Camtasia Studio’s Huge Missed Opportunity

Jon Udel is a big fan of using screencasts to instruct, and I’m a big fan of watching them when I want to learn something. I’d like to start doing some of my own. However, reading his post on screencasting tips today, I was reminded of how I can’t help but think that TechSmith is really missing out on a huge opportunity because of their pricing for Camtasia Studio.

I’ve followed them for a while, and I know that they are pretty much the gold standard for screen recording software. However, their price of $299 is in no-man’s land. It is too low for the market it currently targets, the corporate market, and too high for a much, much larger market; the amateur and semi-pro blogger.

For those company’s who need the software, TechSmith could easily double the price and would probably still sell 90% as many units. But of course, the lost 10% would be well more than made up for by the increased price per unit.  And frankly, a higher price would motive resellers more (which, as a former reseller, I always hated that my business did better financially when I raised prices on customers.)

On the other hand, $299 is way past the threshold where an amateur bloggers would buy a copy. Frankly, I think that is the reason why we see so few screencasts on the web. In my 12+ years experience in selling software tools to developers, I’d say that $69 is probably about the right price for an amatuer to semi-pro blogger to say "Sure, what the heck, I’ll buy a copy and try this screencast thing.

TechSmith could easily cut feature features from this blogger version to differentiate from their professional version. For example, the blogger version could be limited to outputting only to Macromedia Flash, i.e. no AVI, Microsoft Windows Media, RealNetworks RealMedia and QuickTime. The could cut the output-to-EXE feature and the Create a CD-ROM feature. And probably a few more things. 

But TechSmith would need to be extremely careful NOT to cut the features that bloggers would really need. I ran into this over and over with components vendors while running VBxtras/Xtras.Net. I’d suggest a lower-priced version so they could reach a slightly different market, and the vendor would want to cut so many features of the product that it would have been crippled. Instead what’s needed it to look at the features that are needed only by the high end customers and cut those while leaving feature every users could benefit from. For example, if TechSmith were to cut any of the recording, pre-production, or editing features they could very well end of with an expensive demo and lots of frustrated customers badmouthing them on the blogs.

But what they could do, given this market, is to have the screencast on the blogger edition end with a splash-screen/advertisement for Camtasia. Imagine that, having the ability to get advertisements on a larger percentage of the blogs on the web and the only thing requires would be to restructure an existing product! Can you say "No Brainer?"

So, what would this look like?  I think if TechSmith were to offer two editions with the following prices they’d see a surge of new customers, the web would see an explosion of screencasts, and that would be great for (practically) everybody:

  • $69 - Camtasia Studio, Express Edition
  • $599 - Camtasia Studio, Professional Edition

So, if you are a blogger who thinks is a great idea and you’d be anxious to buy a copy of Camtasia Studio for $69 but wouldn’t even consider paying $299, why not go over to TechSmith’s website and send them some feedback on the subject. And be sure to point them to this URL so they can read my justification. Together, we can make a difference. :-)

P.S. One thing the skeptics in the audience should know is that I have recently started playing with the free software called Wink from DebugMode (thanks to Ben Coffey for the recommendation.) While it is great, I’d prefer the polish of Camtasia Studio. However, at $299 they won’t be getting a dime from me. On the other hand, for $69 I’d happy spend the money for the time and frustration it could hopefully save me, and I bet lots of other bloggers feel the same.  So what will it be TechSmith: "$69 in revenue, or nothing?"

My Amazon aStore

Amazon's aStore Logo

Amazon recently came up with a really simple idea for their associates but one that is so obvious I’m surprised they hadn’t thought of it before.  Basically they let their associates specify a list of products and then they generate a mini-store for them. They call these mini-stores an "aStore."  

Amazon even provides a clean url for an associates aStore ( unlike most of the Urls on their website; yeech!) 

My aStore Url is http://astore.amazon.com/mikeschinkels-20.  On the other hand, they don’t let people define their own "Associate ID", mine being "mikeschinkels-20" for whatever reason!  I would much rather have had my aStore Url be: http://astore.amazon.com/mikeschinkel/ but as they say, ya can’t always get what you want… 

So I’ve set up an aStore that I named "Mike Schinkel’s Miscellaneous Readings" which you can see embedded below using an <iframe>. The name is a pun on the name I chose years ago for this blog, of course, but the book selection is anything but random. I only selected those business-related books that made an indelible impression on me; the ones that gave me true epiphanies. 

These are books I think every technology-related entrepreneur must read.  The good news is you can pick most of them up a used cost for most of them for next to nothing. And even if you are not in the technology industry or even an entrepreneur, these books are still great reads as long as you are interested in the wheres and whys of business success.

Update (2008-06-15): I hosted this on my blog when I was using dasBlog but I’m haven’t decided if I will host it again since I’ve updated to WordPress. I never got any revenue from Amazon for it and nobody ever emailed me and said "Thanks for creating the list."  We’ll see…

The Roadkill of the Web 2.0 Era!


Lately I’ve become be very interested in Web 2.0 with particular interest in Mashup development. Microformats, REST-based web services using RSS and/or Atom that empower mashup development, and Building APIs for the web. The concept that the web can finally start evolving into a programmable set of services and data instead of just electronic brochures and self-service applications really energizes me!


On the other hand, even though I am incredibly excited about this trend, I’m frustrated by how few companies are actually doing it!  Very few business people have thus far gotten that “Aha!” moment where they realize what so many technologists instinctively understand; the business benefits of opening up data and systems as web services on the Internet can be vast!


Even with such highly successful companies as Google and Yahoo freely sharing so much of their data via REST-based web services, and Amazon driving significant revenue1 from it’s pennies-per-transaction SOAP and REST-based web services, most business people I speak to either just don’t get it! Or worse, they are either scared to death of it or convinced it makes absolutely no sense!


Well all I can say is that old saw will definitely be true: “What you don’t know can hurt you!” The late majority to this game (and even some of the early majority) that continue not to get it, avoid it in fear, or just plain out deny it are going to become the Roadkill of the Web 2.0 Era





1 Significant for such an early stage

About “One Laptop per Child”

If you’ve not heard of One Laptop per Child (OLPC) you should listen to this presentation Nicholas Negroponte gave about his $100 laptop at the February 2006 T.E.D. conference which I found over at the T.E.D. Blog.

I learned of the T.E.D. blog by reading If your idea is worth spreading, then presentation matters over at Garr Reynold’s blog Presentation Zen, which I learned about by reading A few more Presentation How To’s at Kathy Sierra’s blog Creating Passionate Users whose RSS feed I subscribed to at the time.

Anyway, Nicholas is the former director of the MIT Media Lab and he stepped down from running the lab to found this non-profit organization and focus the rest of his life on OLPC’s goal of ensuring that every child in developing nations has access to a laptop for educational purposes. While some people have fixated on the "$100" price tag or the "laptop" aspect of his project, Nicholas explains that they are missing the point:

"This is an education project, not a laptop project"

OLPC plans to sell laptops to education ministries of nation-states and have those ministries distribute the laptops on the basis of one per child (ages 6-18). Evidently Brazil, Argentina, and Thailand each have ordered 1 million. The OLPC website claims they are also in discussions with China, India, Egypt, and Nigeria (although this article claims India has begged out, which is a shame.) As someone who strongly believes in education’s ability to transform a society’s circumstances, I find this endeavor truly inspiring! While watching it also occurred to me just how many times the course of human history has been changed because of the dogged perseverance of a single individual. I really hope to see Nicholas achieve his goal.

Simple technologies recombined, not technological breakthroughs, spur disruptive innovations

Clayton Cristensen's Book - The Innovator's Dillema

Yesterday when I blogged about simplicity I forgot to mention Clayton Christensen’s take on simple technology. Clayton’s ground-breaking book was entitled "The Innovator’s Dilemma" and is a must-read for any developer who wants to understand the business dynamics between market incumbency and innovative uses of technology.

From his extensive research Christensen states in The Innovator’s Dilemma that disruptive innovations are almost never the result of technological breakthroughs but are instead recombinations of existing and often inexpensive technology in forms the former market leaders don’t pursue. He states the driving reason for the market leaders ignoring disruptive innovations the people in their sales organizations fight against pursuing them because they don’t see big enough market opportunities and/or they can’t make large enough margins compared to their incumbent business. That is, until it’s too late.

Christensen defines disruptive innovations as those "innovations1 that allow small companies to topple once strong, market leading companies and establish themselves as market leaders. His first example was 8" disk drives manufacturers who put out of business all 14" disk drive manufacturers. The latter sold to mainframe vendors at 60% margins, and their customers were interested in larger capacity and faster drives, not in more expensive slower smaller drives with less capacity (which had to be sold at only 40% margins!) But mini-computer manufacturers purchased the 8" disk drives and over time the 8" disk drive manufacturers improved their products to the point of being good enough (key phrase) that mainframe vendors decided to buy from them rather the pay for the increasingly feature rich and increasingly expensive 14" disk drives.  At that point, with cost structures requiring 60% margins, the 14" disk drive manufacturers couldn’t maneuver and they all failed.

Examples of recent disruptive innovations with which you might be familiar are:

  • Open-source ASP.NET apps and .NET developer tools such as DotNetNuke in the content management space, and NUnit and related for testing tools. Both of these started out much more simple than commercial alternatives, but are evolving.
     
  • Simpler .NET components. Five years ago most components vendors were US-based. Today, the Internet has empowered many vendors outside the US to compete on price alone for the simpler components. One only need look at the number of the vast number of Internet Email Components for .NET to see this trend for what it is.
     
  • Small-project Outsourcing. Another trend near and not-so-dear to many developer’s hearts - outsourcing - is all about being able to offer development services for less. Look at places like RentACoder where you can have small projects developed for literally a tiny fraction of what it would cost to hire a developer in the US to do the same work (smart and entrepreneurial developers should see this as an opportunity rather than a problem…)  Today RentACoder’s projects are simple and inexpensive; tomorrow, who knows?
     
  • RSS vs. incredibly fragmented and expensive alternatives to content syndication; RSS is simply XML, after all.
     
  • Wikis, "The simplest thing that could possibly work" according to the Wiki’s inventor Ward Cummingham have edged out many commerical collaboration solutions, and most people say they do it better than what came before.
     
  • MySQL started out as a simple and basic alternative to Oracle, SQL Server, and DB2.  When you look at all the people who deployed early versions of MySQL because of its price (optionally free) instead of going with one of the big three, you realized that good enough really was an important concept at play. Now MySQL v5.0 is out and has stored procedures, triggers, views, and more. And if MySQL ever becomes good enough for everybody, Oracle, Microsoft, and IBM can’t compete at their margins.

I could go on, but those should be enough to help you understand the concept if my abstract description wasn’t enough.

Actually, if you think of another example, it would be cool if you would make a comment here and let me and my readers know about it!

 

1 - Also note that Christensen defined the term "innovation" to encompass a broader scope than just what we think of as technologies. He included business models as innovations too. 


Is Google becoming a Monopoly?

I really love using Google for search, for news, and for my default home page.  I think they’ve done an awesome job of really meeting users needs when many others can’t or won’t.  I also expect to see them rapidly grow and expand into new lots of areas. As a technologist, I’m really looking forward to the many cool things they are going to make available for everyone to use.

On the other hand, Google scares me to death.  People love to hate Microsoft because of it’s marketshare in O/S and office suites with Windows and MS-Office, but I don’t think Microsoft controls the fortunes of so many small and medium-sized businesses nearly as heavily as Google. In terms of total number of businesses, at least in the USA, most live or die by their Google traffic today.  We had a glitch at Xtras.Net that caused Google to remove us from their index for a few days, and our sales dropped by over 40%!!!  Many also hate WalMart because of how they have crushed most local businesses replacing them with a behemoth that is locally ubiquitious and pays practically slave wages.

However, I’m thinking people will soon look back on Microsoft and WalMart as a very benevolent dictators when compared with the future of Google.  Google’s mantra may be "Do no evil", but I’m pretty sure the truth contained in the old adage "Power corrupts, and absolute power corrupts absolutely" will prove to be undeniably intoxicating when compared to the early ideology of a few idealists who where at the time isolated from reality.

How soon will it be before we hear the calls to investigate Google on grounds of anti-trust?  I for one am starting to believe that sooner is better than later.

I guess time will tell…

 

Outsourcing Realities: Time to Stop Whining

I “borrowed” the title of this post from this op-ed from SDTimes by Edward Yourdon. Ed latest book OUTSOURCE : Competing in the Global Productivity Race was just released and I guess he’s writing op-eds to promote it.

I’ve planned to blog about outsourcing for a while, but haven’t gotten to it because of the immediate negative reactions many developers have whenever the word is mentioned. I knew I’d have to explain my points flawlessly or end up with lots of developers hating me! But now I don’t have to, because Yourdon’s op-ed said almost exactly what I wanted to say, and he’s got the credentials to back it up!

Like Yourdon said, we can all be mad at outsourcing and decry that US politicians should do something about it! We claim our standard of living will decline, and the US will loose its competitiveness. Horrible thing, really.

But the reality is we might be able to slow the trend, but we can’t stop it. Anything we do to slow the trend will hurt our competitiveness long term, so why not go ahead and tackle it head on? After all, wasn’t it in elementary school we learned the ostrich sticks its head in the sand to hide? And haven’t you, like me, always been amused by how the ostrich can be so stupid?

Your solution is conceptually simple. As Yourdon states, ensure your “economic value” is greater on a doller-for-dollar basis than your outsource competition (see my prior blog titled “Pricing, and the Economics of Value Creation for a somewhat related discussion I wrote as a precursor to this subject.)

Clearly it is much harder to ensure your economic value than just saying that it shall be. But if you are a developer in the USA, that is what your livelyhood is going to require.

You might as well go ahead and start figuring out how.

P.S. This subject of ensuring a developer’s economic value is one I’ve been considering a lot lately, and I have a lot of thoughts on the subject I plan to share. Expect to see me blog on the subject numerous times over the next year.

Pricing, and the Economics of Value Creation

I’m not an Economist; during my high school and college, economics was for me in the category of “couldn’t be more boring.” But time has passed and both events of the world and my life have increasingly interested me in economics, especially as they relate to making business decisions. And I’ve read a lot about the topic econmics in recent years including books and magazines. I love to pick up the Economist from time to time, but since it takes me a week to read an weekly issue, I don’t subscribe to it for fear I’d get nothing else done! :)

Anyway, today I’m writing about a concept I’ve both witnessed and studied many times over the past several decades: the economics of value creation. I’m going to use examples, but am trying to keep it very short so I won’t be referencing other factors that might complicate the picture.

Clayton Christensen argued in Innovator’s Dilemma that good companies trend “Northeast” by which he meant companies typically strive to increase prices and margins (the direction Northeast refers to the trend of the graph of margin over time.) If you speak to any enthusiastic sales rep, you’ll see the same desire; to close as big a deal as possible.

So the tendancy to strive for higher prices is ingrained but often, doing so it counterproductive. What I believe people often fail to consider is the value provided to the potential customer. Yes there are value-based pricing models, but those are focused on convincing a prospect of the “value” to justify a higher price. Instead, I’m referring to the value that can be derived from each and every potential customer; the lower the price the more potential customers can derive value from the service or item sold. Further, I’m focusing specially on services and items used by businesses to create things of even greater value.

Let me explain by using a contrived example:

Let’s assume a small US town somewhere in the 1800s far away from any other town or city (i.e. essentially a closed system.) Let’s assume most inhabitants were farmers, and someone opened a fertilizer plant. Let’s consider two of the farmer’s crops: squash and tomatoes.

Each crop requires a certain amount of fertilizer; let’s assume one (1) unit to grow a squash and three (3) units to grow a tomato. Further, let’s assume that one (1) squash produced twice (2 times) as much food as a tomato, but the town’s people would buy twice as many tomatoes if price were no object.

At first the fertilizer plant owner charged 0.2 cents per unit of fertilizer, and the market set the prices for squash and tomatoes at 5 cents each prior to adding the cost of fertilizer. The town’s average monthly purchases for squash and tomatoes were 10,000 and 20,000, resectively. The fertilizer plant owner made $370 per month, and the farmers made $1640 per month in aggregate for those two crops.

Later, the fertilizer plant owner decided he could raise his prices since he had a local monopoly. He increased by 0.3 cents per unit to 0.5 cents. This forced the farmers to raise their prices to six (6) cents for squash and seven (7) cents for tomatoes. Times being hard, that extra cent for the tomatoes caused the townspeople to rethink their spending habits. Consumption changed to 17,500 squash and only 5000 tomatoes (remember that a squash provided twice as much food as a tomato.)

Guess the net result? The fertilizer plant owner lost $101 per month in sales, and what’s far more tragic, the farmers lost $352.50 per month in aggregate because of a decision they could not control. Well the squash farmers were dancing a jig while the tomato farmers were devastated, but that’s not the point. :) Here’s a table showing the details:

Prices Description Squash Tomatoes Totals
Units of Fertilizer Req’d 1 3
Food Units Produced 2 1
Fertilizer Unit/Food Unit 0.5 3
Original Price of Fertilizer = 5 units for 1 cent
0.002 Original Fertilizer Price/Food Unit 0.002 0.006
0.05 Original Food Unit Price as Farmed 0.052 0.056
Original Food Items Consumed 10,000 20,000
Original Fertilizer Units Needed 5000 60000
Original Food Units Consumed 20,000 20,000 40,000
Original Fertilizer Revenue $10 $360 $370
Original Aggregate Farmer’s Revenue $520 $1120 $1640
New Price of Fertilizer = 2 units for 1 cent
0.005 New Fertilizer Price/Food Unit 0.005 0.015
0.05 New Food Price as Farmed 0.055 0.065
New Food Units Consumed 17,500 5,000
New Fertilizer Units Needed 8750 15000
New Food Units Consumed 35,000 5,000 40,000
New Fertilizer Revenue $43.75 $225 $269
New Aggregate Farmer’s Revenue $963 $325 $1288
Lost Revenue Totals
Lost Fertilizer Revenue ($33.75) $135 $101.00
Aggregate Lost Farmer Revenue ($442.50) $795 $352.50

Real life is not as clear cut as my example so the fertilizer plant owner would probably not realize the direct cause and effect. Of course in the world today someone would notice that the fertilizer plant owner was raping the farmers, build a second fertilizer plant, and possibly put the first out of business. Hopefully you can see from my example that raising prices doesn’t automatically increase revenue. Sure you might bring up the well known supply and demand curve as evidence this is a no-brainer, the most discussions of supply and demand don’t contemplate the effect of value creation downstream such as the value created by the fertilizer in producing tomatoes. At a reasonable price consumers would buy the tomatoes even though they provided less food. Once the price got too high, their consumption dropped, and so did the fortunes of the fertilizer plant owner and the farmers who grew those specific crops.

Let me bring it back to the real world and give more direct examples:

  • Imagine if a business having a toll free telephone number cost $10,000 per year and $1 per minute. How many business would never have started using them, and imagine how much business based on toll free access just would not happen?
  • What if the least expensive computer cost $5000 each, like the first PCs used to? Think about how many businesses that offer services today using computers couldn’t offer those services because they couldn’t afford those computers.
  • What if there had been no free browser software; if browser software was sold for $199 each, for example? Do you think the world-wide web would have developed?

I could go on and on with examples, but they all boil down to the following:

Items and services used to create added-value items and services follow a different economics model than pure supply and demand. If the price it too high for those initial items and services, overall value creation will be retarded. Conversely, if the price of those initial items and services is lowered, it can empower greater value creation, and the demand for the original items and services may increase exponentially. This definition assumes the value ultimately created supplies an existing demand, or empowers creation of new goods or services for which demand evolves.

I’ll finish with this final example and follow it with a few parting rhetorical questions:

Imagine you invented a process to create an alternative for oil that did not pollute, only cost you one (1) dollar per barrel to produce, and you had no limits on the quantity you could produce. Let’s also imagine you were able to secure exclusive worldwide rights to this process. You could price your oil alternative competitively with the current price of oil or even higher because it did not pollute. If you were a modern day oil company, you would probably do that. Since you controlled the process, you’d probably maintain your high price indefinitely. However, imagine if instead you priced it at half the cost of a barrel of oil? You’d quickly become the leading supplier of fuel in the world (and you would devastate the Middle Eastern economy, but I digress.) And then imagine you continued to slowly lower your price, approaching “essentially free” over time. In this scenario, if fuel were essentially free and it did not pollute, how many entrepreneurs do you think would find ways to create value in new and previously unconsidered ways? How much of your fuel do you think would ultimately be consumed?