How's your IP buying experience? If you are like most people I've talked with it ranks somewhere between a visit to the dentist and buying a used car.
At the IP-SOC 2006 conference this year in Grenoble, Gartner's Jim Tully called on the IP industry do a better job of conveying the true value that they provide to customers and at the same time to think about more transparency in pricing to improve the buying experience among customers. That's a lovely thought, but is there a precedent for such move?
Recall in the early 1990's, General Motors was losing market share and though they knew many of the issues that irritated the customers, their biggest problem was getting their established divisions to address them. So instead of trying to convince the divisions to fix them, they did something radical and established a new division, Saturn. In trying to learn what kind of product it should build, Saturn conducted a series of focus groups. One unexpected thing stood out--people hated the buying process. They felt that somehow, someway, the sales person would end up taking advantage of them. Rather than feeling happy about the deal, customers would walk away feeling that they had somehow been taken advantage of. They thought 'Gee, if I had just toughed it out for another 3 hours with the creepy sales guy I might have gotten another $500 off, or free floor mats.'
Saturn responded to this with a transparent pricing policy--here's the price, take it or leave it. Everybody pays the same, no matter what dealer you buy it from, no matter which sales guy you get. And customers loved it (aside from the fact they now owned a Saturn.)
So the question is; would such a system work in semiconductor IP. Would it create happier customers and more thriving IP market or would it be a race to the bottom for all concerned?
I think not. The Saturn experiment worked primarily because Saturn had a monopoly on Saturns and ensured that they could never be a price war across dealers. Saturn competed against Honda, which could set their price on par with Saturn and change the discussion to 'OK, we're the same price, now let's talk about quality.' So what Saturn effectively did was to change the discussion from price to value, which was a very good thing. (Fortunately for Saturn, it was also known for its excellent quality.)
Perhaps that's the real lesson of Mr. Tully's advice. If customers are making their buying decision purely on price, they are losing sight of the fundamental reasons that we have an IP industry--to create an efficient semiconductor industry that leverages and rewards the hard work of others to drive us forward. Leaders will ensure they have a fair exchange of price for value in the goods they transact. Losing companies will focus on price, inevitably temporarily.
If you have an opinion about this, please feel free to post it here, or email me in confidence at core.values@ip-extreme.com
