Mozy was in many ways an example of brand building. First there is a reliable service that simply works. Second there is plenty of good PR (Mossberg, trends) and word of mouth. Then when the backup category got established the TV spots came to defend the position of the brand.
I got referred to Mozy by a good friend of mine and yes … I have been referring Mozy to many friends as well! Like I said, the service simply works!
This morning however Mozy blew it big time: they changed their proposition from “unlimited backup with yearly subscription fee” to “pay for storage, pay per gigabyte”… Not smart! Once consumers perceive you as free or unlimited (even with a subscription fee) you cannot change the business model unless you are willing to start from zero in brand and relationship building.
For me it is over and out with Mozy and it seems with many others as well, just see the discussions and on Twitter. Lots of companies also participate in the discussion to grab switchers!
As I do backup everything (my music, photos, raw photos, ….) I use a bit of space. With the current plan I can do that for 83USD/2years, the new plan will set me back to 1343USD/2years (data growth not included).
I got last month a trial to Amazon Prime. For those who do not know: Amazon Prime requires a 79USD membership per year and as a result you get free 2 day shipping on products that qualify for Amazon Prime. And…. there are many many many products that qualify!
So, what has happened in terms of my consumer behavior over the last month… I simply go to Amazon for pretty much everything and bypass any other online retailer. Baby stuff? Should I go to Babies R Us? Probably before Amazon Prime I would have but hey… with “free” shipping at Amazon why would I pay anything to Toys R Us for shipping? Camera stuff? Previously I would go to Adorama or B&H Photo Video, now I go directly to Amazon. Computer stuff? Previously Newegg, now Amazon… and so on.
Amazon plays this smart. On top of me switching from other online retailers to Amazon I also see an uptake in stuff that I order from Amazon… because its so easy, no need to pay for delivery and the package will be at my home in two days… Why bother with anything else?
Lessons: ask consumers to pay a relatively small fee for something that could limit their online purchases (benefit retailer) and take away the biggest frustration for consumers when purchasing online (delivery fee and delivery times). By applying the benefit to as many products in Amazon’s catalogue Amazon virtually has a common differentiator against vertically (focussed) online retailers. On top of Amazon’s sharp pricing it is one way to differentiate competition.
With great internet services like Hulu (European readers: see this image) that help you to “Watch your favorites. Anytime. For Free” you must have been wondering why we still pay for cable TV? The answer is: convenience.
The fact that cable prices are still going up (at least here in NYC) will for sure help to accelerate the transition as more and more consumers will try to find alternatives to reduce the large amount of dollars we pay to cable companies every month. Example: in New York City, USD 111.95 per month will give you internet and cable TV at Time Warner Cable… that is a lot for convenience… especially knowing that virtually all TV shows you would like to watch are available on Hulu.com. In fact: you do not even need a hard drive recorder since all the shows are available on Hulu for quite a long time. If news is your cup of tea then you just go to e.g cnn.com to watch Live TV. It is all there… on the net… for free!
So, you are convinced that paying for convenience is kind of weird since you can get it all for free on the net? Read further…
Things are still a bit complicated. Last year it was possible to use media center software (boxee) to stream Hulu content on an Apple TV box connected to your TV. Unfortunately the pleasure was for short: content providers did not want their video to go straight to the TV… As with everything I am sure that hackers, plugin writers will fix this issue and as a bonus will be able to get the Hulu desktop (image) on your media box. I think it is just a matter of time…
Now, once you can use Hulu on your Apple TV or an other media box you might wonder: would Hulu’s 480p content do any good on a 40inch screen? I think you have a point there. The alternative is easy: buy HD content for 2.99USD an episode on iTunes.
Let’s do the math to see how much convenience is worth:
– random internet connection through provider, 25USD per month
– AppleTV, USD 299, (let’s say: 13USD per month over two years)
With a 110USD Time Warner Cable contract you can still buy 24 HD episodes of your favorite TV shows or rent about 18 movies before you would spend more than your current fixed costs!
When will you switch to free?