Friday, September 20, 2013

At $1 Billion, Crime Does Pay

As we talk about technology and how it is advancing, too often we place a myopic view just on what is happening inside of our companies. Yes, the needs of business do tend to drive innovation and improvements in information technology.  That being said, these improvements seldom connect with users on a personal level.  After all do you or your co-workers think about your computers, servers, network, or applications when you leave the office?  Not likely. 

It is the connection with consumers that has propelled companies like Apple and Samsung to such economic success.  Why?  Because they make products like tablets (iPad, Galaxy) and smartphones that really excite people.  As odd as it sounds, I have literally watched VP-level colleagues continually caress their iPhones for hours at a time (during meetings).  Microsoft developed the in-vehicle technology called "Sync" which has also revolutionized how people use technologies while in motion.  Being deployed exclusively in Ford vehicles, Sync has likely added a percentage or two of market share to Ford Motor Company.

The correlation of consumer appeal and profitability cannot be overstated when it comes to technology.  If you can find some way to make people emotionally excited about your app or device, expect to get very, very rich.  I don't really need to do much to make my point.  Should I just say: Mark Zuckerberg, Steve Jobs, or David Karp?

Let me tell you the most secret of all secrets for Intel, AMD, and the whole hardware industry.  When it comes to advances in technology, especially the Internet, you need to look at video games.  Yes, games are the single-most significant driver of advancements within information technology and always have been.  I've heard people argue back to me, saying that email and ERP applications have played a much more significant part in the advancement of technology.  I think not.

Since I'm making a very bold assertion now is the time that you should expect proof.  So here it is fresh off the press.  This week a video game company called "RockStar Games" released the fifth iteration of their hit game "Grand Theft Auto", creatively named "Grand Theft Auto V".  In the first 24 hours of release this game grossed over $800 million in sales.  Two days after that the total sales have eclipsed the $1 billion mark. (http://www.joystiq.com/2013/09/20/grand-theft-auto-5-sales-surpass-1-billion/)  Since we're talking about an entertainment product, here is another piece of perspective for you.  The most monetarily successful movie of all time was James Cameron's "Avatar".  After several years of release and DVD sales, Avatar finally reached a gross sales mark, worldwide, of about $2.8 billion (http://en.wikipedia.org/wiki/Avatar_%282009_film%29).  Of course the profit margin for "Avatar" was only $1.12 billion (http://www.the-numbers.com/movies/records/budgets.php) but that was further halved by a $500 million dollar intellectual property suit against the producers. 

Can you name any of the acting/voice talent in Grand Theft Auto V?  I can't either (no cheating by looking at the packaging!)  The game is going to make as much as Avatar (or more) and most of the revenue will become profit.

There is a lesson to be learned from the interest people show in games and by the money they are willing to pay for them.  As technologists, both practitioners, managers, coaches, and executives, we should pay very close attention to how games are driving the advancement of technology within our corporations.  As we design our IT road maps, we should always be thinking about the human component and the incredible power of personal engagement.

The more personalized we can make our products and services, the more our customers (internal and external) will engage themselves in the technologies we provide. 

Happy customers = Successful CIOs

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