Articles | Ali Ghaemi Online

Lenovo Buys IBM x86 Server Business For $2.3 Billion

Jan 242014

After purchasing IBM’s PC business for $1.75 billion in 2005 IBM and Lenovo have struck a new deal with the Chinese company picking up the American company’s low-end x86 server business for $2.3 billion. The deal was officially announced on Thursday 24th of January, but was leaked the day before. The deal for the x86 involves $4.6 billion in annual revenue transfer and the movement of 7,500 employees to Lenovo.

Several thoughts on this:

This deal further solidifies China’s reputation as a ‘hardware’ country. X86 is the name for a range of microprocessors, which are based on an early Intel design and lead these days by Intel and AMD. While other countries have become known as centres for software development China’s concentration of manufacturers and large ‘iron’ companies has given it a reputation as a hardware centre of gravity. Ironically, Lenovo will now utilize the new line to go after the mobile market where software and applications have been drivers.
IBM is again evolving by weaning itself of its lower end offerings. From low-end applications to desktops and notebooks and now servers IBM keeps moving up. Servers are now considered the low-end of the market.
In contrast, Lenovo is moving upmarket. The PC company is now also a server company. Lenovo is also a competitor in smart phones worldwide. It holds second place in the Chinese market. In 2013, the Chinese company tried unsuccessfully to purchase Canada’s Blackberry. The move was blocked by the Canadian government, but given how Lenovo and IBM reportedly went back to the table in late 2013 for another round of talks one could speculate regarding the cash outlay’s source.
Lenovo’s move into the server business worldwide represents a growing danger to Dell, HP, Acer and Sony. Note that Lenovo is already the leader in PC shipments worldwide, but this move will take away some of the sales leverage its competitors have had trying their ‘complete solution’ sales pitch on customers. Lenovo has had its owns server business, but just like with IBM’s ThinkPad line, offering “IBM” server technology and design takes the Chinese firm to a new level of credibility.

Addendum: A week later Lenovo took Motorola’s hardware handset business off Google’s hands. This reinforces further the notion that Chinese companies, including Lenovo, are focused on hardware. Presumably, Motorola’s phones will continue to be run by Google’s Android software. Moreover, it proves the folly of a company rich with cash (Google) reacting to the developments around it (Microsoft and Nokia), patent purchases by competitors and Apple’s dominance – as opposed to executing its own agenda. Google is hanging on to Motorola’s patents, but they are not worth $10 billion (the difference in amount between what Google paid and what Google received including $2 billion in losses since and a $2 billion hardware sale in the interim) indemnification or not as they are mostly older patents.

What cannot be good for Microsoft: It was announced that Google is purchasing a 5%+ stake in Lenovo. Could Lenovo now load Chrome unto PCs? Moreover, Sony quickly exited the laptop and desktop market. It is selling its computer business to a new entity, which will only compete in Japan.

The Inevitable Success Of Advertising

Articles, Marketing Add Comments »

Jan 062014

The title is an exaggeration, but the effectiveness of advertising is not hyperbole.

Why advertising works is a good discussion. We know the message is biased, partial, not challenged and conveyed and narrated by self-interested parties, but the medium is successful.

The tragedy of the below is not a laughing matter, but it is nonetheless instructive to go back and look at past marketing conveyed through advertising. I want my readers to take a moment to filter the below $182 (US) billion discrepancy through the inner ethical lens.

AIG, the largest underwriter of insurance in the United States Of America, underwent severe turbulence in the recent 2008-2009 financial meltdown. It was only saved through governmental intervention.

Print advertisement from the ’90s: “financial strength,” “strongest insurance,” “AIG’s strength’s and stability,”… $17 billion in…. adjustment reserves,” “highest ratings,” et cetra.

Reality ten years later: according to Propublica journalism project, “On four separate occasions, the government offered aid to AIG to keep it from collapsing, rising from an initial $85 billion credit line from the Federal Reserve to a possible commitment of about $182 billion between the Treasury ($69.84 billion) and Fed ($112.5 billion).” These numbers help the company remain solvent, while nationalizing it.

Things That Need To Go Away: people believing advertisements, advertisers pitching make-believe and other illusions and delusions masquerading as fact.

India – Forecasting Biggest Increase In Technology Spending

Articles, Uncategorized Add Comments »

Jan 032014

India is expected to lead the world in the realm of technology spending growth between 2012 and 2016.

According to BCG (Boston Consulting Group), Holding the #1 global ranking for growth requires spending overall to jump from $30 billion (US) in 2012 to $150 billion (US). The same report from BCG predicts that India will also see the total dollar amount of online purchases increase from $8 billion (US) in 2012 to $50 billion (US) in 2016.

It is clear where the market action going to be and, consequently, where companies looking for growth should set up shop. Conventional wisdom would tell any growth-seeking company to go where the market is expanding.

Free registration required to access the report:

BCG Report

Applications, Cloud And Software Roundup

Articles, Uncategorized Add Comments »

Dec 312013

I thought I would share several stimulating and thought-provoking, as well as a couple of factual pieces on the marketplace. Each is a good and succinct read.

Here San Francisco’s Sandhill Group has compiled status updates and predictions of several industry figures regarding where we are at and what 2014 will bring enterprise software:

http://sandhill.com/article/top-predictions-about-software-companies-in-2014/

In the following link two particular lines resonate painfully. First is, “For an ERP vendor to sell CX (customer experience) software and then mistreat their own customers so badly is more than ironic (or moronic).” The second is, ” If your ERP solution predominately tracks internal transactions, facilitates reporting of same and helps your firm achieve a modicum of efficiency, congratulations – you are, at best, mediocre.” Here is the article on Zdnet:

http://www.zdnet.com/troubling-challenging-2014-erp-predictions-7000024439/

Over at Forbes contributor Louis Columbus advocates manufacturers drop their entreprise-grade ERPs for something newer and cloudier (except he never says such a thing):

http://www.forbes.com/sites/louiscolumbus/2013/12/27/the-days-of-brute-force-erp-are-over/

He does, however, explicitly expose top and bottom performers of the stock market:

http://www.forbes.com/sites/louiscolumbus/2013/12/22/best-and-worst-performing-cloud-computing-stocks-dec-16-to-dec-20-and-year-to-date/

and addresses Mobile Strategy:

http://www.forbes.com/sites/louiscolumbus/2013/12/02/roundup-of-enterprise-smartphone-and-tablet-market-forecasts-2013/

Do not forget Analytics:

http://www.wired.com/insights/2013/12/analytics-eats-world-2014/

Looking for an ERP marketshare list? It downright surprises me that after ten sustained years of acquisitions Oracle is still where it was back before Charles Phillips’ strategy began.

http://dartongroup.com/worldwide-erp-market-share/

Finally, Gartner is forecasting an even bigger uptick for enterprise software than it did previously, namely $22 billion by 2015.

http://www.gartner.com/newsroom/id/1963815

(Channel) Trends For 2014

Articles, Marketing, Selling Add Comments »

Dec 302013

Miller Heiman has a short article on Channel Trends for 2014.

For someone who is on both sides of the aisle – direct sales and channel management – the article seems correct yet overly simplified.

The trends, according to the article, are:

Channel sales will continue to increase
New types of channels will emerge
The wall between direct and channel sales will continue to crumble

The tendency to foster and nurture an indirect sales route is congruent with the nature of the modern market. The world is tilting towards selling many with less margin. It is a volume play. Yes, exceptions always apply. One example is Tesla, which is selling cars directly. The company has been subject of lawsuits from car dealers trying to stop its direct sales route.

http://www.thecarconnection.com/news/1087492_gm-follows-teslas-lead-plans-to-sell-directly-to-online-shoppers

The article’s title is a misnomer however. While the tendency is there the trend does not belong to 2014. It has been ongoing for a good many years.

Additionally, the case for Cloud – which is addressed – is not as clear-cut given the costs, direct (i.e. margins, recruitment, education and marketing) and indirect (resolving conflicts, manpower and expertise), any company would incur.

The old ‘capital expense versus operations expense’ argument also applies. Cloud is less expensive to start, but from a purely dollar figure perspective it soon adds up to more. A better argument is made with factors such as upfront costs, management and ancillary expenses.

Here it is: http://www.millerheiman.com/blog/Miller-Heiman-Blog/September-2013/Channel-Trends-to-Watch-for-in-2014/

Hunter Or Farmer – which Am I To choose?

Articles, Management Add Comments »

Jul 262013

The existence of hunter-type and farmer-type salespersons is an old understanding in sales circles. Hunters are after market share and winning new prizes (deals or customers). Farmers are maintaining existing accounts, maximizing profits, cross-selling (adding products to what the customer has already purchased) and ensuring a consistent and predictable stream of revenue.

Famously, most salespersons are not able to juggle both dispositions. Perhaps it is the duality of the roles or perhaps it is the difference in skillsets. Most companies do not have the recruiting capability or the talent pool to bring onboard both types of salespeople.

What is more, most companies should not try. Unless a company has the size and payroll capability of a Blackberry, Apotex or Sony organizations need to articulate either a growth and market share or maximizing profit and retention strategy. Again, most sales managers and business owners reading this will immediately balk at the choice opting (in other words hoping) for both, but with the wish being unrealistic a choice needs to be made.

So be it if your shareholders and investors are making the choice for you. Otherwise, articulate a strategy and hire for the part.

Is your business needing to grow fast and garner market share (perhaps additional cross-sell opportunities are in the product pipeline a year or two down the road) or is your business in the mood to maintain the customer base by providing a higher level of service than a poaching competitor could offer) and ensure the profitability of the business is not in jeopardy? Then hire accordingly.

*Things That Need To Go Away: hiring generically for a ‘sales’ position.

Statement Positioning

Articles, Management, Selling, Selling More Add Comments »

Jun 052013

How a decision is presented is detrimental in how the choices are perceived and considered. This is not anything new. Here is something more specific. According to an article in The Boston Globe people respond more favourably to a request if it is framed as securing a gain and not avoiding a loss. In sales it is more effective to keep a success in sales maintained and not as not having someone lose a job. The example given is of a charity. It is better to present a request to donate blood as a way to “prevent someone from dying” rather than as a way to “save someone’s life.”

Sales Thought for 2013

Articles, Selling Add Comments »

Jan 142013

As we transition from 2012 into 2013 a number of sales imperatives either manifest themselves, become more important or the tendency takes more of a solid form.

Traditionally, sales has followed an established outline. This pattern, it is now clear, over-emphasized the needs of the seller.
Moreover, since human behaviour and reaction is almost unpredictable the process often failed.
The process went roughly as such: 1- Understanding one’s capabilities and the products or services represented 2- Prospecting in order to narrow down a vast marketplace to a list of prospects 3- Qualification or Marketing to prospects and gauging Money, Authority and Need or Desire 4- Presenting 5- Removing Objections 6- Trial Close including repeating 4 and 5 as necessary 7- Closing

http://www.alighaemi.com/wp/?p=646

This model is still valid and prevalent partly due to training and largely due to companies’ narrow focus and tight time-lines.

Nevertheless, based on my observation and experience, here are my predictions for factors that gain increasing prominence in sales for 2013 and beyond:

#1 Customers control the buying process – sympathy and servitude become increasingly important.
Buyers are more and more informed. Comparing brands, products and capabilities is less and less difficult. Salespersons need to educate buyers as early as possible and to do so from the ground up. Some might call this un-educate.

#2 Delivering more value
Selling will require better understanding why your solution is better than not only your competition’s, but also better than other requirements and the status quo.
Customers are armed with ample information. Could the seller better that?

#3 Salesforce specialization becomes more important.
Whether it is verticalization by industry or a technical specialization (by specific product or technology) focus will gain new prominence in sales. Increased customer knowledge requires similar improvement in account managers’ body of knowledge. Indeed, many a seller might find himself at a disadvantage knowledge-wise compared to the prospect in regards to the seller’s offering.
(Almost) everything is a commodity. How do you educate the buyer on what sets you apart? There is something (real) that sets you apart, right?

#4 Sales culture needs to become pervasive
Organizations that overhaul their internal culture to align marketing, analysts and products and management with sales win.
Currently, much time is wasted in internal squabbles and misalignment. Corporate jockeying is unlikely to end soon, but those who create ‘one organization’ may anticipate positive results.
One for all and all for one is difficult to instil unless driven at all levels at all times in every direction.

#5 Sales compensation has to be re-modelled to compensate the new reality in selling. Company representatives should be compensated for what it takes to turn a prospect into a customer today – not how it worked last year or the decade before. Networking, company and product representation (where customers look, think Social Media) and team selling and cooperation is what it takes nowadays. Are employees co-aligned? Their effectiveness and the company’s success depends on it. A move away from variable compensation is also underway in more innovative organizations. As a bonus, this evolution, when advertised, also garners customer trust.

I believe some elements will never change:
Salespersons who work hard, no matter any other circumstances, win http://www.alighaemi.com/wp/?p=443
Salespersons who challenge customers’ knowledge, perceptions and ‘blow things up’ win
Salespersons who ask questions win http://www.alighaemi.com/wp/?p=335
Salespersons who establish genuine and bi-directional rapport win

Competition

Articles, Marketing, Selling Add Comments »

Dec 292012

Who Is My Biggest Competitor?

In sales one typically thinks of his competitors as the other companies in the same industry.

Belvedere sales staff likely fret over Johnson & Johnson’s shelf space
Dell marketing targets HP
Burger King is upset about Wendy’s taking over the number 2 spot.
Mazda likely issues internal collateral on how its people handle Toyota customers
Etc.

Based on experience, however, would you agree that other companies producing goods or services in the same vertical should every time be relegated to the number 3 spot every time? Consider that. There is that much slack in market for sales and prospects. If only one could convert those into sales, but if one’s direct competitors should be third on the list who or what occupies positions one and two?

One’s biggest competitor is always ‘doing nothing.’ This ‘do nothing’ is where a value or cost-benefit is not identified and companies choose to maintain status quo. Inattention to you has cost you a sale.

The second biggest competitor is likely something outside one’s industry. Any entity has limited resources, which it needs allocated and assigned according to actual or perceived priority. Perhaps your prospect has declined to move forward with the snow removal machines you were pitching in favour of upgrading the in-house cafeteria (or the endless permutations of that scenario)?

Also somewhere in there is commoditization. In our contemporary society there are so many on-going things and change happening at such speeds that not only customers are tired of you and your offering, but also your industry has become pedestrian. There simply is that much competition out there.

Consider the revised competitor line-up in your next sales and marketing effort.

*Things That Need To Go Away: A broader sense of the competition for your prospect’s dollars.

Watson Versus Cancer

Articles, Uncategorized Add Comments »

Dec 182012

Do you remember IBM Computer Watson? It competed against two Jeopardy champions in 2011 and won.

http://www.bbc.co.uk/news/technology-12491688

The computer is back with a more practical and serious purpose. New York’s Memorial Sloan-Kettering Cancer Center and IBM are using Watson’s computing capability and massive database of 1.2 million current and former patients spanning 20 years to help the specialists diagnose cancer and recommend treatment options. Watson will tap into both the patient records and outside data, something it successfully demonstrated ability for on Jeopardy.

The question is whether Watson is as good in diagnosing alternatives as it is in reaching out into a datamart of facts, figures and general information.

Watson has been tasked with working on lung cancer to start.

http://www-03.ibm.com/innovation/us/watson/index.html

Older Entries Newer Entries