A little while ago, I wrote a two-part post on Microsoft’s irrational obsession with Google. Over the weekend, I watched a Science Channel program that detailed the background of Netscape and how it lost its battle against Microsoft. It was very interesting to observe the same kind of obsession and vengeance that Microsoft showed in that battle as it does today toward Google. That made me think: why was Microsoft able to defeat Netscape but not Google? Although Google does have plenty of Ph.D.’s as employees, it seems implausible that Microsoft simply doesn’t have employees smart enough to catch up.

There may be many reasons to explain this historical difference. For example, one may argue that Microsoft was distracted by its anti-trust case when Google was quietly gaining its strength. In my mind, however, one crucial reason was the fundamental difference between Google’s business model and that of Netscape.

As a traditional software business, Netscape relied on making money off its software. Therefore, when Microsoft offered its Internet Explorer for free, it immediately crushed Netscape’s fundamental business model. Google, on the other hand, offered its service to the average consumer for free and instead drew its revenue from businesses/advertisers. By doing so, it defeated the advantage Microsoft had: the deeper pocket. No longer can Microsoft use its free bundling and distribution power against Google. As its service is accessible over the Internet at no cost, Google was able to start on the same footing as Microsoft, and the deeper pocket Microsoft had could not help the company in this case.

The lesson learned from this is that, when businesses face a formidable rival, too often it’s easy to focus on what the competitor has that one does not have. But as Google’s luck shows, the best way to take down a larger rival is by rendering whatever advantages the larger rival has useless. Of course, this is built on the assumption that the company can still find sources of competitive advantage in an alternative area. What essentially happened in Google’s case was that they changed the rule of the game, and by doing so, it diminished Microsoft’s market power.

When a technology innovation appears on the horizon, one would stereotypically expect that the younger generation will sign on to it faster than older adults. This was the same expectation I had with Second Life. Like many people, I thought of Second Life as a playground for mostly Gen Y’s and the occasional Gen X’s. As I am about to reach 33, I thought I would be “old” in SL. But my two recent encounters in SL made me rethink this issue.

The two avatars that I encountered in these situations were both in their mid-fifties. They were very adept at creating their own images and environments within Second Life, much better than a newbie like me is able to. Entering into the interaction, I never intended to find out about their real-life age, but it somehow just came out during the conversation. Both avatars were very kind and helpful, both were happy with their real life, and both expressed a newly found youthfulness in Second Life, as if they were taken back to that time when they were much younger.

These conversations made me rethink the value of SL to different age groups and the real-life demographics of SL participants. If we were to look at three generations of people: the baby boomers and above, the Gen X, and the Gen Y and younger groups, it is actually not that difficult to see the appeal of SL to the first group. As the idea of living a second life allows someone to create an ideal self that s/he cannot fulfill in real life, Second Life allows the older generation to either relive or recreate their life. Now that most of their kids have grown up, they also have much more time to enjoy the virtual world, once they master the technology needed to use it. For Gen Xers like me, in contrast, we are so busy dealing with our real-life responsibilities at home or at work that it is hard to find the time to truly escape to the wonderland. The even younger text-messaging generation may have more time but may not have the patience for the amount of time it takes for 3D worlds to load and function.

Of course, these thoughts came from only two recent encounters, and they are very likely to be biased. I do not have concrete data to support my argument. Digging around on the Internet only landed me on an older set of statistics on Second Life’s real-life demographics in early 2006, which showed a median age of 36. But I truly believe in the power of Second Life for the older generation. The sweeping Internet revolution has already brought this generation to be more on par with the rest of the population in terms of technology use, and it has prepared them for the even newer 3D Web. Once the technology barrier has been removed, these virtual worlds could mean great additions to their life that cannot be found anywhere else in real world. This may explain the findings I posted in a previous blog on how SL enhances individuals’ happiness in real life.

I just attended a talk by Debbie Millman on branding. One idea that I found very interesting from the talk was discussion on the current wave of tribal branding since 2000. Ms. Millman made the point that in this wave of branding, a brand that builds/facilitates connectivity is likely to be successful. She enlisted statistics that show 1 in 3 households in America now consists of a single person, in contrast with only 1 in 10 households as a one-person household in 1950. As traditional communion places like the household downsizes to be a single’s cave, our need for connectivity as human beings has to be channeled through other places and other objects such as brands.

This association between brand and connectivity is very interesting and is consistent with the evolution of contemporary marketing. So I’d like to elaborate on this idea a little further. The marketing discipline is witnessing two interconnected trends: an increasing emphasis on building customer relationships (i.e., relationship marketing) and a perception change of consumers as objects/targets of marketing efforts to consumers as collaborators (see Vargo and Lusch 2004). Both of these are manifestations of connectivity and how marketing may play a role in building connectivity.

So to use some concrete examples to illustrate the concept, a brand can build or contribute to connectivity in two ways: physical or infrastructural connectivity; and psychological connectivity. Brands in the former category build infrastructure for people to connect with each other, such as T-Mobile, MySpace, and Facebook. These brands derive their value not necessarily from consumers’ emotional connection with the brands per se but rather from the value of relationships that are built on these infrastructures. For example, the popularity of a social networking website such as Facebook is dependent on the people that we as users can connect to through the website and how satisfying that connection experience is. Consumer collaboration dominates in this setting as a demonstration of connectivity.

Brands in the second category aim more toward establishing actual psychological connections between consumers and the brand and between consumers and consumers. While the connection between people is still essential to the connected nature of such brands, each individual’s connection with the brand is an essential ingredient to this type of connectivity. For example, Harley Davidson or Apple owners identify among themselves because of a mutual connection with the brand. In this type of situation, rather than functioning as an underlying platform for connectivity to occur, the brand becomes an indispensable bridge in the connection process. Relationship marketing and CRM become key strategies for enhancing connectivity in such cases.

It is possible for brands to crossover between categories. An example of crossover from psychological connectivity to infrastructural connectivity is the online communities that many CPG companies have established, such as Kraft community. Consumer interaction in those communities may no longer be brand-centric and may broaden beyond the brand to other realms of life. An example of crossover in the other direction is Second Life, where devotees who have been able to build meaningful relationships in the virtual world come to love SL as their virtual country, no less than the feeling of patriotism that we feel as citizens of a country. By crossing over or occupying both realms of connectivity, these brand names build a stronger hybrid form of connectivity that is valuable to today’s single-dominant world.