Ian’s Blog on Open Source Marketing

In my previous post I wrote on “A Marketing Model for Open Source”. I finished by saying

“Open source has to have a different approach to the massive gorilla software companies of today. It can’t use its dominant position to force its platform. There is a better way. I’ll explore alternative models for different types of companies later.”

I recently read an article by Mary Jo Foley called “SharePoint: the next big “Operating system from Microsoft“. In this article it says:

• “is it correct to think of SharePoint as almost like an OS (operating system)”? “Bingo.”
• “So how does Microsoft keep the growing family of business services it is introducing tethered to on-premise software”
• “SharePoint Server is the answer. Not Windows. Not Windows Server. Not Office. SharePoint.”
• “Ballmer told the Convergence questioner he was dead-on in his thinking.”
• “Ballmer also provided one of the most succinct definitions of SharePoint Server I’ve heard from any Microsoft exec. SharePoint is just like Office; it’s a bunch of point products gathered together into a suite.”

This got me to thinking about Gorillas (Microsoft) and “The Platform Play”. There is an excellent book called “The Marketing Playbook” by John Zagula and Richard Tong. It details the plays they used “during their years of spearheading the marketing efforts that drove Microsoft Windows and Office to global dominance.”

A summary of how the book outlines the Platform Play is as follows:

Market

• “Inherently the Platform Play is about defending and expanding your turf”.
• “Your Platform is like currency. It’s good to be able to print money”

Read Office
Strategy

• “Use the strongest, most broadly applicable aspect of your technology or business to seed the center of a new ecosystem.”

Read Office

• “…the field needs to be defined in a way that excludes most of them”

Read SharePoint – Collaboration, Portal, Search, Content Management, Business Processes and Business Intelligence

Positioning to Partners

• Invite partners “to joint in your little slice of heaven”
• Make sure “the risks of opposing it stay high”

Read ECM vendors pulling back from the ECM market to develop applications on top of SharePoint from fear of Microsoft.
Messaging

• “In a Platform Play you make comparisons to yourself.”

Read SharePoint version 2 a notoriously weak product
Finally

• “Platforms die when innovation dies”

This strategy can be summarized as using office dominance to expand into a new larger “uber” platform.
Wikipedia comments on previous platform expansion behaviour as follows:
“United States v. Microsoft 87 F. Supp. 2d 30 (D.D.C. 2000) was a court case filed against Microsoft Corporation on May 18, 1998 by the United States Department of Justice (DOJ) and twenty U.S. states. Joel I. Klein was the lead prosecutor. The plaintiffs alleged that Microsoft abused monopoly power in its handling of operating system sales and web browser sales. The issue central to the case was whether Microsoft was allowed to bundle its flagship Internet Explorer (IE) web browser software with its Microsoft Windows operating system. Bundling them together is alleged to have been responsible for Microsoft’s victory in the browser wars as every Windows user had a copy of Internet Explorer. It was further alleged that this unfairly restricted the market for competing web browsers (such as Netscape Navigator or Opera) that were slow to download over a modem or had to be purchased at a store. Underlying these disputes were questions over whether Microsoft altered or manipulated its application programming interfaces (APIs) to favor Internet Explorer over third party web browsers, Microsoft’s conduct in forming restrictive licensing agreements with OEM computer manufacturers, and Microsoft’s intent in its course of conduct.”

http://en.wikipedia.org/wiki/United_States_v._Microsoft

Interestingly though as the book states “Platforms die when innovation dies”. In the words of Microsoft “SharePoint is just like Office; it’s a bunch of point products gathered together into a suite.”?
Innovation or new “uber” packaging?
The real situation is one of choice. Do you want to be tied into Microsoft for the whole stack of:

• Operating System
• Database
• .NET
• Portal
• Browser
• Office
• Wiki
• Blog

What about your corporate infrastructure standards and user preferences?

• Operating System – Linux or Windows
• Database – My SQL or Oracle or DB2 or SQLServer
• .NET – Java or .NET
• Portal – LifeRay, JBoss Portal,
• Browser – Firefox or IE
• Office – OpenOffice or Office 2000, Office 2003 or Office 2007
• Wiki – MediaWiki other massively used wiki software
• Blog – WordPress or other massively used blog software

We are now moving to what Geoffrey Moore called “The Stack Wars” - Get a whole stack from Microsoft, Oracle, IBM or SAP.
In summary is SharePoint the killer platform or the “Choice Killer” and “Corporate Standard Infrastructure Killer”.

Open Source is the alternative to being tied to a stack.

A year ago I wrote “Howells Ten Rules for Open Source Marketing“. This generated a lot of positive feedback and was featured in “Enterprise Open Source Journal”
Alfresco is looking like it will be the fastest growing company I have been at. This made me review the rules and also think about a simple marketing model for open source. Marketing models are often dominated by position - Position in the technology adoption life cycle or Position relative to competitors. I have previously worked for companies focused on crossing the chasm in the early days and later being leaders. I have also worked for companies that were number 2 to a dominant player. The marketing models we used and the understanding of them was critical as it drove a coherent approach to:

• Segmentation
• Competition
• Differentiation
• Positioning
• Messaging

I have previously worked for:

• Ingres – Number 2 competitor to Oracle before they started dominating the market
• Documentum- Leader in Document Management
• SeeBeyond - Number 2 competitor to Tibco in Europe and number 3 in US

There are many approaches to marketing models – Moore with “Crossing the Chasm and Darwin and the Demo“, Ries and Trout with “Marketing Warfare” and ex Microsoft marketing people Zagula and Tong with the “Marketing Playbook”. Often you focus on your position in the market – a follower or a leader – the Avis vs. Hertz model or a gorilla, a chimp or a monkey model.

To make dramatic growth you need two things:

• A shift/discontinuity that shakes up a market – this may be legal, regulatory, technical …
• Customers who have a pain or are making a trade-off

A classic example of a trade-off is many people would like a fast, luxurious BMW but most would rather pay for a Toyota. In software terms it is common for users to have to choose between an expensive, hard-to-use ECM system with robustness, and performance or a low-cost collaboration portal that doesn’t meet their ECM requirements. This is a market that is ripe for commoditization and open source is the market shift to accelerate that commoditization. Martin Mickos of MySQL is famous for reputedly saying ” I want to make the the $10bn relational database market a $3bn market - and get a 30% share“. He also said “Business class is fine but economy gets me there at the same time and you don’t send all of your employees business class.” What is needed is a simple marketing model to capitalize on this situation.
Commoditization is taken for granted in many industries. We all drive commoditized cars. Commoditization is about:

• Efficiency of Development and Manufacturing
• Efficiency of Distribution
• Increased Quality – With high volumes things just have to work
• Reduced Cost

Open Source is made for these market conditions:

• Lower Cost of Software Development – Community, Best-of-Breed Open Source Components and world class engineers
• Low Cost Distribution Model – Internet and SourceForge
• Low Cost Of Sales – Model of Discover, Try and Buy with out a large costly sales-force
• High Quality – Large scale Community testing

This results in dramatically lower cost for the purchaser. The advantages that open source companies have are:

• The Internet, Blogs, RSS have levelled the playing field
• No Legacy
• Being able to start with a clean slate

So when these components are put into a marketing model you get the following. [We have used and field tested these ideas and I have used Enterprise Content Management as an example]:

Situation

Users are looking to rollout ECM to all desktops but have to choose between an expensive, hard-to-use ECM system with the robustness and performance you need or a low-cost collaboration portal that doesn’t meet ECM requirements and the alternatives don’t integrate. There is a resultant very low adoption of ECM – estimated to be 5% to 10% of users

Segmentation – Why Choose

What users want is a low cost, simple to install system that is easy to use and scale-out. It should be simple to develop content centric applications and fit in with a corporate architecture The target is all users who manage content and want a scalable, robust system – “Why Choose”. This is the massive under-served segment between the high-end ECM systems and at the low-end SharePoint. Often these users store content in a shared drive today and use email for collaboration. These are the tools of mass usage.

The segment becomes even more attractive when the focus has been in acquisition and integration as opposed to innovation. This is common as a post bubble strategy was to buy companies to fill out the portfolio at bargain prices.

The segment becomes even more attractive if standards are emerging.

Model Rule One Segmentation: Choose a segment with a large under-served mass between the high-end and the low-end. A lack of innovation in the segment makes it even more attractive. Emerging standards as well make the segment irresistable

Competition

Your competition are the high-priced legacy vendors that are effectively on their way to becoming boutiques. You need to become the brand for the masses with a high-end cachet.
High-End: Content Stack Players

Low-End: SharePoint

Model Rule Two Competition: Your competitors are primarily the high-priced enterprise vendors (and to a lesser extent the low price alternatives) not other open source vendors
Differentiation

This is critical as it has to be simple to explain and indisputable. It is critical to attack “the weakness in their strength” - classic Ries and Trout marketing warfare. An example is:

Differentiation/Comparison Content Stack SharePoint Alfresco

Low-Cost/Easy-to-Use_______N_______________Y________Y

Scalable Robust_____________Y_______________N________Y

Open Choice:______________N_______________N_______Y
OS, App Server,

Java vs. .NET, Portal
Model Rule Three Differentiation: Differentiate on high-end features at a price that people can afford. This is packaged as a simple to install, simple to use and simple to scale-out system. This also fits in with the existing corporate standards lowering TCO.

Positioning

You are entitling people to what they were previously denied. They no longer have to make a trade-off.

The Open Source alternative for Enterprise Content Management Model

Model Rule Four Positioning: Keep the positioning simply. We are the open source alternative for (generic term for expensive proprietary vendor)

Messaging

This should complement your positioning as offering the high-end functionality that users require at a price that they can afford and drive people to try your offering. This is much more campaign oriented.

• By the makers of Documentum® and Interwoven®
• When you are looking to rollout ECM to everyone you don’t have to break the bank
• If you know Content you know Alfresco - Content Wanted

Test Drive Alfresco today

Model Rule Five Messaging: This should say high-end functionality (without stating it explicitly) at a price users can afford and drive people to try your offering

Proof Points

All of this should be backed up by indisputable facts.

• Architecture – Choice of Operating system, RDBMS, Java vs. .NET, Portal, Office suite, Browser
• Scalable, Robust – JSR-170 Benchmark
• Low-Cost, Easy-to-Use – Customer Testimonials

Model Rule Six Indisputable Facts: Have a proof point for each of your key differentiators to make buyers feel comfortable to make a decision to try and buy your offering.

Alfresco is composed of senior executive from very successful traditional enterprise software companies such as Documentum, Business Objects and Interwoven who joined in the belief that open source is the future of software. Geoffrey Moore pioneered marketing for high-tech disruption in the 1990’s and then ten years later talked about marketing and business model discontinuity in Darwin and the Demon. In the 1990’s many enterprise software companies adopted basically the same fundamental marketing models. Open source is a significant change where different successful companies have become successful in differentiate ways. The understanding of open source is accelerating by the month as are marketing models, marketing execution rules and licensing. Hopefully this will stimulate some thought. Open source has to have a different approach to the massive gorilla software companies of today. It can’t use its dominant position to force its platform. There is a better way.

I’ll explore alternative models for different types of companies later.

This week BBC Radio had a feature where the Conservative Party promised to create a level playing field for open source software in the UK in an attempt to save taxpayers more than £600m ($1.15bn) a year. George Osborne, told the Royal Society of Arts “There isn’t a level playing field for open source software. As it stands, too many companies are frozen out of government IT contracts, stifling competition and driving up costs. He also announced that Mark Thompson has been advised on how to make Britain the open source leader in Europe.

The current labour government has come in for criticism for failing to promote open software, most recently in the education sectors where the British Education Communications and Technology Agency extended and agreement with Microsoft despite concerns over the software giant’s licensing and research indicating schools could save money by using open source alternatives.

As Steve Ballmer said in an interview with the Chicago Sun-Times “Linux is a cancer that attaches itself in an intellectual property sense to everything it touches”

John Newton in his blog commented, “Being a British software company, you would think that the UK government would be all over Alfresco as an open source alternative to American software. After all, governments all over Europe are adopting Alfresco for document management, records management and starting to develop web sites. Local and Central governments in France and Spain have been using Alfresco for nearly two years now.”

In this radio feature Microsoft were invited to respond. What was amazing was their comment that Microsoft gave customers “choice”
So when you choose SharePoint where is the choice around:

• Operating System
• Database
• Application Server
• Java or .NET
• Content Management System
• Portal
• Blog Software
• Wiki

In a book entitled ” the Marketing Playbook” ex Microsoft marketing executives talk of Microsoft strategies and tactics and this is a classic platform expansion play (from Office) as opposed to a “choice” strategy. So this is how they kill the “cancer” with “Choice”!

More on the marketing plays next week