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You Are Who You Build For

Every successful technology vendor knows who their customer is. For Apple, the end user is prioritized at the expense of every other consideration, save possibly form. IBM, on the hand, has traditionally designed and built software for businesses; users are a secondary concern.

The distinction is relevant because the requirements of users and businesses are frequently at cross-purposes; what’s good for users may not be good for employers, and vice versa. And while it’s possible to develop products for individuals within a business context – Microsoft Office is but one example of this – it remains a practice distinct from building products for the average consumer. As Windows Mobile’s history demonstrates.

Product development is inevitably a reflection of its target; the institution is a reflection of all of the above.

While this focus acts to constrain an organization’s addressable market – Apple is famously indifferent to selling to enterprises and IBM divested itself of its only consumer brands in 2005, attempts to service non-core audiences have historically been problematic.

HP, for example, seems to have belatedly come to the same conclusions that IBM did, as it publicly contemplates the separation of its PC business. And Palm’s webOS – a consumer oriented mobile operating system business that HP paid $1.2B to acquire, was orphaned in the same timeframe as HP’s now ex-CEO Leo Apotheker ended the firm’s dalliance with consumer relevance to focus on the business he knew best: business technology.

HP was, in that respect, merely following in Cisco’s footsteps, as the enterprise datacenter and networking supplier spent $590M to acquire Flip – a consumer oriented hardware business – that it retired two years later, having concluded that it lacked the ability to run consumer and enterprise businesses side by side.

Sun, likewise, was an enterprise technology company that sought to realize the perceived synergies between consumer and enterprise businesses; billions of Java handsets will sell tens of thousands of Sun servers, as the theory went. And while its technologies live on as core pieces of today’s mobile consumer experience, with a cleanroom reimplementation of the Java runtime at the heart of Android’s success, the firm itself was acquired at a steep discount by Oracle, having never realized its grand consumer-side ambitions. Because it fundamentally lacked the ability to develop and grow a non-enterprise business.

RIM may be the latest to learn this lesson. As consumer oriented operating systems – Android and iOS – absorb its marketshare, the one time mobile business standard has attempted to become more consumer friendly. While that by itself is challenging, the collateral damage – its core customers – is the real problem.

The practical lesson to be learned here is that it is crucial that vendors understand who their target market is generally, and who they’re targeting within that market specifically. Acquisition or development strategies that target non-adjacent, distinct markets may appear attractive, even accretive to the core business, but the execution is challenging enough that such efforts are rarely successful. Which is why there are no vendors with an equal ability to service consumer and enterprise markets.

While both enterprise and consumer focused businesses have historically produced revenue generating businesses, with capital markets traditionally favoring the outsized revenues that business software and hardware generate, the ongoing consumerization of IT represents something of a wild card.

When enterprises were able to impose their will upon their employees, enterprise vendors enjoyed barriers to entry sufficient to shield them from the likes of Apple. Businesses only bought the products that they wanted, which in turn were the products enterprise vendors built for them. But with “Bring Your Own Device” in full swing and accelerating adoption of consumer products like the iPad in Fortune 500 organizations, it seems clear that the barriers to entry that once protected enterprise oriented vendors are breaking down. The inmates are, more and more often, running the asylum.

Which doesn’t mean enterprise vendors should try – like RIM – to become consumer companies. History tells us that is precisely the wrong lesson to learn.

It does mean, however, that as enterprise vendors compete with their consumer counterparts, they will be at a disadvantage relative to their design, and must make adjustments to philosophies accordingly. Life was easy when you were selling to a business; now you have to sell to each and every one of their employees.

The lesson that statecraft has learned – “in the old world you’d negotiate with governments, in the new one you negotiate with populations” – is one that will become more and more familiar to those who would sell user facing business technology.

Disclosure: HP, IBM and Microsoft are RedMonk customers; Apple and RIM are not.

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Related posts:

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  2. You Can’t Fight What You Are
  3. Network Offering: If You Build It, I Will Buy It (And Some Other Folks Might, Too)
  4. Don’t Listen to Your Customers?
  5. The Elephant in Moscone: JavaOne 2009

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Categories: Consumerization.

By sogrady

— September 30, 2011 at 1:34 pm

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Hi, I’m Stephen O’Grady. I live in Maine, but travel a lot.

I helped found RedMonk in 2002, and I was born and raised a Red Sox fan.

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Steven O’Grady gets it right in his post about “You Are Who You Build For”, but the point extends to individuals as well. We are endowed — if you will — with a bent toward individuals and solving individual problems (B2C) or organizations and solving organizational problems. (B2B). No shame in either; the shame lies in trying to be something you’re not.