What hovers ahead - Strategic moves by the giants

The dawn of computers. From the early ages of computers, we have traveled a lot. Today, computer is a necessity. Along with computers came a bunch of companies revolutionizing the digital world. Microsoft became synonym with PCs. Where there is domination, there will be someone who will challenge that dominance. Yes. I am talking about the battle between the OS giant Microsoft and the search giant Google. Ever since Google announced the Chrome OS, there have been a number of developments happening. People who hate MS products welcomed the move. The next move was from MS with the news of MS making office suite available for free over web by 2010. As we know Google offers its own office suite for free over web.

While analyzing these moves, naturally the question arises. What could be the strategic thinking behind these moves? Many people argue in many different ways. We need to look behind and beyond the developments that are leading to these strategic moves by these companies.

First let us consider the Chrome OS. Microsoft controls almost 90% of the OS market. Clearly MS dominates the OS market. But hold on. Microsoft may be riding on the success waves but failing to recognize the changes? As more and more applications are accessed through browser, as netbooks are becoming more popular, the need for OS based on the browser is fast becoming a reality. Yes. The new reality would be the desktop loosing ground to the web and the OS loosing the ground to browser. That is where Google is trying to push hard and the result is the Chrome OS. With rich web based apps in Chrome OS, Google is trying to break the MS dominance in the OS market. Another area is the netbook market which is the fastest growing segment of the PC market. Obviously netbooks are not as powerful as their predecessor notebooks and are primarily used for remote access to web based applications. That means Chrome OS is a perfect match for netbooks. Think of Cloud Computing. Vendors might prefer Chrome OS for it is faster than windows. So if we think the future to be a place where web would become a substitute for the desktop and browser would become a substitute for the OS, Google’s strategy seems to be in the right direction.

Now - as any incumbent does – MS came up with the offer of Office suite to be available over web for free by 2010. Is it a smart move? The supporters of the MS argue on the human factor. According to a report, number of paid users of Apps suite is still in its nascent stage. Though there are significant players - such as Google - in the apps suite, MS by its dominant presence is a de facto choice for the customers if no other reasons than habit. Whilst there are cheaper applications available such as Gmail, the habit of using exchange would make the shift difficult. Initially when web based applications’ growths were slow, MS maintained its traditional office suite. Now when the market is changing, MS would not be making much from its Office suite. By launching Office 2010 web suite, MS entered the web apps targeting the mobile, netbook users. So, the timing of the introduction of web based office suite is to spoil or baffle the Google’s growth, there by making the IT departments to cling to their employees’ habits.

Quite interesting moves by the corporations. We need to wait and see what happens next…

-Deepak

(Courtesy bnet)

Provocative Selling - What is it?

I came across an interesting concept in marketing during my class discussion. The professor introduced “Provocative Selling” as a part of the discussion on global financial meltdown. It was quite interesting. Then I searched for the information on Provocative Selling and got the HBR article by Lay, Hewlin and Moore. The cognition from the discussion turned into reality.

Provocative selling is a marketing technique which can be used when companies face with a stagnant sale.


Source i-ehow.com

During the recession, companies face the tough task of cost containment (I have different opinion as I discussed in my earlier blog on Keynesian Model and Firms). The executives’ spending would be mostly on the existing commitments and only a fraction would be for discretionary spending. As a marketer, one has to fight for this fraction. During hard times, it may become difficult as the proposals go through lengthy reviews and conventional channels are shut. Conventional selling is solution-selling. This means that typically companies consult the customers, offer their solutions explaining their products’ features and functions and persuade the customers to use their products. Provocative selling differs from the conventional selling in that it identifies the competitive challenges faced by the customers and helps them realize the problems as urgent. When customers are down with painful problems, come up with a provocative pitch which customers see as a real threat to their very existence. That means, hit the iron when it is hard.

With Provocative Selling, you proactively identify a critical and big problem that the customer is facing. Then come up with a sale pitch (in this case a provocative point) on the problem. Finally you have to get hold off an executive who has the authority to make purchase decisions.

But it seems Provocative selling is not that easy as it is thought of. There are inherent challenges to Provocative Selling.
It is not applicable to all situations and to all customers.
Since it is a proactive approach rather than a reactive approach, identifying the customers’ problems requires an insight into the customers’ organizations which may not be readily available.
Reaching out to the Right people in the customers’ organization could be a challenge especially during recession i.e. provocative selling requires the contacts of the senior executives and requires the dialogue with them.
Provocative Selling attracts more resources.

Whilst there are challenges, there are advantages too. I see it as a win-win situation for both the customers and the organization. Conventional selling responds to the problems as defined by the customers. The provocative selling proactively identifies the strategic problems addressing the unacknowledged pain. This gives a competitive advantage to the customers as well as to the organization. A successful provocative selling would result in enhanced customer-organization relationship (indirectly helping for repeated purchases). It also helps the organization keep going through the recession time.

In essence, Provocative selling seems to be a promising tool in a marketer’s kit. But the organizations need to be careful in implementing this strategy and should go only with enough research, preparations and resources.

-Deepak
(Courtesy HBR)

Virtualization – what it means to business and business value??

In the previous blog I talked about the “Cloud Computing” and the likely scenario in 2020. Another interesting topic which is making a buzz in the networking world, especially in the data center world is “virtualization”.

Virtualization as the name indicates pertains to the technologies that provide an abstraction layer between the hardware and the software. It provides the advantage of running multiple operating systems in a single server or running a single operating system in multiple servers. Virtualization finds its roots from partitioning. Virtualization did not take off initially until VMware pioneered the virtualization technologies and planted the seeds for virtualization boom.

Let us see the business case for virtualization in the coming five to ten years. i.e. a business case scenario for 2015 or 2020. The key drivers for changes in the data center industry - virtualization in particular - could be the following.

Increasing capital expenditure on IT
Increasing awareness of environment issues and IT
Increasing demand in virtualized data center
Increasing complexity of the networks and their management
Realization of virtualization benefits
Increasing use of internet, web2.0 and applications

The framework:

Today’s data center, networks are plagued with complex architectures, designs, a number of physical devices, cables etc etc. Increasing use of these physical devices has multiple effects. The physical space available is limited. Increasing use of the servers, routers, PCs etc is increasing the energy utilization. According to Harvard scientist’s (Dr.Alex) research, a single search in Google results in 5-10g of CO2 emission and just browsing a site results in 20mg of CO2 for every second a person views it. This is in part because Google employs huge servers to generate results as fast as possible. As the world is becoming aware of the greenhouse gas issues and global warming and its effects on mother earth, various people, governments, organizations are taking steps to reduce the CO2 emission. Kyoto protocol is a step towards reducing the CO2 emission. This set apart, the growing need for bandwidth is making the ISPs to sweat out. As the internet usage is increasing - mainly bandwidth intensive applications such as video (Youtube etc) – the ISPs, data centers are craving for bandwidth efficient devices. Upgrading the ISPs core networks, data centers requires a huge capital investment. But larger data center means greater risk in managing the complex networks resulting in an increase in the operation and management costs of the data center.
But there are developments to counter these drivers of change. Virtualization has come to play a big role in reducing the data center cost. For example, Networkworld report says, by virtualizing the data centers, Cisco reduced the cable plant by 4800 cables, giving 50% more physical space for servers and increased the virtual machine capacity by four times. An IDC analysis says by moving to virtual infrastructure, organizations can reduce the IT costs. The statistics of this analysis gives a 35% of server costs per user savings for a simple virtualization implementation, a 52% of server costs per user savings per year for an advanced virtualization implementation.

So there are a host of advantages that virtualization offers.

But…the challenges…..

As in any technology, there are some limitations and disadvantages in virtualization. There are growing concerns about the security in server virtualization implementation. Similarly CIOs are wary in implementing virtualization for regulatory projects such as credit cards database management. Then there are issues of power and cooling because, by bringing virtualization, the CPU utilization has shot up resulting in more heat generation from these servers. Apart from these, there are issues related to technology itself such as increased usage of memory, CPU cycles etc.

How does the future look?

Keeping in mind about the benefits and the challenges of virtualization, lot of developments is going on in virtualization market. VMware, the leader in virtualization market is improving on some of the challenges that virtualization faces today. Even the chip vendors such as Intel, AMD are working to bring in new chip designs to cater to needs of virtualization. Other vendors such as Dell, HP, Citrix, IBM are also in the virtualization market. As cost saving is the biggest driver, we are seeing more and more organizations embracing the virtualization. The future looks bright for the virtualization technology and for the companies involved in virtualization. By 2015-20 as the technology matures, we might see huge data centers incorporating virtualization and also offering Cloud Computing technologies to the organizations. More and more organizations might move towards cloud and virtualization as they produce more business value out of the investment (ROI). Again, we might see some consolidations in the industry and some new entrants. The incumbents with their market leaderships might pose big barriers to the new entrants. But as usual differentiation would be the strategy for the new entrants to fight against the behemoths in the industry. We might see a good competition (might turn ugly also) by 2015-20 hoping that the end user would benefit from this.

I hope this discussion doesn’t end here. There are huge opportunities as well as challenges for virtualization which are not listed here. Nevertheless this information should provide some useful insights into the future of virtualization market. I think the question “Is Virtualization a good bet for CIOs?” is yet to be solved.

-Deepak

(Courtesy, NetworkWorld.com, CIO.com, IDC)