Category: business advice

IT for the future

CNET’s Matt Asay looks at a Goldman Sachs report forcasting IT spending for 2009. To say the predictions are dire is an understatement. 

Mark’s comments are interesting. He takes issue with Goldman’s view that open source and Software As A Service (SAAS) spending will fall as corporates focus on known vendors such as Microsoft and Symantec.

I tend to agree with Goldman’s analysts that the big corporates will turn conservative for the next few years as they focus on their core operations. As long as their IT infrastructure is good enough, that’s where they will stay.

The real action for open source and SAAS will be in the SME sector. Small businesses will be under more competitive and cash pressures as the global depression bites. The who survive the next three to five years will be the ones who do things smarter, quicker and cheaper than their opposition.

This is where open source, and more important, SAAS come into their own as they give smaller enterprises flexibility and cost advantages.

Some of today’s small businesses will the giants of the next economic boom and many of them will be giants because they embraced the new tools and technology available to them.

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Focus as a survival strategy

Why Apple shouldn’t bother with low margin netbooks

compassThis article originally appeared in Smart Company on December 9, 2008

Speculation is mounting about Apple releasing a cheap netbook. The idea is Apple needs to compete in the ultra cheap sector and their existing range is too expensive in the current market.

While there’s no doubt Apple will have to respond to the difficulties in the market and give up some margins and profits, there’s danger in simply chasing other people’s price points.

Apple’s success is built upon high margin products, not the stack ‘em high, sell ‘em cheap models other manufacturers follow with varying degrees of success. Those high margins allow Apple to offer value added services like free help in their Apple Stores.

While it’s important to meet consumer price points in the current market, pitching a product to meet someone else’s price point is madness. Apple’s market couldn’t be different to that of the Asus EeePC for example.

That people are suggesting companies in Apple’s market and financial positions should be doing these things illustrates just how tough times are in the tech industries. This was flagged in yesterday’s SmartCompany New Years Resolutions article where Amanda Gome specifically clearly flagged IT as an area to cut.

As we learnt in the tech wreck, IT spending is the first to be slashed, and from what I’m hearing there’s a bloodbath looming in the technical services industry.

Others are hearing this too. The website GigaOm and Gartner Research both published tips on surviving the downturn last week.

Gartner’s paper was firmly aimed at tech service businesses, but there‘s plenty of good ideas there for other businesses as well. Their key point is you have to lead the market as followers will struggle.

The GigOm article starts from the same premise as Gartner – businesses need to differentiate themselves from the rest of the market – for GigaOm focus and simplicity are the keywords.

Focus and simplicity are how Apple has achieved its position in its market. Right now is the worst possible time to lose this focus.

All of us need to focus on the areas where we have advantages and how we can simplify things for our customers. We need to be talking to our clients now and understanding where their pain points are and how we can help.

Once we’ve done that, we can start getting new ideas and products out there that will help our businesses through the tough period ahead.

Image by Kriss Szkurlatowski.

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Closing early

shop-closedI’ve been a customer of my local Mail Boxes Etc branch since shortly after it opened 13 years ago.

While generally happy, one frustration I’ve had with them is they have a habit of closing early. Today they were closed 15 minutes earlier than their normal closing time.

In the last two working days before Christmas, this is madness as small business owners rush to get things done and pick up courier deliveries.

But what’s worse is they lost at least four customers. I saw two disappointed customers outside the firmly locked doors and while browsing in the newsagents next door, two customers came in wanting to use the photocopier as they couldn’t use the ones in MBE.

In these tough times, it’s crazy to be turning away customers and upsetting existing loyal customers.

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Apple and the recession

A couple of weeks ago I gave my opinions why Apple shouldn’t chase the Windows market down the cheap netbook path. Philip Elmer-DeWitt’s makes a similar comment on his Fortune blog quoting Turley Muller’s analysis of Apple’s prospects.

The big challenge for all businesses in this downturn is to focus on core values and products. For a company in Apple’s position, to be distracted by a venture into low margin, cheap products would be a terrible waste of management time and resources.

There’s no doubt Apple will be affected by this storm, they are going to lose sales and profits will suffer. The key to survival is to limit that damage and come through the other end with loyal customers and good products.

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Control freakery

Further to my earlier post about Apple pulling out of Macworld, CNBC opines they are doing it so they can control the messages, to quote;

The fact is, Apple hosting its own events gives the company complete and total control over its own message. More and more companies are leaving traditional trade shows in favor of enjoying the total spotlight at their own events. I’ve reported recently that some big names are either dramatically reducing, or exiting all together, the massive Consumer Electronics Show in Las Vegas next month.

If this is true then it’s a shortsighted policy by Apple and anyone else that thinks this way. The days of total control has passed, if it ever existed.

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Apple leaving Macworld

Apple’s decision to leave Macworld is strange and disappointing.

Macworld gives Apple a captive audience of dedicated fans. Any other business would kill for the same opportunity to roll out their new products to such an enraptured audience.

While there’s not doubt the Internet and the Apple Store channels have diluted the importance of the trade show, the Macworld event is still an important part of the tech industry’s calendar.

I’m a bit baffled why Apple would be doing this, I think it’s an asset they should treasure.

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Why a cheap Mac netbook would be a mistake

AppleInsider is speculating about the possiblility of a $599 Mac netbook.

If Apple were to do this it would be a strategic mistake and damage their business.

The key to the Mac’s success is the point of difference they have to rest of the computer market. This difference allows them to achieve higher margins.

If Apple want to get down and dirty with Asus, Dell and HP they’ll find their products and margins will be dragged down with to their levels.

What’s more, it’s a marketplace they won’t win as other players have better low cost models. For instance, no other brand has a successful worldwide chain of branded stores.

The idea driving the netbook push is “Apple can’t justify charging double”. That’s true and there’s no doubt Apple have been overcharging in recent times. So there is room for some price drops.

But cutting prices to meet other people’s price points would be a suicidal move from Cupertino.

A far more sensible strategy is to accept sales are going to drop and focus on their core market, sacrificing a bit of margin won’t hurt either. 

Sure, Apple’s profits will take a hit but they’ll still be profitable while their competitors struggle to make pennies on $500 systems.

This is the key to survival in the downturn, not mindlessly slashing your throat to meet artificial price points.

It’s a lesson for all businesses in this economy. Focus on your core market and your margin. Giga Om has a good guide to “competitive differentiation”.

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