New Product Introductions, Hosted by Big Tech Businesses, as a Genre of Marketing Communications Event, Need a Makeover

Mature ISVs, including Microsoft, Apple, Google, Oracle, and Salesforce.com, to mention merely a few of the most prominent businesses in this industry segment, have made a habit of hosting new product exhibitions on a quarterly, or semi-annual basis. One of the usual objectives of this genre of corporate event is to magnetize someone prominent in the media to write about the new device before her, or him, as a great example of innovation. But, if some of the new products under scrutiny are representative of current trends in product marketing, perhaps the term innovation, itself, needs a makeover. Therefore, these events, in this writer’s opinion, may prove to be more of a waste of cash than anything much more.

Apple’s debut of the iPhone 6, and the iWatch on September 9, 2014 is a case in point. An enormous amount of editorial content has been created around the event, and, one can argue, Apple has benefited from a public relations success. A substantial segment of its target consumer market is sure to have more awareness about the products exhibited than would otherwise be the case.

But, we would argue, the public relations currency, upon which the presumption of benefit from the event is based, is grossly inflated. One buck in this new currency has the buying power, this writer would argue, of a penny of the older PR currency these events used to create.

The problem at the root of this spreading worthlessness, is a real disconnection between the items debuted and any semblance of a panacea for the burning needs of the targeted consumer market for the product category. In this writer’s opinion, the iPhone 6, the iWatch, and Apple’s announced tap and pay payment system are not what most consumers of smart phones, wrist gadgets and retail shoppers are after. It would not be a surprise if sales prove to be much lower than anticipated for these devices.

The difficulty of the notion of innovation is the abstraction inherent to the term. Innovation simply means different things to different people. But perhaps the common landscape beneath most credible notions of innovation includes the familiar accoutrements of either substantial lower acquisition and life cycle maintenance costs for consumers, or a substantially increased set of functionality. If either, or both of these types shrubbery are absent, there is little likelihood anything really innovative is at hand and we are all standing in a desert.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved


Are IBM’s Watson Product Problems the Result of a Confusing Market Message?

Spencer E. Ante recently wrote an article about IBM and its Watson super computer for the online Wall Street Journal. In an article titled IBM Struggles to Turn Watson Computer Into Big Business, He contends sales for this product have failed to meet up to expectations.

The revenue shortfall appears to be very significant. Mr. Ante recounts how “IBM Chief Executive Virginia “Ginni” Rometty . . . told executives she hopes Watson will generate $10 billion in annual revenue within 10 years, according to an October 2013 conference-call transcript reviewed by The Wall Street Journal.” (quoted from Mr. Ante’s article, a link to which has been provided above). But sales of the product were reported to be only $100Mil earlier in the same month.

But what kind of product is Watson? Are we talking about a super computer challenging the television game show “Jeopardy”, or are we talking about ” . . . a development platform in the Cloud to spur innovation and fuel a new ecosystem of entrepreneurial software app providers who will bring forward a new generation of applications” (this quote is excerpted from the front page of IBM’s online presentation of the Watson product. Or are we talking about ” . . . analytical software [with an] ability to ‘learn.'” (quoted from Mr. Ante’s article)

Markets don’t handle ambiguous products very well, and purchase them on a very slow schedule. Perhaps IBM product managers should take a step back to objectively sample marketplace perception of what Watson, the product, is all about, and redesign promotional messaging to better convey the message markets need to hear.

In 2014 enterprise consumers can select solutions from a variety of sources for any of the services it appears Watson can offer. Perhaps IBM is aware of the urgency and is moving, expeditiously, to clean up the brand for this product. If not, it makes sense for them to do so as quickly as possible.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved


Microsoft Q1 FY 2014 Sales of Enterprise Software for On Premises Data Centers Are Surprisingly Robust

Per Microsoft’s Q1 FY 2014 earnings report, sales of enterprise software for on-premises data centers were surprisingly robust. Server product sales grew by 12% over the same quarter, FY 2013. This performance should provide market analysts with reliable indication of the true pace at which enterprise business is moving office computing over to multi-tenant public cloud alternatives.

The actual pace of enterprise adoption of public cloud, multi-tenant subscription offers appears to be significantly slower than public perception. The reasons for the slower pace, in my estimation, include:

  1. A widening gap between enterprise security standards and “the” cloud “norm”
  2. New features only available via traditional client server, on premises server systems; for example, databases (Microsoft SQL Server) and business intelligence applications (SQL Server Reporting Services, Power View and Power Pivot for Excel 2013)
  3. Renewed consumer interest in an expanded on-premises data center. Today, in 2013, the typical enterprise data center is much more efficient as the result of 6+ years of ongoing optimization since the start of the great recession in the United States in 2007
  4. A growing appetite for data gathering and business intelligence computing solutions, particularly for publicly traded enterprises. These applications have delivered substantial returns to consumers, meaning better data, which they have used to formulate more effective strategies to increase operating profits in often challenging sales environments

The importance of the first of these reasons, the security issue, cannot be overstated. Few enterprises will risk entrusting proprietary data, and the computing procedures required to produce it, to today’s cloud systems. They certainly will consider using cloud systems for redundancy, and will sanction staff use of them as BYOD continues to grow in popularity. But the corporate “crown jewels” aren’t going to leave the on-premises data center anytime soon.

Industry analysts may want to reconsider mature ISVs, meaning Microsoft, Oracle, EMC, SAP, IBM, etc. These businesses look to produce more profits over then next few quarters than estimated.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved


IBM Starts to Show Effects of Cloud Adoption by Enterprise Customers

Perhaps no ISV can lay more claim to owning the market for on premises computing solutions for enterprise businesses and comparably sized organizations in the public and not-for-profit sectors than IBM®.

But a research report on IBM’s second quarter, 2013 financial results, published by Credit Suisse reveals some telltale signs of the negative effects of a multi year effort of this same customer base to implement cloud, and private cloud solutions in lieu of IBM’s own standard offers.

The Credit Suisse analyst team of Talal Khan, CFA, Matthew Cabral, Vlad Rom, Ray Bao and Andrew Ruben characterized the quarterly results as “weaker than expected.” They further attested their ” . . .confidence in the quality of the roadmap [a program designed to assure IBM attains its EPS targets for the fiscal year] is lower.”

On August 6, 2013, Julie Bort wrote on the Business Insider website, in an article titled Credit Suisse Downgrades IBM, Thinks Shares Will Fall To $175 “Some IBM employees have told Business Insider that this promise is causing IBM to take drastic measures to control or reduce costs and that some employees call the plan ‘Roadkill 2015.'”

So it is fair to say internal morale at the company is at a low point. We think a lot of this has to do with the results of a steady evolution of IBMs typical customer, meaning the CIO of an enterprise business, from a stalwart for on premises data centers to an ambassador for a long list of cloud services tasked with provisioning same to large communities of BYOD users.

Further, recent public relations collateral points to an effort on IBM’s part to resurrect the PowerPC chip platform (now renamed simply “Power”) into a real competitor to Intel’s X86 architecture. We find this one real hard to believe given Apple’s decision to migrate off of the PowerPC architecture over to Intel, as well as IBM’s long standing aversion for commodity computing hardware markets.

Perhaps Microsoft is not the only enterprise ISV smarting from the Cloud wars.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved