Marketing Memos

Is Microsoft becoming the IBM of the new millennia? It sure looks like it through my tar colored glasses.

Back in the Bad Old Days of the 1980’s IBM was near bankruptcy. In his memoirs, Lou Gerstner noted that after decades of market dominance, IBM had devolved into a navel gazing sloth, unaware of how the universe around it was changing. Though Microsoft has yet to slide into the utter dementia that possessed IBM, it has started down the same path, which will have the same results (though $40,000,000,000 in the bank might delay the seemingly inevitable).

In their dark past, IBM suffered from what I call “mainframe mania.” The strategic plan within IBM (if I can abuse the words “strategic” and “plan”) was to make the mainframe the center of their entire universe, and thus the center of the IT market. No product plan and marketing maneuver within IBM was executed unless it reinforced the notion that the mainframe was the center of every enterprise’s infrastructure.

Why did IBM choose to do this? Well, when your major source of revenue and market leadership is a single product line, you certainly would like to preserve and grow that line. And, IBM actually believed their own hype – that the mainframe could and should be the center of all IT activity.

But like the mighty dinosaurs who didn’t notice all the small, agile, furry little mammals that were suddenly dashing between their feet, IBM didn’t notice the growing hordes of small, agile, (but noticeably not furry) UNIX boxes dashing in and out of data centers. IBM failed to adapt to the changing environment (market demands), and tried to survive on an outdated genetic code.

And it almost killed them.

Microsoft may be in the early days of the same crisis. Ignore Microsoft’s growing bureaucratic ways, and stifling lack of creative freedom. Microsoft is repeating IBM’s earlier error of believing that their core technologies will withstand the onslaught of a changed market (and note the past tense of the word “change” – because the shift has already occurred, and the tipping point has arrived).

Microsoft is obsessively focused on the two elements that breathed life into the small start-up – their developer community and their core infrastructure technology. Microsoft believes that .NET is the end-all in infrastructure design, architecture, and management (just like the mainframe). And Microsoft believes that developers adoption of .NET will carry Windows forward as the preferred application platform (just like mainframe programmers).

Both conclusions are self-deluding.

Microsoft, though aware of the Open Source threat, is intellectually immune from understanding why Open Source came to life, and why IT executives have made it the center post of their strategic planning. Open Source has solved the one most persistent complaint of IT since 1’s and 0’s were invented: that technology is not a commodity. And CIOs and CTOs want commodity technology so bad, the taste of vendor blood is in their teeth.

Unless Microsoft accepts this fundamental change in the market, and devises a way of meeting this new demand, Open Source will get the better of them. Already Microsoft’s focus has turned toward their navels, and it is tough to see the horizon when a bunch of bellybutton lint obstructing the view.

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It appears that yet another technology market has been usurped by an upstart. Being a fan of rags-to-riches stories, I almost giddy over this news.

According to the good folks at Evans Data, MySQL is about ready to dominate the DBMS market place (which helps explain why Larry Ellison is scrambling for higher ground). With use of MySQL growing about 12.5% every quarter, you have to wonder what could possibly halt this juggernaut.

Old School tech marketing people will mistakenly claim that MySQL is popular only because it is free. Though “free” is always a viable selling differentiator, in the big bad world of enterprise IT free is not good enough. All the other factors have to come into play, including support, portability, integration, and more.

So why has MySQL grown to dominate the market and threaten the bonus checks of executives at Oracle and IBM? Because MySQL has met the whole product requirements of the largest segments of the DBMS market, that being the bottom. Working from the top down (as all good marketing professional should):

1. The market are all those people who need a DBMS. Since Joe Six Pack doesn’t need a DBMS, the market is constrained to those who develop applications.

2. The largest segment of the untapped market are small- to mid-sized developers, followed by those developing embedded applications (for which portability, speed, and light-weight distribution are key).

3. A usable DBMS must then integrate into the development and production environment. Since most new development is web based, a DBMS must play nice with web servers. Since Apache and Linux both dominates that market, and also meets the portability and embedded criteria that developers have on their short list, LAMP makes a natural paring and a new “good enough” development system.

(One case in point is WebTrends web analytics. When shipped for installation on a Windows PC, WebTrends installs Apache and MySQL as its foundation, quite to the ignorance of the end user. The solution is embedded, compact, fast, and brutally effective.)

This is where both Oracle, IBM and Sybase committed an elegant form of financial suicide – by not recognizing the untapped market and developing solutions that met the whole product criteria. By focusing exclusively on enterprise sales, they left the lower strata of the market to MySQL.

Like Linux before it, MySQL established a beachhead in their market segment. Though limited in features and functions early on, it was good enough for the bulk of the market. This beachhead gave MySQL sufficient staying power to evolve to meet the needs of other market segments. It is now feature rich enough to handle 90+% of the DBMS marketplace needs and threaten established DBMS vendors.

The lessons technology marketing professionals need to learn are these:

1. Most technology markets develop from the bottom up. Microsoft was a small contributor to the original IBM PC, but parlayed their position to developers and grew their market.

2. If you are a market gorilla, you need to fulfill most of the needs of the bottom of the market to prevent competitors from eroding your base (the trick is to do so and not bleed away all your cash in the process).

3. It is always about the developer. If your provide infrastructure (like a DBMS), the developer is the person that makes you famous. Make sure you take care of them first.

Now, should Microsoft be fearful of MySQL?

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I love it when markets collide, and a new vision emerges. And it is even more fun when I have a hand in it.

The incestuous market forces of network technology, virtualization, and blade computing are now slamming into one another, with IBM gluing together products into a satisfying whole. IBM, who currently holds the lead in the $3B blade computing market, recently announced a new blade rack that includes direct support for Infiniband networking. For the uninitiated, Infiniband is a networking fabric that eliminates inter-server latency and thus make processes running on different servers (i.e., blades) to work more like one computer. This is a boon for tightly cooperative clusters, hub-spoke web farms, and other distributed applications.

Virtual Iron, a Silicon Strategies client, employs off-the-shelf LinTel computers and Infiniband switches to make a lot of little computers look like one large machine (this is the inverse of VMWare, whose technology makes one LinTel computer look like many smaller computers). Blades are a natural hardware environment for Virtual Iron, but hammering together a blade rack, and external Infiniband switch, and other elements is yet another IT provisioning headache, and a multi-vendor support trauma.

IBM’s contribution is the first step to the consolidation of these several technologies — blades, Infiniband, cross-blade virtualization — into a new computer hardware market segment. This segment will attract buyers who need greater platform scale flexibility, who want to reduce provisioning/server/admin expenses and delays, and who see the advantages of having Big Blue deliver most of the solution set. Indeed, with Virtual Iron a working partner with IBM, the only variable left to the buyer is which Linux distribution to use (and since Novell is a Silicon Strategies Marketing client, it would be insane not to use SUSE Linux).

This market segment will initially be composed of high-end, specialty buyers. And, depending on patents and licensing, may remain so for a while. But we can expect HP at least, and perhaps Sun, to follow IBM’s lead and include low latency networking in Linux blades. Not only can they ill afford to not match IBM’s position, but the benefits of even well managed blade clusters will be part of what drives this market segment.

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I cut my technical teeth working within the Hewlett Packard universe (can you say RTE, MPE, HP-IB, m-o-u-s-e).

Back then there was a joke about the ever so technocratic HP. The joke was:

If HP sold sushi, they would market it as cold, dead fish – low on parasites.

Sadly, not much has changed. If you have it handy, grab the November 7th edition of InfoWorld and flip to page 33. On the right there is an advertisement from HP (as there were many marginal advertisements from other vendors) concerning Service Oriented Architectures (SOAs).

The prose of HP’s advertisement are so miserable that embarrassment would be an upgrade in stature. The HP problem now is not the selling of the cold, dead fish, but preventing sales by driving readers into deep comas with buzz word laden drivel. Take for an opening example their opening lines:

Synchronize business and IT . . .

The headline has major defects throughout, most laughingly being what InfoWorld wrote on page 42, namely “Everyone has heard the clichés about ‘aligning business and IT’ . . .” When the magazine you are advertising in says your headline is a cliché, then you have need to strangle your copywriters before they write again. But, it gets much, much worse.

The current business climate demands that companies readily embrace and adapt to change, using technology to switch direction with speed and agility.

This one sentence may win the aware for the longest string of meaningless and overused jargon to ever reduce magazine pulp into glossy toilet paper. The statement is both obvious and without purpose. It alienates firms that are in less competitive markets (say public utilities) that don’t readily switch anything, much less with speed and agility. And clumsy, redundant phrases like “embrace and adapt” show there is a thriving market for thesauruses.

But more to the point, it says nothing useful to the reader, especially in the context of the ad and the surrounding article, both focused on SOA. HP tried ineptly to rescue their opening blunders in the rest of the first line:

SOA can help companies meet this goal by providing well-architected, secure, reusable, managed, and loosely-coupled services across the enterprise that help companies enhance business and IT alignment.

I don’t think War and Peace was as long as that sentence. Nor did it contain as many commas. Imagine for a moment that the topic was an operating system. Could “well-architected, secure, reusable, managed” describe an OS too? Yes it could, which means HP’s run-in sentence provided no value proposition about their product, and certainly no unique differentiator.

At this point the average reader would have turned the page or committed suicide — anything to avoid reading more HP effluvium. But like witnessing a terrible automobile accident, my morbid curiosity was roused and I plunged on into the next passage:

HP’s SOA offering carefully synchronizes business and IT, putting customers on course to build their Adaptive Enterprise.

Oooooook? Not content to bore their readers with clichés and buzz words, HP proceeds to confuse them. First, HP pimps their “SOA offering” without providing the reader any idea of what they offer (indeed, you will not discover what this offering is even if you insanely commit to reading the entire ad). They then blindly hype their “Adaptive Enterprise” initiative, both assuming the read knows what that is and wants to build it.

And that last part was a cardinal sin! Selling product A based on the desire for product/outcome B necessitates the demand for B. If customers don’t know about or want B, product A will die a slow and lingering death. Yet undeterred by these sins, HP seeks to rack up a permanent place in Marketing Hell for this:

These offerings provide the underpinnings of our consulting and integration, service and support, and IT and business process outsourcing;

Aside from sentence structure befitting a brain damaged foreigner, this stanza whirls the reader into a dizzy misunderstanding of whatever it is HP is trying to sell. To understand HP’s point, one must deconstruct the sentence, and since that takes more than five seconds, nobody (except anal retentive blog writers) would bother. But basically HP is selling services of all types, allegedly to help companies design, implement, and support SOA. But I have a $20 bill that nobody outside of HP marcomm group understood that, and I’m not sure people inside of HP’s marcomm group did either.

I could go on (and on, and on, and . . .) about this complete waste of advertising budget, but HP has already paid a high price by inserting this alongside better written appeals from BEA, Intel, IBM and others.

I never thought I’d say this, but I miss the cold, dead fish.

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I have used this blog to beat up on a number of technology vendors. Sun seems to be a favorite whipping boy. I guess I’m guilty of kicking a company when its down.

But, I do need to say something nice about Sun . . . before I bemoan their recent strategy missteps.

In regards to their new SPARC chip T1/Niagara chip, I want to say WOW! In the battle for chip functionality in some markets, the T1 is something special. Sun has managed to create an 8/32 way mini cluster on silicon. When one looks at the requirements of a web focused server farm, or any server sets that rely on threaded symmetric multi processing (SMP), he T1 fills several subsegments of the clustered server market, and perhaps a few of the virtual machine market.

The problem is it that the T1 only serves these subsegments, and the top end of segments at that. Sun continues to box themselves into a corner by holding the high ground while the invading hordes (commodity chips and servers) chisel away at the base of the hill. Since IT buyers want to build relationships with key vendors, they turn to those who provide both their current need and their long term strategy. Sun is not supplying whole products for all these points . . . just the upper tiers.

Here is Guy’s #1 Golden Rule of markets: Never invest in a technology defined by being the biggest, fattest, or one that optimizes bottlenecks. These markets die because technologies develop that eliminate the advantage currently offered.

Take modems and the internet for example. Many people have created slick little technologies to speed throughput on copper bound telephone lines. And the market responded by installing cable modems and DSL. Improving a mature technology is bound to lose over a new technology, or an unstoppable market force.

In Sun’s case, the unstoppable market force is commodity servers. With AMD and Intel in a speed hiking, cache fattening, price slashing slugfest, the growing IT demand for their commodity will eclipse Cell Processors, T1, and other non-competitors. The market has made its strategic choice and will avoid products that are not in the general mold.

How much time does AMD or Intel need to create their own 8/32 chips? Not much given their current roadmaps. They soon will deliver products that also fulfill the high end, and can be bought from Dell, HP, IBM, and Ma Kettles Corner PC Shoppe and Quilting Emporium.

In Sun’s defense, they are trying the classic marketing maneuver of changing the rules of the game. They are hemorrhaging their software IP in an attempt to create a market around Sun and Sun’s remaining revenue creating products. By offering “open” software across a number of platforms, they hope to equal what has occurred organically in the Open Source and commodity computer markets.

But that is a lot to give up to compete with an entire market movement, and one that ultimately reduces their differentiation to all subsegments of IT. Sun may well become the King of the Hill in open systems servers . . . but will spend all of its time, money, and manpower defending their mountain top.

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