It has become something of a truism to say that modern companies need to approach today’s consumers with new attitudes and techniques. Digital lifestyles consumers are much more technologically and business savvy than any other generation of customers, and are certainly more demanding.
We have set out to speak to the best of the new thinkers in digital business, in whatever sector they operate. Today we have chosen digital music, as it affected by many of the problems facing other sectors and is and the source of some of the most exciting innovation (and harmful mistakes) in the business world at the moment.
Jens of Sweden are a young Scandinavian company that have produced three MP3 players – and have been enormously successful in their home market. In fact, the founder and MD of the company, 25 year old Jens Nylander, has become something of a celebrity in his home country, due to his refreshing take on consumer electronics and his approach to designing and marketing the devices his company produces. He has some very strong opinions about consumer electronics, and how to reach, and keep, his customers.
After only a year, Jens of Sweden have a turnover of SEK70 million (€7.68 million), and a loyal customer base across Scandinavia.
The public’s first point of contact with digital music tends to be when they finally spot a music player that they think is groovy and they want to buy. Acquisition of a gadget is often the first step into an new enthusiasm. The iPod is a good example: Apple knew that most of the people who would want one didn’t know or care about MP3s, AACs or DRM, but they did know that they’d like something shiny that they could brag about to friends.
There are a number of digital music players coming onto the market these days, and they take many forms. Portable CD players that play disks with MP3s on them have been out for a while, Sony’s NetMD expansion of the Minidisc format has seen some success and may expand further if Sony’s ATRAC-based music service takes off. Remember, NetMDs do not play MP3s – they play ATRAC-encoded music files and are quite closed systems when it comes to putting music on them and taking it back off again.
Of course, Flash memory and hard drive-based players are where the action is, and most consumer interest seems to be focussed there. New players based on these two hardware categories appear almost daily, and there is a broad range of players in each one. To get a consumer product like a digital music player noticed in the market these days, you need to offer something different, or the Sonys and Apples out there will beat you every time.
On top of this, we’ve discovered that not all MP3 players are equal – some are less than straightforward to use and there are disadvantages to each platform. For example, Flash memory players have sigificantly less storage than hard drive based players, but they’ll be playing your music long after your iPod’s battery has died for the day. However, on a long trip with a Flash memory player, you may well have grown tired of hearing the same six albums before the battery gives out.
I interviewed Jens Nylander to find out what his thinking was in introducing yet another range of MP3 players, when there were so many out there to chose from.
First off, I asked him what his motivation was in designing the players: “My motivation is based on design rather than technology. It seems that I have always loved design and things that work very easily, rather than complicated things, as most of the gadgets are on the market. Most of the technology is trying to put new things with new cool features on the market as soon as they have them available – it’s like a race. The newest, coolest gadget gets the most attention.”
“So what I’m trying to do with our company and our trademark is to change this: by making technology into design. But, [our products are] for the general public, not for a limited number of customers like Bang and Olufsen and similar brands.”
“We take technology that is already in the market and proven to work very well, put them together in products and make them look Scandinavian. We Scandinavians like devices that are easy to use and should not be complicated. It should have good dimensions, the weight should be low – we are trying fulfil all of these things with our product assortment.”
Jens is looking to produce devices that work more like appliances – appliances based on reliability and tested technology. He’s not just stopping with MP3 players though – next up could be PCs.
“Today we are working on digital music players, we have three different models. In the future, we’re going to do the same in other product areas.”
“Apple have a good business idea – they are designing computers that look amazing. If I were to put a computer in my living room, it would be an Apple, not a PC. Bill [Gates] is trying to put computers in the living room, but they don’t match the designs people have in there.”
“So we’re working in digital music, and bringing music into the living room by attaching small devices to home stereo systems. We’re also looking at PCs, a box that can be placed anywhere in the home and looks much better – one that doesn’t have a large chassis, and is made of better materials. Completely different from our competitors.”
I mentioned the Hoojum range of cases, with their attractive and wallet-threatening new Nanode, the nanoITX case coming out later this year.
“Hoojum are really good at developing these things, but they are not perfect. If you put something in a small cubic box it should be easy, but it’s not because you have to add a PC screen that looks similar. If you buy a Philips or a Viewsonic or other brand and try to put it with a Hoojum, it will look really strange.
“It’s also quite hard to get a Hoojum working on its own if you are not a technology enthusiast. We want to make something that is much, much easier.”
Cases and appearances are one thing, and I personally think they’re an easy fix: a new case can be designed by one person and be in fabrication in a couple of weeks. However, operating systems aren’t quite there yet, are they? Often appliance PCs are let down by something they have no control over: the operating system that ends up being installed on them. Even Windows XP Media Centre edition is complex and full of too many features for a simple living room PC. What does Jens intend to do about operating systems? Could they produce their own for their appliances?
It’s not an area they wish to get into: “You will only catch a small market if you make a special operating system, so we will be stuck with Windows, but you can cut out a lot of the functionality.”
Jens is unhappy with the constant revisions that hardware and software manufacturers make to their products, “Manufacturers are trying to put too many functions into one box – and that’s the problem, you get bugs. Manufacturers swap to new models every year – it’s going too fast for them. We would like to keep products simple, and keep them for a long time. Updating them with small modifications is reasonable.”
The company is pursing the mass market, not just the enthusiast – and the dreaded “Ikea” word came into the conversation.
“We are looking a supplying larger quantities than the exclusive brands,” said Jens, “We would like most people to have our products in their homes or when they are travelling. It’s like Ikea – you get a broad public, you get a price for a product that’s better value than your competitors.
“Our MP3 players are bought by everyone – and everyone is pleased with the quality, they have an identification with the product. They feel that it is great to have it, that it works, it doesn’t fail when you are [playing sports].”
The company’s currently largest MP3 players (512Mb) can hold about 150 tracks – tiny when compared to even the smallest hard drive music players available, although they are planning a 1Gb version. Would the company be moving away from Flash memory devices in favour of larger storage capacities? Jens has a number of very good reasons for steering clear of microdrives for the time being.
“It’s interesting to see that small hard drives are increasing in capacity, but there is a limited market for hard drive-based players. They have rotating mechanical parts that can fail, they take more battery, if you drop them on the floor they can break. They also have a higher failure rate during production. I don’t know why you should have a hard drive player. The only thing that is better is the capacity. So, what are we giving the consumer if it’s not this kind of capacity?
“We are producing an extremely small product that can be used every day. Storing 10,000 tracks on an iPod isn’t as good as having a product that only weighs 40 grams, compared to 200 grams.
“The success the iPod has had in the US is penetration – they have told everyone it is a lifestyle product.”
“We have been discussing this for a long time: should we switch over to a couple of hard drive product?. We will not do so. Memory chips will get smaller, they will cut down the voltage, they will get better battery life. Hard drive players will get more problems – like bad sectors.”
“In Scandinavia last year, the market for Flash-based MP3 players was about 150,000 units, and for hard drive players it was 20,000 units. In the US, the popularity is switched, but with different numbers of course.”
Jens current models have USB1.1 interfaces for uploading music and files from PCs. USB1.1 was superseded some time ago by the faster USB2.0 standard. Although some customers have asked about USB2.0 models, these will be a while yet in appearing: “There are problems with USB2.0 – [speed] bottlenecks with memory and stability issues. We need everyone to be pleased, and just putting USB2.0 on there would cause problems. We need to work on it for a couple of months to iron out problems, and we need faster memory with lower voltage and then we would do it.”
Simplicity and reliability is obviously important to Mr Nylander, and he has no wish to introduce superfluous features that may detract from his devices’ core functions, or cause problems.
“People are putting digital cameras in things – like the iRiver IP1000. It has a 0.3 megapixel camera. Why would you use that? I don’t understand that. It’s so limited, and makes the device more expensive to produce.”
“If you make a rule of bringing out new things every year, then the public will expect it, and people will wait for the new product. It’s better to wait, wait, wait, wait … then bring out a great product.
“I have been buying cell phones since the beginning, but somehow I have convinced myself that I don’t need everything – a long battery life and simple to use. They put so many things into mobile phones that the user interface is so slow now.”
Of course, it had to be asked: how long until their first video player?
“Video is for enthusiasts at the moment, it’s in too many different formats. The market for each is too limited. The broad public is ready for products with DVD slots – a device that just plays DVDs. The way to go today is to make cheaper products that play DVDs, but don’t have hard drives. I think we will wait until 2005 before releasing a product with a hard drive, because it is too early now.”
Jens is keen to build a bond with his customers, to attract the same kind of brand loyalty that Sony and Apple currently enjoy. However, once the company’s products enjoy international success, he’ll probably have to change his mobile phone number: “It’s important to give customers quality, support and service, to stay with them. We have sold almost 100,000 players, we have always been helpful.”
“I had a phone call two days ago from a customer. He rang my cellphone – he’d had a cycle accident, and had hurt himself, but wanted to tell me that his player still worked, though it didn’t look very nice any more.” Jens asked the customer to send in the player and it was restored to its old self. “That’s why customers pay a little more – but in return, you get more.”
So it’s not just about producing a device and getting mass market sales?
“It’s much more fun for me and my colleagues to build a brand, rather than just sell stuff.”
The company’s players are compatible with Microsoft’s Windows Media format files, but they do not incorporate Microsoft’s digital rights management. Jens believes that incorporating DRM into the player would be “too much work for not enough benefit. My general idea is to make everything as free as possible. If we make music easy to download cheaply then illegal downloads will drop off.”
A fair price for downloaded music is something that has been discussed ever since the first online music store – and we’ve yet to see the market settle down. The average price at the moment seems to be $0.99 (€0.83), but some labels would like to see it go higher.
“A reasonable cost for music is $0.50 (€0.42). A smaller fee means people will buy more music, rather buying a few songs and downloading the rest illegally. Subscriptions services are a good idea.”
Finally, I asked Jens what his advice to music publishers and stores would be to finally take digital music into the mass market:
“Get out there and sell music cheaply!”
We will be carrying a full review of the Jens MP-130 next week.
Jens of Sweden
Hoojum’s Nanode
MP3 discussion in the UK, with links to original music – Josaka