IDsoftware is reinventing virtual products: Quake Live

IDsoftware has with its latest product surely taken the way of how gamers are able to play a full-scale 3D game to the next level. The provided Quake live platform enables players to play their favorite game directly through the web browser. Once the game is set to full-screen mode, the player will not be able to distinguish the online game from the original game Quake 3 which Quake-live is built upon. More information for the less informed reader could be found here, here and here.

Revenue stream
This brings us to the key question of how a company can keep a game alive and have a revenue stream when players do not follow the conventional pattern of buying new games in order to satisfy their hunger for challenges. Game companies have since long realized how important it is to keep the customer base once they have released a blockbuster game. The enormous online society of World of War Craft is probably the best example in how to keep customers close. The difference between WOW and Quake3 is extensive, not only are these completely different games but that WOW players still expect new features and updates whereas the Q3 players do not.

Shifting focus from hardware to bandwidth?
IDsoftware seems to have a good approach to the solution which is a quite remarkable one. As of today, they are still looking for beta-players to test the game and the potential of the site. More than 1.200 players are already testing the game which only requires a small client-program. It should be highlighted that the game in question, is a full scale 3D-shooter game looking just like Quake 3 which back in 2001 required the best hardware available. I dare to say that this is truly revolutionary if they succeed to accomplish to provide a service where the game floats without delays, which is the most crucial performance parameter within this game genre. As of today, there are no indications of such drawbacks. This unique platform will enable players to compete against others, participate in tournaments and track their game statistics.

What will the business model look like?
The concept is clever in many ways from a business point of view. The company will be able to establish technical control since the players will only have access to the game through their site and since the game is run completely on the server provider’s side, the possibility to cheat are close to zero and facilitates updates. For industry actors, e.g. hardware manufacturers, the site will provide great opportunities to sponsor tournaments and brand themselves among players. The possible opportunities remind of sponsored tournaments on internet-poker sites where the sponsoring party is providing a tournament with a variable price sum. With the strong brand name Quake the future opportunities for the Quake-live platform look promising. Let’s hope that advertising will not be their only revenue strategy.

Whether Quake-live will be a success or not is difficult to say but it is still a happening worth mentioning due to the innovative nature of the concept in an already innovative industry in today’s knowledge-based economy. To re-release an old game, packaged in a new concept and technology and make it financially profitable is surely not an easy task. However, the concept opens the door for a new paradigm for how games are distributed to customers and to strengthen IPR control technically. It is really taking virtual products to its limit and further diminishes the importance of operating systems towards an increasing focus of online applications which can be observed by looking of how Google continuously works its way to move office applications into the online applications domain.



Nicolas Preisig is the second guest blogger invited to post his thoughts here at Intangitopia. He is a part of the new generation of highly talented engineers, lawyers, and business managers pursuing modern skills and tools necessary to create value for industry, universities, and society in the emerging knowledge-based economic paradigm. The ideal education to acquire this skills and tools is the School of Intellectual Capital Management at Chalmers University in Gothenburg, Sweden.

A Horizontal Acquisition in the PC Industry: How to Handle Branding for Long Term Value?

Intangitopia presents it's first Guest Blogger, Jonas Nilsson.

In December 2004, Lenovo finalized the block buster acquisition of the IBM Personal Systems division. Lenovo, barely existing outside China and more known for low cost products than having a premium focus, was to nourish the world’s most premium connoted PC brands – IBM and its Think series computers. An unholy alliance according to some, but Lenovo were determined to create a pioneering collaboration between the East and the West to ultimately form a global industry giant.

My focal point on this topic is how Lenovo chose to leverage the extremely valuable IBM brand on their acquired ThinkPad and ThinkCentre computers. Lenovo were given the right to physically put the IBM brand name on the computers for up to five years after the acquisition. But in the end of 2007, Lenovo decided to drop the IBM brand – ranked among the most valuable in the world - two years before schedule. My hypothesis is that dropping the IBM brand from the Think PCs was good for Lenovo in building long term value for Lenovo from a brand perspective. The analysis is conducted from three starting points that I have determined relevant in this case.

Customers’ Trust in the Ability for Lenovo to Sustain the IBM Think Brand Value Proposition Customers initially worried that the values that IBM and the IBM Think series represented and delivered, such as quality, innovation and support, would be lost when Lenovo took over. Lenovo had aligned the corporate culture and vision to achieve the value propositions of the Think PCs, but did it correspond to the image of the brand?

First of all, the IBM PS operation basically still existed in the new organization, why little was to actually change for the customer, which was steadily communicated by Lenovo. Also, with the IBM brand physically on the PCs, the customers could be assured that IBM endorsed the new structure. I found three main aspects that diminish the risk of customers losing trust in the IBM Think brand’s value proposition.

1. Lenovo’s steadily increased revenues and profits indicate that the customers have trusted the new structure and shows that customers’ believe in sustained value proposition from the Think PCs.
2. IBM PC customers have traditionally been loyal to the brand. After almost three years of having Lenovo in the picture, many of these will have gone through a computer purchase cycle under Lenovo and have therefore already acknowledged the new structure.
3. The brand is much more than the IBM name and Lenovo have been extremely careful with capitalizing on the perception of how a Think PC should operate, look and feel but also how it should be serviced and supported. This has ensured trust in the value proposition.

These arguments in sum, suggests that sustaining the brand of IBM on the Think PCs for two additional years would not significantly have helped in preserving the consumers trust in the value proposition, since the name still have needed to disappear in two more years. The arguments would likely not have been considerably affected during that time.

Long Term Brand Building
The early removal of the IBM brand from the Think PCs was a step in leveraging the Lenovo brand in the vision of being one of the largest actors in the PC market with aggressive growth ambitions. Despite the values the IBM brand brings, it diminishes the Lenovo brand. It could also confuse the less familiar customers; “what is actually what here?”.

I have used Google Trends as a tool to illustrate how frequently “IBM ThinkPad” vs. “Lenovo ThinkPad” have been searched for on Google historically and how commonly referred the terms are in Google News (which basically summarizes news from a large pool of media channels).


First of all, it is obvious that Lenovo is in a positive and IBM in a negative spiral in terms of people’s awareness and the media attention of the brands (similar trends in search volume index is seen when comparing “IBM” and “Lenovo”). This suggests that leveraging from the IBM brand is of decreasing importance and the possibility to keep growing with the Lenovo brand is likely good. Also, after the brand change in 2007/2008, the number of news references did increase vastly compared to the previous years (even if we add the IBM ThinkPad references) creating a lot of attention of the ThinkPad, which is good for the brand building and suggests that the brand change decision was good.

Strengthening the Lenovo brand two years earlier than initially planned was likely positive, since it speeds up the process of creating a long term brand value for Lenovo.

Aligning Corporate Vision and Culture
Though the top managers all the way might have been consistent in their thinking of Lenovo as the company, it is not unlikely that the employees with such different backgrounds rather indentified themselves with their previous brands. Exclusive Lenovo branding should in the long perspective help unifying the company. Lenovo’s vision has been to communicate the beginning of something new, a pioneering collaboration between the West and the East to create “a unified global PC leader with growing market positions in developed and emerging markets”. A distinct action in order to bridge the gap between the vision and the culture is definitely to make sure that the new company operates under one name. The symbolism is great, in my view.

Conclusion
From the three starting points that I have analyzed, Lenovo’s decision of dropping the IBM brand earlier than initially decided, likely was the better move looking at the long term value creation from a brand perspective.

Managing the brand is of utmost importance to the technology intensive firm. In dynamic markets with rapidly changing technologies and conditions, the customers want to know that their supplier has a vision of their desires beyond the traditional price/performance aspects. The customer wants a company they can trust and the company wants recurring customers.

Jonas Nilsson