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What People Don't Get About Tesla

By Rob Enderle TechNewsWorld ECT News Network
May 1, 2017 10:18 AM PT
tesla

Tesla is like Apple in that it represents a revolution in thinking. Although everyone seems to focus on the electric power plant, that is really a small part of the Tesla revolution, and I'm convinced that if Musk were to launch an almost-identical company but with gas engines, it would cut through the market like a hot knife through butter. In terms of volume, the electric part isn't as much a sales accelerant as it is an impediment.

I'll share some thoughts on the Tesla revolution, focusing on what people who drive the cars often take for granted and those who don't own Teslas often don't realize. I'll close with my product of the week: the HP PageWide Pro MFP.

Recalling the iPhone Failure

Tesla has been holding a valuation that exceeds GM and Ford at times. Even so, old-time car company executives like Bob Lutz have expressed their conviction that the car company will fail. This reminds me a lot of Apple's early iPhone years, when very powerful executives constantly shared their views that the iPhone would be a failure -- and most of those who did that are now out of jobs.

Everyone seemed to focus on the fact that Apple was using a largely failed central design element, but what folks seemed to miss when it took off was that the way the iPhone handled apps -- and particularly, entertainment -- was what really made it different.

Coupled with a marketing budget that was more than 10 times what anyone else was spending, that resulted in a breakout win, even though the major smartphone firms at the time seemed to refuse to see it coming. The "iPhone failure" was the failure to see it as a threat soon enough to come up with a strong counter.

What was particularly ironic was that Palm actually had an iPhone-like project before Apple did, but the then-CEO killed it, arguing that smartphones were business-only devices. Hope he is enjoying retirement.

Tesla's Failure

Much like those smartphone firms looked at the iPhone and saw a failed design concept, car companies look at the Tesla and see an electric car. In fact, their counter efforts -- like the Ford Electric Focus or the Chevy Bolt -- are reminiscent of the initial efforts to counter the iPhone.

This reminds me of a case I read about years ago -- how Ford and GM first tried to counter the Japanese car threat with the problematic Ford Pinto and Chevy Vega. They basically did a great job of analyzing Japanese cars that existed in the market in the mid-60s and then used what they learned, but the effort took more than five years. Japanese cars advanced significantly during that time. Looking back, it's clear that the Vega and Pinto would have been competitive with cars five years earlier, but they weren't competitive with the cars in market when they arrived.

When auto makers look at the Tesla, they see an electric car and figure they can make one cheaper. What they don't get is that what makes the Tesla desirable is its exclusivity, ease of use, and customer experience.

If Musk ever figured out that all he'd need to do was create a gas-powered line of cars that went from sportscar to SUV, he'd own the automotive market. If he learned to market the Tesla S' near-universal capability, he'd likely do to the car market what Jobs did to the smartphone market, and there would be a lot fewer car companies as a result.

What Makes Tesla So Different

Tesla offers a storefront sale. You go to a shop in a mall, pick what you want, and the sales people order the car for you. They don't pressure you, the experience is nearly painless, and the car you get is uniquely yours even though your choices are far more limited than you'd typically get.

You see, in retail, we've learned that too much choice can be worse than too little, because it leads to mistakes and gets in the way of the sale. Negotiating a price is painful, and it can lead to dissatisfaction if we find out that someone else got a better deal.

Tesla's support is at your convenience. The car is pretty much an appliance, so a lot of the service elements in a regular car, like oil and spark plug changes, don't apply. Updating is done wirelessly for software, not flashed at the dealership, and if your car is needed for a physical update, Tesla comes to you and leaves you a loaner, which you can keep for a fee if you want to upgrade.

The car is connected all the time and supported much like an enterprise computer company supports its most loyal customers -- remotely and automatically. This does suggest that if Amazon were to go into cars, it likely could become the strongest alternative to a Tesla experience. That's largely because Amazon already has the back end for this in AWS, and it might be able to go from stores to an online buying experience, advancing the Car as a Service model even further.

Teslas typically are leased, and once you are in the program, you basically have the car as a service. For an incremental fee you can swap out the car -- kind of like you do with smartphones -- and you often can pay for modular updates that bring the car to current specifications. Tesla is much like Apple, in that once you're in a Tesla program, it's doubtful that you'll ever leave.

Inside the Tesla, the infotainment and driver information components are easily the best in the world. Only Volvo comes close, and it isn't that close. This will become far more important once autonomous driving fully matures, but moving between a traditional car and a Tesla often feels like moving between a current Ford or Chevy and one that was built in the 1960s.

The Tesla is very close to what you might think Apple would do, were it to wrap a car around the iPad. It is really pretty pathetic how little the traditional car companies have advanced over the last decade, given the changes we've experienced in personal technology.

Wrapping Up

What pushed me to this topic was folks starting to pile on again in an old thread in the Jaguar forum, where I compared the then Tesla S to the Jaguar F-Type that I eventually bought. (I turned it into a column here.) Folks on the forum were divided into those who admired the Tesla and those who compared it unfavorably to a Toyota Prius -- but most had never driven or ridden in the Tesla.

Those who hated the Tesla argued that it lacked the engine sound and would suck as a track car (it would), and that it really wasn't a performance car -- even though in its most performance-oriented configuration it would outpace a million-dollar hyper car to 60 (and dust it to 30).

All were clearly missing a few things: It had more capacity than an SUV, was a full-sized sedan, and had unmatched reliability and customer loyalty while still providing supercar-like straight line performance. It is the closest thing to a universal car currently in market.

Granted, the electrical part does speak to the performance angle -- but like my Jaguar buddies, if you really want a performance car you are far more likely to buy something else. If Tesla made a car that didn't require a charger, I doubt the GMs or Fords of the world could hold it off.

I think what is saving the car firms and limiting Tesla is that Musk won't do an internal combustion version of this car (others have pointed this out) and he is having trouble executing line diversity, having basically two cars (and the Model X is a bit of a pig).

Also, everyone clearly will be at risk if flying cars (or human-carrying drones) should take off. So, we are far from done. Still, the next time you look at a Tesla, remember what folks got wrong about the iPhone: The part that most folks focus on isn't the part that drives the success of the effort. It's the experience that makes the difference.

Rob Enderle's Product of the Week

Printers are so last decade, right? At least, that is what I thought I'd be saying by now if you'd asked me last decade whether I'd need a new printer. I still print labels. I print boarding passes -- I'm not going to be "that guy" that hold up the entire boarding line because I can't find the boarding pass on the phone or the scanner, or our phones won't talk to each other. I also need to print and sign contracts, because not everyone uses digital signatures.

It's been a while since I bought a printer, but I'd heard of the PageWide from HP. Unlike typical ink jet printers that have a moving head, it has a fixed page-wide head that it feeds the paper under. So, I picked up the MFP 477dw to replace my aging Inkjet printer.

HP PageWide Pro 477dw Multifunction Printer
HP PageWide Pro 477dw Multifunction Printer

This thing is impressively fast (40-55 pages a minute). Once it heats up, it spits out the printed page like a baby spits up its formula, but with far less drama. The other nice thing is that it is set up so that both the paper path for the page feed scanner and the printer go in the same direction. My last printer moved the paper left to right for the scanner but front to back for the printer. Since the printer sits next to me, that meant the printed pages were shooting out toward my lap.

If you want a smaller paper size for pictures, boarding passes or labels, it has a second paper bay for that (granted, getting label paper is a tad more difficult than I thought it would be). Now switching between a UPS or FedEx label, boarding pass or regular printing is just a change of a setting. It is a little thing, but damned if I don't find it really useful.

The ink is expensive but you get a ton of it, so if you don't do a lot of printing, the ink could last you months if not years. The PageWide Pro MFP 477dw is likely a little bit of an overkill for my small office (but I'm OK with that), and it costs around US$550 so it's no cheap date.

There is a smaller model, the 452dn, which prices out at a far more reasonable $340. It has a nice color display and connects via ethernet or WiFi. I'm surprisingly happy with this new printer, so the HP PageWide Pro MFP 477dw is my product of the week.


Rob Enderle has been an ECT News Network columnist since 2003. His areas of interest include AI, autonomous driving, drones, personal technology, emerging technology, regulation, litigation, M&E, and technology in politics. He has undergrad degrees in merchandising and manpower management, and an MBA in human resources, marketing and computer science. He is also a certified management accountant. Enderle currently is president and principal analyst of the Enderle Group. He formerly served as a senior research fellow at Giga Information Group and Forrester. Email Rob.


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