Fallacy of Composition

It's daybreak. The sun's rays climb thru Old Ironside's

rigging in Boston Harbor. A dog barks in Southie; a rooster

crows in Hopkinton; and everywhere dumpsters are packed with

shredded evidence of yesterdays State of the Art computer

program listings. A new day is dawning. And before it is

finished, some companies will experience the joy of winning

and others, the despair of losing in the contest of software

marketing.

The Joy of Winning has a way of obscuring the facts.

When things go "right" ...they go unquestioned for the most

part. That's because everyone is happy. However, the pain

of losing --- physical, emotional, economical --- is quite

different because of the very nature of pain, itself. Pain

signals that things aren't going right or didn't go right.

And there are but a few alternatives.....

One can [1] grin and bear it; [2] remove themselves

completely from the offending agent; or [3] attempt to change

it. In some situations there are no options. Ecomonic pain

is one of these.

Grinning and bearing economic pain makes so little sense

that even the IRS has a rule book that says if you lose money

more often that 60% of the time (3 of 5 years), you leave

yourself suspect of not playing for an economic goal but that

of a hobby. And if the "SERVICE" won't get you, your

investors will. As opposed to the wheels of criminal justice

which grind slowly and finely, those of economic justice

grind like an garbage disposal --- violently and quickly.

Many in personal computing marketing have already discovered

this "option".

Secondly, removing oneself completely from economic pain

is either voluntary or involuntary. Either one steps out of

harm's way .... or creditors push one aside so that they may

salvage what they can. Many in personal computing marketing

have also discovered this "option".

Finally, we come to change as a means to relieve

economic pain. Many in personal computing marketing [the

survivors] are discovering this true option by adapting

their micro hardware/software marketing approach from

personal computing to business computing. Unfortunately for

some, adaptation will not in itself assure success for reason

mentioned further on.

SPILLED MILK

Too much had transpired over the last few years for this

article to convey but a scant synopsis for a reference point.

At this point, it is senseless to point fingers in attempts

to identify the agents of pain in the personal computer

industry. Rash investors, unrealistic authors,

unsophisticated franchise owners, get rich quick

profiteers, and others all have contributed to an industry in

need of change.

Until the micro retail merchants took over computing,

most talk of margins in data processing concerned report

layouts --- left and right. Under the crusade cry of "all

things must change", the computer store front was born;

margins, push money, cooperative advertising became the

vernacular; disjointed software tools of all types flooded

the market; and a form of computer selling took over a

tentative hold that was doomed to fail.

As we enter 1985, distribution channels have been

opened, dredged and closed. Retailers have been leapfrogged

by distributors who in turn have been vaulted by vendors

going direct. Horizontal software tools have already

solidified market positions to the extent that over 90% of a

leading independents software sales revenue is generated by

only eight titles.... even though over 350 titles may be sold

in a given month. (On this subject trade discussions about

consolidation seem a bit behind the reality).

Yet, from the rubble O-N-E key fact remains.

No one has revised downward the estimates for software

sales by 1990 - $9 billion or whatever. And being about

halfway there, it's profitable to ponder who are going to be

the vendors providing that growth --- much of which will

surely be derived from the foundations [or vestages] of the

current micro market.

DOWN TO BUSINESS

Personally, I like my gin straight and computer

marketing on a business to business basis. Because what

makes business to business computer sales so viable is

expertise - not only in knowing a market opportunity, but

fulfilling that opportunity with true solutions and servicing

that solution to assure the obtainment of the benefits sought

and bought. Consequently, I heartly support those in micro

computer marketing who are attempting to change marketing

modes from personal computing to business. There are some

serious obstacles, however, a few which I wish to point out.

METAMORPHIS

At the retail level the forced metamorphosis is on;

corporate sales staffs are being formed as less than 10% of

the business in now attributable to walk ins. The retail

store is becoming much more like a branch sales office which

brings new problems. Most sell similar hardware and those

that don't are obtaining it at such an alarming rate via

authorized dealers as to create "the grey market". Longer

lead times before closing may require a different type sales

personnel --- far more accustomed to different compensation

plans, working styles and hours. If its axiomatic to

entrepreneurs "that" you never entrust the critical success

factors to someone else, then it's just as true in the

business to business sales environment that you don't entrust

your livelihood to those who can't handle it. Developing

your good salesforce will be easy. Cash flow will suffer

during this transition.

VERTICALS

The rush is on for selling into vertical markets,

markets being considered to be one of the like kind such as

pharmacies, or in the corporate area human resource

management systems. As a result, knowledge of horizontal

packages such as PFS File/Write/Report/Graph and Lotus 1-2-3

has to be expanded to include knowledge of specific

industries. Additionally, vertical packages come in a

variety of complexities ranging from standard packages

"dressed up" [i.e merely positioned differently] to subject

matter expertly designed systems capable of handling the

nuances of a particular industry.

Vertical packages have been smoldering on the back

burner for a couple of years. However, generally, reference

to them was again in terms of bigger margins. Be warned that

if that's the only reason for considering verticals, we can

expect many more shoe stores where computer stores currently

exist. Good vertical packages for XT's cost more than the

hardware and can soar above $20,000!! That sets prospect

service and expertise expection very high, because verticals

are success and support sensitive markets - not price.

If we apply the old market wisdom that any market can be

shared up to three major vendors then we know the downside

number of successful companies will be 3 X the total number

of sic codes. But because of the service requirement

regional preference due to a qualified computed sales support

organization will greatly increase that number.

Vertical markets are target markets. Most prospects all

want to find a better way to run their business; and most all

are sensitive to competitive pressures. Building an

awareness and interest in an offering is quick and simple ...

Garnering the preference and purchase becomes the challenge.

And it is my contention that preference ultimately distills

down to service ... for service gets happy customers who

in turn get more users. Functionality is also important, but

here the key is flexibility either provided through

mix/match/or modify - another important element of service.

Verticals aren't always simple, but can require a

comprehensive knowledge of technology and the application of

a solution. A requirement could look like this.... 4 XTs

tied together with a local area network running a human

resource department of a division tied to the corporations

mainframe via a micro to mainframe link ... this repeated in

10 subsidiaries or divisions. This could be a $250,000 sale.

COMPETITION

A FINAL WORD OF CAUTION: IN ENTERING THE WORLD OF

VERTICALS, ONE ENTERS THE WORLD OF EXPERIENCED MINI AND

MAINFRAME O.E.M.s WHO HAVE BEEN PLAYING THE TRADE FOR

SIXTEEN YEARS. IF ONE'S THINKING IS THAT THE COMPETITION

WILL COME FROM THE STOREFRONT DOWN THE STREET, BEWARE. IT

MORE PROBABLY WILL COME FROM THESE HEAVILY EXPERIENCED

VETERANS OF SOLUTIONS MARKETING WHO HAVE LONG STANDING

REPUTATIONS.

THE LAST WORD

No, I really never did like the way retailing took over

the computing industry.

No, I really never did understand how $ X95 became the

standard price for software. And

No, I really never did think that computing marketing

would "work" this way.

Having lived through chlorophyl, lemon-fresh, maxi this

'n that and the Doug Flutie hype, I am happy also to see that

personal computing is now being sold on a business to

business basis --- even if the business is owned personally.