How to tackle the competition for free Thursday, November 01, 2007

Two years ago we evaluated a medium sized financial technology software company with a view to investing. It was evident that they had way too many "products", which was actually causing them internal challenges.

Most had begun life as bespoke developments for customers but over which they had negotiated the right to commercialise. In many cases, little research or development effort had gone into the commercialisation of the products but because they had potential, so the company deemed them to be product offerings.

From a sales perspective, the sales effort was blunted by the confusion of what message to present to the customer - they simply had to many offerings and so weren't sure what to pitch with. Added to which, the "products" range spanned several market segments within financial services, so it diluted their "specialist" message - customers in each segment perceived them as being generalists!

But one product caught my eye and so I enquired how they were approaching selling it. Answer - they weren't trying really because the market had a dominant supplier. Leaving aside why they hadn't just dumped it then, I offered them an answer - give it away for free to everyone in the market. My rationale was a) they would probably get some consulting revenues from folks eg as per open source model b) you'll get noticed for disrupting the market, which may prompt other conversations c) the dominant supplier will suffer some pain and have to go on the defensive d) there was no downside to them because they were doing nothing with it anyway e) you can shape the agenda, even if only briefly.

For several reasons, the investment didn't proceed. And sadly, I don't think they proceeded with the advice either, because it just felt "too scary".

I was reminded of this when I read the story here on Blognation about a consortium's efforts to create "Open Social". Led by Google, it's an initiative to create an open set of APIs for application development for social networks. The throng includes Ning, LinkedIn and Plaxo.

At a stroke, the consortium are pitching an attractive alternative to developers who might be focussed on Facebook applications (dominant supplier) with the option that they could development applications that can be even more widely distributed over many networks. Moreover, by challenging the Facebook "walled garden", they are shifting the agenda and may disrupt the market with this moral high ground. Aside from distribution, it also shifts the balance of power back towards the developer - with Facebook, they could just shut you out or copy you at any point.

At the same time, with other social networks such as Bebo playing catch up and racing to try to offer their own platform to developers, this provides a "higher ground" response than simply one of "me too". For some, they may feel themselves already too far along the proprietary route, but I'd suggest better to delay and hop aboard this train given the greater abundance of developers likely to convert to this model.

As for Facebook, they have an interesting choice - fall in line or tough it out based on their distribution offering and existing position.

Labels: ,

posted by John Wilson @ 8:37 AM Permanent Link ,

newsvine reddit



They think it's all over - it isnt yet Monday, May 14, 2007

The vast sums in football have transformed the game and multiplied the stakes involved for clubs. Take the football playoffs - the playoff final in the Championship is considered to be the highest money prize match in the world, because it gets you admittance to the Premiership and £60m of revenues.

Likewise, West Ham's fine of £5.5m in the Premiership is considered to be one any club would have taken if it meant staying up. Hence, mere grumbles about West Ham fielding ineligible players are set to become a court room battle - were there no money at stake, would clubs be as determined in their bid to undertake expensive legal action? Consequently, the battle to be the best team and assure survival by accumulating sufficient points may not prevail and the final relegated team's identity may still change.

There's a famous saying in football which comes from the commentary of the 1966 World Cup Final - "They think it's all over - it is now". Well, for this relegation "game" at least, perhaps not quite yet.

So it is with Open Source. Certainly there are principles at stake that are espoused by the founders of the GNU movement, but now it is effectively big business that carry the real weight in the debate, motivated by the sums of money involved. That firms like IBM get added kudos from backing a "moral" position is simply a bonus. Likewise, have all firms that have adopted Open Source been motivated by a) moral position b) access to better software c) money (potential to save on licence fees)?

Labels:

posted by John Wilson @ 10:09 AM Permanent Link ,

newsvine reddit



In the red corner is Microsoft v "the World" in the Blue Sunday, May 13, 2007

Microsoft claims that free open-source software, like Linux, violates 235 of its patents and is planning to act, according to a report today in Forbes.

The article makes passing reference to how music companies have sued their "users" and questions whether Microsoft might do the same to its user for patent infringement. However, there is a huge difference here in that the users in question include many major corporations around the world. Moreover, open source is actually big business too with IBM having made a big commitment to it. Hence, Microsoft will have a much bigger fight on its hand.

Having begun the fight, you have to assume that Microsoft have done some end-game analysis. Clearly this isn't going to endear it to a large portion of the tech community and you can expect a PR backlash that will test even Hugh MacLeod and his Blue Monster, let alone Steve Clayton! If Microsoft does proceed with action, it will alienate many customers but if it does step back it will have done itself some reputational harm for executing a flawed strategy. So, what other outcomes are there? Does Microsoft gift these patents to the community as a goodwill gesture? It seems unlikely too.

Hmmm. Got me a bit stumped on what Microsoft perceive this happy ending might be.

Labels: ,

posted by John Wilson @ 10:58 PM Permanent Link ,

newsvine reddit