Marketing Memos

No sooner did I speculate on who will make a run at providing p-cloud (private cloud) management tools than VMWare comes charging like malcontent bull in a Pamplona ally.

Like Apple before it, VMWare is co-opting a single letter of the alphabet to brand a series of products. Apple owns ‘i’ and VMWare now owns ‘v’. I hereby establish my claim to ‘g’ for everything I create, such as g-confusion and g-discontent.

One of VMWare’s initiatives is vCloud, which is one component of their broader Virtual Datacenter Operating System (VDC-OS) gestalt. VDC-OS – a clumsy acronym in an otherwise slick acronym flooded market – seeks to virtualize the data center in very broad terms. It already has select virtualization components for CPUs, storage and network and a 2009 roadmap for central management.

What is interesting about their announcement this week is the addition of a security module. Though conceptually there is nothing fancy about their security addition, it is the addition itself which is telling. As I recently mentioned, the winner in the p-cloud space will have to stitch together all the normal IT functions into one tool that allows the total abstraction of the data center – auto-discovery, server classification, network segment management, virtualization, provisioning, monitoring, redundancy, failover, alerting and more. That VMWare has taken on a small aspect of security shows they understand the whole product definition for p-cloud management is incomplete.

It is good that they recognize the problem. I wonder if they foresee the solution.

P-clouds present a perpetual problem with whole product development, namely that nobody can do it on their own. The primary reason the high tech business is rife with alliance that change faster than smoochers at a spin-the-bottle party is that everyone is seeking to create a whole product by getting other companies to provide some part of the total solution. As markets and competitive realities change, so do alliances.

The closest thing to a permanent relationship in Silicon Valley exists between Larry Ellison and his ego. After that the longevity of a press release is the nearest runner-up.

So VMWare faces a problem. To virtualize the data center requires providing in a virtualization management tool all the infrastructure management components that CTO’s have bought over the years from best of breed vendors. VMWare would be certifiably insane to try building VDC-OS by itself. They do not have not can they acquire and rapidly integrate expertise in all the different facets of data center management. They have to partner and open VDC-OS in such a way that other solution providers can port their existing technologies into VMWare’s evolving infrastructure.

Cisco helps. Nobody knows networking like Cisco, and they have tagged with VMWare on some other projects. Since virtualizing the network is part of the whole product definition for p-clouds, VMWare has a head start. Expect partnerships with HP (monitoring ala OpenView), possibly AlarmPoint (alerting) and others. VMWare has already implemented an API to bridge VDC-OS the data center cloud to external clouds, so perhaps the APIs will enable other technologies to aid in managing a p-cloud.

Do not expect a lot of participation from Microsoft and Citrix.

In the oddest alliance since Microsoft and Novel made kissy-face, Redmond has partnered with Citrix to bridge not only Hyper-V and Xen but Citrix’s more capable virtualization management tool. This is a shotgun marriage where two competitors with nothing even close to a whole product are teaming to block VMWare’s inertia. Microsoft and Citrix stand to lose enterprise mindshare if (or perhaps when) VMWare brings true p-clod capabilities to the market.

VMWare has a vision, and at first glance appears to understand that they need to open their architecture to extend it outwardly. As interest in VDC-OC grows, they VMWare will feel the heat to open further – ala Salesforce.com App Exchange – to allow nearly any addition functionality to be added without VMWare having to build it themselves.

Once I see that, I’ll know who will lead … nay, who will own the p-cloud market.

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Financial forecasters foretell that the technology sector leads the economy out of recessions.

Which means we are in for a long one this time.

I decline to scare my fellow technophiles into believing the end is nigh. It might be … I just lack any specific evidence indicating eminent doom. North Korea and Iran are persistent wild cards but they have nothing to do with technology marketing. They are strictly consumers of high tech products like rockets and reactors.

Yet as recessions go, this one will be worse than average. Today the Federal Reserve – co-progenitor of the current recession, thank you Mister Greenspan – downgraded their economic forecast. Far from being Depression 2.0, the outlook is still glum with unemployment rates and GDP shrinkage rivaling the late 1970s. The Fed’s dower description of the economy echoes what Computer Economics predicts – that the recession will not bottom out until the end of 2009. Thankfully inflation is not an added factor, but given a couple of trillion dollars in new national debt, that will come along about the time the economy revives.

The effects of the recession are already felt in high tech.

During the summer and fall while giving speeches on recessions marketing, I told my audiences not to believe the overly optimistic forecasts by industry analyst. Those people are paid to be upbeat even when their clients are beaten down. Sure as silicon is sacred in The Valley, analyst fall forecasts are proving to be higher than Peruvian Coca farmers.

Look at any sector in IT technology and you will find no sunshine. HP reported today, and except for services they see slumping sales. Servers down. PCs down 19%. Printer and ink (for Gawd sake) down 19%. In other words, if it is a commodity or a supply, belt-tightening rules apply and sales have and will continue to degrade.

What does a marketing executive do during periods of economic carnage, aside from investing in the Jack Daniels company one bottle at a time? It largely depends on the market and segments in which you play, but there are some simple rules for recession survival.

Best buddies: IBM makes about 20% of their annual revenues off a mere 100 customers. Targeting long-term relationships on which you build near exclusivity helps. Pick your top 100 and arrange sit-down strategy meetings to learn their plans and forecasts. They don’t stop spending during recessions, but they do change their priorities. Know those priorities and apply them to your top 100 and perhaps the rest of your customer base.

Sell proper pills: Marketers stereotypically peddle either pain pills or vitamins (i.e., “we can cure your problems” or “we can make you a muscle man”). Selling pain relief has the unfortunate requirement of discussing pain, and unless your particular digital analgesic relieves your customers of recessionary afflictions, then you increase their desire not to spend by discussing pain. Switch mainly to selling vitamins. Show how you can make them stronger in bad times. Your message will be better received.

Up and away: Sell up and sell laterally into existing accounts. During down cycles, people don’t want to take on new technologies because it amplifies risk. However, selling up and selling sideways is selling into existing accounts where you are known and trusted. T’is better to sell a low cost add-on module to 100 existing customers than nothing to 100 new customers.

Socialize: Social marketing works in B2B … believe it or not. Studies show peer-level recommendations work in high tech. But you have to instigate and facilitate these conversations. The good news is that once you learn the ropes, this can be cheaper, faster and more effective than other forms of marketing. During a recession they may be imperative as many people resist thinking about purchases until someone they trust brags about their buy.

Then there are services. It may be too late in the game for you to invent meaningful sets of new services that have clout in a staggering economy. But HP’s report shows what IBM figured out a long time ago: that IT is complex to the point that services are more important than product (and increasingly so since IT products are rapidly commoditizing). HP’s services revenues (discounting the effects of their recent EDI acquisition) crept up.

The take away is this: marketing during a recession requires being closer to your customers than ever before, be it tapping your top clients, selling deeper into your base, or becoming a service oriented outfit. In down times think high context, not high volume.

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One rule of marketing is to test your campaigns before launching them. This is so basic that those who fail to do so will fail in spectacular ways.

Sounds like we are talking about Sun again.

We are. This morning I received a quasi-spam from Sun promoting Glassfish, their Open Source web application platform. Since I have been delinquent on studying Glassfish and seeing where in the web app ecosystem it fits, I immediately jumped to the Sun Microsystems web site.

Sure as sin Glassfish was not only prominently displayed in the left side menu of downloadable goodies, the home page banner was a big blue ocean with a glass fish swimming therein. I clicked into the download menu and as expected there was a “learn more” link. So far so good.

The link points into the Java development web site … to a blank page. “Learn more by learning nothing!”

Now I’ve bungled a thing or two before – small things like a marriage and the overthrow of a small, third world government. But not testing links from your home page, not assuring that the linked web page/site is in code lockdown, or rushing a promo email into the wild are all signs of an organization not executing well internally. We know Sun suffers from ideological product initiative, and that is tragic enough. But failing to satisfy prospects looking at free software removes any belief that quality and support exist behind the products.

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In recent conversations with industry activist and profiteers, I have concluded that there is a hole in one market and another market that is morphing from maturity.

I sat with Robert Eve, the marketing VP at Composite Computing, during a recent IDC briefing. Composite is in the data virtualization business, making seemingly endless pools of unrelated data more usable. We mutually concluded that the advent of certain technologies (commodity hardware, exponentially expanding bandwidth, cloud computing) combined with near real-time business pressures will reduce or eliminate traditional extract, transform and load (ETL) operations. Things are moving fast in business and computing technology is changing data center options.

Speed will overrule other decisions.

Not everyone believes this trend.  I exchanged email with Bill Hewitt, the CEO at Kalido.  His company – which lives in the more traditional data warehouse market – sees increased rules of governance growing traditional ETL operations and data marts.  As slick as real-time business intelligence is, harmonizing the data and documenting the source of business decisions remains an imperative.

Missing is management of these computing monsters. The concept of the cloud is still relatively new, despite industry ex-leader like Sun announcing that they will jump into the game. Cloud management remains the domain of Google, Amazon and other organizations with more computing iron than a NASA wet dream and the staff to support it. Yet the concept of private clouds (or as I’ll coin the next industry abbreviation, p-clouds) is being discussed.

And like teenage sex, everyone is talking about it and nobody is doing it.

Thus, there is a hole in the market. Some vendor needs to develop a management suite that handles all the misery of cloud management. Auto-discovery, server classification, network segment management, virtualization, provisioning, monitoring, redundancy, failover and alerting. Nobody I know of has all that in one package. Openview, Tivoli and other products are partial solutions. But for clouds to be effective, all the resources in the cloud must be abstracted and managed as such.

Writing code to do this? Talk to me about marketing it.

While clouds may soon make the average data center one huge abstracted gizmo, the need to make sense of all that data grows. The formerly hot BI sector is showing its stretch marks, displaying occasional hot flashes but largely cooling and going down market. The BI market is morphing in part because the high end is saturated and in part because the promise of BI hasn’t paid off as well as many enterprises had hoped.

It is a sign of a mature market when there are customers who never got their ROI but still use the product.

It is also a sign when you have two or more Open Source contenders in the space. I chatted with a very animated Brian Gentile, CEO at Jaspersoft. I mentioned my and Robert Eve’s observations on clouds and data marts, and Brian concurred. The early trend is toward throwing hardware at the problem, reducing the delays and distance between the information consumer (i.e. info worker) and supplier (i.e. database). Brian reminded me that the BI sector has been around for 25 years and is fragmenting, which is why the Open Source vendors are making headway and why Jaspersoft in particular is doing well since their code can be easily embedded into other applications.

Other BI vendors are going vertical, to find markets in which they have or can recruit subject matter experts and thus add industry specific smarts. This is a short-term play because vertical focused business consultants are using Jaspersoft and Pentaho (because they are free) to craft industry specific reports (and sometimes openly sharing these), and then leading their clients to deploy the same. This results in downstream sales for the Open Source solutions.

P-clouds are cloudy but will be very sunny for a fast moving solution provider. BI is sunny but growing cloudy as winds blow mid-market users from the original BI market leaders to the new dogs. And the poor IT admin has to rack and rack and rack more gear to feed the voracious cloud of tomorrow.

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