Wii

Nintendo’s new Wii video game console is now out-selling all other consoles combined. Why? Because Nintendo focused every aspect of the Wii’s design on growing the market.

To quote Nintendo’s President, Satoru Iwata, in designing the Wii, “We're not thinking about fighting Sony, but about how many people we can get to play games. The thing we're thinking about most is not portable systems, consoles, and so-forth, but that we want to get new people playing games.” [emphasis added]

To accomplish this objective, Nintendo couldn’t just do the same thing its competitors were doing. It had to do something really different – something that made video games fundamentally easier to learn and play – and offer it at a more-affordable price point. This is a classic example of blue ocean strategy, as others have noted.

Being “really different” is extremely beneficial to establishing new industry standards – as Bill Gates, the all-time world champion standard-setter, made clear long ago. The novelty, elegance, and simple power of Nintendo’s motion-sensing Wii controller have garnered impressive PR, with YouTube flooded by consumer-generated videos of the Wii remote in action.

Nintendo’s success in out-selling its competitors is amazing enough, but what’s even more impressive is that Nintendo makes a direct profit of $50 on each console it sells. Sony and Microsoft each lose money on their consoles, hoping to make it up through per-game license fees from third party game developers. But because Nintendo’s Wii console is outselling all of its competitors, it is also the most attractive platform for third-party game developers – so Nintendo will tend to make more money in licensing fees from these game developers, too.

Any way you slice it, Nintendo’s blue-ocean strategy of growing the market is trouncing its competition.

Meanwhile, the music products & lesson industries are, together, almost as large as the video game industry (2005 data). Thumtronics can do in the music products & lesson industries exactly what Nintendo has done in the video game industry – grow the market with products that are cheap, simple, and fun, and capture that growth with intellectual property.

The success of Nintendo is a ringing endorsement of Thumtronics’ strategy.

Better

Potential investors often smile knowingly at me and say, “Let’s assume for the sake of argument that the Thummer is better than every other musical instrument available today. So what? Being ‘better’ really doesn’t matter. Entrenched standards are impossible to displace.”

Common sense tells us that this conclusion can’t be true, or we’d all be living in the Stone Age – so why does this urban legend persist?

One reason is that consumers and experts disagree on the definition of “better.” Consumers tend to prefer solutions that are cheap, simple, and powerful, in that order, but experts & specialists tend to prefer “power” alone. As a result, experts’ published reviews tend to rate the most powerful products as being “better” – yet consumers keep buying the cheap & simple stuff. This can create the impression that the “best” products aren’t winning in the marketplace, when really it’s just a disagreement over the metrics of better-ness.

Another reason the urban legend persists is that being “just a little bit better” is not enough. To quote W. Brian Arthur, a leading academic expert on the subject, a new product has to be “200 or 300 percent better than its predecessor before it can take over. Without that shift, the old product stays locked in. The best technology is not necessarily the winning one.”

That is, if your product is 10%, 20%, or even 50% cheaper, simpler, and more powerful than its competition, then it’s going to lose, because it’s not enough better. Your product has to be enough better to overcome the inertia of the status quo, and that requires being at least two or three times better.

But what if your product is, say, three times better than its competition in ways that were important to its potential consumers? Say, three times cheaper, three times simpler, and three times as powerful? If your product were that much better, in those ways then it would be the odds-on favorite to win.

That’s why I’m so excited about Thumtronics’ Thummer and ThumMusic System. They have the potential to make music-making three times simpler, three times cheaper (counting instrument & lesson costs), and three times as powerful (in terms of expressive potential and new tonal effects).

So if you’re trying to decide which innovations have the best chance of market success, don’t get trapped in the Stone Age. Use your common sense to see that being ‘better’ matters. It is one of the most important predictors of an innovation’s rate and extent of market acceptance, giving an innovation the potential to disrupt its industry and topple its market leaders.

[Note: The original version of this posting claimed that the Thummer was ten times better, not just three times better, which attracted comments that this was perhaps gilding a lily -- so I reduced the claim from ten to three. Underpromise & overdeliver, as they say.]

ThummerSetup

The gold-colored Capel prototypes emit MIDI directly, and don't need any special drivers or software.

However, if you are one of the lucky few who have an Eaton model Thummer prototype (the red one), then you also need the Thummer Setup application, which includes the Thummer's drivers.

Using the URL's below, download it to your computer and run it from there.

To download the Windows version, right-click here, save the file to your computer, open the folder to which it was saved, and run it from there.

To download the Mac version, do something similar with the file here.

Blue Ocean Strategy

In their book Blue Ocean Strategy, Kim & Mauborgne describe typical marketplaces as “red oceans,” whose inhabitants rip each other apart in a frenzied struggle for market share, staining the ocean red with their blood.

They argue that the wise company (or investor) does not waste its resources in such a fruitless struggle, but instead seeks to implement “blue ocean strategies,” by simultaneously pursuing differentiation and low cost, with the goal of creating a totally new market space that is unstained by the blood of competition.

You’d think that investors would avoid emerging red oceans like the plague – but that does not appear to be the case. Here’s an example. Redbox is a joint venture between McDonald’s (yes, the burger joint) and Coinstar. Late in 2005, Coinstar invested $20 million in Redbox for slightly under half the company, giving Redbox a de facto post-money valuation of just under $40 million. For that kind of valuation, you’d think that Redbox must be growing into a pretty nice blue ocean, wouldn’t you?

But it’s not. Redbox is fighting tooth and claw for a share of the DVD rental & sales market. Its competitors – including NetFlix, Blockbuster, & Hollywood/Movie Gallery – are all slaughtering each other in a vicious struggle for market share. This market was worth about $35 billion in 2006 and is expected to grow to about $38 billion by 2009 (according to statistics I found in the Austin Statesman (Sunday July 15th, p. H1), in an article by Jennifer Mann of the Kansas City Star). That’s a growth rate of just 2.8%. In short, the video sale and rental industry is a “red ocean” of vicious, profitless competition.

Wise investors would not be pouring money into this “red ocean.” None of the various competitors has such a wide advantage in cost or differentiation that it can earn attractive margins over the long term. Red oceans are a sucker bet.

But surely blue ocean strategies are riskier than red ocean strategies? Quite the contrary. Blue ocean strategy is all about minimizing risk. Red oceans are the riskiest place a firm or investor can possibly be.

With that in mind, consider Thumtronics. The current music products & lesson industry is worth nearly as much as the DVD sales and rental industry – about $30 million – and growing faster, at 3.5%. Yet the blue-ocean market of non-musical consumers is even larger, with the potential for even faster growth. By targeting the mass market of non-musical consumers with a uniquely simple, cheap, and powerful new musical instrument & music-learning method, Thumtronics has the potential to establish an entirely new “blue ocean” market, far removed from the bloodstained waters of the musical instrument industry’s intense competition.

Thumtronics’ strategy is all about creating a deep blue ocean, because blue oceans are the only way to bet.

sus4

Here’s an interesting effect in Dynamic Tuning.

Using the Max/MSP implementation of Dynamic Tuning found here, first

• Slide the slider on the lower left of the screen rightward to “fully tempered”
• Set the tuning slider to 696.6 cents (1/4-comma meantone or 31-tet)
• Play a major triad on your QWERTY keyboard (e.g., the buttons labeled H-K-U)
• While the triad is sounding, slide the tuning slider up to its maximum (720 cents, 5-tet)
• Hold the slider there a moment, and then slide it back to where it started (696.6 cents)

What did you hear?

What I hear is:

• A nice, pure-sounding major triad, then
• A sus4, then
• A major triad again.

How’d that happen?

Well, when you push the slider up from 696.6 cents to 720 cents, you’re widening the tempered perfect fifth accordingly. The pitch of the major third (and the placement of the fifth harmonic of the tempered timbre) is higher than that of the root by four tempered perfect fifths minus two octaves. That means that the major third is widening from

• ((4 * 696.6) - (2 * 1200) = (2786.4 - 2400) =) 386.4 cents, which is a nearly-just major third, to
• ((4 * 720.0) - (2 * 1200) = (2880.0 - 2400) =) 480.0 cents, which is 18 cents flat from a just perfect fourth.

Just by wiggling the tuning slider, you can go from a very restful major triad to a tense sus4 – with the sharpened P5 adding to the tension – and back again.

Cool! :-)

Abstraction: A Parable

One of the most powerful tools in science is abstraction, which Wikipedia defines to be “the process of generalization by reducing the information content of a concept or an observable phenomenon, typically in order to retain only information which is relevant for a particular purpose.” The story below is a parable on the power of abstraction.

1998: Redmond, WA
In 1998, Microsoft responded to a host of competitive threats and internal opportunities by undertaking the development of a language-neutral runtime engine (.NET Runtime), application framework (.NET Framework), and Integrated Development Environment (or “IDE,” Visual Studio.NET). Such a language-neutral Runtime, Framework, and IDE would have to implement all of programming functions that were shared across languages. That is, the Framework/Runtime/IDE had to provide an abstraction of programming language functionality. At this higher level of abstraction, all programming languages would look essentially the same.

However, at this time, within Microsoft, “language neutrality” meant “supporting every language whose name began with ‘Microsoft,’” such as Microsoft C++, Microsoft FoxPro, Microsoft Visual Basic, Microsoft J++, etc.

Project 7 Is Born
On a late fall afternoon in 1998 while soaking up some uncommonly-bright Redmond sun (and some uncommonly-good Pyramid Hefe Weizen) on my back deck, my brother Peter and I were discussing this strategy. I worked in Microsoft Research’s University Relations Group at the time, handing out cash to researchers at MIT and other universities, and Peter worked in Microsoft’s Developer Relations Group, helping independent companies develop great software development tools for Windows. Despite being “leaf-node” employees with no strategy-setting authority whatsoever, we decided to re-define “language neutral” to include non-Microsoft languages – specifically the dozen or so most academically-interesting or commercially-important programming languages. Then, in true Microsoft style, we gathered the support and resources we needed and Made It So. (I understand that Microsoft isn’t like this anymore, which is a terrible shame.)

Project 7….Scores!
Cutting to the chase… Project 7 was wildly successful, swatting home runs on all of its objectives and becoming a model for many subsequent technology evangelism efforts inside Microsoft. (This article mistakenly refers to my efforts as “Project 42,” but the rest of it is basically correct.) There are now over 40 programming languages for .NET. While the success of Project 7 is a testament to the power of technology evangelism, the success of .NET is a testament to the power of abstraction. By abstracting the notion of programming languages to a higher level, .NET made it possible for previously-isolated programming languages to interoperate seamlessly, providing new opportunities for discovery and innovation.

The LINQ Project
Project 7 also yielded some significant ancillary benefits. Among these, one of my personal favorites was that Microsoft was able to identify and hire some of the brightest minds in programming language design. One example of this (out of many – please forgive me, guys, for not listing you all here) is Erik Meijer, whose breakthrough work on data access has recently been incorporated into the .NET Runtime as LINQ (Language INtegrated Query).

Erik started the work that became LINQ by abstracting data access to a higher level. At this new level of abstraction, (a) all data sources look the same, (b) a small number of simple algebraic operations can perform all necessary data access tasks, and (c) these operations can be integrated into any programming language.

As a direct result of LINQ’s abstractions, LINQ is...

1. so easy to use that programming tasks that would previously have required expensive, specialized database programming skills are can now be accomplished, using LINQ, by any competent computer programmer.
2. so powerful that data access tasks that would previously have required separate, specialized code for different kinds of data sources can now be accessed with a single, simple piece of code.
3. free with Visual Studio (including its free express editions).

LINQ’s abstractions are based on ideas from the fringes of mainstream computer programming practice: lambda calculus. The vast majority of software developers working today have never even heard of lambda calculus – except for the odd programmer (often considered to be very odd indeed). LINQ uses lambda calculus to solve the perennially vexing problem of data access so elegantly – and through such a ubiquitous vehicle as the .NET Runtime – that mainstream programmers simply cannot continue to ignore it. Because all mainstream techniques had previously failed to solve the perennially-vexing problem of data access, the eventual solution had to come from the fringes.

So, what does this have to do with Thumtronics’ musical innovations?

Thumtronics and Abstraction from the Fringe
Thumtronics’ musical innovations also arise from applying the tool of abstraction to ideas from the fringes of mainstream practice. Whereas traditional approaches to the display, control, and synthesis of musical information are focused on pitch, Thumtronics’ innovations:

1. Abstract musical information to the higher levels of


1. Musical Intervals: the relationships between pitches, rather than the pitches themselves, and


2. Temperaments: the relationships among intervals, in which (for example) the major third is defined as being the same width as four tempered perfect fifths minus two octaves (syntonic temperament), or in which the diminished fourth is defined to be the same width as five octaves minus eight tempered perfect fifths (schismatic temperament);


2. Abstract the structure of the Harmonic Series and Just Intonation to the higher level of pseudo-harmonic timbres and their related tunings; and
   
3. Organize the display of musical information using the geometry of an isomorphic keyboard (also known as a “generalized keyboard”).

Thumtronics’ abstractions are based on a collection of ideas – generalized keyboards, tonic solfa, the chromatic staff, Euler’s tonnetz, tuning theory, etc. – that the vast majority of musicians know nothing about (aside from the odd microtonal musician or aficionado of alternative musical notations, considered by his peers to be very odd indeed). Thumtronics’ abstractions use ideas from the fringes of the mainstream music-making community.

However, just as LINQ’s fringy abstractions solve the perennially-vexing problem of data access, so do Thumtronics’ fringy abstractions have the potential to solve the perennially-vexing problems of (a) music education’s high failure rate, (a) the music products industry’s commoditized products, (c) the exhaustion of the resources of tonal harmony (also known as the “crisis of tonality”), and (d) the failure of any one music theory to adequately explain the many different tuning systems used around the world.

Can Thumtronics’ innovations really solve all of these problems? Maybe. I know a powerful abstraction when I see one, because I’ve seen them and driven them to success before. I’ll do the same with these.

The Moral
The moral of this story is simple: abstraction of ideas from the fringe can solve perennially-vexing problems and change the world. Never bet against an abstraction whose time has come.

Thummer Diffusion

Sales Growth: How Many and How Fast?
How fast and high can sales of the Thummer grow? No theory can provide exact numbers, but the Unified Theory of Acceptance and Use of Technology (UTAUT) can provide a qualitative guide. Here’s a brief, paraphrased summary of UTAUT.

In the UTAUT model, only two characteristics affect a given innovation’s rate and level of adoption:

• Performance Expectancy: “Adopting it will help me attain gains in job performance.”
• Ease Expectancy: “Adopting it will be easy.”

In addition to the characteristics of the innovation itself, two environmental factors also matter:

• Social Influence: “Influential people say I should adopt it.”
• Satisfactory Infrastructure: “My adoption of it is supported by a satisfactory infrastructure.”

The first three factors above determine an individual’s intention to adopt the innovation. That intention, plus the fourth factor above (satisfactory infrastructure) determine whether the innovation is adopted or not.

Personal factors including experience, gender, and age all tend to moderate a given individual’s (or population’s) willingness to adopt a given innovation. For example, generally speaking,

1. everyone values performance – especially men and young people of both genders;
2. women value ease more than men do;
3. older people value ease more than young people do;
4. inexperienced people value ease more than experienced people do; and
5. experienced people value performance and infrastructure more than inexperienced people do.

Application to the Music Products Industry
The UTAUT model explains why the music products industry sells relatively little product to girls and older folks. The industry has focused relentlessly on delivering better products to its most-demanding customers – experienced, professional instrumentalists – who are overwhelmingly male. These experienced guys want performance, and will sacrifice everything else to get it. The resulting twiddly-fiddly instruments are attractive to young males, but turn off everyone else, producing exactly the demographic holes that the UTAUT model predicts.

On the other hand, the Thummer delivers ease to girls and older folks (especially when combined with the ThumMusic System), while also delivering unprecedented expressive performance to young males. This means that the appeal of Thumtronics’ innovations is potentially universal – so there may be no upper bound on its potential rate of adoption or saturation sales level, especially once (a) the Thummer-specific infrastructure has grown organically over time, and (b) the fully-integrated Pocket Thummer puts ease in your pocket.

Diffusion of Innovations
The Thummer’s high scores in the UTAUT model are repeated in other models. For example, the older Diffusion of Innovations (DOI) model, popularized by Everett Rogers’ book of the same name, lists five characteristics that affect the rate and level of a given innovation’s adoption: relative advantage, compatibility, simplicity, observability, and trialability.

The Thummer scores high on all five of these criteria.

• Relative Advantage: “Is it better?” Experts say so. See for yourself.
• Compatibility: “Does it work with what I already have?” Yes! It’s MIDI and USB-MIDI compatible; it is compatible with your computer and video-game controlling skills; and it is compatible with traditional notation and music theory.
• Simplicity: “Will it be easy to learn and use?” Experts say so – and if you’re a novice musician, it will be even easier if you use the ThumMusic System, too.
• Observability: “Can I observe others using it?” Absolutely! Check out these demos – and soon, live performances, music videos, and more YouTube videos, from the creative musicians who buy the first Thummers. This is one of the Thummer’s most important characteristics: that its relative advantage will be demonstrated in an emotionally-charged manner by high-status individuals in public. That’s marketing nirvana.
• Trialability: “Can I give it a test drive, free?” Yes, right here – and these test-driving apps will get better and better over time.

Any way you slice it, the Thummer has all of the characteristics necessary to spread like wild fire.

Order of Product Introduction
These criteria also explain why Thumtronics is releasing the Freedom and eMotion Thummers first, rather than the Pocket Thummer. Although the Pocket Thummer is likely to have much wider consumer appeal, the performance of the Freedom Thummer and especially of the eMotion Thummer will be much higher. This raw performance power is attractive to the experienced Music Brains who can drive the Thummer into live performances, music videos, and user-created YouTube demos. The Music Brain’s output, not Thumtronics’ advertising (which it can’t afford), will create consumer demand for Pocket Thummers.

Same with the ThumMusic System. If the ThumMusic System were released first, then its performance expectancy, ease expectancy, and satisfactory infrastructure ratings would all be pathetically low. It just doesn’t make sense to learn the ThumMusic System unless you want to learn to play the Thummer (except for vocal music instruction using tonic solfa, perhaps). But once the Thummer takes off and consumer demand for Thummer-lessons grows, the performance expectancy, ease expectancy, and satisfactory infrastructure ratings of the ThumMusic System all skyrocket.

Conclusions
The order in which Thumtronics plans to introduce its products is based on an analysis of their strengths and weaknesses using the latest proven scientific techniques. These techniques also suggest that the Thummer’s sales could grow rapidly, and to a very high level.

Music Brains

When a start-up company invades a market with a new product, it can’t spread its forces across a broad front. Instead, the start-up needs to identify a narrow beach-head, concentrate its limited forces there, conquer the entire beach-head quickly, and use it as a base for the invasion of the wider market. Such a beach-head market’s members should be easy to reach, eager & able to buy, and evangelical to others. This beachhead market needs to be small enough that you can dominate it quickly, but big enough to take you to profitability.

Thumtronics’ initial beach-head market for the Thummer is the “Music Brain,” which we describe as a “serious musical hobbyist with a degree and/or job in science, engineering, or medicine.” We settled on this beach-head market after discovering that the majority of people joining Thumtronics’ online ThumClub were, in fact, Music Brains.

Number of Music Brains
How big is the Music Brain market? It turns out to be just right for a beach-head market, at just under half a million Music Brains in the USA and just over a million world-wide.

The US Census Bureau’s 2007 Statistical Abstract contains the necessary data for the USA. According to its “Adult Participation in Selected Leisure Activities by Frequency: 2005,” if we define being a serious musical hobbyist as being one who plays a musical instrument at least once per week, then 3.5% of Americans are “serious musical hobbyists.”

The same source reports that there are 13 million Americans with degrees and/or jobs in science, engineering, medicine, or related technical fields. If 3.5% of all Americans are serious musical hobbyists, then – all else being equal – 3.5% of scientists and engineers should be serious musical hobbyists, too. So, there should be (0.035 * 13 million = ) 455,000 Music Brains in the USA.

How many Music Brains are there worldwide? We can estimate the answer by looking at population or by music product industry revenue.

The USA’s percentage of the global music products industry’s revenue is 44% of the world total (as reported by The Music Trades). The USA’s percentage of the population of the major markets’ population is 34% (USA: 300, European Union: 450, and Japan: 125). So the USA can be estimated to have between 34% and 44% of the world’s Music Brains – let’s call it 40%.

Using this compromise figure, the number of Music Brains in the major world markets is approximately (455K/0.40 = ) 1.1 million.

Characteristics of Music Brains
Thumtronics’ market research suggests that Music Brains are:

• Experienced: have an average of over 20 years of experience in playing and/or studying music.
• Free-spending: spent four times more money on music products in the previous year ($1300) as non-hobbyists ($280).
• Exposed: more than half played in bands, performing publicly on average twice per month to audiences averaging more than 60 people.
• Evangelical: reported that an average of five friends would buy Thummers after seeing the respondent’s Thummer (and infection ratio of 5:1).
  

More than half of the Music Brain respondents reported jobs in Information Technology, so they are particularly Internet-savvy. This makes them easier for Thumtronics to reach, and also makes them particularly capable of (a) adding value to Thumtronics’ open-source software & courseware development efforts, and (b) helping spread word-of-mouse through blogs, YouTube demos, chat rooms, and other meme-spreading vectors.

In short, Music Brains are easy to reach (through the Web), eager & able to buy, and have the potential to be evangelical to others – exactly the characteristics one wants in an initial niche’s members.

Conquering the Music Brains
Is the Music Brain beach-head niche small enough to conquer quickly, while being large enough to take Thumtronics to profitability? Yes.

Firstly, Thumtronics’ outsourcing-oriented, direct-sales-based, viral marketing business model has a very low burn rate, so it can be profitable at a low rate of sales – 1,500 units in the first year, for example. 1,500 units is 0.3% of America’s 455,000 Music Brains, and only 0.1% of the world’s Music Brains. Given how highly connected Music Brains are over the Web, our initial PR (through the popular science & engineering press, in addition to the music gear press) should reach most of them either directly or through word of mouse, giving them awareness of the product and knowledge of where to learn more about it on the Web. From there, an online purchase is just a mouse click away.

Secondly, as stated above, Music Brains report that each will be able to convince an average of five friends to buy Thummers, too – an infection ratio of 5:1. If convincing all five friends to buy Thummers took an average of six months, then the incubation period between generations would be six months long.

At an infection ratio 5:1 and a six month incubation period, Thumtronics’ sales growth would be astounding. If Thumtronics sold all 1,500 Thummers on the last day of the first year of availability (for the sake of argument), then six months later it would sell 7,500 more, and six months later it would sell 37,500 more. That’s 1,500 Thummers sold in the first year and 45,000 in the second. At this same growth rate, the global market of 1.1 million Music Brains would be exhausted by the end of the third year. Those sales would deliver something like $400 million in revenues. Thumtronics’ low-overhead business model would convert a surprisingly-large percentage of that revenue to profit. These profits could fund the development of the ThumMusic System, the Pocket Thummer, and the subsequent assault on the mainstream consumer market with a lower-priced, fully-integrated music-making solution.

Do I expect that Music Brains will actually deliver a 5:1 infection ratio? No. I would love for it to happen, and such faddish growth is entirely possible (and easily accommodated by Thumtronics’ business model). However, I prefer to assume the more conservative infection ratio of 1.8:1, which means that each Thummer buyer will convince slightly fewer than two other people, on average, to buy a Thummer, too. This lower infection ratio will exhaust the Music Brain market within just five years, and still give Thumtronics the profits it will require to assault the consumer market.

This is not to say that only Music Brains will buy Thummers in its early years of availability. Rather, Thumtronics will focus all of its marketing efforts on reaching Music Brains and convincing them to buy Thummers. If other people are convinced, too, that’s great. We’ll keep an eye on the characteristics of our customers, watching for emerging sales trends which we can encourage as the Music Brain market becomes saturated.

However, initially, you’ve got to invade a market along a single beach, and for Thumtronics, that beach head is “Music Brains.”