The Lure Of The New And Improved


Are upgrades as popular as before?


Since the days of the Gillette Safety Razor, Americans have been tempted by two words that have proved nearly impossible to resist: "new" and "improved." Sure, we in IT would like to believe we're above such simple motivations, but the fact of the matter is that careers, if not entire companies, have been built around selling upgrades to existing products.

For years, selling upgrades was a staple of many businesses. But changing customer-buying habits, more complex products and other factors have conspired to interrupt what was once reliable streams of revenue for many companies.

It's worth noting why, as the 10th anniversary of the biggest upgrade in the history of IT comes up: the release of Windows 95, which shipped in August 1995. No product before or since has enjoyed the success that that product has. In a recent VARBusiness interview, Microsoft CEO Steve Ballmer said of Windows 95: "It was not only a great product, but from a market-condition, market-timing standpoint, it was almost perfect."

To its credit, Microsoft fueled enthusiasm for the product months in advance of it with marketing, executive interviews and much product training. When the product finally hit stores, consumers' appetites were whetted, dealers trained and budgets allocated for the upgrade. Though millions of copies of Windows 95 were sold on new machines, millions were also sold at retail and via mail order in shrink-wrapped packages that business users and end users installed on their existing PCs, many with the help of a trusted third-party adviser. The amount of add-on business computer stores, consultants and integrators did around Windows 95 was staggering. The simple software upgrade led to sales of new machine hardware, networking gear, applications software and, yes, professional services, too.

Fast-forward to today. The market, of course, is more sophisticated, and the ways in which customers buy are so vastly different. It all begs the question: Has the time for the great upgrade come and gone? Ballmer doesn't think so. Neither do others. Apple still manages to squeeze $100 or so from a chunk of its user base every 12 to 14 months with frequent upgrades. The reason is twofold: Each successive release of the Apple operating system includes useful innovations, and the product itself installs simply and easily without undoing that which users have already painstakingly done to "better" their machines.

Then again, Apple users tend to be better educated and more enthusiastic about their machines than the typical PC user. Getting PC users to upgrade used to be as simple as whispering "chip upgrade." But they aren't upgrading hardware the way they once did. It now costs more to open an old desktop and add new memory and a new chip than it does to simply buy a new machine. Because of that, however, desktop users tend not to upgrade their OSs as often as they once did. And, by way of extension, they tend to stick with the same version of Microsoft Office longer.

Notebooks and laptops tend to be a different story. Because they get banged around more, companies typically upgrade portable devices more frequently than they do desktop systems. And because out-bound knowledge workers tend to be more demanding than their desk-bound counterparts, they upgrade software more frequently.

Roll it all up and you have a pretty simple formula for what makes an upgrade successful. First, there has to be a perceived necessity to move. In the case of Windows 95, business users actually believed they would fall behind their rivals in terms of productivity if they didn't upgrade. Likewise, there has to be some tangible manifestation of innovation that an IT executive can point to to justify a purchase. (It can be modest, too: I remember when Microsoft leapfrogged in word-processing functionality with the simple unveiling of "drag and drop" text editing. WordPerfect engineers were so embarrassed by the simple programming trick that they went home one Friday and tried to replicate the feat themselves. In less than a weekend, WordPerfect had the feature, too, and customers by the thousands began upgrading.)

An upgrade must also not damage anything that exists today. As in medicine, the first rule of an upgrade is "do no harm." Finally, an upgrade also has to be priced appropriately. A $100 OS upgrade for a machine worth $300 isn't worth the effort--not when a new device can be had for $400.

If any upgrade you're looking to get behind violates one or more of these rules, then don't bother. No matter what you do, you'll never get a customer to say, "Start Me Up."

T.C. Doyle is senior executive editor at VARBusiness. You can reach him at tcdoyle@cmp.com.