Marketing Memos

I skated through OSCON last week, stumbling over a great deal of bad marketing, lousy messaging, and a squadron of 20-something kids who could not keep their elevator pitch under 30,000 words.

T’is the nature of start-ups and other enfeebled entities.

However, a few outfits either had such interesting products or refined messaging that I would put them into the “watch these guys” category.

Top on the list was click2try. The first marketing lesson today is the company name. Though not 100% intuitive given what their product does, their name nearly creates instant cognition. A well thought-out company or product name can be the difference between cold and hot leads.

What click2try does is host a cloud where end users can create a private instance of software they wish to test drive. Users get a certain number of hours of free test time and the joyous experience of having the software installed, configured, ready and of having the whole stack saved in between sessions for instant reload with all configuration tweaks and data retained. End uses can buy extra time if their demos run long.

What impresses me about click2try’s business plan is that they have three separate revenue streams. End user play time is one stream. The other is commercial software vendors who don’t want to set-up their own demo clouds. They invest less, get started faster and get better results by outsourcing. click2try also offers a white box version of their cloud to vendors that want to bring demo cloud headaches in-house.

Literally, click2try earns money coming and going, from both vendors and buyers. Slick.

Slicker still was their presentation. Tom Callaghan was the click2try’s pitchman at OSCON. Tom and click2try know how to present, and by present I mean get people from a state of ignorance to a state of appreciation in a logical order. Their booth art gave you and idea of what they did (first step, grab the buyer’s attention). Tom delivered a well thought out elevator pitch that I’m guessing was under 18 words (second step, creating understanding and interest). The elevator pitch allowed anyone to understand the click2try gestalt and then ask questions peculiar to their own needs (which, when answered as well as Tom did, creates appreciation – third step).

The marketing lesson herein is that you must guide prospect from ignorance to appreciation quickly, and this is oddly done with well crafted baby steps – good display and copy, precise elevator pitch, ready answers to all common questions. If you cannot achieve this, you will fail.

Another cloudy contraption at OSCON was Twilio. They provide telephony services in a cloud with a tasty twist. Their cloud telephony platform is programmable, either as a service from Twilio engineers or by the customer. When customers call you, they dial a number in the Twilio cloud. The cloud pings your server where your code (PERL, PHP, Ruby, nobody cares) makes decisions, queries databases, or wakes the boss – whatever you are talented enough to code. Your server then sends instructions back to the Twilio cloud for telephony action. In short, low risk, low cost, completely programmable/integratable outsourced telephony.

The marketing angles are multi-fold. The weakest angle is that it is a cloud service, and thus very scalable. Most companies don’t grow so fast that their PBX boxes run out of horsepower, so floating on a cloud has limited market appeal. The actionable bit is that Twilio works with whatever technology you are already using. Running LAMP? You’re good. A Microsoft shop? Twilio can handle that … providing your Windows servers are not blue screened. Running a half breed HTTP stack on your G-Phone? It will fly.

Twilio’s floor pitch, though not as perfect as click2try’s, was good. Better still is their web site where they rapidly take visitors from curiosity to cognition … providing you make one unguided click. In their “how twilio works” page is a simple, effective Flash animation that describes the value proposition better than what is on their home page. I’m sure the simple fix will become apparent to them shortly.

Last on my list is Appko, which is a ham-handed abbreviation of “Application Company.” Contrast this name with click2try. Which company name more quickly communicates what they do and what they deliver? Appko may be a clumsy name, but it is one step ahead of Twilio.

I’m kinda found of Appko because they are executing on an idea I had years ago but lacked the gumption to launch. They preload a server with Open Source versions of the primary applications you need to run a business and a navigation wrapper around all of them. Order the box, plug-in two internet cables (external net, internal net) and get busy. They bundle and support major Open Source server-side applications. You can build/host a web site, facilitate employee collaboration, perform some HR functions, and more. When I coughed up the idea years back, I considered calling it “Business in a Box.” Not a great name, but it got the point across.

Appko confuses their customers a bit by calling their product “Appko CRM”, then explaining that the product does email, collaboration, document management, e-commerce, HRM, ERP, and other business functions far beyond CRM. One of the rules of marketing is to eliminate confusion. The best early sales pitches are the plainest. click2try did this well, Twilio did pretty good, but Appko’s pitch creates confusion from the opening line. Happily, this is easy to fix.

Appko’s target market is the SMB, heavy emphasis on S. Commonly these corporations lack anything resembling an expert IT staff. Typically Ma and Pa recruit their self-taught, geekish offspring to engineer their IT infrastructure. Finding, evaluating, installing, configuring, testing and then implementing a package of applications is so far beyond their capabilities that most never try. Many are turning to SaaS vendors for point solutions or NetSuite for a more integrated package.

Appko may have a long-term advantage in the market if they can broker or build integrations between these popular Open Source apps. The customer would receive a private, behind-the-firewall suit of tools with knowledge that the data is portable since the code is public. Appko benefits by investing next to nothing in software development, though they better be careful about support pricing (SMB’s are notorious tech support time wasters, bless their pointed heads).

I hate bottom fishing markets, but they are large and largely untapped. Appko is tapping them. They need to create buzz, mainly because all other forms of SMB promotion are cost prohibitive. They need to segment the SMB market and pick a juicy slice, adding tools that add delight to buyers in the segment. And they gotta get their pitch tighter, a process they can kick-start by talking to the folks at click2buy.

……….

Three companies with three unique products that have promise. One had a well thought, well honed presentation and a great name. Another had an odd name but respectable presentation. The last had an awkward/explainable name, but no smooth pitch. All other things being equal, on who would you bet your venture dollars?

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“Bottoms up” is not just something you say during cocktail hour or at a strip club. It is a market strategy as well, and Google will implement it with a fist full of dollar bills.

News of a Google netbook operating system – Chrome OS by name – has emerged. Targeted for netbooks running ARM and x86 chips, COS centers Google’s Chrome browser as the interface to the world and to Google applications. This latest Linux distro is designed to address the bottom of the commercial computing market (we’ll ignore the One Laptop per Child gizmos that would otherwise win the Barrel Bottom Scraper Award for underpowered PCs).

Scott McNealy understood half the equation when in an over-caffeinated frenzy said “The network is the computer.” Naturally McNealy saw the hardware side of the system, being that he was in the hardware business. But as any technology marketing maven will maintain, it is the apps that sell the hardware.

Google is all about the apps.

Restate McNealy’s maxim for software and you get “The Internet is the app.” Google search is arguably the most popular app on the Internet. Their desktop applications … not so much, but for low-end users they are plenty.

Low-end users like netbook buyers.

Now that Google apps (Docs, Gmail, Maps, etc.) can operate offline, and given that Google’s browser can be tweaked to enhance these offline apps, Google has all the components for customer lock-in or delight, depending on how un-evil Google really is. Non-power users who want a computer for the most mundane uses – people for who Open Office is overkill – could easily exist using Chrome OS, Chrome Browser and G-apps. This is probably 80% of the market.

I’ll take an 80% segment any day.

The open marketing question is “what hardware vendors would ever use COS?” Industry analysts assess the low end Microsoft tax on netbooks to be about $20 a unit when XP is deployed, or about 7% of the cost of the cheapest netbook available today at CompUSA. $20 may not sound like a lot to you or me because it is a one-time cost. Some industry estimators expect 35 million of the little laptops to be built this year. The Microsoft tax would rack-up nearly three quarters of a billion dollars, which is serious money to hardware vendors or anyone outside of the Obama administration.

Smart money is betting that Google will ask only a nominal, fixed partner fee for joining the COS party. Pay a few grand to gain access and your hardware company is alleviated of the Microsoft tax. Assuming that the brand of operating system is irrelevant to the average netbook buyer, netbook builders are looking at a few extra million dollars a year to pad their 201Ks (which were 401Ks before the recession).

Google’s goal then becomes monetizing the user, not the OS. Tech pundits predict that advertising will be Google’s approach. This may well be. The evil half of my brain (which in full disclosure actually occupies more than half my cranium) sees a million ways of inflicting advertising on unwary netbook buyers. Most methods however are intrusive, unwelcome and exactly what Google will not do. Chrome will not force people to endure Google ad pop-ups, or permanently scrolling banners on the top of the screen (besides, netbook screens are too small to waste on banner space).

Brand and first choice in external interactions is where Google gains, advertising revenues following online. Google is creating a 100% Google environment and a go-to brand. When netbook users wake in the morning, their lives will revolve around the Google OS. Add Google browser, add Google desktop applications, add Google search (built into everything), ad nausium. It is a completely interconnected and Internet driven brand. Microsoft came close to this when indoctrinated info workers adopted Microsoft Office atop a Microsoft OS.

It was Microsoft’s overriding strategy that both gives Google opportunity and may require Google to cede it.

The question is if Google must open the OS in order to compete. For all Microsoft’s faults (a list that is slightly longer than War and Peace and a Hugo Chavez speech combined) it understood that the application sells everything else. The network is the computer, the Internet is the app, the app is everything. When there is a market leading application, Microsoft supports it then clones it. Microsoft has always entertained, encouraged and even funded developers to assure that the next great app – whatever it may be – will be under development somewhere. Microsoft always wants the Next Big Thing to run on Windows first.

If Google closes COS, it will enjoy only limited market penetration. People slightly more advanced than monkeys – anyone who has not created permanent couch indentations – will eventually want to do something on their netbook that Google has not provided. Google’s desktop toolbar is not a digital Darwinian ecosystem. Gadgets are insufficient. Google will open COS in order to expand.

Just don’t expect it in version 1.x. Google knows not to invite unnecessary heat, and will keep COS locked while it matures and takes complete ownership of the low end of the market. After that beachhead is secure, they will open, expand and become a serious threat to Microsoft.

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It is always fun to see a market tipping point at the moment it occurs.

Samsung, the Korean tech titan, is rumored to be exiting the hard drive business for ultra thin notebooks, switching instead to solid state drive (SDD) production. It appears that Hitachi, Fujitsu, Seagate and Western Digital have abandoned that market as well, leaving Toshiba alone to peddle electricity sucking spindles for your groin warmer.

When five out of six primary players leave a market, you know that market is toast.

Intel is accelerating the switch. They report that as soon as next month they will double the density of their SSDs, pumping in a hefty 160GB into the small form factor. Since SSDs are a relatively new market phenomenon, and since work has only begun on how to bundle more bits into the drives, we can expect Moore’s law to switch from CPU cycles to SSD saturation.

Amazingly, this is occurring without a single dollar of Federal stimulus money.

Markets change and technology markets change fast enough to make blinking a hazard. Given the inherent advantages to SSDs for laptop users, and the gurgling price/capacity wars, we can expect most new business laptops to come with SSDs within a year or two, and most new consumer laptops soon thereafter.

With markets changing at that speed, marketers have an added headache, namely calling the point for abandoning old technology. It is never easy to decide when to abandon a market or strategy, but it is part of the CMOs role. In the technology business it takes gamblers’ nerves. Exit too soon and you leave behind a viable cash stream. Switch too late and you are on the bottom of the compost heap in terms of market share and revenues.

The primary indicator to making this decision is when a new solution set presents customers with one or more benefits while eliminating former deficits. Laptops now outsell desktops and that gap will widen rapidly. When laptops were twice the price (or half the performance) of desktops, only road warriors and people who enjoyed typing with pencil erasers would own one. When the price/performance gap between laptops and desktops became more or less none, buyers started switching. The new benefit (having your computing power wherever you went) was important and the old deficit (high price or low performance) went away.

Sure, this sounds basic, but how many CMOs include this criterion on their monthly product line review check list? Fewer than presidential cabinet members with tax problems (well, that’s unfair … there are way too many of the latter).

SSDs are now following laptops, figuratively and literally. The new benefits are significant – less battery drain, less fragile, more reliable and cooler on your private parts. The only deficits – price and capacity – are falling fast. Thus we are at the edge of a market demand shift.

Now, if Intel or Samsung would thank me for pointing out their advanced thinking by sending me an SSD for my HP 6530b laptop …

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