A call to action: Linux needs innovation now

Product innovation and channel partnerships are being given short shrift by Linux distributors and vendors, says Samba Team co-founder John H. Terpstra. In his analysis of the rise of Linux popularity, Terpstra spotlights opportunities missed by Linux evangelists. In particular, he calls for more technology innovation -- including increasing the user friendliness of Linux -- and partnering with independent consultants.

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There are lessons to be learned from the interactions between Linux and the IT Market

Looking back at the rising popularity of Linux and open source technology since 1996 is an up and down experience. From the dot-gone bubble up to the present, many of the things that happened, or did not happen, seem hopeful, disappointing and/or contradictory.

Recently, I conducted a survey to uncover perceptions about the suitability of Linux for business desktop use. At the end of the survey, one pro-Linux person said, "I just do not understand why there has not been a rush to switch to Linux [on the desktop], it is so much better than [Microsoft] Windows!"

Over the past two years, I have heard that question echoed by many open source advocates. The question begets more questions: What are the dynamics that drive this popular view, and why is the market so unresponsive? Are we are all missing the obvious? Has it has already happened while we were asleep at the wheel?

This article makes some observations regarding the rise of Linux popularity in the market place. My comments may bore you, or they may inflame and cause you to react. Whatever your inclination, please do act! If this article bores you, then move on. If you want to express an opinion, then please do. I promise to reply to every response, as far as is humanly possible.

You'll notice that this article asks some questions and does not answer them (yet). That is deliberate. Depending on your feedback, future articles may attempt to provide concrete answers to some of the questions raised. Right now, let's get some critical questions on the table.

Attributes for success

There is a prevalent opinion that a product will automatically succeed if it is the best there can be. The expectation is that it will sell itself if it is good enough! What does that mean? Does it mean that Linux is not good enough today? Rubbish! Plenty of IT shops are using Linux in the enterprise today. But, how do IT shops know for sure that the quality is good enough?

Sometimes the best technology doesn't win. Some say Betamax was a far superior technology to VHS, but VHS won the day and is the video standard we all use. Clearly, technological superiority is not the sole important factor.

Let us assume that there is a perfect Linux desktop product for businesses. Our hypothetical desktop Linux has everything the business end user might want. It has all the right native Linux applications, it installs and runs all Microsoft Windows applications. It is free and exceptionally well supported (for free, of course).

So, how would it fly in the enterprise-level market place? The sad news is that it probably would still fail to attract rapid acceptance. That's because the method by which businesses make their purchase decisions is very complex.

Back in the early 1980s, I believed that people make rational and logical decisions. A marketing manager pulled me aside one day. "John, it's time you realized that people buy by emotions and then justify with logic," he said. "That is why their logic is so broken!"

So, while Linux developers may have a good handle on all the important aspects of a successful product, their creations may yet suffer less than spectacular market acceptance. Let's explore why this may happen.

Classical marketing theory says that every product has four attributes, all of which must be "right" if the product is to succeed. Commonly called the "4 Ps" of marketing, they are product, price, place and promotion.

Product

The perfect product has the right functionality, usability, utility, shape, form, aesthetics and so on... Yet, there is no such thing as a perfect product; all products have defects. I have yet to find one customer who can judge a product and say that everything is perfect. The real question is: Does the product's effective value proposition (EVP) outweigh the perceived product deficiency (PPD). Successful products have an EVP that is massively higher than the PPD. The fact remains that not a single Linux business-level desktop product has scored particularly well in all areas. Some have scored well on install ability, usability, utility and poorly on other key physical attributes.

For desktop Linux to gain acceptance in businesses, we need to get product attributes to clearly align with user wants and needs. How big is the gap between today's attributes and those wants and needs?

As a business desktop platform, Linux has these strengths: stability, performance, interoperability and utility.

Key deficiencies of Linux as a business desktop platform include lack of [MS Windows] applications for Linux, poorer hardware support than MS Windows and lack of user familiarity.

Recently I asked business users to tell me why they can or can not use Linux on the desktop. There was not one person who claimed that any Linux desktop could meet all user wants and needs.

Some product-specific issues were raised, but they were not the main problem. Usability, utility, facility and task suitability were the concerns that were frequently raised.

So, if user friendliness is users' biggest objective, why have Linux advocates not focused on this issue? Why have most Linux product reviews focused on one usability issue -- difficulty of installation -- while commenting very little on usability, utility, facility and task suitability? How frequently do IT shops have to reinstall a Linux desktop in the course of hardware life? If this will be a regular occurrence, then the focus is warranted. If not, then have reviewers perhaps missed the point a little?

Price

Classical marketing studies have shown that human beings make an association between price and quality. To verify this, as an experiment, offer a $10 bill to passersby in a shopping center who agree to give you a $1 bill first. Surprisingly, many people will not accept your generous offer out of suspicion that the $10 bill may be a forgery. Try as we may, price does convey a notion of value or quality. In every market the leading (and usually most expensive) brand generally has the most pull with customers.

Businesses are risk averse and will do much to avoid pain or anxiety. Their perceived risk factors of adopting Linux may be based on fact or pure fiction. That's because risk may be qualified, but is rarely quantifiable. For IT shops pitching Linux, that makes risk such a difficult factor to deal with.

To a business decision maker, a product's price conveys a measure of the exposure a manufacturer may suffer if a product should fail in service. Price utility is high when there is fair balance between the perceived risk of failure to the manufacturer and risk of injury to the user in the event of a failure. This utility is amplified where significant usage benefits may be realized.

Another feature of price is what marketers call the can measure the price elasticity of demand by quantifiable research. This is found through research to find how many units might be sold as the price moves from too low through to being too high. The point of optimal utility is reached when the value of number of units sold times price yields the highest return.

Place

Place, or channel, is the mechanism by which a manufacturer delivers its products into consumer hands. Every channel has norms. It has highly standardized practices by which manufacturers, distributors and resellers interact with end users.

If a vendor wishes to move a new product into an already established market, then the first channel challenge will be gaining the attention and commitment of credible distributors and resellers channel to carry that new product.

The IT channel is made up of many elements. These include, original equipment manufacturers, distributors, resellers, training and certification outlets, support providers, consultants, etc. Each of these has an eco-system for remaining in business (being profitable). These may be threatened or may benefit from a new market entrant.

The impact of the release of Linux via a direct sale to the customer has been overlooked. Also, Linux companies have not capitalized on existing channels. Think about these questions: How many Linux companies have contacted your company through traditional channel players? Has it offered significant financial benefits to any particular channel entity? Has the introduction of Linux perhaps put some channel players out of business? Has it created new opportunity for others?

Again, classical marketing teaches that there are five buying roles that make up the decision matrix for the channel: buyers, users, deciders, influencers and gatekeepers.

In 1996, I discovered that one of my customers had raised my status from a supplier to that of independent reviewer. To my surprise, I found they used 12 other people like me. One day another reviewer told me that the customer had asked him to review one of my proposals. His recommendation resulted in the project going ahead. Both of us were independent consultants to this customer. Today, independent consultants are hired by large companies as a means of exercising due diligence for their shareholders.

This leads to a big question: What have Linux vendors done to get the active support of independent consultants in promoting the use of Linux (either on the server or on the desktop)?

I once saw a secretary throw an envelope containing product brochures into the waste bin because she thought that her boss would not be interested in "all those sales blurbs!" Gatekeepers, like this secretary, can totally mar a salesperson's ability to get a foot in the door.

I'd like to hear from business customers and Linux companies about the strategies Linux vendors are using to get a foot in the door. Are there any? How have the resulting tactics affected the channel?

Promotion

When a manufacturer communicates its value proposition to the consumer, it needs to address how the consumer will progress through the stages of the buying process: needs arousal, information search, solution specification or evaluation of alternatives, seeking of offers, bids or quotations, purchase, implementation and iInstallation (Note: Often omitted as a buy phase), and post-purchase evaluation

Each buy phase requires a different communications methodology, implies a different message need and dictates particular customer centric interactions. It is unfortunate that these are so often neglected. To many companies, promotion is nothing more than advertising; to others a focus on trade shows.

In order to select the right communications vehicle one must identify all channel players who are significant in the supply food chain.

Linux companies have spent millions on promotional activities and are still missing the boat. Issues such as how to help the customer through the decision process are ignored, with the Linux companies relying purely on chance. It seems logical that, if Linux companies had addressed the specific hurdles, they probably would have gained a more substantive commitment to Linux-based business solutions.

The most neglected buying phase is that of post-purchase evaluation. Immediately following a significant purchase, most of us go through a period of questioning the safety and/or wisdom of our decisions. Smart vendors zero in on this time by reinforcing the decision. They offer specific comfort information and provide reassurance of support, ease of gaining answers to questions or concerns, etc. This process is technically known as post-purchase dissonance. The duration of this phase may be short or long, thus the communication (promotional) tactic a company may use has to be matched to needs of the moment.

We often joke about the fact that a happy customer tells a friend, but an unhappy customer tells everyone. Hearken to the critical post-purchase period: It is the easiest way to make the next sale to the same customer. Which is more cost effective? Making another sale to a happy customer or finding a new customer?

How does your company go about finding information to help progress through these buy phases? It might just provide clear illumination as to how a Linux company might change its promotional activities to gain many more dedicated customers.

Market Reaction

In 1884, a French physicist -- Henri Louis Le Chatelier -- postulated how chemical reactions behave. Ever since I first heard of his postulates, I have been intrigued at its simplicity and consistency in areas well outside of the scope within which it was first proposed.

Le Chatelier's principle states: If a "stress" is applied to a system at equilibrium, the equilibrium condition is upset; a net reaction occurs in that direction which tends to relieve the "stress," and a new equilibrium is obtained.

Another way to say this is: When a system that has normalized is placed under stress, it will react so as to cancel out as much as possible the net effect of the change.

Markets behave exactly this way at the threat of a potentially disruptive influence. The emergence of Linux and open source software has been called a disruptive technology. This is not without reason since software that is essentially free absolutely poses a threat to traditional (at equilibrium) proprietary players.

Innovation is a mechanism of change, both positive and negative, within the market place and in the economy at large. Where a negative change is affected, there is a tendency to revert to the third law of thermodynamics, which is better known as the law of entropy. It asserts that in the physical universe all things tend to decay.

Put another way, a disruptive technology -- like Linux -- will reduce the total value of the market. Innovation is then an essential factor that is needed to replace market value that has been lost through the disruptive change.

So, Linux is widely recognized as a disruptive influence in the IT market place. The market and its traditional competitors have reacted to minimize the effect of the impact Linux has made. Many have now conceded that Linux will not go away any time soon.

Meanwhile, open source software use is growing. It is now up to the Linux and open source companies to provide proof of innovation. Only by innovating will they again increase the total value of the IT market. I am confident that one way or another this will happen, but we all have much work to do. Right now, it seems to me that most Linux companies are caught up in the maze of marketing and not focusing on innovation.

It is important that we should all see the market reaction in perspective. It is a predictable, albeit somewhat emotional, reaction.

Escaping the maze: A call to action!

Customers are smart! They look for competitive advantages in the purchases they make. Smart companies that want to sell a product look for differentiated strengths or competitive edges. Market leaders are generally credited with having a compelling competitive edge that presents a barrier to competition.

Do you ever get the impression that one company has such an overwhelming advantage over its competitors that their continued existence is surely threatened? That does not happen by chance, and it is no accident!

Any company that does not forcefully hone a present its competitive edge in the marketplace is vulnerable on the killing fields of commerce. Successful companies measure customer wants and needs. They recognize their channel advantages, find out and focus on the strengths of their customers and prospects, and they learn all they can about how their competitors behave under pressure. Such insight helps them to attack competitive plans and to strangle their effectiveness. And it usually happens without competitors even being aware of it.

I was once told by a Linux company executive: "We are not big enough to compete with Microsoft." The results of this type of thinking are clearly evident: That executive's company went out of business. This company had a very attractive product, but its meek competitive attitude made it a sitting duck on the killing fields of commerce.

Business schools have taught the techniques of marketing for several decades now. So, why is it that the success rate for new businesses has not significantly improved over the years? Is there a basic inability to "walk the talk?" Are the concepts all wrong? Are the theories wrong?

Maybe, like the Linux company executive, the people in charge of many of these failed businesses were thinking that they weren't "big enough to compete." Maybe they didn't learn their marketing lessons.

All too many Linux companies came in the dot-gone bubble and are no more. I am ever hopeful that those still in the game will get much smarter. In fact, I hope they will become exceedingly street-wise. After all, if they all die, consumers will be denied the choice they want. Isn't that right?


About the author
John H. Terpstra is co-founder of the Samba-Team, a member of the Open Source Software Institute Advisory Board. He is active with the Linux Standards Base and the Free Standards Group, has served as a steering committee member of the Li18nux (now OpenI18N)and currently serves on the SPEC/SNIA (Storage Network Industry Association) Standards Group. He is also SearchEnterpriseLinux.com's Integration and interoperability and Security Expert.

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