(photo copyright 2007, A. Barake)
Where I talk about more-or-less obvious but infrequently discussed strategies by Sun, IBM, Microsoft et al.
I think it was in during the last century, with the advent of the hardware/software dichotomy that this type of strategy evolved. IBM may have been the first to use it successfully. A prerequisite is a pair of complementary things to sell, with at least one that you control completely, through secrecy, patents or a huge market lead. Let me describe it.
Suppose you sell hardware, and you make and sell software for it too. Your competitors also sell hardware and software of course. Your hardware is different and possibly proprietary or difficult to clone or to re-brand. So the strategy is to make software that runs on both your own and your competitors' box. You under-price or give away the software, and call it bundling.
Better still, you give away stuff that is almost or as good as your competitor’s, and you value-add and sell a version that runs only on your platform.
Sounds familiar?
IBM with Java and Linux
Sun with Solaris
And both are also attacking Microsoft with Eclipse and OpenOffice respectively.
Yet Microsoft thrives.
Explain in 2 pages or less....
Microsoft fights back using another strategy; they sell software that runs mostly on smaller cheaper platforms. They have an arrangement of co-dependency, as their releases grow and become more bloated, they require bigger and bigger Intel horsepower, until that low-cost hardware begins to overtake the computing power of big boys. This is an attrition strategy; much vaunted in management theory courses.
Microsoft's core business is software, so it is the protected commodity. The hardware is Intel, but multi-vendor and commoditized so competition drives the price down below the proprietary guys’ stuff. They are pursuing a software-first strategy and the other guys are pursuing a hardware-first strategy. Are you still with me?
It is with reason that IBM fears Microsoft more than it fears Sun or HP.
IBM and HP also sell Intel servers, but they are branded, not commodities. Both try to mitigate the hardware-first exposure by also making money on professional services (which can sometimes be an adjunct to sale - nudge nudge), server software and very big boxes. Forced upgrades due to byzantine dependencies among their software offerings help too, and the upgrade cycle is one way to drive this.
IBM has little software presence on the desktop except with IDE’s and I’m not sure they sell workstations since the Lenovo deal. In other words, they threw in the towel for now.
On the Internet side:
The classic version of this story is, of course, Microsoft vs Netscape, where hardware becomes system software and software becomes the browser. We know who won.
More subtle, as chronicled by others before me, Google learned a thing or two from this. They give away email, blogging, API’s, server side apps - to counter Yahoo’s offerings in that space. Free and easy Web access for the masses, no emphasis on paid subscription modes, whereas Yahoo does act as an ISP. Google’s core business depends on search and on page views, all the rest of their offerings simply draw customers into their portals while at the same time undermining Yahoo’s non-search businesses. They are not evil but almost...they followed in the footsteps of the well-tried IBM and MS strategies.
Yahoo - has no strategy that I can tell. They are like Sun. Java was a gift to the community that hurt Sun, since it is platform independent. I guess they thought that they could make an OS/hardware combo that ran the JVM better than the other guys, but IBM with its marketing (and technical) clout claims that that is not the case. In a way, it is as if Microsoft had written Linux. That is what happens to a nice earnest tech company that swims amongst the sharks.
Is their hope for the "good tech" to overcome the "mediocre tech" with good strategy?
My proposal would be combine the Apple, Sun and Yahoo brands as the high-end stuff of computing. The champagne. Then market it to consumers and businesses as the cream of the tech-savvy crop. Apple and Sun are an almost perfect match, and it would get Apple into that server market they so covet. R&D would be a plus rather than a risk, since the audience would want to take those risks, it would be cool, fodder for the early adopters. Yahoo would provide even more channels for Apple’s media side
There. Free strategy. Why don’t I command the multi-million dollar bonus?
I know many tech types who can't bring themselves to believe that that kind of “deep thinking” goes on; but this is exactly what the people who took biz courses when you were toiling to understand complex stuff end up doing, and they make the big bucks. Hustlers, thugs, ruthless opportunists... having the only kind of fun they can, since they can’t make things, are too competitive to collaborate with anyone, and certainly can’t code. I think they are missing out, because in the end, what's left is an abstract and hollow victory, scorched earth, and lots of resentment against inferior technologies. Real satisfaction can only come by making things better, and not just in the monetary sense as noted here. The alternative is growing entropy until the next cleansing crisis.
P.S.
This just in.
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