Marketing Memos

Oracle, as always, has a good game plan, though they have not thought out everything under the Sun.

I attended Oracle’s outbound communication extravaganza concerning the completed swallowing of Sun.  In the time from initial purchase to the final approvable by European Union regulators, Oracle has been busy deciding what parts of Sun to keep (pretty much everything), how to integrate to company (interestingly) and where to create real market value (specific).  In an event short on surprises – unless Larry did something quirky, which I missed by having to leave early – OraSun changes the game, which is the entire point of marketing.

Aside from seeing “Sun” positioned over “Oracle” on all the event branding (the last time this will undoubtedly occur), the basic market strategy of the merger can be summarized as “We are your IT hub, we are specializing the center of your operations, and don’t look at that man behind the curtain labeled ‘cloud computing’.”

The first and recurring OraSun gestalt was that Ellison owns a stack, from iron to apps.  They are not kidding either.  Ignoring technology religion, Oracle now provides a solution for servers, storage, virtualization, middleware, databases, applications and the management of the two major strata (systems/apps).  They may have nothing in the networking realm, but they will next year when Oracle buys Cisco (that was a joke, but I heard you gasp).

This is an interesting turn of events.  As one OraSun exec noted, the IBM of the 1960’s offered head-to-toe solutions, insinuating that Oracle was the IBM of the new millennia.  Given how close to financial death IBM came to in the 1980s, we should add an Outlook entry for 2030 and retake Oracle’s financial pulse.

History is its own recycling bin.

OraSun’s marketing strategy is to be one-throat-to-choke for the hub of datacenters.  They rightly recognize that mission critical work is both ill-suited to cloud computing and that by tightly cross-tuning the OraSun stack, they will create a market domineering solution set.  Much of OraSun’s presentation spun tales of how the database, Solaris, SPARC and flash-enhanced storage are being co-designed.  The end goal is to assure that the OraSun stack is inarguably the most technologically effective data hub.  HP can’t compete as their Itanium solution is rapidly evaporating and their database offering almost isn’t.  IBM has a shot, but with fat margins in services, declining acceptance of DB2 and a post-Gerstner reluctance to centralize authority, they likely will not challenge the throne.

OraSun positioned themselves very well.

Oracle’s (wo)men in black – black suits and white shirts were the corporate executive uniform – repeated the manta of removing the systems integration task from the datacenter.  Oracle’s messaging was pointed like a revolver at CIOs and CTOs, claiming that systems integration is a major headache for these folks and that no other vendor offers all integrated points.  Granted, Oracle artfully ignored some plumbing products necessary to even a data hub (routers and network management), but their point was compelling assuming that the top of the stack – applications – met customer needs.

One OraSun spokesperson was somewhat defensive on the subject of cloud computing.  Obviously Oracle understands the issue and also understands that they do not have a clear market advantage at present.  He struggled with the concept of saying “grid” computing is “cloud” computing before tossing up a hit-piece slide on VMWare, which does own the cloud space.  For now it will be an uncomfortable stare-down:  OraSun is willing to own and dominate the hub of the data center on specialized Sun hardware, and let VMWare handle less-critical cloud computing with generic hardware.

For now.

Since OraSun gives away virtual machine solutions, they have the ability to buy cloud management tools that lost to VMWare and integrate those into OraSun systems management utilities.  After Sun is completely integrated into Oracle and together they dominate the datacenter hubs, expect Larry’s Legions to make a cloud play.  The market exists, is important, complements OraSun’s virtual desktop products, and is acquirable.  OraSun is merely talking-it-down for the moment.

Heads-up VMWare:  Larry will gun for you next.

The prelude is a hiring binge.  OraSun is vacuuming the salesperson market and adding 2,000 head to their global sales squad.  Ellison understands his “unified stack” position in the market is unique but not impenetrable.  Alliances will be formed and cloud computing offers some alternatives to raw central-server and grid approaches.  OraSun’s mission is to move as many customers to their combined solution as quickly as they can, because the switching cost of disengaging from a stack as complete as OraSun’s will be huge.  Lock-em’ in rapidly while working out the cloud initiative, then dominate the remainder of the datacenter market.

OraSun’s wildcard was not as wild as expected.  No real news was released about MySQL aside from OraSun integrating controls for their infrastructure management tools into the almost universally popular and largely free DBMS.  This is less of a commitment than a loss leader.  MySQL has invaded the enterprise in much the same way as Linux did.  It is not ready to be in the mission-critical hub, but it needs to be managed more effectively than most current tools permit.  By adding MySQL to the OraSun infrastructure management suite, Oracle is blocking alternatives and thus avenues of escape for customers.

From a marketing standpoint, Oracle shows once again that old lessons should not be ignored.  They have taken the enduring one-throat-to-choke market demand and amplified it.  CIOs – aside from the rightfully paranoid ones – will be hard-pressed to argue against adopting Oracle.  Marketing is first and foremost about identifying and satisfying needs, and OraSun is aggressively doing just that.

Let’s see if the scheme works.  Oracle likes buying successful companies, but Sun was nearing fiscal death when Larry swept in.  Larry’s also trying to buy one of the worst basketball teams on the planet, so maybe he has simply run out of good investments.

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When does a brand become detrimental to a company?

Ask Google. They are having a relatively rough time with their brand this week.

Google encountered trouble during the corporate equivalent of a temper tantrum. When they discovered that someone in China (presumably the government) had hacked into Google’s network and spelunked through dissident emails, Google threw a hissy fit. Executives at the all knowing Google failed to know that the government of the People’s Republic of China (PRC) remains one of the most ruthless around. Google should have known this since Google helped the PRC censor Internet information in order to (according to the PRC) “Properly guide Internet opinion.”

Kinda evil, eh?

Google’s brand started dissolving. In Google’s infancy, they adopted an informal corporate motto of “Don’t be evil.” This kindly directive even found its way into Google guiding manifesto “Ten things we know to be true”, a creed that doubled the simpler tradition established by Bill and Dave, of Hewlett and Packard fame, and their five item “HP Way”. On Google’s top ten list is the ideal that “You can make money without doing evil.” The cynics (realists) among us recognize this isn’t a prohibition against doing evil things, just a recognition that it isn’t essential.

The problem was that Google and their admirers amped-up the “don’t be evil” mantra into a core branding element. Google employees view themselves as not evil. Their admirers have nominated Google for digital sainthood. The population in general bought this part of the brand …

Through ignorance they ignored Google’s complicity in Chinese censorship, which is evil.

It was Google’s reaction to being hacked by their partners in civil liberties crime that dinged the Google brand. When Google threatened to cease censoring searches in Shanghai, people asked “Why are you censoring now?” Adages for doing no evil collided with evidence of doing evil. A core and central aspect of the brand was t-boned by reality.

Foremost, brands must be authentic, or at least branding lies must never be discovered. Take used car salesmen … somewhere … please … preferably to the free side of a cliff. Our common perception of these snaky lemon squeezers is opposite of how they sell themselves, as trustworthy and helpful enablers of transportation. The brand they promote conflicts with your perception of them while you stand on the highway shoulder waiting for a tow truck. He sold you “Honest Bill’s Used Cars”, but you now want to buy large caliber ammunition instead.

Honest clunkers. Don’t be evil, but censor.

When composing your brand, you had better base it on something impregnable, lasting and real. Reality is as consistent as gravity and tends to have the same terminal impact. Base your brand on something authentic and that you can keep authentic. Don’t be evil and don’t be a used car salesman.

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BMW and Enzyte may have too much in common.

While reviewing course materials for the CEO Marketing Boot Camp, I got a case of giggles. In the class we mention how BMW does branding. BMW has a legendary brand that was anything but accidental. In fact most readers can recite the BMW slogan from memory and yet never question it. That is how good BMW is at defining and communicating their brand – they have us all educated and convinced.

The BMW slogan is interesting to marketing experts because it never mentions automobiles or technology (and BMWs are technology products). BMW claims to provide the “ultimate driving experience.” Ultimate means the best. Driving is a largely male oriented passion. Experiences are what we live for. So BMW offers a greatly enhanced male life, just like Enzyte claims.

I’m sure the people at BMW are not happy about this comparison because the rest of the jokes write themselves.

BMW’s branding is only part of their marketing success, which is matched by their automotive engineering success. BMW’s marketing and innovation are well paired. Peter Drucker, the father of modern management once said “Business has only two basic functions – marketing and innovation.” Everything else is administrative work. In Silicon Valley, we have more innovators per square inch than we have square inches to spare, and most innovators fail. They only have half of the success equation.

Having sat-in on too many funding pitches, the absence of marketing expertise among founders (the innovators) is often painfully obvious, and has been the reason for many funding rejections. This is an endemic aspect of start-ups – that visionaries lack go-to-market strategy skills. This is not in and of itself fatal if the founders can recruit good marketing people or otherwise find sage advice, and then follow it. However, visionaries are blinded by vision. Their initial observations about market opportunities keep them from examining the full scope of go-to-market issues or unpleasant market realities. Founders are often reluctant to release control over the marketing function yet do not possess enough marketing strategy savvy to guide their organization.

The end result is fairly predictable. These visionary-led start-ups find initial traction with early-adopters, who are also visionaries and risk takers. After that initial success, the start-up stalls. Revenues plateau or decline, the company burns through what little cash it has, and the visionary solution vanishes or is cloned by someone else. If the start-up is funded, investors will often insert members of their cabal into the organization and attempt to instill marketing strategy discipline from above. In desperate circumstances VC’s find ways to eject the founding visionary.

This “investor patch” is notoriously ineffective. Founders fail to follow advice or control because their vision is limited to the set of circumstances that lead them to invent. They cannot see the forest of marketing strategy because they are climbing the tree they originally discovered. It is a little like love. Try explaining to a child what being in love is like and you will create a bored or confused kid. But once they grow up and experience love, they understand the broader and more detailed aspects. Visionary founders are like these confused kids – they do not have enough perspective to comprehend what they need to do.

This is the visionary entrepreneur’s handicap. Successful founders either have significant (albeit high-level) grasp on the major functions of marketing strategy, or they have the guts to recruit and trust experts. Most founders don’t do either, and thus most start-ups fail. I find this state of Silicon Valley affairs to be perplexing. Technology innovators are not ignorant people. They have worked long and hard to achieve deep understanding of their technologies, yet rarely labor at understanding marketing strategy. They may read one of the Chasm books and proclaim themselves well prepared. This is akin to reading a book on the basic mechanics of a parachute and then lobbing yourself out of an airplane. The results are amazingly similar either way.

Peter Drucker was right – an organization must innovate and market. In a start-up, where early decisions define survivability, and where the money to hire full-time strategists simply does not exist, the marketing savvy of founders is critical. Venture capitalists know this, and VCs send portfolio CEOs to school to assure that daily marketing disciplines are being lead from the top. VC’s are happy when one-in-ten of their investments pays off – but they would be happier if ten-in-ten did. Hedging their bets by building better CEOs is the primary path to achieving better investment odds.

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