New systems—part computer, part multizone receiver—will enable C-tailers to deliver profitable, unique systems that aren't labor-intensive.
By Frank K. Sterns
"Any color—so long as it's black."
With those words, the age of mass production was launched. The premise was simple: Limit options in order to standardize production and maximize profits. So, with that in mind, thousands of identical Model T Fords rolled off the production line to meet the needs of an ever-expanding base of customers who relished the freedom of movement that the automobile provided. And old Henry, with his Ford Motor Company and assembly line process, became one of the most successful, wealthy and famous entrepreneurs of the industrial age.
Now let's jump ahead 100 years or so. Everybody owns a car or two. Freedom of movement is considered a birthright, and consumers covet instant access to entertainment and information. Numerous media provide this entertainment and information to them: movies, concerts, cable/satellite TV, AM/FM/satellite radio, CDs, DVDs, iPods, music servers, PCs, the internet, PlayStation, the BlackBerry, cell phones. Consumers want access to as much of this entertainment and information from anywhere and everywhere—and they want it RIGHT NOW! That means in the car, through the house and the yard, while they jog in the morning and, dare I say it, even in the bathroom. Not only that, but consumers want it customized and personalized to fit his or her lifestyle and personality.
Henry Ford taught us that the key to profitability was standardization, but consumers won't settle for basic black anymore—they crave customization.
So what's a custom retailer to do?
If you custom-design "one-off" systems for every customer that walks in your door, you're likely to stay very busy but not very profitable. That's because the cost to design, engineer and support these one-off systems is so huge that only the super-rich can afford to pay for them. And the super-rich expect lifetime support—for free. (If the cable company changes its channel lineup, guess who's rolling trucks to that customer's house?) Moreover, the capital required to finance such a complicated project over its duration can bury even the most financially savvy custom retailer, and can easily squash a startup. After all, the formula for profitability is margin times turns, and such systems don't turn over fast enough.