Marketing Memos

I recently gave a talk at the Software Licensing and Marketing (SLAM) conference where I painted a dower and gloomy picture for technology marketing this and next year.

Seems I may have been overly optimistic.

Though not yet officially proclaimed, we are in a recession. If my wet cocktail napkin math is any good, we will in this recession for quite some time — well into next year. Oddly though, in the earliest quarters of this recession some multi-national tech companies (Oracle, IBM, etc.) reported amazingly good sales growth.

And this will be a short lived phenomenon as the recession spreads.

Dig into their numbers. For example, IBM recently reported an 11% sales growth. But if you subtract the effects of the falling U.S. dollar, IBM’s sales grew a mere 4%. Granted, any real growth in the early part of a recession is a Good Thing™. But for an industry giant like IBM to slip to a 4% growth rate indicates the beginning of a downward slide.

That recessionary slide is going international.

We live in a global economy. Unlike any other time in human history, a major change in fortunes in one locale will impact economies everywhere. Thus tech companies that are currently doing well abroad will soon not be doing so well anywhere. The temporary influx of cash will rapidly diminish as the dollar finds a floor and the U.S. recession spreads like an Asian flu.

Satyam may be the leading indicator.

Satyam has routinely experienced growth rates of 45% or more a year. But for fiscal 2009 they recently scaled back their expectation by 40%. And this is a preliminary pull-back and will get worse. With oil inflationary pressures raging unabated, with Europe and the Americas reducing corporate spending, and with hyper wage inflation in India, the situation for Satyam is likely to get darker than a certain hole in Calcutta.

For tech marketeers, this means the number of recession survival options is dropping faster than a college girl’s top during Mardi Gras. U.S. is down, Europe is pulling back, and now Asia is sliding.

What makes this period exceptionally worse for tech is that we are at the end of one of our industry’s very predictable cycles. During good economic times customers go on buying binges, acquiring all forms of new technology, including stuff that they don’t really need. The market then goes from this binge phase to a period of technology indigestion, where customers quit consuming and try to integrate everything they have bought.

The current indigestion phase has arrived at the same time as the recession. Ouch!

Expect to see a lot of small tech companies with promising wares to be gobbled-up in the coming year. Many will simply die, but others will find acquisition exits to avoid becoming corporate corpses.

For the rest of you, Silicon Strategies Marketing has some tactics and strategies for surviving a recession. Give us a call and write us a check … we’ll be glad to help.  There may be a recession, but we have decided not to participate.

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When Gartner insinuated that Microsoft was doomed, you heard the loudest sound from a mass of penguins since the release of Happy Feet (had to plug that movie since my step-brother did the motion capture for it, as well as Lord of the Rings, Polar Express, and other great films).

The death of Windows has been greatly predicted, and equally exaggerated, but nothing lives forever and Microsoft may well accelerate necrosis with Vista (does anyone like Vista?). Bill Gates abandoned ship with suspiciously good timing … after all, rats are the first to jump a sinking ship.

Gartner’s maintains that Microsoft has not listened to the market. This is not news per se. Microsoft has always worn a hearing aid, and often it needs to be rebooted. Vista may be the terminal manifestation of this malady. Vista provides nothing of significant new value while crippling system performance and breaking certain peripherals. Giving up a little performance might be acceptable when significant new functionality is part of the bargain.  But what Vista doesn’t giveth, Vista does taketh away while smiting your peripherals.

The timing for Vista’s vultures could not be worse. Competition is perpetual, a lesson that Microsoft has unlearned. Vista and its nothing-for-something value proposition arrives while Linux continues its accent. Linux is becoming ever more user friendly while maintaining ruthless internal efficiency. Since Linux can be had for zilch (providing you bootstrap your own support), it provides unbeatable value.

Especially in comparison to Vista.

Gartner gurus also note that Vista carries decades of legacy code in a highly non-modular package. Thus any change in core or subsidiary functionality is difficult and time consuming, as witnessed by the five years it took to give whelp the product. New millenium markets move much faster, and both Mac and Linux OSs — being new, UNIX based, and highly modular — will evolve faster than Windows can hope to.

Windows may be the new CPM.

Microsoft’s tin ear continues to be their downfall. Many customers, especially corporate types, want to stay on XP. Yet Microsoft has announced that after June this will not be possible — no OEM or shrink-wrapped copies of XP will be permitted. In other words the market has spoken and Balmer said “tough.”

Back home we call that “stupid.”

However, Linux may not be the scariest of Balmer’s nightmares. Commoditized broadband has given birth to competition from Software as a Service (SaaS). The pit bull of SaaS is SalesForce.com, who from the start said their goal was to eliminate software as we know it. Google started pecking at Microsoft’s highly profitable application suite by giving away word processors, spreadsheets, shared calendars and other goodies (or should we call these Googlies).

Now SalesForce and Google are tag-teaming Microsoft while Gates skates away across his lake of greenbacks.

SalesForce CRM data can now be called from Google applications. This is the first and best integration of significant and popular independent SaaS offerings, and one that adds real functionalist. Small companies who have grown dependant upon SalesForce, and would like to dump Microsoft, now have a means for doing so while adding new capabilities.

That’s a good value proposition, unlike Vista’s inverse value prop.

Recall what I said at the top of this missive about Vista delivering nothing new or valuable. SalesForce and Google are, and attacking Microsoft’s strengths in one breath.

Rumor’s of Windows death may be exaggerated … or they may have been a tiny bit premature.

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