Hacker News Reader

Comment by hayksaakian | Hacker News Reader

If you work backwards from what generates revenue (purchases) in the travel industry you'll find that marketing drives decision making more than the underlying airplanes, trains etc.

Physical assets are a known quantity for better and for worse. They intrinsically depreciate. On the other hand, Brands grow over time from word of mouth and other marketing, so long as their final product is at least average.

View on HN

Right. Another way of highlighting the absurdity of dismissing things like Priceline as non-assets is to look at the history of computing. Microsoft commoditized PC hardware, and became tremendously valuable selling the dominant OS. Google is doing the same thing with Android.

Is Windows or Android not an asset? Is it not the dominant asset in terms of value, even if manufacturing electronics at scale is larger in physical terms?

> Microsoft commoditized PC hardware

No. Tandy (aka Radio Shack), Dell, Compaq, and so forth commoditized PC Hardware.

Microsoft made the OS a commodity, reducing the cost of an OS from thousands of dollars to only $100. Android / iOS have done the same thing except reduced the cost to $0.

The hardware manufacturers don't make as much as the software guys. Because people and habits are tied to the software, not hardware.

I think OP meant that Microsoft commoditized PC hardware through software, in other words by making Windows the thing that people wanted to have, and the hardware under it could be interchangeable.

Most people didn't care if they had a Dell or a Compaq, as long as it ran Windows.

So in this case: I don't care what hotel I stay in or who rents me a car, as long as I know that through Priceline I'm getting a good deal.

I personally didn't read it like that, but your interpretation makes sense. After thinking about it, I think your interpretation of the post is superior.

Yes, that's what I meant. Windows was a commoditizing force on PC hardware makers. Microsoft did the commoditizing here by taking their market power that came from controlling the thing people wanted most, and enforcing standards that hardware makers had to meet in order to reach the market MS controlled.

It's the same in travel, where the airlines and hotels are selling commodity products, and the high value is in the brokers people trust to select among the commodities. But the brokers here are also in still competitive positions, because it's still easy for consumers to switch compared to something like an OS or social network.

Brands have no inherent value though; they're the consumer equivalent of religious icons. They cease to have meaning if they're not kept alive by advertising and can be destroyed by a single screw up or undermined by a clever emme.

Marketing people sell value, they don't create it.

don't tell that to Warren Buffet

Warren Buffett is a wonderful person but he's the product of a mixed economy with strong institutions. My point (which could have been better made) is that brands depend heavily on social infrastructure for their survival

Put it this way, suppose the C-suite and the board at Priceline went insane and wiped all their own servers before leaping out of their penthouse windows. It would disrupt the travel industry, but it wouldn't be that difficult to build another price aggregation network - the infrastructure is already there. And a year later, nobody would care.

Consumers aren't nearly as invested in brands as marketing people like to imagine, they're just lazy and stick with whatever works OK. Can you imagine consumers feeling sad about the demise of Priceline or any other major brand? If Geico went out of business I'd feel a little bit of nostalgia for those animated gecko commercials and might reminisce that they were a good company to do business with, but that's about it.

In the eyes of who?

To the company and its owners, if my brand allows me to sell an equivalent widget for a higher margin, how is that not value? Just because value can be created or destroyed by a single action doesn't mean that value is somehow less valuable.

To the user, if I derive greater pleasure because I believe I have bought a more valuable product (attributable only to the brand), just because there is an equivalent widget out there, does that somehow discount my pleasure?

What even, is the basis on which, in this hypothetical scenario, we have determined the widgets are equivalent? Surely there is some subjectivity that would be driven by people's opinions, influenced directly or indirectly by brands, in that decision.

Soap bubbles are beautiful but you wouldn't pay money for one because you know how ephemeral they are. The value in brands is the expectation of future revenue that will inure to them. I'm saying that not only is this fragile, if it's destroyed then it's not good for anything else. By contrast, suppose the Fancy Hotel Company goes bankrupt through mismanagement; you still have an actual fancy hotel - an aesthetically pleasing building, comfortable furniture, experienced staff, logistical relationships with suppliers etc. Changing the name on the building to the Cosy Hotel Company would be a sales problem in the short term, but would have zero impact on the actual operation of the hotel itself.

Yes. Let's take a simple example - processors. I'm sure you can think of reasons why some prefer Intel and others prefer AMD, and why those different choices might be valid depending on the users' criteria. But which processors do you think HN runs on?

You probably don't know or care because it makes no functional difference to you. You might still have preferences about the next computer you buy but only insofar as you can imagine it making a quantifiable difference to you.

As a consumer, your contribution to brand value is only as good as your knowledge of what makes a branded offering unique and irreproducible.

My comment was not to say that there are not situations where brand plays less of an influence, only to provide a counterpoint to the parent's comment that "brands provide no value." There are certainly industries or products where brands are less valuable, but that doesn't diminish those industries or products where brands do provide real value to both the buyers and sellers (although not always both each time and certainly not in equal amounts).

Maybe brands could be tied to momentarily moments of happiness for some people. But the modern branding and marketing, but also mass media, is a pretty bad environment to grow a child, to be a female, and for people and societies in general. So i highly doubt the positive value of marketing.

But sure, they do help extract higher margins.

>to be a female

explain?

Reply on news.ycombinator.com