New tech still suffers old marketing woes

March 3, 2003

BY MICHAEL KRAUSS

CompUSA is my neighborhood computer retailer. Of course, I also shop at Gateway and at Dell. But when I want to get hands-on with a piece of equipment close to home, I like CompUSA for the convenience.

Recently I wanted to put my hands on a Tablet PC, a new product category that's about the size and weight of a notebook computer, but functionally more like a writing pad. With a Tablet PC, you use a stylus and write notes just as you would with pen and paper. I heard about the new Tablet PC in a conversation with a lead user, Peter Siegel, the chief information officer of the University of Illinois at Urbana-Champaign. He told me his department had been offered a number of the devices to test last year.

Then I read an article in The Wall Street Journal by technology columnist Walter Mossberg touting the Compaq TC1000 as "the most innovative of the group" of new Tablet PCs launched last autumn.

The invisible hand
As I drove over to the computer store, I felt this invisible hand. It was like someone's marketing program was working pretty well. I'd received word-of-mouth communication about a new class of product from a friend. Then I'd been reinforced to consider a specific brand by an article in a trusted publication.

Somebody is a pretty clever marketer, I thought. That someone turned out to be Matt Mazzantini, manager of the commercial product marketing team for Hewlett-Packard in Houston. In a recent interview, Mazzantini laid out the marketing campaign behind the TC1000. It's targeted. It's integrated. It's efficient. And I think it's a useful model to illustrate the challenges and complexity of launching a new technology product.

Here are some of the things Mazzantini and his colleagues did:

• Product development: They built a flexible product. They were evolutionary, not revolutionary. The TC1000 works as both a notebook with a keyboard or as a tablet. "The technology is adapting to the way we, as humans, like to work," Mazzantini says. Then there's the carbon glass face and the four-to six-hour battery life that Mazzantini likes to publicize. "The competition won't come anywhere near our battery life," he says.
• Price: The product costs from as low as $ 1,699 if purchased from the Web site. Mazzantini claims the merged HP/Compaq is striving to be cost-competitive. "We've decided to price aggressively. We're lower than Toshiba, Acer and Fujitsu. Overall, we're between 3% to 7% lower than competition," he says.
• Beta programs: Mazzantini participated in two preproduction beta programs, one driven by Microsoft -- in which they chose the customers and deployed beta units of the product to their customers. In addition, HP did its own "early evaluation" program for which they seeded HP customers who had an interest in the form factor of the Tablet PC.
• Promotion: Mazzantini did a lot in this area. He says there's a fairly healthy advertising budget.
• Launch event: They launched the product for customers and reporters at a special event held at the Millennium Hotel in New York. "This was the first time in a number of years that we had a real 'launch event,'" he says.
• PR: Building on the launch event, Mazzantini got some favorable press for his product, notably a positive review from Mossberg's Journal technology column. Unfortunately for Mazzantini, Mossberg was skeptical of the product category mainly due to software challenges from Microsoft. He saw the product as useful only for specific target audiences.
• Targeting/market segmentation: Mazzantini anticipated this concern. He's focused on the education, pharmaceuticals, healthcare and legal markets as prime targets for his new creation. "Anyone who uses a lot of forms and documents, that's the target," says Mazzantini, who also described a psychographic target. "Corridor warriors: People who go from one meeting to another are the target," he says.
• Channel marketing/co-op programs: Building awareness within the target was key. Mazzantini focused on low-cost and high-impact co-op programs. "We were on the cover of all the catalogs of our channel partners. We're in the process of being on the Web sites of every one of our retailers," Mazzantini says. "We are trying to be everywhere online with the product." He also described an aggressive direct e-mail program.
• Web marketing: Once buyers are aware, Mazzantini wants them to learn about the features, functions and competitive advantages of the TC1000. Drive them to the Web site is his approach. Mazzantini has built a solid Web site at www.compaq.com. There's a 3-D illustration that emphasizes the flexibility of the product.
• Sales strategy: Mazzantini's staying true to the tradition of HP innovation, using it as a lever. He's demonstrating the TC1000 as a door-opener with large-scale commercial clients -- customers who like to see new devices and expect innovation from HP. That gets the buyer's attention. Then he sells them either TC1000s or the traditional line of notebooks. He says he's ousting incumbents such as IBM and insurgents such as Dell using this approach. "We've grown our overall share the past couple of quarters leveraging off the TC1000," he says.
• Partnerships: "One of our partners is FranklinCovey (the Salt Lake City-based learning solutions company)," Mazzantini says. "They've got a software application that works on the TC1000." He's also partnering with Microsoft.

Mazzantini strikes me as an impressive marketer. He's crafted a well-balanced launch campaign that weds marketing impact to cost efficiency. The program he describes feels far more rational and reasonable than those of the dot-com boom years.

My only concern about Mazzantini's program is the complexity. Given the global scope of his product, he and his team have a lot of details to manage.

Easy does it
This doesn't faze Mazzantini. He feels marketing tech products is "even easier than launching traditional packaged goods. Once customers have an opportunity to see the product, they fall in love with it. It sells itself and makes my job a lot easier," he adds.

Spoken like a true believer. I'd expect nothing less.

Still, there is a fly in the ointment: product distribution and shelf space -- old-time packaged goods problems.

Arriving at CompUSA, I asked the salesman if he'd heard of a Tablet PC. Could he point me to the Compaq TC1000? He scratched his head and checked the store computer.

Scanning the store, there was a huge promotional display for mobile devices enabled by the Pentium 4 processor M. Ablaze in front of me was an array of color computer monitors tuned to the day's NBA game. There were notebooks, a large display of cell phones, a computer game department and a plethora of HP photo-quality printers.

No TC1000.

We searched the store computer under "Compaq TC1000." Nothing came up. I asked the salesman to search again under "TC1000." There is was. None in inventory. Price: $ 1,999. He encouraged me to shop for it on the Internet.

Disappointed, but not discouraged, I thanked the salesman and left the store realizing just how hard it is to get distribution and shelf space with today's computer retailers. Maybe marketing technology products is as tough as marketing traditional packaged goods.

Matt Mazzantini's doing a great job; he's just got one more detail to cover.

Michael Krauss is a partner with DiamondCluster International in Chicago. He can be reached at michael.krauss@diamondcluster.com or news@ama.org.