP Blackbird is slowly dying down at this point.

So What’s Next?

While HP only offers a pre-configured system at this point, HP will enable ordering of fully configurable systems in early October but that won’t correct the situation in time. Since only a limited quantity of pre-configured Blackbird desktops have been produced (only 518 PC’s), it is likely that HP will sell their minimal inventory and scrap the concept of a high-end PC under the HP brand if this campaign doesn’t pan out. At the very least, HP can still count this as a win since this product adds another facet to their new “The Computer is Personal Again” marketing efforts. Unfortunately, measuring the impact of this branding campaign will be tough.

Here’s to hoping HP strikes gold (in the future)!

Since the beginning of the month, I’ve been reading up entranced by the bitter fight between NBC and iTunes, which had been well covered by Phill Ryu. This is an interesting case where someone at NBC sadly thought that this was a good idea but have clearly miscalculated.

Basics of What Happened

This case can be summed in 5 basic steps:

1. NBC’s sells shows on Apple’s iTunes Store at $1.99 per episode; contract comes up for renewal
2. NBC tries to re-negotiate with Apple asking $4.99 per episode; Apple refuses to budge on price
3. Negotiation goes public; NBC hoped “the people” would side with them, forcing Apple to concede
4. Negotiations goes nowhere; NBC switches to Amazon’s Unbox service for Tivo
5. Wheels fall off the bus!

So who’s the Biggest Loser?

I think that NBC will lose because:

Reason #1: People will buy the DVD

NBC is operating under the assumption that people are willing to pay $5 per episode. Considering that a typical television season has 21 - 23 episodes (according to Ryan Tuttle, who is an avid TV watcher), I’m calculating that viewers of shows like 30 Rock, which had 21 episodes, will shell out almost $105 based on the new price:

21 episodes/season * $4.99 per episode = $104.79

That’s a fair sum, considering that you can buy the 30 Rock Season 1 DVD for less than $50. If viewers paid $1.99 per episode, they would be shell out a more reasonable $41.79:

21 episodes/season * $1.99 per episode = $41.79

Reason #2: People will steal download shared episodes for free

In comparison to movie downloads, shared TV episodes are more popular. It seems that while only a small fraction of shared files, or torrents, are TV series, 50% of all download activity is focused on grabbing these shared files. And at $4.99 an episode, downloading these for free would be a steal.

Reason #3: iTunes is FREE while Tivo’s are not!

You can download iTunes for FREE but the barrier to entry for Amazon Unbox Service is a Tivo box. While there are potentially 1.5 million broadband-ready TiVo boxes that can take advantage of this service, it seems that Amazon is tight lipped about how many subscribers are currently purchasing movies through this service. Even if you estimate that 2% of subscribers, that’s only 30,000 potential customers, which will fetch about $150k per episode which seems a bit on the lighter side.

Reason #4: People will opt for cable/satellite TV

Many of the folks that I’ve known who buy episodes do not have cable. They buy episodes from iTunes because it is more cost effective. If you assume that a viewer watches three TV shows and there are 4 episodes a month (one per week), a typical viewer would pay much less than a regular cable bill:

3 shows * 4 episodes * $1.99 per episode = $23.88 per month

When you compare that to a normal cable/satellite bill (approximately $30 to $60 per month), viewers can save a ton of dough. But when you price an episode at $4.99, a viewer will now pay $59.88 per month and at that cost viewers will likely opt in to cable TV.

Reason #5: People will Tivo the episode

One of the reasons that people have Tivo’s is that they can digitally record shows. The benefit of having the Unbox service is that you can access movies, and that is worthwhile if you are a bare-bones cable subscriber. A typical Tivo subscriber would “Season Pass” the show and enjoy the show at their leisure.

Final Marketing Pressure

To makes matters worse, Apple is considering a more aggressive marketing strategy for the TV episodes, with rumors swirling of a price cut to $0.99 per episode. When you consider that NBC had a 30% market share of downloads on iTunes, I see NBC really taking it on the chin.

Oh well, hope that you don’t own any GE stock shares (GE is the parent company of NBC).

In case you haven’t heard, the real identity of Fake Steve Jobs has finally been revealed. If you still want to believe that Jobs is behind the wildly successful The Secret Diary of Steve Jobs blog, then please click on the little X at the top right corner of your browser and get back to whatever you’re doing before you were distracted.

An attempt to expose Fake Steve Jobs fails

Many have wanted to uncover the true identity of the Fake Steve Jobs (aka FSJ). In May, BusinessWeek covered the blog once news surfaced that the author was selling a book about the FSJ parody on Amazon. And then three weeks ago, the heat was turned up as Fake Steve Jobs posted an entry about how Valleywag was attempting to uncover his true identity. That’s when the story really changed because that’s also the time when a significant list of potential bloggers was posted. The list included:

• Leander Kahney, managing editor of Wired News and author of the Cult of Mac blog.
• Eric J. Savitz, the West Coast Editor on technology investing for Barron Magazine.
• John Paczkowski, a technology news blogger for All Things Digital.
• Andy Ihnatko, a technology columnist for Chicago Sun-Times and opinion columnist for Macworld Magazine.

All of the these authors seemed like good candidates for the anonymous blogger job. Unfortunately, they all denied involvement or simply avoided answering the question of whether they were/were not the person behind FSJ. There was even speculation at some point that Valleywag was behind the blog but all things changed yesterday.

Fake Steve is finally exposed

Well, it turns out to be Daniel Lyons, a senior editor at Forbes magazine who covers enterprise computing and consumer electronics. For over a year, Fake Steve Jobs has been entertaining many of his readers (including myself and several other notables at Spunlogic) with his “candid thoughts.” For instance, he pokes fun at the ideas of Steve Wozniak, talks about how Apple’s responsible for the rise in the stock market, and even talks about iPhone snafu’s. Daniel has “channeled” Steve as if he was Steve Jobs — as a reader, you know that there’s no way that the blogger is Steve Jobs but you still want to believe that it is (in a Santa Claus kind of way).

But just like the video drama marketing spoof lonelygirl15, all things must come to an end! At least it was fun to read while it lasted.

This week, Apple has released a beta version of Safari for Windows. Wow — that means Safari is now available for the Mac, PC and the soon to be released and highly hyped iPhone. Now like all smart technologists, I downloaded and installed it as soon as possible. But, within a day I realized that Safari is no reasonable substitute for Firefox or Internet Explorer.

Here are 6 reason reasons why you may want to think twice before switching:

1. Control + Enter shortcut doesn’t exist. Folks that are getting things done already know this little trick saves a few keystrokes by automatically appending the “www” and “.com” to any word (just type in yahoo and then press Control + Enter to see it in action). Without it, I have to waste more time typing in the complete web address – yuck!

2. Refitting the browser window to the desktop is challenging. While you can click and drag on the border of almost any Windows application to adjust how it fits into the screen, these controls in Safari are limited to the bottom right hand corner.

3. Plug-in support is non-existent. Plug-in developers are not considering Safari yet because Safari has only a 4.7% market share as of 1/07. That means that you’ll likely “run for the hills” if you’re accustomed to using Firefox add-ons such as IE View (which easily let’s you switch between Firefox and IE) or Web Developer (which puts web development powertools at your fingertips).

4. Your website and application won’t look/work correctly. While developers these days are paying more attention to how their favorite website and applications are working in Safari, there have been several instances where highly-visited websites did look right (for example, the headlines on the popular The Register website did not display correctly earlier this week).

5. Importing bookmarks not a part of the installation process. While Safari imports all of your browser bookmarks, it does it secretly and puts in a special place called a “bookmark folder” [which is accessible via a special icon in the Bookmarks Bar]. (Addition: While Safari for PC tries to make it easy, it is a shame that the process is not more apparent — that could be accomplished by including an informational screen during the installation process). This process lowers the average user’s awareness of how to get to your favorites.

6. Another reason I can’t justify buying a Mac. Until this week, web developers had an air-tight excuse for needing a Mac Mini or Mac Book – they needed to ensure that their web site or application was compatible on that “other” platform and Safari was only available on OS X. Damn you Apple!

For a company that’s known for exceptional user interface, design and innovation, Apple has let us down with this release of Safari for PC. Let’s hope that before Apple goes alpha to a public release with Safari that they fix some of these issues and give us “Windows lovers” another reason to switch back to the Mac!