Consolidated Insights

These Insights are from recent interviews with executives from Agile, Aspect, AMD, Macromedia, palmOne, Sybase, and Quest. To see the article related to these interviews click here.

HIGHER LEVEL STRATEGIC QUESTIONS

Question: From a corporate perspective, how do you view the competitive landscape and your place in the competitive landscape?

Answer: Sybase’s Mark Westover - In the overall competitive landscape, we see IBM attempting to be everything to everyone, Oracle moving much more aggressively from infrastructure into applications, and Microsoft escalating their push into the SMB market.

The opportunity for Sybase lies in recognizing that these competitors will be present in most accounts, and it benefits us to operate within a heterogeneous environment, which is a key differentiator over the others.

One way Sybase has succeeded is by recognizing key customer problems, choosing a solution area (like mobility) and focusing on enabling their solution for an array of new devices, to the point where we claim to be the market leader in mobile middleware.

Sybase has consciously walked away not from markets, but parts of the whole solution – and enabled our partners to offer professional services to fill in the remainder of the whole solution.

Answer: Aspect’s Brian Gentile - We look at the snapshots by industry analysts as a starting place, and then conduct our own analysis of the competitive landscape. Going beyond the simplified view, we gain deeper understanding of our true market position relative to our competitors. We look at a ‘served market’ as opposed to a ‘target market.’ Since some of our competitors are so much larger, we only really compete with a percentage of their total business -- and that helps us closely define the served market upon which we are focused.

WALKING AWAY FROM MARKETS

Question: One key success factor we have found is to clearly target the markets you will pursue, and those that you will not pursue. We have found that not pursuing business is one of the biggest strategic challenges facing smaller companies. Please tell us how you dealt with this issue.

Answer: Macromedia’s Peter Meechan - It’s not that hard to figure out what to do, but it is hard to figure out what not to do. To succeed, you need to put wood behind two or three arrows and that’s all. We’ve focused on three main opportunities: the professional designer, the line of business manager, and consumers. We don’t focus on the enterprise, even though the market is potentially larger.

SUSTAINABLE DIFFERENTIATION

Question: The paradox of success is that you become targeted by your competitors. It’s one thing to create a differentiated offering, but how do you sustain it, especially when you start to get “noticed”?

Answer: AMD’s John Volkman - Nobody wants us to go out of business because we’re the only option, but few are completely unhappy with Intel. We have a 6 - 12 month competitive advantage over them, and we are running as fast as we can to keep that lead.

Intel is changing the playing field. They use FUD (fear, uncertainty, and doubt) and MDF and take an aggressive stance with customers who would consider working with us. They’ve created a potential downside for working with a competitor by moving the game into the MDF bucket. “Intel inside” is about money related to the purchase relationship – it’s a massive channel lockup strategy. Customers become dependent on Intel for their marketing success.

Answer: Quest’s Vinny Smith – Oracle follows our lead, but we can’t stay in one place. We have to maintain fresh products, and quickly develop new releases. We have to be on top of everything.

In addition, we look at macro trends in the market, we watch where the market is going, and where new market opportunities are being created for us.

Answer: Sybase’s Mark Westover - Sybase has chosen to focus (primarily) on the financial services market and on mobility. This enables us to stay closer to the customer’s needs and design products that exactly meet those needs. One advantage is that Sybase limits their sales, marketing and R&D expenses to these target markets.

This is a critical strategic element in how a smaller company can succeed. A larger company cannot easily incorporate the customer requirements from a multitude of markets into their solution. Even if it invested the same total dollars in product development for a particular market, a larger vendor is forced to make trade-offs to serve multiple masters. Sybase can serve our markets more effectively.

WHOLE SOLUTIONS

Question: Often, a smaller company cannot provide a “whole solution” for the customer, while a larger competitor usually comes closer to being able to offer a whole solution. How important has this been for you and how have you dealt with this issue?

Answer: Aspect’s Brian Gentile - Certain products require a platform-like ecosystem to be built around them. We collaborate with partners to deliver pieces of the solution we may not be able to deliver alone. In our industry, no one vendor offers the complete eco-system so partnering becomes very important regardless of size.  

In addition, we like to work very closely with our channel partners so we can create even greater value for our customers. We really team with our partners to better address the market.

INNOVATION

Question: In your opinion, how important is innovation to competing against larger firms? Please give us some examples.

Answer: AMD’s John Volkman - It couldn’t be more important. In our market, we have to deliver really significant innovations, and only a handful of companies can bring the expertise to continue to make these innovations.

This is an incredibly capital intensive business. To succeed, you need to produce in volume, you need to own a lot of the variables, the process technologies, the design technologies, etc. It’s very hard to find a partner who can stay with you, who can produce in volume when the innovation is happening at breakneck speed.

Answer: Sybase’s Mark Westover - By working with innovative customers and focusing on only a few markets, Sybase can develop solutions that are ahead of where the market requirements currently are. We attempt to be ahead of where the requirements are by working closely with some of the most innovative customers by seeing what they do and what they need.

Answer: palmOne’s Ken Wirt - Innovation is critical for us. We’re not going to be the cheapest or have the broadest distribution, so we have to be the most innovative.

Innovation doesn’t necessarily mean having the best technology features. The Zire is a great example. We were very successful with innovations that fall into the category of “less of everything.” The product is smaller, lighter, monochrome, simpler and less expensive. We listened to what people wanted, and gave them an innovative solution.

SUCCESSES AND FAILURES

Question: We are interested in learning what works and what doesn’t work. Please share with us a strategy, or element of your strategy that did not work and why.

Answer: Quest’s Vinny Smith - At one point, we had a product that was running out of steam and it took us quite a while to realize it. It’s sometimes difficult to move away from something you’ve invested in. We didn’t want to move away from that market and didn’t want to deal with the changing resource allocations. The good news is that we’ve learned from that experience.

Answer: Macromedia’s Peter Meechan - In the past, we may have tried to bite off more of the overall ecosystem than our core competency would allow. We needed to understand our role in the ecosystem and narrow our product focus, which we eventually did.

Question: We are particularly interested in memorable success stories. Please tell us one or two that demonstrate the successful implementation of your strategy.

Answer: Macromedia’s Peter Meechan - We targeted the world’s largest mobile data services operator, NTT DoCoMo to launch with them as our beachhead for a new product – Flash Lite for mobile phones. We now have 14 operators that have deployed Flash Lite. The strategy of starting with the top company in a segment worked extremely well for us.

Answer: Agile’s Simon Parmett - Our decision to go it alone, to be the pure-play PLM company paid off. We haven’t tried to be everything to everyone. We’ve focused in on where we can add the most value and have been aggressive in acquiring companies that help us build out that footprint.

In addition, our philosophy is that a product advantage can only last so long. The long-term competitive advantage will come from a litany of customer successes.

Answer: Quest’s Vinny Smith - Four years ago, we were looking at the database space, we knew we were going to roll out a new SQL server product. So the question was, is that market big enough to meet the goals for the company?

We spent a relatively small amount of money to buy a windows management company to move into a new market and essentially invented a new company inside the existing company. That company had four or five million in revenues and a few years later we are getting over $100 million annually. Our lesson is to not be content with the markets we’re in or be content with our current successes.

OVERCOMING OBJECTIONS

Question: Regarding the relative size of your company vs. the competition, what has been the primary objection customers have put up and how have you overcome that objection?

Answer: palmOne’s Ken Wirt - In terms of winning in enterprise accounts, they aren’t looking for “yet another vendor.” Our strategy has been to fit in by being compatible with the enterprise’s existing standards (like Office and Outlook) and being the easiest to use, which enables us to come in through the back door.