Marketing Memos

Marketing intangibles is tough work. And yet, this is a growing part of the high tech world, so we better get used to it.

Physical objects are fairly easy. I have watched with amusement when a techie walks past a rack of servers at a trade show. Their eyes widen, their jaws, drop, and they gaze slobberingly at the hardware in a Homer Simpson donut trance. Then again, I’ve seen a similar response from women walking past a shoe store.

But intangibles are harder. How does one create a functional and emotional connection to something that cannot be seen, measured with a yard stick or a SPECmark? How does a marketing professional make the vaporous solid?

This is not a trivial question. As IT technologies become more commoditized, more of IT dollars are spent on services and software. Techies won’t stop at a booth that simply promises great service. Well, not outside of Amsterdam at least.

There are a variety of ways of creating functional and emotive connections concerning intangibles (which I will haphazardly lump software into, though you can at least demo software and create a pseudo tangible connection). The primary way is to lean more on emotional motivators than functional ones. I know this sounds like heresy to an industry that was built on features, functions, and benefits. But heretics are often right (well, at least the ones not burned at the stake).

Emotions are very real . . . to the audience. Tapping into those emotions creates an instant reality for the receiver of the marketing message. And, the more basic the emotion, the more powerful it is. People my age and older may well remember a public service announcement that appeared on TV during the early stages of the environmental movement. This commercial showed an American Indian scanning a polluted horizon, then turning to face the camera with a tear in his eye. The “product” being sold was environmental consciousness, which is completely intangible. But the commercial was very visual. Very powerful. 100% emotional.

You may recall some television ads for security software that ran on major news networks a few years back. In these ads, either a cyber punk or a long-legged blonde, both in basic black, tapped on a keyboard and claimed they had just hacked into your corporate database. These ads, targeted at CEOs, were designed to generate fear and insecurity and drive them to buy software that wasn’t even demoed. Very visual. Very powerful. 100% emotional.

Even IBM, who now derives most of their income from services, has latched onto this basic premise. I’m staring at a flyer I received, sporting a concerned looking Asian businessman and a caption that reads “Today, if you fail to innovate, you simply become a commodity. How painful.” This flyer promotes IBM’s business consulting services. Very visual. Very powerful. 95% emotional (well, they are a technology company - they had to slip somewhere).

My belabored point is that the more intangible a product/service, the more you have to ignite an emotional response to make it “real”. That emotional response has to make the audience want to take action, not merely investigate features and functions. The emotion your outbound marketing creates is the tangible part.

Now, speaking of basic emotions, if anyone has the phone number of that long-legged blonde . . . .

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The good folks at CIO Insights released their 2006 IT trends report, which was surprising for its lack of surprises.

We have conducted long and deep discussions with CIOs over the years, focusing on their strategy development and direction (the pivotal piece from Silicon Strategies Marketing is our “What CxOs Think About Linux” white paper). CIOs are beginning to achieve what they have craved for decades — a primarily standardized and commodity infrastructure.

One of the findings in the CIO Insights trend report echoed what we have heard from our CIO interviews — that there will be significant business advantages achieved through commodity computing. What CIO Insights called a “frictionless infrastructure” is what CIOs had told us was a standardized infrastructure. Through mass standardization, they expect:

• Operations to be streamlined, which lowers costs and raises end user productivity
• Development to be streamlined, which brings competitive advantages more quickly
• That business agility would be greatly improved
• That their staffs would be more effective and responsive

Whew! That’s a lot of benefits for one area of strategic planning.

What we found interesting (and what the CIO Insights review helped confirm) is that cost containment is not their top priority. I have lectured several Silicon Strategies’ clients on deleting the cost saving issue from their messaging, because of this and because it is a non-differentiated message (what vendor doesn’t claim their technology will reduce costs? ).

What is on the top of CIO minds is that they are a significant contributor to corporate growth. CIO Insights notes that a full 78% of CIOs intend to increase earnings through growth, not cost reduction. Little wonder as the world market is rapidly becoming one, and globalizing will bring healthier top-line revenues.

This is where Linux and other standardized technologies have taken center stage. Linux is the great equalizer of server vendors, driving even the mighty mainframe down into cost competitive ranges. TCP/IP and Ethernet are the standards for communications, and the web has become the defacto human interface. By eliminating (or at least reducing) any variability in the server, OS, networking and UI, CIOs have reduced the delays — the friction if you will — in deploying new an innovative solutions.

Now here is the scary part: We are just beginning. Companies firmly planted in this paradigm are not fully deployed. Smaller firms are just starting their consolidations and conversions. The gains in IT productivity are yet to be fully realized.

In a few years, IT’s ability to respond to changing business demands will be so short as to change the very nature of competition.

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You must invest in your brand. But even I sucked in a lot of air when Intel announced they would back their new brand with a $2.5 billion marketing campaign.

That’s big money . . . unless you are a congressman.

I touched on the need to back your branding in our “Manhandling a Market” white paper. You can (and should) create your brand, articulating what you want the market to think and feel about you and your products. And to make sure the market starts to believe that, you must spend time, money, and manpower to communicate the brand.

Intel’s new brand slogan, Leap Ahead, coincides with their recognition that the PC chip market is becoming less profitable, while new markets are exploding around them. Every customer who has money has at least one PC (I have three in my private office alone), so the new PC market is saturated, leaving upgrades and replacements. And to differentiate in the face of AMD’s aggression, the design work gets harder and more expensive. In short, margins and profits are thinning.

Paralleling the drooping margins in PC and server chip sets, is the new and relatively untapped Digital Consumer (c). Media and entertainment have long been the driving forces in American sedation, and our expanding waistlines. As the Baby Boomers hit retirement age, and the Baby Echoes begin their hyper-earning period, the demand for digital consumer electronics is popping like a volcano, and the need to cross integrate all this gear grows.

If you think this might be overblown, take Mike for example. I don’t know if “Mike” is his real name, but he goes to my gym. I saw him watching video on a handheld device while he sweated on the treadmill (Mike being one of the few Baby Boomers not growing horizontally). I chatted him up, and discovered that on any given day he may use the same device to listen to a podcast from a political feed, listen to an audio book, tune into an internet radio station, take a business call, or watch a video (he would not disclose what he had been watching, so I think the porn industry may be finding new markets).

Intel is smart to attack this market. Thus far, PC’s have been the hub for digital media interchange. But you would be hard pressed to find a TV at Best Buy that wasn’t digital (at least on the inside), and should be able to receive content from any digital source (your set-top-box, via Wi-Fi from your laptop, uploaded from your video iPod). Music, being more portable and pervasive than video should be rapidly interchangeable from your home media center, to your laptop, to your dash board, and the other direction as well.

With Intel changing their market focus, they felt the need to change their brand as well. For years Intel gained a premium for their CPUs based primarily on “Intel Inside” branding. Now Intel must promote two things simultaneously: the new digital lifestyle, and that Intel provides the best electronic guts for the gadgets that make up your new life. And this must be communicated to the entire civilized world, and Washington D.C.

That takes bucks. About two and a half billion of them.

Only the future will tell if Intel’s “Leap Ahead” brand resonates with consumers (my gut tells me it is a step backwards from “Intel Inside”). But Intel is putting their stockholder’s wealth behind the effort, and that is an essential element.

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Don’t get me wrong. I like Scott McNealy.  In the dry world of technology, his pithy quotes are worthy of a compilation, if not an occasional Poison Pen Award.

But a weakness in marketing was painfully exposed in McNeay’s recent eWeek guest column.  Therein, Scott proceeded to create a myth in order to sell Sun’s current weak position in the market.  Aside from being a possible sign of desperation, it was transparently inaccurate (the only other explanation is that Scott is delusional, so I’ll give him the benefit of the doubt).

Distilled, he argues that IT generally has no technology “exit strategy.”  His assertion is that IT does not understand or anticipate the cost of abandoning technology, and that they need to have an “exit strategy” checklist.

This is a blind assumption.  For decades IT execs have worried about technology lock-in, and have been party to the drive toward standards-based computing.  Indeed, Sun was a favorite child of IT for many years given that Sun helped drive the mass adoption of UNIX, and reduced the technology switching costs for IT through competition with IBM, HP and other UNIX vendors.

So why would a person and a company so familiar with the perpetual advance of standards-based computing dismiss IT’s participation in the process, and their forward-thinking outlooks on technology adoption? 

Because Sun is in a bind.

Linux and Open Source caught Sun by surprise.  Linux started life as a commodity, with little differentiation between Linux flavors.  Linux has helped force the commoditization of servers, by reducing their differentiation.  Indeed, some analysts believe that Linux on x86 can now serve the needs of almost any IT computing demand.

IT drove this change.  IT adopted Linux in part because it eliminated many technology switching costs (whereas UNIX only reduced switching costs).  IT adopted x86 servers because it reduced IBM, HP and Dell to commodity vendors.  Yet Scott does not recognize this in his guest column. 

Why?  Because Sun needs a myth to stem this  tide.

Sun failed to see the growing Open Source trend, whereas IBM and HP capitalized on it.  This left Sun in the bad position of having their entire brand and market differentiation assaulted.  The only thing worse than Sun’s lackadaisical reaction to commodity computing has been their attempts to subvert it.  Sun has half-opened their software inventory, under terms that no coherent person would call “Open Source”.  Yet Scott sells the new Sun “openness” as if it were better than the very market force that is crushing Sun’s market share.

To sell this, he must have a truth or a myth.  Since there was not a handy truth to support Sun’s marketing plan, a myth was created — that IT didn’t have good technology exit strategies.

The truth is that IT’s exit strategy is driving commoditization of the server stack.  And for Sun, the truth hurts.

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