Wal-Mart Plays the FUD Game
What's FUD, you ask? It's an acronym that describes the strategy some Internet businesses use to build up buzz and cow the competition: Fear, Uncertainty and Doubt.
We in the media are supposed to be above it all. We’re impartial, unbiased observers who pass along what we see and hear without fear or favor.
What I’ve learned over my 22 years in this business (30 if you include academic journalism) is we’re more and less than that. If a tree or business falls in the forest and we don’t report it, it makes no sound. But our power to control events is, at best, marginal. Most often we’re used.
This is true whether you’re with a “media conglomerate” or, like myself, a humble freelancer. We seldom know what goes on behind closed doors. (If we do reconstruct it, it’s only long after the fact, when we turn to writing history.) The newsmakers tell us what they want us to hear and it’s only with great effort (and some luck) that we ever find out different. The Time-AOL merger secret wasn’t protected by some conspiracy that threatens freedom. Few media stories are ever reported beforehand because media executives all know how to manage (and warn off) the media.
This skill, one perfected by political campaigns and corporations alike, means newsmakers take a dim view of our abilities. They can tell us whoppers and we’ll swallow them whole. The whoppers then become the truth and move markets. These are lessons first taught to the technology press by Microsoft.
The fact is Microsoft never innovated anything – VisiCorp had a windowing interface years before Windows came out. But Microsoft used Fear, Uncertainty and Doubt (FUD) to defeat VisiCorp and dozens of others, even IBM. The key to its success wasn’t in keeping its lips shut, but in keeping the press fed with vaporware. When something was announced that Microsoft didn’t have but needed, Microsoft claimed to have it and then quickly set about building it.
Venture capitalists have learned this game well. Accel Partners is now playing the FUD game on behalf of its partner, Wal-Mart, against Amazon.com. Wal-Mart’s size and capital gives Accel’s FUD offensive credibility. It’s having a profound impact on Amazon’s stock price and, thus, its ability to raise capital for a counterattack.
The plain fact is Wal-Mart’s moves to date are mainly vapor. It has yet to build the delivery infrastructure needed to deliver a single Wal-Mart, let alone thousands, to online customers. Yet the “we will bury you” talk from Palo Alto is swallowed whole, in part because it sounds credible (we’ve been predicting it for years) and in part because the case isn’t easy to disprove. We don’t know how many warehouses, or what kind of physical infrastructure, Wal-Mart has committed to. Amazon’s own resources can currently deliver the equivalent of just a few Wal-Mart stores per year, and even then they have merchandise from just a few departments. Wal-Mart plans to send you the whole store – even the stuff that is so bulky and cheap the delivery costs more than the merchandise.
Of course, we’ve been here before, too. FUD is what we heard from Barnes & Noble a few years ago, from CDNow some time afterward, then from Reel.com and Toys R Us – and it’s what we’re hearing now from Best Buy and eBay. Each display of FUD has been followed by a time of testing. Amazon has prevailed (or at least held its own) each time.
Will Wal-Mart succeed where the others have failed? Wal-Mart seems certain to have some place on the Web, maybe a profitable one. But don’t bet on the FUD – Amazon is still one wascally wabbit. Huhuhuhuhuhuhuhuh . . . that’s all for today, folks!
