enterprise distribution

[gerald.feldman at hp.com (Jerry Feldman)]

On Wednesday 16 March 2005 5:43 pm, John Chambers wrote:
> I've seen the theory that there are two ways ?for ?a ?product ?to ?be
> successful: ?1) ?high ?quality, ?2) ?a ?large ?marketing budget. ?The
> important thing to realize is that there's no point to ?having ?both.
> If you have either, the other won't increase your sales. It will only
> increase your costs.
Quality does not always translate into sales. In the mainframe days, IBM was 
known for their marketing excellence, but they also were known for the 
quality of their products, which were generally grossly overpriced and 
somewhat behind the competition in technology. We can debate their software 
(such as OS and DOS (mainframe)). They had the first successful virtual 
machine architecture, VM370.
You could apply this analogy to automobiles when the very high quality 
Japanese cars started to hit the US market and the very low quality 
Chrysler, Ford and GM products started to lose a lot of market share. 
But, I don't think that quality and marketing budgets are necessarily more 
expensive and mutually exclusive. 

> This has been presented as the explanation behind the low quality ?of
> market leaders in many fields, and computers are often the very first
> example. ?Bill Gates leverages his IBM connections to get a ?huge ?ad
> budget ?for ?his ?software. ? Given that budget, quality software was
> pointless.
Gates "leveraged" his contracts with IBM until Microsoft broke with IBM. 
But, we also must give Bill Gates a lot of credit in that he was one of the 
few people who believed in desktop computers in the 1970s when the MITS 
Altair was being developed. He and a few others also saw that 
shrinkwrapping software products and selling them essentially as groceries 
in volume was the future. His (Microsoft's) business practices once they 
became the market leader were by-the-book monopolistic. He looked at what 
John D. Rockefeller did with the oil industry and effectively did similar 
things. 


But, back to quality and marketing.
The lack of quality is also expensive. In the short term, it increases 
support costs. In software, if a design flaw is caught early in 
development, then it can be corrected relatively inexpensively. If it ships 
and that flaw is discovered later on, the cost of fixing it might be very 
high. Additionally, poor quality products over a period of time will 
counteract that marketing budget as Detroit discovered. Remember the 
"planned obsolescence" of the 1960s and early 1970s. Today, it is very 
difficult to look at a car and determine what year model it is, and Detroit 
cars are of a much higher quality than they were. 


-- 
Jerry Feldman <gerald.feldman at hp.com>
Partner Technology Access Center (contractor) (PTAC-MA)
Hewlett-Packard Co.
550 King Street LKG2a-X2
Littleton, Ma. 01460
 (978)506-5243