Reading the interactive design news I discovered W3C research, released for public view and feedback on October 29th, 2009. W3C created the first draft of the Emotion Markup Language 1.0, conceived as a “plug-in” language for use in three different areas: manual annotation of visual and audio material involving emotionality; automatic recognition of user behavior from sensors; and generation of emotion-related system responses. According to this document, EmotionML can be applied to numerous aspects of modern technology including sentiment analysis, monitoring, control for virtual worlds, social robots, expressive speech synthesis, emotion recognition, and support for people with disabilities. For example, in ambient assisted living systems, this language would measure simple satisfaction levels at mealtime for people with autism, as well as proactive response when things go wrong with elderly individuals, allowing for a more patient-centered rather than institutionally-centered system. Under normal circumstances - and prior to critical conditions - there is a sensation in the human body that, if recognized in time, allows the prevention of a fatal situation. Multimodal Interaction Working Group proposes a general emotional language for various applications, as well as providing default options.

Here is an example of a how simple emotion annotation might look like:
<emotion>
<dimensions set=”myFriendlinessDimension”>
<friendliness value=”-0.7”/><! — a pretty unfriendly person — >
</dimensions>
 </emotion>

New language provides new ways to describe emotional dimensions by valence, potency, arousal, intensity and unpredictability. Most language specifics require a deeper understanding of the scale values, but by just examining the code, I found it amusing, and bewildering, to see numbers assigned to something that consists of more than just physical aspects. Is it then possible to capture the subtlety of human emotion? There are primary emotions that are undoubtedly recognized during typical interactions, such as fear, joy, and happiness, but there are also a wide range of complex experiences that consist of moods, feelings, stances towards objects and people, etc., that are so multilayered, momentary, and fleeting, that it seems virtually impossible to recognize them - let alone put numbers on them.

We possess a well-developed sense of emotional encounters and we experience emotions consistently. Our emotions become an inseparable part of our communication, and of our relationship to the environment. So it only makes sense for current technology to create an environment where interactions are emotionally rewarding. The recent Milo demo from the Natal project demonstrates amazing character development; making it clear that the modeling of emotion is the next step in the advancement of human-machine communication.

I find it exciting imagining an emotion markup language 10 years from now. How much of what we experience as humans could be translated into a digital language? How would our emotions be affected when they are encountered with a virtual replica? Will we experience positive emotions with digital characters more so than with real people? And what would we prefer? I asked my friends about the meaning and expression of emotion in their daily lives. The passion I heard could only come from another human and I hope this language will never be forgotten: “Emotion is a flood of feelings - taken outside of a person’s body or heart; expressed from hands and breath as music, in words as poetry, in paintings as color, and in dance as movement. Emotions are like colors of blood in your veins that carry memories, both happy and sad, and when they flow past your heart, feelings are triggered. Emotions make us feel sick, happy, full of life, or longing for life. Without emotions the earth is colorless, and there is no one to see its variance and beauty.”

Finally the final part of the 3d blog. As I mentioned in the previous posts on 3d, there are very poor tools for creating great looking 3d user experiences. This article will not concern itself with the aesthetics of 3d or the usefulness, utility or desirability of 3d UI’s, for discussions on that see here.

First off I’ll do a quick overview of the basic tools for creating 3d assets before diving into the tools for creating interactive 3d for different kinds of user experiences.  This is a high level guide to the topic and in no way attempts to be exhaustive, just hopefully helpful.

Tools for digital illustration - Just creating great looking 3d.

The biggest tool provider for anykind of 3d anything is Autodesk.  They are the million pound gorilla when it comes to 3d tools.  Over the last few  years they have swallowed up what used to be the top 3 tools in the 3d world, Autodesk SoftImage (formally XSI), Autodesk 3ds MAX and Autodesk MAYA - all previously rivals (stunning the DOJ where asleep at the wheel for those purchases) .  These are considered the mega premium tools and have almost religious followings in the 3d community from game makers to film makers but to be honest from my perspective as a 15,000 foot generalist they are more or less identical in terms of capabilities.  They are also ‘huge’ from a time investment perspective as they combine multiple sub tools, for animation, modeling and rigging, physics, creating shaders, lighting and rendering.   Whilst they are widely used and regarded by moviemakers and game-makers there are plenty of much less expensive alternatives that can do 90% of the same basic things.

These tools are so big they have become platforms for thousands of vertical solution providers, a few of my favorites for 3ds Max specifically include Splutterfish Brazil, a plug-in renderer, Dreamscape (rendering landscapes, seascapes), V- Ray, (a plug-in renderer for architecture).

Other long time contenders and less expensive choices for 3d creation include Caligari Truespace, Eon Vue, (Landscapes and terrain),  Rhinoceros 3D (rhino) for industrial designers, Cinema 4d (popular with film-makers and motion graphics folks),   there is a great Wikipedia article on all the different tools here.

Sooner or later you will want to visit Turbosquid - it’s a huge 3d web marketplace for models, shaders, plug in tools and tutorials some of which are free.

COLLADA™ Is an open source intermediate file format that defines an XML-based schema to make it easy to transport 3D assets between applications - something that you will quickly discover is a god send. This includes geometry, materials, textures, lights, camera, animations, instantiations, and scenes. COLLADA also includes skinning and morphing for character animation. Shader effects for several shader languages as well as some physics support.

Once you’ve created or bought your 3d models, products like Autodesk Showcase include a fancy real-time 3d engine which allows you to move around high end renderings of industrial design models in real time, complete with soft shadows and high end shaders. (Car interior image below is showcase)

This tool is primarily intended for doing ‘pre-visualization’ and design review of industrial design forms using the power of the high end video cards and is a glimpse at what’s possible with the latest rendering engines.  They also include the ability to play with libraries of pre made common materials, and environment lighting and immediately see the result, which has historically been a massive time waste with traditional renderer’s.

Hypershot Bunkspeed, is a quasi-competitor to Showcase allowing you to do semi-real time high dynamic range lighting, (HDRI). HDRI is a technique for doing image based lighting, which is how you get something to look photo real.  The product is mesmerizing, super easy to use, and really useful for illustration.  Simply drag the high end shaders onto the model, pick your image based lighting and (image below) is what you get.  The soft shadows and ray tracing capabilities make the output look spectacular.

There is also a plugin for Google’s Sketchup tool that uses Bunkspeed. Sketchup is the world’s easiest 3d box-modeling tool, ideal for quick 3d sketches of physical relationships; bunkspeed kind of makes anything look hot with the right HDRI image choice.

RTT is a technology company making another one of these real time 3d rendering Showcase like tools. I find this type of product interesting because of how they clearly demonstrate what is possible with real time, high-end rendering.  RTT also offers sever based rendering solutions which can deliver rendered frames to less capable hardware in semi-real time.  This allows car configuration UI’s to be done remote from the client.  (TT image below is real time)

3d Real time UI Rendering API’s

OpenGL® ES is a low-level API for advanced graphics using well-defined subset of OpenGL. Open GL has largely become the standard API for doing high end 3d outside of the PC and XBOX platforms which are dominated by Microsoft’s competing Direct X technology.  GL-ES provides a low-level applications programming interface (API) between software applications and hardware or software graphics engines.  Apple developers have the option to use open GL ES on the I-phone and now the I-PAD  for example.

The wizzy bookshelf spin into the bookstore effect from the IPAD launch video, another example of 3d metaphors successfully working to add some bling to a product announcement.

These API’s make it easier for developers (mostly games developers) to write code that is slightly abstracted from the exact hardware it will run on, making it more compatible with a wider audience.

WEBGL - WebGL is a cross-platform, royalty-free, open web standard for a low-level 3D graphics API based on OpenGL ES 2.0, exposed through the HTML5 Canvas element.  The basic premise is that most browser makers (except IE perhaps) are working together to enable basic support for this as part of the HTML 5 specification, which is still a year or two away from prime time.  These open standards would go along way to making 3d UI not require a specialized engine plugin (like Flash or Anark); many people are hyped up about the potential for this to finally let the 3d cat out of the proverbial bag.

Nvidia’s TEGRA 3d UI

This 3d UI (carousel image shown in the article header) was shown in working from June 2008, and generated significant excitement that a 3d touch based UI that looked reasonably hot would actually become a commercial reality.  Turns out this UI will not apparently see the light of day according to this report. I believe the UI below was authored using the now extinct tool ANARK game face which was bought from Anark after having been a tool for implementing 3d UI’s in games for a several years.

Tools for building 3d UX Today.

Today as a designer wanting to create a real time 3d interactive experience your choice is pretty much limited to Adobe Flash with one of the various plug-ins, like Papervision or Away 3d. Inherently Flash is not a great 3d platform basically because the first thing you should know about 3D and Flash is that Flash doesn’t really support 3d.  What Flash does know is how to display vector shapes on the screen and how to calculate math expressions. With that, 3D can be faked by doing really sophisticated mathematical transforms. Generally this approach is ok for minimal 3d transitions and simple geometric models but as soon as the going gets rough (say you need high polygon models or shaders) designers resort to non real time 3d and interactive pre-rendered 3d Flash movies. Still, Flash 10 or one of the plugins mentioned above is really still the de facto option for developing interactive 3d sites today albeit they are often less than spectacular and don’t really take advantage of any of your specific GPU or video card hardware (features like anti-aliasing and texture smoothing are missing). One of the worst qualities of flash based 3d is the menacing ‘jaggies’ of aliased fonts and geometry, and the ‘sparkly’ effect that is created with non smoothed textures. The creative industry is obviously heavily invested in Flash, so if Adobe keeps plugging away it’s likely 3d will become easier and better through their classic and venerable authoring suite.

Electric Rain are a small software company who make  Swift 3d which is a well respected modeling and animation program for Flash.  It takes 3d rendered geometry and does something like the ‘live trace’ feature in illustrator, converting it into less memory consuming 2d vectors.  For canned 3d effects it’s an easy and well travelled solution for designers.

Scaleform are a company plugged into the Games community with a tool that enables them to support Flash movies inside proprietary games engines, a great deal of modern games use this technology which gives them the, coding, production and animation benefits of Flash inside their rendering engines, thus making the production of sophisticated menu systems, Hud’s, (text, maps, equipment status, health etc) or the configuration UI’s much easier.

Expression Blend is a UI building tool produced by Microsoft which can create 2d or 3d interfaces for Microsoft’s client application engine WPF, or its online cousin Silverlight.  Expression Blend is ‘good’ for building 2d UI, however when it comes to 3d we are back in the dark ages. It can display and manipulate 3d models with simple mapped textures but every time we’ve tried projects utilizing 3d - we have quickly run into performance challenges (even on high end hardware).  There’s no support for any sophisticated effects, shaders, anything more than the most fundamental lighting, no decent animation support.  There are some 3rd party tools to make life easy on WPF. Another Electric Rain product (I’ve not used) ZAM 3D is a 3D XAML Tool for Microsoft Windows Application Development. It provides developers and designers with a quick and easy solution for creating 3D elements for Microsoft Expression Blend and Visual Studio projects. It also acts as a 3ds or dxf to XAML converter.

It seems increasingly clear to me that Microsoft has de-invested in WPF, and I’ve given up hope that it would become a decent way to create a 3d UI.  In all the hype about WPF at its launch, there was some good demos and excitement, yet here we are 4 years on and really there are no decent product examples of WPF applications, and very few announcements from Microsoft about its roadmap.

There are a few other choices out there like Anark, which is a long in the tooth tool from yesteryear which looked very promising as a way to author 3d user experiences about 10 years ago, but today seems to have been abandoned by its parent company as a super niche tool.  We’ve built some incredible 3d demo’s in Anark but the tool seems to have not received a significant update in a long while and it’s expensive.

ARToolKit is a Cross-platform Library for the creation of augmented reality applications, developed by Hirokazu Kato in 1999 and was released by the University of Washington HIT Lab. Currently it is maintained as an open source project hosted on Source Forge with commercial licenses available from ARToolWorks

ATOMIC Authoring Tool is a Cross-platform Authoring Tool software, for Augmented Reality Applications, which is a Front end for the ARToolKit library. It was developed for non-programmers, to create small and simple, Augmented Reality applications, and released under the GNU GPL License.  I’ve not used it and can’t speak to its usefulness.

The Astonishing Tribe, also known as TAT have a 3d development environment I’m curious about, its called Kastor, and I think works with TAT Cascades which is a UI framework. Some of the demo’s mentioned in my previous post’s on 3d were probably developed using this tool set.  The Red-dish demo (below) they did last year utilized OPEN GL ES 2.0 shaders and anti aliasing functionality.

Kanzi is a suite of tools and technology for 3d UX development. The Kanzi SDK tool is designed to be used with OPEN GL ES on mobile devices. Its Rendering engine Kanzi Engine is supported by a range of silicon manufacturers.  I’ve not used this tool in a professional context yet, but the examples on the site suggest a mature product with many of the capabilities for building good looking, hi quality 3d.  At the time of writing this, I just recieved an email from a Finnish company called Rightware that has just acquired Kanzi from Futuremark.

Images above from Kanzi demos above.

I’ve purposefully left out discussing the merits game engine technologies like Unreal, ID- Tech and Valve’s Source engine, Microsoft’s XNA and many others which are less ‘tools’ and more like ‘starter kits’ for the development of 3d games, they handle low level features but they are really only for those conversant in C# or lower level languages and not really optimized for building user experiences or more general products.

I’m very interested if you know of other commercial tools for building UX and will update this blog with suggestions and comments when I receive them.

Tools for building 3d UX tomorrow.

At heart the people using UX building tools and contemplating 3d UI concepts are desperately in need of tools that allow them to ‘play’ in high performance real-time 3d quickly and easily. The lack of these tools, I’d argue is the main adoption blocker for seeing more high quality 3d user experiences. Occasionally I see something really impressive in 3d that makes it more clear what we are striving towards in terms of output from such tools.  At the Intel booth at CES 2010 was a very impressive dual touch wall (Image below). This was not created (to my knowledge) with a cutting edge 3d tool but it demonstrates the kind of output UX designers like ourselves at Artefact are striving/desiring to create.

Check out a video of the animation on Youtube.  This would be impossible to build in any tool that I’m currently aware of and had to be coded from scratch.

Watch this video of someone creating a “little big planet” level.  This is a tool that comes with the game for players to create additional content and share with the community.  You use a PS3 controller and a character to create levels within the game.  Note in the video that there is no difference between building the level and being in it which makes the authoring process very experimental.  Objects are ‘physically’ enabled by default. There is minimal difference between the “authoring process” and the “experiencing it” process.  This tool is actually very simple to learn, super complex to master.  It’s also a modern work of art.

This tool represents a kind of design target for me, today it feels especially for UX like we are down where C++ developers where years ago, down in the weeds creating everything from scratch, specifying every possible variable and property. The desire is to have a palette of starter objects, 3d controls, shaders, lights, behaviors and effects that are a starting point to start sketching great user experiences.  When my sketch work is complete, allow me to dive in and get busy scripting custom behaviors, defining custom shader’s and geometry.

The complexity of 3d tools makes production a very deliberate, detailed and labor intensive process.  As a result designers are limited in their ability to experiment and iterate in building 3d user experiences.  So my ideal tool combines lots of ‘starter objects’ with the ‘stateless’ UI demonstrated by Little Big Planet and Autodesk’s Showcase application.  With such a tool I think we’d be pretty close to the kind of tool that would take the world by storm. (Quietly I’m hoping someone sends me a link) Contact me if  you want Artefact to design such a tool, right now that would be a dream project.

Innovation, breakthroughs, leapfrogging, whatever you want to call it, is earned by carefully balancing the extremes. Ken Fry, design director, recently wrote an article for Fast Company about finding the best scenario to produce better innovation.

Do you think you know which scenario works best for your organization?

1. You plan to generate a lot of “blue sky” ideas so you keep constraints at bay. There is no technology constraint or clearly defined market opportunity. The sky is the limit.

2. You see the opportunity to design the next great tablet device that does everything an Apple iPhone can do, but with a bigger screen. It is a wonderfully clear and focused goal.

Will either scenario get you great ideas, lead to a successful design, and all of the fame and fortune that goes along with it? Not likely.

Blue Sky vs. Buttoned Down: Which Scenario Produces Better Innovation? [via Fast Company]

Job requirement: Facilitation

I got worked up in a tizzy recently and had to have a drink with international sex symbol Dennis Wixon.  I told Dennis that some of our lab work (which includes protocol analysis and RITE method) can feel like administrative busy work, especially if the person doing that work is an outsider to the project team.  The role becomes meeting organizer.  Organize the meeting of target users and stakeholders.  It’s possible to be brought in to projects without an understanding of the business goals, the target customers, the design requirements, the purpose of the product, and the design decisions that need to be made.   Not knowing these things, doesn’t set up the person doing this work to make very good design recommendations.   Do the designers want an outside perspective?  Not really.  They have enough opinions from others.  Do they want a meeting organizer?   Yes, but is there more?

Dennis reminded me that facilitation skills are essential.   I didn’t like the answer at first, but he’s right.  There are many stakeholders involved in problem identification and generating solutions.  There are designers, janitors, product managers, cooks, engineers, testers, marketers, executives, accountant’s, receptionists, lawyers and their lawyers. Researchers can be good people to facilitate the formation of stakeholder’s interpretation and conclusions of user’s behavior.   Researcher can know which verbal reports are useful and useless pieces of data.   The good researchers know the important differences between a sequence of thoughts generated by users solving problems and social verbalizations used to commuicate through descriptions, justification and rationalization.  It is the researcher’s job to get stakeholders looking at the best data.  Lead them through their own analysis and interpretation of observations.  Influence their conclusions.  Faciliate the process of making good product design decisions.

I have not thought much about what it takes to be a good facilitator.  Experimental psychologist, sociologist, anthropologists and other social scientists that research people aren’t necessarily educated in the art of facilitation any more than designers, engineers, marketers and business managers.  Researchers that know how to facilitate a group of stakeholders to make the best decisions from good data will be highly regarded.  It’s the researcher’s facilitation skills that can make the difference when dropped in to projects to coordinate the meetings between target users and stakeholders.

Update: You can find the PDF version here.

This article is not a primer on how to do business in China. The reality of doing business in China can be, well, pretty ugly.  We will not go into the corruption and other non-niceties of conducting business there in detail.  To summarize very briefly, China’s leading political ideology (if there is one) according to James McGregor, is enriching the country (and usually the political leadership and cadre’s families) in any way possible, without ever disrespecting or challenging the government’s structure, position, and authority.

In China, you pretty much have to play by their rules, show respect, and demonstrate how your objectives are not only good for your business but also good for China as a nation.  You shall never criticize the government or proclaim what’s wrong with their politics.  For more information on these topics and some of the more interesting anecdotes from the front lines, we highly recommend McGregor’s One Billion Customers: Lessons from the Front Lines of Doing Business in China.  McGregor himself also recommends an excellent reference on the nuances and peculiarities of business culture and negotiation in China in Lucian Pye’s work Chinese Negotiating Style.

Take the recent debacle between Google and China over censorship:  the audacious Googlers violated the simple rule that you simply don’t ever question their rules.  To be sure, China regularly censors sites and content, closes down search, social networking, and other sites, and spied on Google accounts.  They may have done some other questionable things, but one must remember that China is not a democracy.  In a way, it reminds me of the movie Fight Club, where the “first rule of fight club is you don’t talk about fight club” (that’s also the second rule of fight club, incidentally).  In China, the first rule of China is you don’t question the rules of China.  The second rule is you don’t disrespect the Communist party or the government.  They shall not lose face.  I’m trying to avoid taking political positions here, so be it.  Google’s exit is, perhaps, Baidu’s gain.

But let us not digress further.  Discussing the politics of China is not within our purview at Artefact, so better to leave that to the political pundits, freedom fighters, activists, and global political leadership.  We might contend, however, that even by playing within China’s rules of censorship, progress can be slowly made and China’s citizenry can be empowered with technology, information, and the means of assembling and building communities, for they are a clever people with a lot of pent-up creative ingenuity.  Revolution and political change is ultimately up to China’s people, not to foreign multinational corporations who want to sell their products and services in China’s markets.

Who is the Intended Audience?

The audience for this article is primarily professionals in product management and development, innovation, R&D, product and product portfolio planners, engineers, and executives who are responsible for designing and creating technology products (hardware, software, services).  In particular, those of you people above who feel perhaps a bit less informed about China than you’d like to be.

What this article is intending to convey are some key insights, lessons, or realities you should know about if you intend to develop, design, and market consumer products for China. Among the many considerations you’ll need to make as a business interested in entering or further penetrating the Chinese market(s), learning how to work and communicate well with the right officials and rainmakers, being unbelievably persistent, and understanding the varying and even appalling levels of corruption that may be involved will consume much of your time and energy (and, perhaps, your soul).  Your challenges will range from building the right win-win argument, establishing long-term relationships with the right Chinese business people, power brokers, and partners, all the while not defying the rules or causing anyone to lose face.  Another significant challenge will be distribution, as getting your product in front of consumers in China is not quite how it works elsewhere in the world.

In the spirit of full disclosure: I myself have never traveled to China, though I was in Hong Kong for 10 days in 2007 and studied some Mandarin and Chinese history in college.  In researching and writing this article, I owe a tremendous amount of debt to the market researchers, strategists, cultural translators, user researchers, and Chinese graduate students and other Chinese professionals whom I interviewed for this article (Elaine Ann, Ash Bhoopathy, Ravi Chhatpar, Ian Donahue, Anjali Kelkar, Shuang Li, Lin Lin, Fei Qi, Erin Sanders, Pinxia Ye, and Lisa Yong among them).

The Short Version:  10 Tips + 1 Caveat

If you are pressed for time, short on patience, or just generally not fond of my laborious prosaic style, here is the abbreviated version of all the main points I want to make.  If you care for more details, please read beyond this section for additional details, anecdotes, charts, and statistics.

China consists of many markets and many unique customer segments.  If you don’t know this by now, you really should.  Therefore, you will have to do your share of ethnographic homework and market research to succeed.   However, doing the above, particularly the ethnographies and user research, will be more difficult than you are used to.  Add to that that most Chinese consumers still don’t really know what their needs are!  Their world has changed so incredibly fast, and for many, they still are learning about what there is in the consumer marketplace beyond the basics of food, clothing, shelter, and the most basic consumer durables.  Therefore, products cannot simply be “translated” into Chinese; they must take into consideration the cultural and social context, thought models, and unique behaviors of the many different types of Chinese people.

Why?  Because life in China is unstable and insecure. The government is no longer a provider of any form of safety net.  So everyone must look out for themselves.  Money is power, prestige, and respect in China.  Hence, the Chinese are prone to flaunt it if they have it.  Incomes in China have not necessarily kept pace with GDP growth over the past couple decades, and meanwhile the cost of living is rising.  Foreign goods are also subject to high import tariffs, making them extraordinarily expensive by Western standards.  The paradoxical thing with the Chinese, however, is that while they admire and strive for luxury and quality items, they are also traditionally very frugal and value-minded, particularly the older generations.

It’s worth noting a thing or two about the Chinese consumer retail environment and experience as well.  While the retail environment is beginning to look a lot more like that of the West (modern shopping malls and hypermarkets are being built by the hundreds), there is still something very different and unique about how and where the Chinese shop, which is one reason you will really need to work hard on your distribution strategy.  Shopping malls are more like lifesized catalogs for most of the middle class, where they can browse and take note of the latest high-end styles and products.  But, more often than not, the middle class consumer will then head out to the street to the large marketplaces or bazaars (in areas like Zhongguancun in Beijing) where hundreds or thousands of small vendors will sell the same or shanzhai versions of many products (electronics, fashion, or media) at negotiable prices.

Chinese consumers are also beginning to greatly increase the amount of shopping they do online, as credit card penetration has rapidly increased and other forms of online payment have emerged and gained consumer trust and confidence (like Alipay from Alibaba, which is more or less like Paypal).  Also, the Internet simply offers a great variety of products to choose from, things which may not be available on the mainland.  Today, most online shopping is transacted as cash-on-delivery, but that is likely to change in the coming years.  And because mobile phone penetration in China is significantly higher than computer penetration, expect that consumers will begin using their phones and computers to shop more.

Despite the high value that most Chinese consumers place in peer-review of products, however, they are still suckers (like most of the rest of us) for the right celebrity product endorsement.  So, don’t underestimate the influence of the right personality.

WARNING: Stop here if you’ve had enough or are a lazy reader.  Continue below the fold if you’d like to hear a lot more details.  And also join in the conversation on our blog by commenting on, debating, or even contesting our claims.  We hope to open up the conversation to all of our readers for our mutual enlightenment.

The Future Looks Red, but No Need to Panic (Yet)

Global GDP (nominal) was roughly US$61 trillion in 2008.  According to the International Monetary Fund, the European Union collectively represented about 30.2% of the global economy, the United States 23.7%, Japan 8.1%, and China had the fourth largest economy representing 7.1% of global output.  Ten years ago China represented only 3.9% of global GDP.

In the last 30 years, starting just before Deng Xiaoping initiated China’s economic reforms, the country’s GDP has grown more than 81-fold, while the US’s GDP grew only about 6.3-fold (not adjusted for inflation).  This is truly awe-inspiring!  But, make no mistake, China is still overall a relatively poor nation.  Today, it is a country of relatively few haves and significantly many more have-nots. It has an emerging middle class, which depending on how you define “middle class,” is anywhere from 50-500 million people.  The middle class and the rural poor have managed to more or less escape extreme poverty in these past three decades, and now are finally becoming a massive and legitimate consumer force in their own right.

Late last year, China passed the United States as the #1 automobile purchasing nation.  They now manufacture more cars than we do too.  They’ve all but acquired Volvo from Ford and bought the rights to technology platforms from Saab from GM.  They have more Internet users (338 million) than the United States has people.  They now have over 720 million mobile phone subscribers, and are still at only 54.5% penetration.  With their strong and steady economic growth rate, predictions from a variety of experts and analysts — from the World Bank to the IMF to Goldman Sachs, Morgan Stanley, and Credit Suisse — indicate that Chinese GDP in purchasing power parity (PPP) may actually pass that of the United States in anywhere from 5 or 10 years (optimistically) to maybe 20 or 30 years (conservatively).  The ever entertaining Swedish professor of international health and co-founder and Director of the Gapminder Foundation, Hans Rosling, has even predicted the very day that Chinese GDP per capita in PPP (and that of India) will pass that of the United States:  July 27, 2048.  Definitely check out his TED talk.

What is undeniable is that eventually China will have the largest economy in the world (though not necessarily the highest per capita wealth in the world).

Nobel laureate economist Robert Fogel recently raised a lot of eyebrows by declaring that in 30 years, China’s GDP will reach $123 trillion and represent 40% of the global economy, with the United States trailing in a distant second at 14% of global output, and the European Union at a measly 5% of global GDP.

The good news is that this means there is still time for you, as an American or Western business, to still look to China as an important component of your global strategy. Chinese-made products are still beleaguered by a perception (and, perhaps still too often, a reality) of low quality, cheap and shoddy manufacturing, and questionable adherence to safety standards.  China is still learning how to move up the global value chain, but it is doing so at an alarmingly rapid clip.  Shaun Rein, Founder and Managing Director of China Market Research Group and a widely-recognized expert on strategy consulting in China, has even found through his own company’s studies that Chinese consumers are also leery of Chinese-made products (food, in particular) and willing to pay a 10-20% premium for foreign brands they believe will be safer.  Moreover, he rejects a McKinsey report to suggest that Chinese trust levels in domestic brands are actually at an all time low.  Good news for you!

So, stay positive and read in more detail about the 10 things you should know about designing products for the Chinese consumer.  We know that these can’t possibly cover everything you’ll need to know to succeed, but these lessons should provide you a great start.

The Longer Version

Many markets, many customer segments.
Do your ethnographic homework and market research.

China is big. Really big.  And things of that scale make eyeballs widen and mouths salivate.  But one thing China most definitely is not is a homogeneous country of 1.3 billion identical customers.  If there is one thing you should know about China by now, this is it.  The myth of selling your product to 1.3 billion customers has long ago been busted.

When foreigners think of China, they often imagine unity, consistency, and regularity… a predilection toward the collective over the individual.  The truth is, however, that China is a complex collection of provincial, local, cultural, and social sub-markets, where local politics and cultural practices create major differences.  Furthermore, the Chinese are far more self-interested and individualistic than you may assume.  For centuries, there have been vast differences between the rural and the urban, between one province and another, but since Deng Xiaoping’s economic reforms began around 1980, the country has diverged along multiple dimensions as economic development, planning of special economic zones, and new wealth have been distributed unevenly, unfairly, and at differing rates throughout the country.

As cultural translator and socio-cultural researcher Lisa Yong of Y Studios in San Francisco told me, “Beijing and Shanghai are not China.  It’s just not true.  Just like New York and L.A. are not America.”

You’ve probably heard about Tier-1, Tier-2, Tier-3, and so on cities.  But, few users of this classification system are ever very specific or consistent about which cities fall into which buckets (particular Tier-3 and lower), and most global companies have tended to focus on the richest Tier-1 cities first, then work their way down.  Clearly, the Tier-1 cities consist of Beijing, Shanghai, Guangzhou, and Shenzhen (Hong Kong too, if you want to include this Special Administrative Region, though it differs from the rest of China in many ways).  The Tier-2 cities tend to consist of the provincial capitals.  Nonetheless, if you look at GDP per capita figures for these Tier-1 and Tier-2 cities (based on data from the National Bureau of Statistics of China), they range quite strikingly from Nanning — a provincial capital whose key industry is mining — with a GDP per capita of 15,685 yuan in 2007 ($2,062 US), while Shenzhen — a major electronics, high tech, and manufacturing center — has the highest GDP per capita among China’s cities at 89,814 yuan in 2008 ($13,091 US).  Due to the policies of these special economic development zones and different regional industries, even among these Tier-1 and Tier-2 markets the differences can be significant.

One scheme for defining the East Asian Middle Class (EAMC) developed by Hsin-Huang Michael Hsiao and Alvin Y. So includes six classes in Chinese society, an elite capitalist class at the top, four classes representing the “middle,” and a lowest class of farmers and peasants:

An analysis conducted by Li Chunling of the Chinese Academy of Social Sciences, estimates that of the urban Chinese population in 2006 (577 million), 0.6% were in the Capitalist class, 18.8% in the New Middle class, 19.6% in the Old Middle class, 25.4% in the Marginal Middle class, and 35.7% in the Working Class.  Presumably the remaining rural population (737 million) was lumped into the Farmer class.  Again, one can see in the table below a tremendous range in incomes and distribution of wealth.

China’s GDP per capita as a whole was 18,934 yuan in 2007 ($2,490 US).  The differences between rural and urban China are considerable, as you can see in the table above.  Rural China, representing 55% of the population of the country, has per capita net disposable income of 4,140 yuan ($603 US) versus 13,786 yuan ($2,009) for urban households.  In other words, urban Chinese on average have 3.3 times as much income as their rural counterparts, the differences being even more pronounced in Tier-1 and Tier-2 cities.

Lisa Yong admits that the differences between all of these “tiers” of cities was and still isn’t entirely clear cut.  She sees the development of China’s cities occurring more organically, with often some of the most interesting things often happening in the heartland or the most unexpected places.  For example, she claims that Inner Mongolia has been successfully growing its own regional brands in the food and beverage industry.  The lesson here is that you will be facing competition from the bottom-up who are more in tune with the currently most underserved consumers.

Then, there’s the whole consideration of segmenting these markets.  The major difference, beyond regional differences and income-level, is without question age.  The urban youth generation (15-30 years old) are markedly different from their parents and elders, earning them the nickname the “rare generation.” We’ll discuss some of these differences in more detail later.  Beyond, the demographic differences, you’ll really need to get immersed in the culture and do more proper ethnographies and user research to understand the more psychographic, motivational, and behavioral difference among these age clusters.

Finally, if you thought the Tier system was already enough to wrap your head around, now McKinsey Insights Asia is suggesting a new framework around city “clusters,” which they believe overcome some of the limitations of the Tier system, which relied primarily on GDP per capita.  In this approach, 22 “clusters” have been identified, recognizing the linkages between neighboring cities in terms of industrial composition, government policies, demographic characteristics, and consumer preferences.  The clusters tend to include one or two large hub cities, with groups of smaller cities developing in their vicinity, as seen below.  One advantage in this model is that one can begin to understand how the value chains between businesses and industries link neighboring cities together, thus influencing their economic development as well as the social and cultural customs and trends.

Experienced design researchers in Asia, like Elaine Ann from strategic innovation consultancy Kaizor in Hong Kong, says that many of the methods of user research taught in the West, at places like Carnegie Mellon or the IIT Institute of Design, don’t always work that well in China.  Her advice is to approach things in a more personal way, by taking the time to establish a real relationship first.  In other words, you’ll have to invest more time for many Chinese people to feel comfortable.  And, because the Chinese are very concerned with how they are perceived by others, it can be disastrous to conduct ethnographies or research where people are being viewed by strangers or other “outgroup” individuals.

The best advice, of course, is to go there for yourself and really get immersed.  See it with your own eyes.  Have patience and work with locals to help build rapport with the people you want to research.  Learn Mandarin (or putonghua) too.

You also want to make sure to research the right people.  This might be confusing to some Chinese, who expect that you’d want to interview and observe the most senior people in an organization, say, as opposed to someone who works on the warehouse floor.

Knowing your customers and their needs is, of course, a basic principle of smart business.  In China, the challenge is that the consumers are very different from place to place, by age, by income level, outlook on life, and by education level.  Furthermore, Chinese consumers are still learning about their own needs and wants as consumers. So much has happened so quickly that they may not even know what want.  And, what they like today might be different tomorrow.

Ian Donahue, a market research consultant at Anovax in Shanghai, explains some of the other unique challenges with understanding Chinese consumers.  For example, language ability is not enough.  Social identity theory is an important frame for understanding Chinese notions of ingroup and outgroup.  Though fluent in Mandarin, he never moderates an interview because he is viewed as an outsider.  He suggests further that even regional differences are critical.

“Always use local moderators, if possible from the same city,” he explains.

For example, going into a home in Shanghai for an ethnography with a Beijing moderator can be a problem.  Like Elaine Ann suggested, one should also expect to invest more time conducting ethnographies than what might be needed in the West.  As Donahue broke it down, the first hour will consist of a lot of resistance, confusion, and discomfort.  “Why are you here?!” the participants will be wondering.  However, with a skilled and charming moderator, possessing a good personality, and adept at building rapport, those barriers can be overcome in the second and third hour of an interview.  At this point, participants will be more likely to open up.

Other tips from Donahue include using small teams for in-home studies.  Chinese homes are small and space is a concern.  Try to limit yourself to three people: a moderator, an observer/notetaker, and a videographer.

When interviewing younger people (age 15-29), expect their parents and grandparents to hover by closely and suspiciously.  These children of the one-child policy — often called “Little Emperors” as they are the single pride and hope of their families — tend to be very spoiled and pampered.  Their families are very cautious and protective of them.  Therefore, make sure to show respect toward other family members.  Allow them to sit in and participate, but respectfully try to keep the focus on the participant.

Although in complete agreement with the sentiments of Ann and Donahue, design research consultant Anjali Kelkar from the Studio for Design Research in Hong Kong, believes that with many younger, urban Chinese, it can be a little bit easier to make the connection that is critical to a good ethnographic interview.  She bases this on her experience that many of these young folk are very curious, chatty, and eager to talk to foreign people and share their experiences.  Admittedly, though, this sometimes requires either being or being accompanied by someone who is part of that right ingroup, someone who “belongs.”

Shuang Li, Principal UI Designer at Intuit, has many years of experience and perspective doing user research in China, as well as trying to import and teach good UI/UX and design practices for companies like Sina.com.  She corroborates the general truth that the Chinese are somewhat taken aback when people want to know what they think.  It is typical for a Chinese research participant to try to guess what they think you the interviewer want to hear rather than be open and honest.  But, as she points out, this isn’t too different from conducting research in the United States, especially when getting paid for one’s participation is a primary motivator.

In addition, the fields of user-centered design and ethnographic research are still relatively new in China, and as a result, many of the local partners with whom you might work may not be as skilled or experienced as you might hope. It will be a challenge for you to keep protocols straight, practice good interviewing techniques, and impress upon your Chinese research partners to not view the interviews as unstructured conversations.  Emphasize sticking to protocol, asking questions about why people behave as they do, not interjecting one’s own opinion, and so on.  Finally, data are not always viewed by the Chinese as inviolable nuggets of truth.  Culturally, there is a deeply-rooted history of manipulation of data in day-to-day life, government, and elsewhere.  So, emphasize the importance of quality, objective data.

As Li puts it, usually “people don’t take them (data) seriously.”

For another perspective on the fudging of data and cooking the books, check out this piece from Shanghai-based business journalist, Jordan Calinoff.  And, check out Thomas Friedman’s latest columns where he suggests that China could be the next Enron (note:  I intimated something along those very lines in an off-hand Facebook status update on December 29, 2009, two weeks before Friedman’s column… just saying…).

To get rich is glorious.

The “proverb” above is a loose adaptation of Deng Xiaoping’s exhortation to his country to “let some people get rich first.”  The Chinese have always been a mercantile society full of entrepreneurial spirit.  After the devastation of their economy under Mao Zedong’s Great Leap Forward and Cultural Revolution, with Deng opening the country up to economic reforms, it became evident that the only leading ideology for the country as a whole was to “enrich itself,” as James McGregor points out in One Billion Customers.  As China’s government policy shifted from wealth repudiation to wealth creation, the dismantling of much of the socialist safety net also left the average citizen with nothing left to trust in.  Except for cash money.

Money and wealth and the material goods they afford translate to status and respect from others.  This explains why many Chinese who have “arrived” like to flaunt their fashions, cars, or gadgets.  For Chinese youth, the mobile phone is the largest consumer purchase they typically make.  It is for them their most important symbol of status and freedom.

The high savings rate that the Chinese exhibit as a whole does not translate across all groups, however.  The young, urban Chinese (15-30) are reported to essentially save nothing at all, as Pascal Nouvellon of COFIDIS explained to Shaun Rein of CMR in an interview last February.

As credit card penetration continues to expand, we might expect the hallmark frugality of the Chinese consumer to change, with younger people, more optimistic about the future and their prospects, choosing to buy on credit and accumulate more debt in order to obtain the material goods they desire.

As the chart above also shows, other forms of payment are taking off.   While China is still primarily a cash society, Alibaba’s equivalent of Paypal, called Alipay, has increased its membership dramatically in the past few years. The Chinese have not always felt comfortable with the security of making transactions online, hence most e-commerce today is transacted as cash-on-delivery. But, Alipay seems to have garnered the young consumer’s trust, with accounts now exceeding 250 million. That makes buying things on Alibaba’s other property, Taobao (China’s version of eBay), a snap.

Shaun Rein firmly believes that e-commerce will continue to explode in China thanks to the proliferation of credit cards, Alipay, and the ability of consumers to shop not only from their computers, but from their Internet-enabled mobile phones as well. This phenomenon, however, will most surely be limited to the young, urban Chinese who are comfortable with this type of consumer behavior.

In sum, the young Chinese consumer is still single-mindedly optimistic about making it rich. Along the way, he/she is also becoming more sophisticated in the new ways of transacting commerce. The desire to flaunt one’s arrival will continue, and I would suspect that many young people (or their parents) will be soon learning the dangers of abusing credit limits.  Already, a New York Times article cites that “about 11 percent of Chinese parents have paid credit card debts for children 22 to 27 years old, a group that has become accustomed to the good life but has found it difficult to pay for, according to a survey by the Beijing Youth Daily newspaper.”

Nonetheless, the emerging Chinese middle class mindset may now be that after letting some of the people get rich first, as Deng suggested, now the masses would like to “eat the emperor’s grain” too.   Taking a page from American hip-hop culture, emcees from the growing hip-hop scene in China understand the brutal reality of an increasingly materialistic world.  Wang Li, a 24-year-old rapper from Dongbei, says in a New York Times article that, “All people care about is money.  If you don’t have money, you’re treated like garbage. And if you’re not local to the city you live in, people discriminate against you; they give you the worst jobs to do.”

Ingroup and outgroup /
Youth tribes and their elders /
Identity, lifestyle, and culture /
Seeking the good life

The challenge with the Chinese consumer is that there are so many different segments to consider.  We think two of the most valuable distinctions to make are 1) between rural and urban Chinese, and 2) between the youth and their elders. However, below we will tend to focus the discussion on the latter:  the differences between the “rare generation” and their parents and elders.  What is their middle class dream?  What do they want?  How are they different?  What is the good life that they are seeking?

Chinese youth and young adults under 30, to put it bluntly, are fundamentally different from their elders. They are typically only children (born under the one-child policy) who’ve grown up without experiencing major political turmoil (the Tiananmen Square Massacre perhaps one exception) during times of continuous economic growth and having relatively more freedom to make personal and professional choices. They are the pride of their families, often overindulged and  spoiled rotten (“Little Emperors”), given the best of everything their families can give them, because their parents are investing all of their hope in the future success of their one child who will carry on their family name.  These youth are ambitious, energetic, modern, individualistic, creative, and optimistic.  They have attitude and personality, are savvy and complex, are proud to be Chinese, and are constantly experimenting with self-expression and identity through consumer choices.  They have no instinctive aversion to borrowing or accumulating debt, like their elders.  They are obsessed with the latest fashions and gadgets.  Newness and novelty are important values to them as they want to keep up with styles.  This means they can’t always wait to save up their money to buy the things they want.  They have to buy them now, before it’s too late and they’ve gone out of vogue!

While highly individualistic and self-expressive, their desire to be “different” is not quite the same as in the West.  As Ian Donahue explained it, Chinese youth socially tend to resemble the American high school clique culture.  Social acceptance to a group, or tribe as I might call it, is critical.  Being an independent renegade or loner is not desirable.  Remember, these are also mostly only children, and to a certain extent there is a high degree of loneliness or isolation as they have grown up without siblings.  They seek acceptance and companionship from others.

Influenced heavily by Korean and Japanese trends, as well as American products and styles, you will witness many different types of groups or tribes forming.  Donahue mentions the two most apparent ones as the “Party and Club” group of youngsters and the “Young Professional” as another major group.  The former tends to work just enough to pay for their night time lifestyle.  They care about fashion, clubs, music, and socializing.  They might convince their parents to buy them a nice car, or hit up grandma and grandpa for cash.  They are not thinking a whole lot about their future and are not very responsible with their money.  The Young Professionals, on the other hand, follow their parents wishes much more closely, focusing on making the right choices in school, career, etc.  They are incredibly hardworking and have very limited social time.  They work on the weekends if they need to, tend to be bottom-rung workers in large companies, and aspire to higher salaries which will eventually enable them to buy the luxury items they can display as symbols of their success.

But, some Chinese youth don’t necessarily view these young professionals in the most positive light.  Qi Fei, a 25 year old graduate student from Dalian, says that a lot of people think that these members of the are an “embarrassment.” They work very hard at large companies, but are at the bottom of the hierarchy, and don’t have much money compared to the entrepreneurs or people with their own companies.  To make matters worse, they have very little time for much of a personal life.

Of course, there are many other youth segments to consider, including the Sporty/Jock types for example, who might embrace an entire culture around sports and a brand like Nike, which invests heavily in creating and marketing a culture around their brand and products in China.

Another popular word in Chinese is , meaning “petit bourgeois.”  If you ask a Chinese to describe such a person, you will almost universally hear them described as young, single, urban women under 30, fond of Starbucks coffee and Häagen-Dazs ice cream, who typically spend 1/3 of their income on bars and restaurants, 1/3 on shopping for brand-named clothing, have an aversion to saving money at all, love watching European art performances and listening to Italian violin, and have Van Gogh paintings hanging on the walls of their apartments. They appreciate the value of design and lust after the latest trendy foreign products (iPod, Miss Sixty jeans, Gucci, Chanel), but have to save up for some time to be able to afford one or two of these luxury items.  These women seem to enjoy the experience and atmosphere of being out and about in expensive clothing, sipping coffees, and view themselves as rather elegant.  But, the term is also used somewhat disparagingly by other Chinese youth.

Yu, Chan, and Ireland’s identification of four “personas” among the urban youth of China (from China’s New Culture of Cool), included:  1) Ding Li, The Playgirl, 2) Wang Liang, The Striver, 3) Chen Hong, The Modern Conservative, and 4) Li Hua Min, The Rule Breaker or those who are sometimes called the or “hooligans.”

There are some clear consistencies between Donahue’s more general assessment of the youth market and the Cheskin team’s four personas.  The Playgirl and Rule Breaker tend to cluster with the Party and Club-going tribe, though the Playgirl tends to be a younger teenager, working a low-end job in something like retail, interested in friends, boys, fashion and shopping.  She aspires for luxury items in her life eventually, though she doesn’t think a whole lot about the future yet.  The Rule Breaker is usually older, perhaps not having succeeded in entrance exams for the university, and now leads more of a hardcore party lifestyle at night, drinking, dancing, listening to deejays, etc.  He gets money from his family to support his lifestyle.  He might look more like a “street punk,” with dyed hair, tattoos, and piercings.  He sleeps in late and gets up in the afternoon to hang out until he parties the rest of the night.  Both of these groups/tribes/personas are similar in that they will have a unique set of preferences, styles, brands, and definitions of what’s “cool” or fashionable.

The Striver and the Modern Conservative might cluster together into the Young Professional segment described by Donahue.  The Striver is a young professional, very hardworking, ambitious, and aggressive.  He is driven by attaining fame, power, and money.  He wants a cool car to reflect his status and is passionate about technology and gadgets.  He spends a lot of his free time on his computer, watching movies and listening to music (mostly free or bought on pirate discs on the street), playing games, and reading about and engaging socially online in his passions.  His mobile phone, as with all the other young people in China, is his most essential tool and symbol of status when away from home.  He strives for the good life that he believes is possible through the formula below for achieving success (primarily among those in the Tier-1 and Tier-2 cities):

The parallels between this perspective from American hip-hop artists to the new Chinese hip-hop artists is incredible.  The perceived keys to male middle class (heterosexual) success are seemingly identical.  Compare Young MC’s lyric from his popular hit “Bust a Move” to the freestyle rap of Wang Li of Dongbei, mentioned earlier:

“Got no money and got no car, then you got no woman and there you are.”
— Young MC

“If you don’t have a nice car or cash
You won’t get no honeys
Don’t you know China is only a heaven for rich old men
You know this world is full of corruption
Babies die from drinking milk.”
— Wang Li

On the flip side, there is also a growing trend of female empowerment in China.  Many of these young women are interested in savoring life and the things you can buy and not particularly interested in having children.

The Modern Conservative is similar to The Striver in terms of her desire to achieve professional success.  She is socially more conservative and reserved, and possibly more likely to be one of the so-called “Little Emperors.”  She is under tremendous pressure to please her parents and live up to their standards, but though she studies and works hard, she may not want to be competing to the be the very best.  She wants to live a rich and fulfilling life, which she defines differently from her parents, where she seeks more balance, though she may be too reserved to admit this to them.  She follows the rules and tries not to stand out too much, but she values her personal freedom to choose a career and eventually choose to live however she likes.  She is less likely to want to have children, though she’d like to be married and lead a life of balance between work and personal leisure and travel.

These are just some of the few segments beginning to describe the large and complex group of 327 million young people in China.  These “tribes” form their own unique social cultures, where the products, fashions, and styles they strive for tend to be more consistent within the ingroup.  However, as a rule of thumb, brand loyalty within these tribes is very low in China, because all brands are new.  And since the young Chinese especially are constantly searching for the next new thing, they can change their loyalties very quickly.

As another peripheral example of the type of sophisticated segmentation happening in China, Jessica Liu — formerly vice general manager of Sinomonitor International, now Research Director of Media at Synovate — in one study segmented just the most affluent of Chinese consumers into no fewer than five groups, including such segments as the “Modern Butterfly,” the “Peacock” and the “Laboring Bee.”

Yong warns that the challenges of defining and segmenting your customers will be a real challenge.  ”There’s so much gray area, so you need to put a lot of effort in,” she says.  She says that the labels are nice but hard to do well.  The boundaries are blurry and everything is becoming more and more interconnected within China and between China and the rest of the world.  As she puts it, “Some parts of China are looking more and more like Hong Kong, Taiwan, or Japan even.  So, where is the real China now?”

Again, the message is clear:   you can’t really know and understand China and its people until you go there and see it and them for yourself.

As an aside, you often hear about the amount of texting and IM/chat that the Chinese do, but do not be fooled when you hear all the big numbers.  Our analysis below shows that Americans are far more prolific texters than the Chinese.  Why?  Most likely because we are more inclined to purchase unlimited text and data plans.  The Chinese generally seek to avoid paying for services like that as much as possible.  And they are accustomed to finding ways to evade paying for things that can be gotten through pirated means or through cheaper alternatives.  Hence, they are much more prolific users of IM/chat, like QQ, than they are of text messaging.

So what about their elders? The older generation of Chinese consumer (35 and up) remember a time when they had next to nothing and few if any choices.  While they are excited with the quantities and varieties of foods they may find at a hypermarket, they are generally struggling to understand all the new products and brands which they’ve never had a need for before.  Consequently, they are very resistant to change or experimentation with new products.  They feel that their lives are good enough, and their interests are in providing for their child. Raising a child has become more expensive, college tuition is expensive, and their child has many wants and needs.  They may wish to spend extra money on developing a talent in that child (music, sport, etc.) in the hopes of making him/her a more exceptional student who will succeed in entrance exams and pursue and education leading to a good career.  Children in college rarely get part-time jobs, and if they do, they tend to be low paying ones.  Entry level jobs after graduation also are low paying, so parents frequently support their child with housing costs, and especially for a male child by buying him a car.  The net result is that this older middle class demographic is extremely challenging to market to.

Qi Fei, the graduate student from Dalian, says her father is not at all tech-savvy and is frequently overwhelmed with technology. When she left Dalian to go to graduate school in Chicago, she strived to teach him to use MSN, video chat, email, and the computer in general so that they could communicate.  But, today he still struggles with these technology products and wouldn’t dream of buying something online.  On the other hand, his generation is very happy about the options they now have in clothing, shoes, and accessories.

As Qi explained, “Almost all technology products are geared toward young people.  I don’t believe manufacturers are doing a good job at selling to people like my dad and providing them support. They always feel frustrated so they don’t use these things actively.”

For many of the older generations of Chinese, now confronted with more consumer choices than ever before in more areas of life than ever before, they are simply poorly equipped for making confident decisions in the face of overwhelming options. This is a potential source of stress and confusion that product developers and marketers should be sensitive to.  For example, consumer advocacy, information resources, and peer review and filtering resources could be of tremendous value to these consumers.  That is, if they are willing to adopt the technologies that offer such resources.

On the other hand, another graduate student from Beijing, Ye Pinxia, says that it’s easy for the older generations to make choices:  they just compare prices and get the cheapest one. She shared with me another story about how she and her mom went to the big electronics marketplace to get her a new mp3 player because the CD player she’d been using for 8 years had broken.  While Ye urged her mom to get something cool and fancy, her mother was unmoved by the thousands of choices, features, and designs.  She wanted something that played mp3s, had a radio, and was cheap.  End of story.  After comparing prices among many vendors, she got a non-descript device for 140 yuan (about $20).  Ye is pretty certain it’s a shanzhai product too.

As we mentioned before, traditional Chinese attitudes toward saving are deeply ingrained.  Among the older generation, who are used to using cash almost exclusively, you always save first and then spend.  Qi feels that the notion of buying on credit is actually quite foreign to many older Chinese, in fact, and that too many people have limited knowledge of how credit cards work.  She knows people who have used credit cards for a few months and then cancelled them after too many unexpected charges.  Chinese banks in general have not been very customer-centric, and there may still be a lot of mistrust among consumers when it comes to credit and other banking products.

In terms of associating products with particular lifestyles or cultures, the older generation are less likely to be swayed by the designs of modern global brands, which younger generations tend to associate as being cool and different.  For Ye Pinxia, a Macbook or Apple product is cool, not just for its design but because so few people in China have them.  Even with her cell phone, she does research on which stickers her friends have placed on their phones to make sure she doesn’t end up getting the same stickers.  However, for Ye’s mom, she finds the products which appeal to more traditional Chinese styles more appealing.  Mom recently told her that an HP laptop skin designed by a Hong Kong designer with a huge Chinese flower and lots of red and gold ornaments was her favorite.

In the end, China’s urban youth tend to be more interested in brands and products that project a lifestyle or image they’d like to identify with or aspire to, something new and exciting, and not necessarily purely about traditional luxury or status-oriented brands.  With the older generation, the traditional values, colors, designs, and brands with strong reputations tend to be more appealing.  But for all, being a savvy shopper will become an essential life skill.

When all is said and done, though, each type of consumer will have his/her unique set of preferences and needs.  As the ancient Chinese proverb goes:

Competition:  national pride and national brands + the shanzhai industry

At its core, Chinese society is all about self-interest.  It is very strong on competition but very weak on cooperation.  Despite its admission to the WTO in 2001, China still hasn’t quite gotten its act together in terms of respecting intellectual property rights.  Historically and culturally, they just have never had major qualms about stealing ideas.

Commenting on the current situation with Google and the Chinese government, Oded Shenkar, a professor of business management at The Ohio State University and author of The Chinese Century, stated in a New York Times piece that, “The U.S. is the world’s greatest innovator and China is the world’s greatest imitator.”

Shuang Li has witnessed in the past 8 years that Chinese companies are taking the influences of product design from Japan, Britain, France, and other countries, but starting to design their own unique versions and takes on them to better suit the tastes of traditional Chinese culture.  However, in the realm of software and user interface design, she feels they are still mainly imitators with a lot to learn.  Her experience trying to instill good human-computer interaction (HCI) principles at Sina.com was frustrating.  ”People here like these things, the cartoons, small animations, lots of blinking… but in the past few years they are picking up and starting to build serious applications, for banks and real estate companies, and they are drastically improving.”  Nonetheless, she says if you compare two bookstore websites like Amazon.com with Dangdang.com, you’ll see many violations of basic HCI principles in the latter.  It will take time for the domestic brands to learn.

In James McGregor’s book, he also is pretty brutal about the fact that your technology, trade secrets, designs, and know-how will be stolen and/or copied (and probably even get to market first).  Guaranteed.  China, he says, is not the legalistic society that typifies the West.  If a Chinese wants to do something, he will find a way to skirt the rules or laws.

Any technology company doing business in China should assume that its designs and products are being copied.  China’s tech sector is built on reverse engineering foreign products.
— James McGregor

But, don’t forget lesson #7 about the tremendous national pride of the Chinese. They do not wish to be the world’s factory any longer. They do not want their consumers to embrace and adopt only global brands.  As they learn and modernize and their economic power continues to grow, China is fully intent on building and growing its own national brands to compete globally.  Few are well known at this point, besides Lenovo and Haier.  But there are major competitors growing domestically in China, like Huawei which is beginning to rival Cisco.  And China has been working hard to create their own microprocessors to feed their tremendous demand for computing power.

In other industries, China is even taking a lead, like new, clean energy technologies, for example.  There’s an excellent piece by Evan Osnos on their 863 Program in a recent New Yorker article.

Another rising domestic brand in China is Li Ning, a sporting equipment and apparel company that is taking on Nike.  In my conversation with Ian Donahue from Anovax, he explained their successful strategy of targeting the lower tier cities first by offering products with styling and looks reminiscent of global brands like Nike but at a fraction of the cost.  They are now one of China’s most well known and well regarded brands, working their way up from the lower-end consumers and now hoping to challenge Nike head-to-head in some Tier-1 and Tier-2 cities.

Of course, Nike’s response or approach is to do what they always have done:  emphasize their technological advancements and superior features which distinguish their product, and do a heck of a job marketing themselves.  But, Nikes are affordable only to the richest of the Chinese consumers.  Nevertheless, they’ve done a remarkable job of creating a community and a culture around their brand.  And, as mentioned in lesson #5 above, Chinese youth are drawn to aspirational products and brands that they can identify with, products that evoke a lifestyle, culture, and identity.

Will more Chinese brands become dominant global players? Yong believes that the Chinese are confident that there will be a “homegrown Apple or Microsoft eventually.”

The fact remains, however, that the Chinese consumer on average, is still relatively poor by Western standards.  Based on the National Bureau of Statistics of China’s 2008 Yearbook, this is what the breakdown of urban household consumption was per capita in 2007.  The data are broken out into 7 groups:  the poorest 10%, the second poorest 10%, the 2nd quintile, the 3rd quintile, the 4th quintile, the second wealthiest 10%, and the wealthiest 10%.  Keep in mind, also, that the average urban citizen earned 2.6 times as much as the average rural citizen, while consuming 3.6 times as much on personal household expenditures.  As a result, the amount of consumption by rural folks on many of these consumer categories are incredibly low.  I’ve converted to US dollars to give you a better sense of the relative difference with American citizens.

And, thus, shanzhai products come in to fill a market need for more affordable technology products (or fashion, shoes, etc.).  Get something that looks more or less the same, works more or less the same, has the same features, but costs half the price or less.

For the aspiring middle class consumers, fake products are just fine.  Sometimes they’re even better than the real thing.  Li describes the typical Chinese consumer decision-making process as follows:

1. Is someone else using it?
2. Can I afford the full price one?
3. Is the fake alternative available and being used by lots of people?
4. If so, I can get a fake one and not lose face since so many other people have them.
5. Finally, for small electronics, phones, and watches, often the more features there are, the better.  Because, culturally, people like to show off the bells and whistles.

Another reason why Chinese consumers are generally okay with shanzhai products is that “getting a good deal is important in the culture.  It shows you are an intelligent, savvy, smart shopper.”

So, Chinese consumers do not have big hangups about pirated or fake products.  And fake everything is available around every corner, in more styles and variations than you can possibly imagine.

According to Shaun Rein’s firm, CMR, they estimate that as many as 3.5 million Chinese consumers have at one point owned an iPhone.  He contends that 2 million real jailbroken iPhones were smuggled into China before China Unicom’s debut of the phone on October 30, 2009.  Many of the real ones already resold on the secondhand markets.  Meanwhile, China Unicom’s predictions of 5 million handset sales in the first few years is looking unlikely, as supposedly only 5,000 have been sold.  The reasons for this have been explained above, but basically can be summarized as Apple and China Unicom didn’t really understand their target consumers and their needs and preferences.

But besides the jailbroken iPhones in China, there are the HiPhones, iPones, iPhone Airs, iPone Airs, and hordes of other shanzhai phones trying to capitalize on the appeal of the Apple brand and product, with some estimates as high as 10-13 million so-called “iPhones.”  Here’s a gallery of a small sampling of fake iPhones and other shanzhai phones.  Or someone proudly showing off her “shanzhai iPhone and iMac” (sic).

And, it only takes a small workshop with 5-10 people to produce these devices.  They’re all over Shenzhen, within 100 miles of all of the suppliers the “real” phone companies are using.  So, they just buy the same parts and assemble and modify them into all kinds of strange frankengadgets.  By avoiding taxes, these little enterprises can sell shanzhai devices very cheaply and still make a handsome profit.

Gartner estimates that more than 20% of phone sales in China are shanzhai devices.  So, not only are these products competing with foreign global brands, but with legitimate domestic Chinese brands as well.

Moreover, the shanzhai industry is exporting their wares too, in large numbers.  Their biggest destination is India, but they also export to developing countries in Eastern Africa, Asia, and Latin America.  iSuppli estimates on the number of “gray market wireless handset shipments” have grown from 37 million units globally in 2005 to 145 million units in 2009, with growth expected to continue.  They anticipate 192 million fake phones shipping worldwide in 2012.  If you combine those figures with Gartner’s figures on global handset shipments, you’ll discover that 4.53% of all mobile handset shipments in 2005 were shanzhai phones.  In 2008, the proportion increased to 8.64%.

That means that all together, shanzhai phones had about the same market share as LG or Sony-Ericsson!

And, it’s not just phones, laptops, purses, or sneakers.  According to the Annovax website, Microsoft estimated that 82% of their Windows operating systems being used in China in 2007 were pirated.  Counterfeit products are produced in every product category, from engine lubricants to mobile phones to food and beverage.  Even shanzhai tissues… for your nose.

The better your reputation, the more likely you are to have your products counterfeited.

Of course, to look on the positive side, one interesting aspect of the shanzhai industry is the entrepreneurial spirit and creativity of young Chinese individuals or small groups of individuals.  It makes one wonder if they could potentially take their DIY approach and legitimize it and cater to more demanding niche audiences making customized or bespoke gadgets?   Think the Long Tail.

Lisa Yong, in fact, believes this is the next logical step for the smart and progressive entrepreneur.  To evolve their design process into one that becomes a highly customizable experience for the brand or the product.  ”Not unlike the modding scene in the US for computers, laptops, or cars,” she says.  The beauty of all of this, she believes, is that it is all happening organically, from the street, the bottom-up, with these small workshops in Shenzhen or with other entrepreneurial business people who want to co-opt what’s out there and make it uniquely their own.

Bottom line for you:  your stuff will be stolen, copied, imitated, and possibly even improved on.  And, that’s not likely to change any time soon in China.

In the Internet, They Trust

As mentioned in the short version, the Chinese have a general distrust of media.  To most, government media and ad-supported media channels simply lack integrity.  Every advertiser claims that the product they are pitching is cool and fashionable.  But this can’t possibly be, so the Chinese consumer has been for years relying on the Internet as a primary source of trustworthy information.

In fact, the China Internet Network Information Center (CNNIC), in their 24th Statistical Report, indicate that trust in the Internet is high:  “84.3% of Internet users believed the Internet to be the most important information channel.”

Because the government monitors Internet sites and frequently censors or shuts down sites (check out if your website is blocked by the Great Firewall of China), most Chinese are leery of sharing too much about their identity online.  For this reason, good old bulletin board systems (BBS) have been the tried and true forum for people to connect and share information with one another.  It is estimated that there are more than 3 billion user accounts on BBSs in China, with 338 million Internet users.  That’s almost 9 accounts for every user.  The popularity of BBSs stems from the fact that most accounts can be created anonymously.

Ye Pinxia says that she is constantly on the Internet.  When she wanted a new mobile phone, she went online and read several articles where people described their experiences.  She cared about a good user experience, a device that was user-friendly, had good build quality, and an acceptable price. Her typical search begins on Google or Baidu, then she narrows down by price range, and then begins to drill down on specific models, reading reviews. After sufficient research, she decided on a Motorola model, headed over to Zhongguancun in Beijing, visited several vendors to compare prices and bought what she had decided on, without any problems at all.

The Chinese are also big bloggers, even finding the courage to express themselves somewhat freely online.  According to some slightly dated statistics from CNNIC, by the end of November 2007, there were 47 million bloggers and 72.82 million blogs in China, which represented nearly 25% of all the Internet users in China at that time.

Social media usage has been on the rise as well.  Facebook has been regularly shut down in China and user numbers are dropping to 1-1.5 million. However, Renren.com (formerly Xiaonei) is a Facebook clone with 40 million users.  Kaixin001 has 30 million users.  51.com has 130 million users. And Baidu (search engine) is used by 110 million people.

Twitter has been completely blocked.  However, there are plenty of Twitter clones:  Taotao from QQ has over 50 million users.  Fanfou, Jiwai.de, and Digu are also popular.  However, these microblogging services have also been prone to being shut-down by the government.

Despite the regularly shutdowns and censorship, Shaun Rein sees consumers being increasingly influenced by digital and social media marketing as a trend for 2010 and beyond.  This is a critical consideration for your marketing budget, particularly because, as mentioned before, the average Chinese person uses the Internet 18 hours a week versus only 12 hour a week by the average American.  The young Chinese consumer is not generally interested in TV or print, like American consumers.

For the average Chinese person, the Internet has opened up their world (when not censored) immensely to discover infinite new things, people, products, cultures, and news.

Despite all the positive benefits of Internet access in China, Anjali Kelkar also points out that use of the Internet as a way to alleviate social isolation and loneliness is becoming a concern for some of the only children of China.  These children rarely have cousins even, since their parents were also only children.  They spend vast amounts of time online, seeking companionship and friendship, frequently through online multiplayer gaming, chatting, or other social media.  While certainly not a problem unique to China, there are some who are concerned with the amount of isolation and time spent online, and the possibility of it eventually leading to future social and psychological problems among very active users.

Finally, Shuang Li doesn’t necessarily believe that all people invest all their faith in the Internet.  In her view, China is “still very much a word-of-mouth society from those you can trust.” In that regard, however, she believes that blogs and other social media tools can help amplify this word-of-mouth effect.

Transitioning from Goods to Services and Experiences:
Food / Style / Living / Mobility / and more…

If you are familiar with The Experience Economy, by Pine and Gilmore, they introduce the notion of a pyramid of economic value creation, that they believe is evolving because technology, increased competition, and increasing expectations of consumers has led products (in the generic sense) to become commoditized.  For the most part, in the West, they would argue that we are experiencing the evolution from a service economy to an experience economy, where consumers demand more than just someone else delivering the goods/services they want to them at a reasonable price.  They are now demanding entertainment, education, engagement, or enlightenment from their consumer experiences.

Of course, the rising middle class and wealthy urban consumers are not just buying luxury and expensive goods and products, but they are now beginning to pay for services and new experiences.  This will be an area of tremendous economic development for the Chinese economy.

In terms of the product landscape in China, Qi Fei believes that Chinese manufacturers still have a long way to go in terms of service and support for their products, one of the reasons why she tends to prefer American or European products.

Yu, Chan, and Ireland, in China’s New Culture of Cool, identified four key areas where the upwardly mobile young Chinese consumer will be evolving his/her consumption.  It is in these four opportunity areas that the demand for new services and experiences will be experiencing some of the most rapid changes and developments.  These four areas are in:  style, food, living, and mobility.

What are some examples of these new services and experiences that young Chinese consumers are demanding?

In “style,” beyond the fashion and accessories are services like beauty salons, beauty consultations, cosmetic surgery, grooming and personal care services, and spas.

In “food,” the big thing is people eating out.  Food is a central focus of Chinese culture.  Now, with the exposure to cuisines and influences from the outside world, consumers are curious about experimenting with new flavors, ingredients, and eating experiences.  Of course, entrepreneurial Chinese are also taking this influences and fusing them with traditional Chinese elements to create new types of cuisines (part of the larger “China Style” trend).  In addition to restaurants, there are coffee shops, bars, and quick convenience food destinations or carts.  Restaurants are places to be seen and to people watch, much like shopping malls.  China’s social life is expanding beyond just the street.

In “living,” as China’s citizens have transitioned away from government provided housing to having to rent or buy their own properties, there has been an explosion in the home furnishings and decorating industries.  Unlike the U.S., homes in China are typically bare when purchased, just empty shells awaiting the owner to provide the flooring, lighting, appliances, wall treatments, etc.  As home ownership increases and home-owners seek ways to personalize and individualize their own environments, retail sales of appliances, materials, tools, furnishings, and other home-related goods are booming.  But, along with that there should be increased service offerings around interior decorating, home repairs, contracting, plumbing, home theater installations, and other maintenance.  Cable/satellite TV and Internet services will increase.  And other aspect of living, outside the home, will boom, including exercise, gym memberships, yoga, adventure seeking, travelling, entertainment, and other types of leisure activities.

In “mobility,” the two primary objects around which mobility revolves are the automobile and the mobile phone, both of which provide personal freedom.  Auto owners are enthusiastically joining driving clubs and communities around particular vehicles or brands.  Auto repair and customization services should be expected to grow.  Other forms of mobility taking off (besides the ubiquitous bicycle) are electric bikes, some of which are low or no emissions vehicles.  Travel and adventure are another new opportunity for Chinese consumers, who are more easily able to leave their own province and explore the rest of China, or leave China entirely to see the world.  In terms of the other key object representing mobility, the mobile phone has become a prerequisite device for China’s youth, enabling them social freedom, entertainment, or even business or productivity needs.  Laptops are also fairly ubiquitous among university students, though computer penetration overall in China is still relatively low.  Because mobile phones, however, are rapidly penetrating the population, they are becoming the conduit to the Internet and new opportunities for entertainment, services, and communication needs.

Another important area of future development of services and experiences will be around all matters financial. As the Chinese consumer’s income continues to rise, as home ownership increases, as credit cards begin to further penetrate the population, and as the current excitement over spending on goods wanes and consumers mature, young Chinese and old alike will be increasingly looking to financial, insurance, and investment products to help them manage their money and plan their futures, and the futures of their children if they choose to have them.

Currently, most Chinese consumers have a fairly low knowledge of finances, investments, banking, credit cards, insurance, etc.  They will need to be educated as they become more sophisticated and wealthier consumers.  Smart businesses offering these services will also need to understand their distinct customer segments and their needs and concerns well, in order to develop the products, services, experiences, and communications that consumers will identify with and understand how to incorporate into their lives.

Conclusion

Trying to summarize China’s development and emergence as a superpower and consumer powerhouse is a daunting task.  There’s simply too much to cover.  You’ll probably note that we omitted many trends and issues that are by no means any less relevant than those presented above.  For example:

• the aging population and declining birth rate leading to a potential demographic crisis decades ahead
• the environmental catastrophes that have resulted from a belated rush through industrialization with little regulation or concern for ecological consequences
• possibly looming credit and housing bubble crises
• new lust for automobiles
• music and pop culture
• politics
• the fact that China is soon to be the largest luxury market (their wealthy consumers really love their Gucci, Louis Vuitton, etc.)
• rapid urbanization and the potential social problems inherent in large numbers of less educated migrants shifting en masse to urban centers looking for work, how they will adapt, communicate with family back home, etc. (check out some of McKinsey Global Institute’s many fine reports on the subject area, including their prediction of 1 billion urban people by 2030)
• an increasing rich-poor gap
• education in China:  is it still too rote-memorization modeled?  will they produce the great designers and innovators of the future?

Nevertheless, we think the 10 subject areas we presented above, in both the more digestible and the more bloated forms, should provide American and Western business leaders, designers, product developers, and anyone else interested in the Chinese markets with some useful background, guidance, and things to think about.

One of the challenges inherent in trying to capture insights about the Chinese market and its consumers is that anything you learn today may not be true a year or two from now. But, don’t let that deter you.  It should be an exciting opportunity for continuously learning and facing new challenges.

In addition, don’t forget the “heartland” of China beyond the Tier-1 and Tier-2 cities. These are cities where people have less purchasing power, but are also eager to strive for the quality, empowering, and well-reputed products of the West.  It is in these smaller cities and towns where you’ll really face the competition with China’s rising domestic brands.

It’s going to be an exciting decade to come for China, that’s for sure. You’ll see global companies try to bring innovative products to the growing consumer class, but they will need to shed a lot of their assumptions, put in their due diligence, truly immerse themselves in the country, the people, and the cultures, and adapt to one of the most rapidly changing and exciting markets in the world.

Simultaneously, you’ll witness innovation and new ideas and products emerge from China itself, from the bottom-up especially and maybe even from the top-down.  Global manufacturers need to think about how they can help empower Chinese consumers, harness their creative drive and entrepreneurial spirit, develop product platforms and remixable/mashable elements that consumers can use to customize, personalize, and make their own, to add their own Chinese essence to.

They should also be thinking about how to improve customer and user experiences as their marketplaces become overwhelmed with products and services ranging from the totally crappy to the totally genius.  Consumer-empowering tools and online community-based product reviews and peer-filtering tools across many product categories (cars, technology, home furnishings, fashion, personal care products, music, etc.) will be vital to equipping the Chinese consumers, old and young alike, with better decisions and choices about the products and services they incorporate into their lifestyles.  These are likely to be online tools and services, accessible via mobile Internet devices, and other types of products that are currently on the cutting-edge, but they will need to be adapted to the unique customs, cultures, and needs of a dynamic and diverse populace.

And, of course, the Chinese are keenly aware of the ascendance of design as a key differentiator in many product categories, including electronics, fashion, shoes, financial management software and applications, life management tools, health monitoring devices, products providing food and medicine safety information, products for the elderly, credit cards, and more.

If you actually made it this far, congratulations! Please be kind enough to share you comments, thoughts, and criticisms with us, as we hope to continue expanding our knowledge on this most fascinating topic.  Cheers!

One of the more obvious trends at this year’s CES was 3d TV, all the display manufacturers had major installations showing off their 3d HDTV offerings.  The CE industry seems to have collectively decided that 3d is the next big thing and that consumers will go for it in the home.  The mood at CES from the attendees I encountered however seemed overwhelmingly skeptical about what seems to be a supply side (industry) push of a new technology that is just not ready for primetime.   There is an obvious need for the CE industry to repeat the success its had in recent years getting consumers to buy into big flat screen HDTV’s and they are obviously trying to get us to all upgrade again in the next few.

The skeptical arguments I heard landed in four camps, the effectiveness of the technology, (is the effect cool enough?) the content pipeline (Is there enough 3d content? ) , the cost of new glasses and displays?, and finally the glasses make me look like a ‘dork’ factor. (I must look like a right plonker wearing the oversized polarizing glasses over top of my existing  glasses).

Almost all the demo’s I saw currently utilize the approach that requires polarized glasses to see the intended 3d effect. Let me tell you if you’ve not seen it, the  effect of the 3d on these big displays with glasses is pretty compelling - not as dramatic as the first time you saw full HD,  or say the transition from Color to black and white.  But with good authoring the effect can be pretty cool and it’s not hard to see its significantly better than HD as long as you are wearing the glasses.

The Demo’s I saw of non glasses 3d relies on lenticular lenses overlays and multiple image perspectives being rendered at the same time for you to see the desired effect. They have a ‘sweet spot’ of convergence where your eyes are far enough apart to see 2 slightly different perspective images and the effect is cool if you are in the ‘zone’. If you are not in the zone you need to move your head from side to side to see the different perspectives.   One technical problem with this technique is the need to render several different perspectives of the same image. This is fine for CG 3d game content, but 3d cameras with more than 2 lenses don’t exist to my knowledge, not to mention there are no standards or  formats to support transmission of multi-perspective video content.

The lack of 3d content problem is non-trivial issue but something the industry from broadcasters to camera makers and TV manufacturers are probably prepared to invest several  years to fix, (the way HD content eventually became commonplace).

Toshiba’s alternative approach is to convert 2d content  into 3d on the TV in real time utilizing its just announced ‘Cell TV’. The Cell TV has ten times the processing power of most personal computers. All the computing power is used to convert 2d HD video into 3d on the fly which is a pretty impressive feat but starts to raise the obvious question of cost.  As an aside the Toshiba Cell demo had so much computing power that they also used a magic wand controller (like the wiimote) for selection and manipulation of their 3d UI. The UI (below) was a vision of 3d UI hell,  a nested sphere of spheres with no order, rhyme or reason.  (See my 3d UI blogs)

Sony was demoing some 3d Playstation games with a PS3 firmware update they said would be available soon, games are an obvious way in for the likes of Sony to create a compelling amount of content with relative ease. The driving game I played was pretty cool the 3d seemed to work really well with a 3rd person camera perspective as good 3d requires, decent foreground, mid and long distance content to ‘pop’.

As far as cost goes, on top of the $2-3000 or so you may spend on a 3-D set, you’ll have to pay extra to buy or rent 3-D movies. Apparently Sony plans to start selling sets labeled “3-D ready,” meaning they can be upgraded to 3-D later with some additional costs and accessories. I don’t know about you but I’m happy to have just fairly recently upgraded to a nice HDTV so I’m going to be in the market for a newer better one for five or so years.  I also have not heard anyone rule out the possibility of having the 3d effect simply be a standard HD video signal from an external box which could obviously reduce the cost of the upgrade to 3d significantly.

According to the latest data, around 126 million citizens of the United States of America currently wear eyeglasses. Since there are around 300 million people living in the United States, that’s almost half of the population.   Looking like a Dork with two pairs of glasses on aside, customers of 3d who currently wear glasses will need to make a big behavioral shift (swapping glasses or adding an extra set) which I believe they simply not do  - the effect is neat but not that good.   Maybe optically correct 3d polarized glasses will become the norm at the eye doctor?,( let me hear a collective sigh of skepticism. ).  Also for some of my colleagues at the show, the  glasses seemed like a source of much frustration claiming they were causing strain and would lead to exhaustion.   I think an additional negative of the glasses is the scenario of gathering a group of folks around to watch the ball game, with everyone having to wear the glasses or else what they see is a blurry unwatchable nightmare.  Talk about a nerd fest.

I for one don’t think glasses based 3d HD TV’s will become broadly adopted. These devices will become an option for the high end technophiles who have to have the latest thing and perhaps loner gaming enthusiasts but broad based adoption will take many years as current flat screens are too good to warrant the upgrade for most people.

I think there’s enough technical and infrastructure challenges that perhaps  3-5 years from now we may start to see some major commercial adoption of non glasses 3d HD. Eventually I expect that 3d cameras like Microsoft’s Natal will track our gaze with sufficient resolution that a more convincing 3d can be created ‘in software’ with no glasses or requirement for new display devices.  Until then 3d displays are and glasses are not for me.

Full letter

“Missing” were Rob Girling, Christopher Konrad and Vinita Bhoot. Photos by Kevin Wong.

On the last day of this year’s IDSA conference in Miami, Rob and I shared a cab to the airport with Stuart Constantine, core77 co-founder.  The three of us were recovering from an all night binge of conference party shenanigans, but we somehow mustered the strength to talk shop.  We talked about the trouble John Kolko had stirred with his recent blog post on the future of industrial design.  We also discussed how some of the conference presentations and discussions challenged the relevance of industrial design to today’s social and economic demands.  It became clear that there was a growing chasm between old industrial design and new industrial design.

What emerged from all this talk was a manifesto to the industrial design community.  Read it on www.core77.com.  In it I suggest ten things an industrial designer can do to redefine their profession.   Check it out and let me know what you think.

The Experience Imperative via (@core77)

If you missed the live webcast/webinar/stream by Masuma and Martijn on Designing Products for Emerging Markets, you can now download the video file for your own viewing pleasure at mydesignshop.com

Here’s the description of what you’ll receive:

Drawing from their experience designing technology experiences for these users, they dispel common misconceptions and reveal practical insights and methods for undergoing this design process. Specifically, they explain how to conduct the discovery phase, including the planning and execution of fieldwork, remote data collection, and concept generation in the field. They also demonstrate how to make sense of fieldwork results and how to choose the most relevant concepts to pursue further. They’ll highlight examples of successful and failed products, discuss the reasons for these outcomes, and show examples of their recent work in this exciting space.

Designing Products for Emerging Markets via (mydesignshop.com)

We are constantly learning about how we want to gain people’s attention through better SEO strategies or by participating in “the” conversation though 140 character impressions, but there is another half: the sticky strategy. In a recent study, we listened to Massively Multiplayer Online (MMO) game players talk about their recent change from one game to our client’s game. From this study, we learned about how this particular group of people coped with changes in game-play-mechanics and culture as well as three factors that went into making it a successful transition. Those three factors were providing a place for people to get started, to become advanced users and a place to show off. We’ll also discuss why those factors are important for any business, especially in the e-commerce world.

Why did our participants, like one whom I shall name Andrew, make the switch? The most common reason was because Andrew’s sister made the recommendation. The recommendation and trust from the type of relationship they shared was enough of a reason to try something different. As Neilsen reports, friends and family members largely influence a shopper’s decision making process. We see the same thing happening here with Andrew and his sister. Andrew is a young man who lives independently and enjoys spending his free time playing MMO games and watching movies through Netflix. Like all the other participants, he invests a great deal of time with the characters he has developed within the MMO game making them a very important part of his life. His characters embodies a lot of the values he believes in from aesthetics to game-play style to accomplishments earned. Similarly, it’s the same way any other person might invest their time and effort in customizing their new car or decorating the interior of their living room. Andrew is also close to family and has periodic phone conversations with them. One evening, after the usual conversation with his sister about the kids and work, they changed subjects to our client’s game that she has been playing that also interested Andrew. Without too much convincing, Andrew was sold on the game and soon found himself trying it out. Because he trusted his sister’s point of view, and also the fact that they shared similar preferences in games, the transition happened swiftly. Not only was he getting a significant recommendation, he knew that going into it, his sister would be there for help. [1]

The interesting part is that there is comfort in knowing that Andrew’s sister will be there for support and company. The question for you is, do your new customers feel the same when they make the switch?

So how can your e-commerce business create and foster an emotional solace when trying something new? Well after interviewing more participants, it comes down to the company to provide an official “forum.” I say forum with the meaning of a place where people can gather and exchange information freely. It’s your e-commerce site that provides the destination for this type of interaction and support to flourish. There will be arterial sites and channels that will exist, but a primary home base is the very core where the rest of the community stems from. We’ve talked about using blogs, Twitter accounts and Facebook pages to be part of your arsenal of communication channels and means to check the pulse of your living business. The benefits of having a home base though, is that your customers will have an official place that they can go to for relevant information whether it’s related to new promotions, new support information or product announcements from a reliable, authoritative source. It also shows that the company cares about their community and provides them a place for community members to interact with each other. This type of direct interaction let’s people share their experiences and drives excitement and participation. Even if you don’t have a fully fledged system in place that facilitates a community, there are resources out there that can help. Get Satisfaction, a web based support and community service allow businesses, both small, medium and large to field complaints and questions about products or services that can be integrated into your own domain. It even allows you as a company to designate influential customers as ambassadors of your brand who represent your company and help out for the sake of being helpful. But enough of a plug, there is a way and there are options.

There were three factors observed that made the switch easier for our participants: A place for people getting started, a place for people to become advanced users and finally a place to show off.

A place for people to get started

Otherwise known as the “Out-of-Box-Experience,” new or advanced players need help getting started with a new game. Even though the game is the same genre - lots of people playing at once together in an immersive environment - the mechanics will be different and require some degree of retraining. A place to “get started” can provide information that covers the whole range of experience from identifying what each control does, what labels mean and the different skills that are available to your player. For players who were playing our client’s game, they had access to a lot of this information online. Players like Andrew benefited greatly from getting started guides when we talked about how they got started. There was a lot of fear for new players that the advanced players would brush them off as completely useless and incapable of doing their own research. It’s a significant emotional barrier. But having “getting started” guides made the transition easier and allowed both new and advanced players to proceed with less abrasion. The information can also go so far as to describe best use cases or best practices during game play. Finally, having this information available in bit sized pieces makes it much more approachable as well compared to thick user manuals that is hard to search or thumb through.

A place for people to become advanced users

Otherwise known as “tips and tricks,” the community of existing players may have experienced unique ways of applying your character outside of the typical scenarios initially imagined. Unlike “getting started,” these tips and tricks might introduce the community to new ways of playing the game never previously imagined. Use cases emerged from exploits in the game served as a form of inspiration on how to evolve your product. Additionally, this place can also host more fluid discussions that further the development of these new and emerging behaviors. It becomes a much more organic and relevant form of communication much different than getting started guides. For instance, getting started information will be less likely to change in terms of content because the game is what it is (for the most part), but new character skill combinations and team dynamics might bring out a tip that others want to apply as well. Products and services in general all have use cases and you can’t deny the fact that some of your customers will use your product in ways you didn’t imagine. Allow your customers to share their insights and allow them to help each other become savvier.

A place to show off

Our participants weren’t necessarily proud of the game they purchased, instead it was more about the characters and adventures they experience from playing it. Products and services, like games, are only tools that help people serve a much more meaningful part of their life. While some might idolize their shiny new gadget, it’s the function it carries that makes using it worth while. Our participants had a community as an audience to celebrate their character’s accomplishments. This encouragement made the experience much more rewarding and compelling to continue playing. Even as an audience member themselves, celebrating other’s successes was just as gratifying. These intrinsic rewards are much harder to facilitate compared to extrinsic rewards like monetary benefits. Being able to create that kind of experience is a greater differentiator and one that is harder to replicate. Doing this can make your business much stickier.

How was all this accomplished? Well this community was completely hosted by two web technologies that are widely available today: discussion forums and wikis. These are technologies that have existed for quite some time now and can be easily deployed through your own web hosting provider. While they may not be next generation technologies, they are tools that facilitate next generation behaviors in consumption and peer to peer interactivity on the Web. The great thing about these tools is that they enable knowledgeable people within the community to provide most of the content. As long as these channels are moderated, it’s possible to “crowd source” the community to enable a semi-self sustaining system. Getting started guides can easily be generated through wikis, while discussion forums promote new tips and tricks which can then be added to the wiki as well. Finally, forums also serve as a way to allow people to share their stories and have people celebrate their achievements through comments, similar stories and even questions. Especially for veteran players, their comments have far more impact and weight than those who are just getting started. The time they have invested in the game affords them a level of respect and authority that is compelling for many players. As a result, tying in an identity system like profiles, or in game player names in this example, will be an important component towards their experience.

This community which not only supports new players (or customers) but also encourages continued use makes switching less dramatic. For Andrew, trying out the game and finding a flourishing community that provided resources to him at his finger tips made the switch harmless and almost enjoyable in some ways. He now finds himself helping others and even offered to help me get started if I decided to start playing. That’s the level of stickiness that I’m talking about. While e-commerce companies continue to strategize news ways to increase their SEO and improve their search capabilities, the human aspect which rewards participation and continued use will make a meaningful impact that factor greatly in buying decisions, retention and repeat customers. People begin to form a much larger source for recommendations that extend well beyond close friends and family given a healthy community.

Businesses are getting closer to people’s lives and people are demanding that business respect the way they choose to live it. Our client has recognized that there’s a significant amount of activity outside the actual playing time in game that’s equally as important and has applied the use of certain communication tools to successfully accommodate their behaviors. You can do the same too.

[1] Now, I’d also like to point out that in this case, it’s easier to try a new product when it’s “free.” The game we were evaluating had a one time, upfront cost, whereas the competitors were requiring a monthly subscription fee. That difference allowed people to try out the game without facing additional costs like they had experienced before, which was very appealing. Also, it’s easier for people to try something different when it doesn’t impact critical business operations. Our participants were evaluating games, an entertainment product, so we didn’t have any additional insights about operations. However, if you’re selling goods or services that may have significant ramifications, then you know better than anyone else the additional challenges you face with convincing new customers.