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Wednesday, January 28, 2004
Martin Kahn, a Venture Partner with Rho Ventures and Chairman of OneSource Information Services, Inc. came up with one of the more insightful observations offered by panelists at this year's event. In response to a question on how to manage margins in an era of increased content commoditization pressures from technology, Martin noted that extremely accurate wrist watch movements can now be produced for mere pennies and yet there is a thriving market for high-priced status brand watches. Similarly he notes that getting just SEC filings and real-time stock quotes used to be prohibitively expensive for individuals, but now that they are freely available there is still a strong market for premium financial and business content. Branding and positioning still play a key role in determining the perceived value of content services, despite relentless commoditization pressures. And yet there are only so many people willing to pay for solid gold watches when a Timex can give virtually the same functional value. It's a tricky game, and the temptation is to think in terms of solid gold engineering and marketing when the opportunities may lie across a very wide array of market segments. AT&T built commonplace telephony components to MilSpec standards for years after that kind of product development standard had proven to be ineffective in capturing the needs of a changing marketplace. Similarly the penchant for vendors of premium professional content to engineer their services for the most demanding high-margin clients has tended to lock them in to product development cycles that deliver highly reliable services that oftentimes lag behind the needs of broader markets. The "good enough" development standards of companies like Google may never make them ready for prime time in business content, but in the meantime millions of professionals every day turn to them for "good enough" answers.

By John Blossom - posted at 9:38 AM
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