Information Age Passes Up Gold by Ignoring Silver
No Information Age cliche is more cloying than the ethnically correct gaggle of kids--the light of wonder shining in their beady little eyes--as they happily gaze into their classroom computer.
What rampant ageism! Beavis and Butt-head may rule and Nintendo and Sega rake in billions, but the simple demographic reality is that the American population isn’t getting any younger. Judged strictly by the numbers, the “gray market” is the largest under-tapped opportunity in personal computing today.
A large and relentlessly growing chunk of the 60-plus population now has the leisure, the discretionary income and--contrary to its media image as a bunch of hapless technophobes--the willingness to integrate computing into everyday life. In short, the future of computing belongs to the old, not the young.
“It seems counter-intuitive,” acknowledges America Online President Steve Case, whose aggressive on-line service has roughly 500,000 subscribers. “But it turns out that older people make excellent customers for us. They have lots of time, a lot of them now use computers to track their investments, and more of them are interested in using electronic mail to communicate with their grandchildren.”
Even without a targeted marketing effort, Case observes, his network still attracts an increasingly silver clientele.
“When I was in Massachusetts recently,” Case recalls, “I ran into some old codger about 70 years old who starts talking to me about getting plugged into the Internet. He didn’t know all about it, but he knew enough to be dangerous.”
Ultimately, Case predicts, America Online “will make as much money from the seniors as from the kids. I think they’ll certainly be more stable customers for us.”
To be sure, a few companies do have the senior market explicitly in mind when they design their products. For example, Datatech Software offers a software package called Rich and Retired, which lets users create their own retirement scenario spreadsheets--including such senior-specific options as 401(k) plans and reverse mortgages. As a bonus, the software will make a guesstimate of your life expectancy based on responses to various health and lifestyle questions.
For the most part, however, personal computer hardware and software companies have treated the silver market with a mixture of benign neglect and studied condescension, despite the market’s growing size and wealth. Computer advertisements overwhelmingly feature bespectacled baby boomers. The only gray hair to be found is on the heads of imposing senior executives proclaiming they couldn’t possibly run their companies without their IBMs/Compaqs/Dells/etc. (Apple Computer does feature one elderly gentleman who is using his PowerBook to--surprise!--record his life story for his grandchildren.)
Similarly, there seems to be embarrassingly little thought and effort going into making keyboards, trackballs, mice and other computer interfaces more accessible to seniors.
“Business generally, whether software development or other, doesn’t clearly understand the implications of demographics for their markets,” says Edith C. Bjornson, a program officer at the New York-based Markle Foundation.
Several years ago, the foundation helped fund Seniornet, a not-for-profit organization designed to bring computer literacy to the elderly.
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Seniornet teaches older people how to use the technology and gives them computer network access to keep in touch.
“It turned out we had a tiger by the tail,” says Bjornson. “Older people learn computing just as efficiently as any younger person.”
While Seniornet barely has more than 10,000 members, Bjornson notes that the initiative is supposed to be not-for-profit, and says it offers persuasive evidence that there is a genuine market opportunity.
Developing the silver market, she says, isn’t an issue of philanthropic do-goodism. It’s the silver-tinged future.
Perhaps the clearest indication that the senior market in software and services is where the money will be comes from the American Assn. for Retired People, which, in addition to being one of the most powerful lobbies on Capitol Hill, is the publisher of Modern Maturity, which, with 25.8 million in household circulation, is the nation’s largest magazine.
“Basically, we are not now on-line,” says spokesman Tom Otwell. “But it is something we’re seriously considering.”
The AARP is also looking at what kind of retirement software it could develop or distribute.
Who knows? Maybe the AARP will also become the nation’s largest distributor of personal computer software. Aggressively pursuing the gray market would be an unambiguous sign that America’s computer industry is becoming more mature.
Michael Schrage is a writer, consultant and research associate at the Massachusetts Institute of Technology. He writes this column independently for The Times. He can be reached by electronic mail at schrage@latimes.com on the Internet.
