Engineering and End Run Around Red Hat's Strategy
The Client: SuSE Linux, now the number-two commercial Linux distributor and provider of open source solutions.
The Situation: SuSE Linux was founded in Germany and had a very Eurocentric culture. This helped them gain 70% market share in EMEA, but they struggled in North America against market leader Red Hat.
Silicon Strategies Role: North American marketing strategist for the SuSE Linux product line.
Initial Observations: Being a successful European company, SuSE's U.S. office faced a very different problem in the Americas. SuSE's U.S. office did not have anyone on staff with a classical technology marketing background and the home office in Germany had not mapped the competitive situation abroad. Their North American sales had been nearly flat during Linux's early hyper-growth phase. Through a series of executive interviews Silicon Strategies Marketing concluded:
- SuSE Linux did not have a consistent brand in North America
- The market had assigned SuSE Linux a negative brand, that being of a quirky technology company with interesting products, but without mind-share or traction.
- Corporate-wide, SuSE Linux did not have any core marketing messages – their messages in North America were muddled and tended to copy Red Hat's.
- SuSE Linux did not effectively position their otherwise superior technology.
Going Back to Basics: SuSE Linux's U.S. office was eager to take the fight to Red Hat and other competitors. Together, SuSE Linux and Silicon Strategies Marketing:
- Defined the brand and value statements that SUSE wanted the market to believe, based on defensible positioning.
- Established core marketing message for the brand, products and each decision maker genotype.
- Committed to strongly branded themes for their major trade shows.
From these seeds, many other activities were launched by SuSE and Silicon Strategies Marketing:
- Rapidly collected customer testimonials that reinforced the new brand and strong SuSE Linux technology position.
- Extended core messages through strategic partners including IBM, HP, Oracle and others.
- Carried messages through collateral, presentations and advertising.
- Created proposals and RFPs for Fortune 500 companies using the new brand, position and messages.
The Results: The results were very positive:
- Revenues for business products increased 5,000% in two years.
- Trade show traffic, magazine ad response and positive media coverage improved.
- Messaging and positioning content fed a renewed PR campaign resulting in media mentions of SuSE Linux wherever Red Hat was covered (all smaller competitors were excluded as the media told our two horse race story).
- Strategic partners took renewed interest in SuSE Linux – even paying for representation in SUSE trade show booths.
- SuSE Linux was sold to Novell for six times annual revenues.
The Lesson: There are a number of lessons from the SuSE Linux marketing strategy engagement:
- Success in one region can blind a company to how they should market in other regions. SuSE Linux's U.S. operation needed independence in order to move their market forward.
- When you do not create your brand, the market assigns a brand to you. SuSE Linux's market-assigned brand would have kept it a distant second unless they took control.
- Never fight your competitor toe-to-toe. We took our communications to CxOs who then put SuSE on the short list, despite Red Hat having favor with IT techies.
- The market rewards strength and strength is reflected through communications. SuSE Linux attracted more participation from customers, more attention from the media, more key customer deals (including a corporate-wide contract for Ford Motor Company), and a favorable acquisition.