Marketing Memos

August 29, 2007

Acer Brandage

Email This Post Email This Post

Nothing like a little market consolidation to convince you that the world as indeed gone mad.

This morning the circuits were buzzing with news of Acer both rising to the #3 PC maker position (behind HP and Dell) via purchasing of Gateway … which had agreed to purchase Packard Bell.  Thus we have a digital menage a trois climaxing in panting brand exhaustion (hope that doesn’t trigger your spam filter).

The problems with this deal are many.  Merging three companies (four if you include the already absorbed e-machines), three cultures, and three infrastructures is a hideous affront to sanity.  But being a marketing Guy, I focused on branding.  Managing one brand is tough.  Managing two is worse still.  Managing three is pure art.

The problem is how to create three distinct brands in a commodity market?  PCs are by and large indistinguishable from one another in terms of form and function.  Sure there are gamer niches, road warrior laptop plays, and power user high ends.  But Acer, Gateway and Packard Bell are indistinguished from white box products, much less one another.

In theory a multi-brand PC play could be done, by forcing each division to focus on one segment in the market.  Acer could claim the high end and continue to produce Ferrari laptops and hot servers.  Gateway might be restricted to undifferentiated middle-tier retail products, and Packard Bell could be doomed to churn out Wal-Mart bluelight specials.  This may be the only way to manage three brands in a commodity market.  But it also requires eliminating overlap between product lines, and that removes from the minds of customers (especially B2B tech buyers) the ability to create deep partnerships based on the “serve my every need” CIO desires.  In other words “why buy Acer when I can get nearly the same thing from HP and have access to one company, one brand, and everything from notebooks to mainframes?”

But evidently, Acer thinks they can pull it off, saying “The company plans to market multiple PC brands worldwide
after the transaction, thereby increasing sales. “


Acer shares closed down 1.85% at T$63.60 before the announcement.  Evidently Acer is the only one who is buying their hype.

August 14, 2007

LinuxWorld Lackluster

Email This Post Email This Post

Having long teeth in the Linux market place — due mainly to my lasting associations with SuSE, Novell, the former Linux innovator VA Software, and a boatload of small Open Source firms — I attend LinuxWorld every year, to see old friends, make new ones, and monitor the state of the industry.

My recommendation to you is to go to LinuxWorld while you can.  If it exists two years from now, it will be a community-only event.

Linux (and LinuxWorld) are victims of their own success.  Now that Linux is thoroughly mainstream, vendor need to attend LinuxWorld is reduced to those in negative competitive situations, or those kick-starting a new venture.  Red Hat is now a permanent no-show, and the major infrastructure vendors are cutting back on booth space.  The community booths ate up a larger share of floor space than ever before.

Regardless of the state of the show and its future, there are amusing and sad things to note about the event and the exhibitors.  Between Novell taking center stage on the exhibit floor, hoisting the SuSE gecko colors, and everyone sporting an “enviro-friendly theme”, the floor was awash in green.  I felt like I was walking through a salad bar.

The Unisys booth was sloppy and completely unmannedAs is my habit, I stopped to examine booths , analyzing the presentation and messaging provided by the vendors, and sadly it is getting worse.  First, I have to metaphorically slap Unisys for being outright sloppy.  Aside from being a tiny prop-board display, their booth was completely unmanned each of the several times I passed by (click the pic for a bigger image).   The first rule of trade shows is to staff the booth with enough people that you always have someone there to great prospects and reporters.

Another strange booth (and not alone in its marketing deficit) was this waste of space from Applied Watch.  Notice the large, evil looking lizard, and the cryptic slogan (click the pic for a higher-rez shot).  Also notice that there is nothing else on their backdrop that tells you what they do, what their value is, or why you should stop to chat.  Applied Watch had a booth that said nothing and drew nobody at LinuxWorldThis explains why their booth was devoid of visitors both times I walked by on the 2nd day of the show.  At trade shows you have less than 15 seconds to motivate someone to stop and talk.  With nothing to encourage a conversation, stopping foot traffic is nearly impossible (this is why both babes have always been a popular tool at male dominated geek fests like LinuxWorld).

Speaking of women (my favorite topic), there were a lot at this LinuxWorld, but not as attendees.  PR teams are heavily staffed with women.  When I see a show where the vendors have brought scads or ladies, and most talk like PR agents, then I know an industry is approaching stagnation, since PR is the first resource to bump-up flagging sales.  Phrased differently, interest in women is a sign of maturity for both men and trade shows.

One of the bigger news items was Novell CEO Ron Hovsepian’s keynote, in which he all but begged the community to establish a one-stop point for application certification on all Linux distros.  This is a sure sign that Novell is painfully lagging their main competitors Red Hat and Microsoft in getting applications certified on SuSE.  They want to level this playing field and Ron wants the community to force the issue.

Good luck.  The community wants Linux to win, but they have zero vested interest in making Novell’s work easier.  Not only is there a lack of motivation for founding, establishing, promoting and managing such a project (how would you get Red Hat to participate?), knowing such a project raises Novell’s prospects may be repugnant given their dealings with Microsoft.  It would be good for Linux in general, but as long as applications are piling-up on Red Hat, the community likely cares little about how they are not piling up on SuSE.

My last observation about this year’s event was the overpowering presence of embedded Linux and associated development tools.  The embedded market is huge and growing geometrically as consumer goods adoption grows and competition drives affordable components.  But like most nuevo markets, this one is horribly fragmented with specialists claiming to accelerate development in one niche or another.  It is a good time to make money, but expect a lot of victims in the coming two years as the smaller embedded players get bought or die from financial blood letting.

One of the possible exceptions is a niche player called Virtual Logix, who make a virtualization system for embedded devices, as well as some real-time OS support.  At first I didn’t get the value proposition of virtualization for embedded operating systems.  But the keyword is “insurance”.  The fact is that vendors want to add features to embedded devices in the field.  There may be time when adding a parallel OS or even a micro OS in parallel is the fastest/cheapest/stable way to add functionality.  By building virtualization into your products, you open an avenue to add capabilities without having to force your customers into a switching decision.  I cannot vouch for the Virtual Logix products, but the idea is interesting and potentially powerful.

SCO … go!

Email This Post Email This Post

The Open Source community can barely contain its collective
glee now that a judge has ruled SCO does not own the copyrights to UNIX.

The community should take a deep breath, because the game has just gotten
interesting.  Microsoft and Sun will make it so.

During their disingenuous term of copyright “ownership”, SCO
extracted money from Microsoft, Sun, and other companies wishing to avoid any
potential litigation vis-a-vis UNIX copyrights.  Sun paid their tribute, as did Microsoft.  Bill gates
upped the ante by channeling funds through intermediaries into SCO to help with
their litigation against IBM, and thus hamper Linux adoption through FUD.

SCO share price drop after judge rules against their copyright claim
These cross funding schemes have a number of implications.  First, the
judge made it very clear that any licening monies SCO received for the
copyrights they did not own are now payable to Novell.  Novell has the option of
forgoing that payment, but in the warfare of free markets, releasing prisoners
is bad policy.  With a mere $8M in cash, SCO could not likely stay alive if
such bills came due, and Novell would enjoy life more if SCO simply
vanished.  Given how their share price tanked on the first day of trading after the judge ruled, the end may well be neigh.

This win also changes the relationship Novell has with Microsoft.  In
their deal earlier this year, they entered many covenants that kept one and the
other out of court over Microsoft patents and Novell IP (copyrights). 
Novell may now have slightly more leverage in the wake of the SCO ruling, but likely won’t use it as their
newly minted pact with the devil has far larger benefits over the long term that the immediate harasment value.

But they do not have such a relationship with Sun, and given legal vagaries,
might well wish to enforce copyright restrictions against Solaris.  True,
Solaris is not a profit ceneter any longer given its release into the Open
Source wilds.  And if any of the copyrighted materials have already
entered the realm of GPL (as they may have with the passive consent of Novell
and their own Linux distribution), then there may be no leverage at all. 
But the heads at Sun must be rifling through legal documents as I type to
assure themselves that they are in the clear.

Which brings us to the question of Novell’s intents.  Will Novell Open Source these conflicted copyrights?  They may have already.  When they bought SuSE and started distributing Linux (with these copyrighted materials allegedly embedded and exposed), they may have Open Sourced the intellectual property.  I have not dug through their distro, so I don’t know myself.  Given the timing of the acquisition and the SCO suit, I doubt they foresaw this set of affairs, and thus may not have made the necessary edits in time.  The entire, prolonged, expensive debate may all well be moot if someone, somewhere is holding onto an aging SuSE distro CD with a Novell label affixed and can find therein a GPL stamp.

Let the digging begin!

p.s.  A personal note the SCO CEO and all around scuz Darl McBride.  Thhhhpt!

August 7, 2007

Mobile Linux Losers

Email This Post Email This Post

When I see companies with falling performance partnering, I think of every mad slasher film Hollywood have ever coughed-up.  The scene is predictable.  A bunch of frightened girls huddle together while a chainsaw wielding maniac slaughters them one-by-one.

At least that is the image that flashed through my mind when I saw a pair of LinuxWorld-timed press releases from Wind River.  Don’t get me wrong, I like the folks at Wind River and since they are in my back yard I know many of their employees.  But internal scuttlebutt indicates a lack of Open Source enthusiasm at Wind River as the proprietary factions within the company either do little to promote embedded Linux, or actually hinder the process.

So this week we see Palm’s latest product misconception, the Foleo line, adopting Wind River for future development and deployment.  As a niche product, enough bad things cannot be said about Foleo, and they all have been uttered already.  If in the face of LinuxWorld this is the best news Wind River can generate, it says much about industry adoption of their embedded Linux development tools.

The other, slightly more hopeful note came from a joint announcement with Motorola (a company who rapidly lost its lead in the mobile market) in joining the LiMo (LInux MObile) Foundation, yet another group seeking to standardize Linux for their own sake.  Though LiMo has a list of interesting co-conspirators (like DoCoMo, Samsung and others), the success of this group will depend not on standardizing a mobile Linux platform than by bringing new capabilities to market.  Currently, propritary  mobile platforms are innovating the user mobile experience (think iPhones and BlackBerrys) and turning cellphones into the Unified Communication Hub.  Now if they could just get young girls to use hands-free kits while driving, I’d feel a lot safer crossing the street.

In other words, handheld infrastructure is not the big issue, and a standards group will only help sell more embedded Linux if it in some way facilitates more rapid and creative application development. 

This is where LiPS (Linux Phone Standards) comes in.  Already releasing the first LiPS specification, they have moved into the market some standards as well as a set of widgets and applications.  In other words, LiPS has already kissed the mobile application space (sorry, some puns cannot be helped).

It is somewhat disheartening to see multiple organizations seeking to “standardize” anything, especially Linux.  And I cannot help but wonder about the motivations for launching LiMo after LiPS has delivered solutions.

Regardless, the mass interest in mobile Linux is wonderfully reminiscent of the early days of server-based Linux (which never developed for desktop Linux oddly enough).  We see a mad scramble of current and former heavyweight competitors all seeking to make Linux more meaningful and usable in a specific market.  Mobile is still open to innovation and given the incredible price pressure in this consumer market, Linux is a natural fit. Being a betting man, I’m confident that Linux will usurp all other mobile platforms with the possible exception of Microsoft’s, and even on that I’m willing to wager.

 
Contact    Site Map    Search    Privacy    Copyright