IBM's "Open Client Offering" -- is there a deeper meaning?

IBM just announced their "Open Client Offering"

IBM said on Sunday it will offer an open desktop software system for businesses that puts the cost of managing Apple or Linux computers on a more equal footing with Microsoft's Windows software, improving the economics of Windows alternatives

This seems designed to complement IBM's offer (discussed in a session at this year's Lotusphere) of free IBM consulting to help MIcrosoft customers negotiate Microsoft licensing.

During this session we will review the best practices customers worldwide are using when negotiating Microsoft Enterprise Agreements. We will understand what analysts are recommending when negotiating their contracts with Microsoft, review cost savings scenarios using our knowledge and expertise on Microsoft contracts, and provide examples and comparisons of other customers who have saved money negotiating with Microsoft. This strategy has helped customers around the world save up to 50% of their Microsoft budget buying the same products from Microsoft, helping them to "free up" their IT budget to invest in mission critical or value added projects.

Dan Lyons offered a perspective in a Forbes piece, entitled "What's in a Name?"

Here's a marketing challenge: What do you do when you're trying to put a fresh look on a 20-year-old e-mail system? Well, if you're IBM, you start calling it "Open Client"; you hype it as being Linux-related; and you throw in a bunch of smack-talk about helping poor, oppressed customers throw off the yoke of Microsoft.

...

But maybe you really believe that IBM has changed, and that it really wants to save you money and make you free and empower you with loads of choice and help you simplify your life. In which case, this no-list-price, non-open "Open Client" installed by consultants and delivered by three vendors working at cross-purposes may be just the thing for you.

Shouldn't IBM be focusing more on its customers than trying tio save them from the predations of IBM's competitors? As Sun Microsystems slowly sank in the west, Scott McNealy  spent more and more time in anti-Microsft tirades. IBM appears to be on the same tack.

Comments

[Volker Weber]

I think I have an interview on tape, where you suggest that nobody pays for Exchange, if they play the Notes card. That was in January 2000.

[cliffreeves]

Jeez, Volker! Do you keep everything?

To your point, though: I'm not offended by the notion that customers negotiate with vendors. I'm questioning the focus of IBM adverising free consulting in licensing MIcrosoft's products.

My point may be clearer by analogy. Imagine Ford advertising free advice to existing Toyota customers on how to negotiate a better deal on leasing their next Toyota.

What would that tell you about the relative focus and trajectories of those companies?

[Richard Schwartz]

Tell you what, Cliff... When Microsoft stops using all the means at their disposal to play hardball against IBM, IBM will stop using all the means at their disposal to play hardball against Microsoft.

Deal?

[cliffreeves]

Richard, you are missing the point.

Perhaps I haven't been clear.

I have no complaint about the tactic. I just think it's revealingly lame.

[Ed Brill]

I think Richard's point is that Microsoft does plenty of the same. What is the difference between the IBM effort you point out and Microsoft's programatic tool to analyze Notes/Domino environments that presumes to identify which Notes applications are not actively in use? (of course, this tool has already been proven to be manipulate-able)

In relation to this announcement, Microsoft, too, seems to have time to focus on the competition. Of course, the quote is lame at best. Says Bill Hilf:

"If they are concerned about lowering the cost of computing, why not help their customers get off the mainframe, which is four to five orders of magnitude more expensive than anything offered on x86?"

Um, ok.

[cliffreeves]

It's a fair point, Ed. Microsoft isn't completely above this either.

It does seems to me perfectly reasonable to suggest people move off a competitor's platform, but if it's a coompany's major theme, I'm a little suspicious. Don't they have a value proposition of their own?

So I am sceptical when it's a primary focus, and whoever does it. For example, I don't think MSFT should focus on migrating Notes customers. I think highlighting buyer's remorse in a customer is a bad idea and, once again, it makes people suspect you don't have a value proposition of your own.

On the other hand, there's a fair amount of demand for migration from legacy systems. Whether it's a reasonable view or not, some customers view mainframes and Notes in that category. I think the Notes analyser and Bill Hilf's comment is each a reasonable response to that demand.

What struck me, though, was the focus on how to negotiate licensing your competitor's software. That did seem to cross the boundary -- not of fair marketing or even good manners -- but of common sense.

[Richard Schwartz]

Seems to me that your own logic, Cliff, dictates that if there's a fair amount of demand for migration away from license agreements with terms that are overly skewed in favor of a technology vendor that has excessive market power, then someone is going to fill that demand. And whether it's a reasonable view or not, some customers do view Microsoft license agreements in that category. And IBM (via a significant acquisition a few years ago) is clearly in the business consulting business, not just the IT business, therefore it seems to me that their offering is a reasonable response to that demand.

[cliffreeves]

I didn't suggest what IBM is offering is unreasonable. I suggested their behaviour is symptomatic of a company losing track of what's important: which is delivering good products to customers.

I think my Ford:Toyota analogy is apt.

[Rob R]

It is worth noting the completely different frame of reference Microsoft and IBM have in addressing their customers. Since IBM's portfolio is right across hardware, software, IT services and business consulting it needs to look at the customer's whole business.
The Toyota vs Ford analogy assumes both IBM and Microsoft have the same scope. What you're describing as a loss of focus is more accurately described as a broader field of vision.

[cliffreeves]

That's a good point, Rob. IBM does have a broader value proposition. Richard made a related point: that as a consulting company IBM should be offering advice.

I know nothing that is wrong, illegal, underhanded, or immoral about this approach. Gartner provides similar guidance and it seems to me appropriate that they do.

However, in IBM's case this is free advice and has nothing to do with their core businesses -- unless it has one or both of two goals:
-- to sell some other IBM consulting
-- to divert those savings to spend on IBM software

Does that seem an effective way to achieve either of those goals? Would you trust someone who said "renegotiate your software contract with X, and spend what you save on me?"

In other words, it seems an indirect way at best for IBM to deliver value. I mean, if IBM has a consulting or software proposition worth paying for, then why not sell that?

It reminds me of a strategy floated right after IBM acquired Lotus in 1995. It was called "The Microsoft Margin Erosion Program." Recognizing that Lotus Smartsuite was rapidly losing share to Microsoft Office, the suggestion was to drop the price of Smartsuite to zero, and so erode Microsoft's margins on Office. It was shot down when someone pointed out that Borland had already tried that with Quattro Pro. Not only did it not work, but it was an approach used by "companies who couldn't compete."

This isn'tmuch different. As I said to start with, it's a symptom of a company running out of good ideas.

[Horace]

Oh, my, <<< content deleted -- cjr >>> The idea is to get one's foot in the door under any pretext, then insert the apparatus.
the ford salesman isn't interested in helping the toyota buyer with his lease; he's interested in selling the toyota buyer a ford.
if you want to be presumptuous about "trajectories," then perhaps you could spend a few minutes dissecting gates's recent, incoherent rants about the relative and absolutes perfections of vista.
adler called it the "masculine protest." most folks call it whining. <<< content deleted -- cjr>>>

[cliffreeves]

Horace ***

Yes, Horace, the "foot in the door" intent is obvious.

Yes, Horace. You are correct. The Ford salesman is not interested in helping the Toyota buyer do anything but buy a Ford. That's why Ford doesn't take that approach.

It's your incoherent rant I'm answering, Horace -- not Bill's :-)

*** FYI, Horace provide a fake GMail address. I edited out some gratuitously insuting phrases. IMO they didn't add anything to his comment.

[Richard Schwartz]

Ah, so the fact that IBM is doing this for free helps makes it inappropriate? Tell me again, please... how much does Microsoft charge for the new Transporter Suite for Lotus Domino? And how much does Microsoft charge for white papers about Domino migration?

And re your statement that this has nothing to do with IBM's core businesses, you know as well as I do, Cliff, that when you're in a competitive situation and you're not in the incumbent position, then your first objective is always this: keep the conversation going. Anything that does this is in fact advancing the core businesses. And the second objective is: create opportunities to turn the conversation in directions that allow re-examination of your own offerings. IBM has found a way to do that by presenting something that benefits the customer while promoting the value of IBM's business consulting services and also creating the opportunity to interject with "You know, there's only so much money you can save this way, so instead of just looking at lowering your costs we could also look at lowering your TCO and increasing your ROI through a migration to Domino..."

[cliffreeves]

Richard, I haven't said this is inappropriate. Just not smart.

I think that offering to analyse Microsofts' licensing is an unusual way for IBM to show the value of its own products or services.

If I were at IBM, and someone suggested we do this my comments would be:

1) Free services are either worthless or a way to promote something else that isn't free. Let's be clear about what that "something else" is.

2) Why don't we talk about the value of our products and services rather than focus on -- of all things -- Microsoft's licensing?

3) This looks to me like bottom-feeding. Don't we have better ways to demonstrate value than this?

[cliffreeves]

It occurred to me that my prior comment qualifies as free advice, so I thought I'd explain why I offered it.

I have a great fondness for IBM as an institution and a company. Let's be clear to anyone who wants to challenge this: my money is where my mouth is. I am an IBM stockholder and, within my own modest portfolio, a major one.

I generally have great admiration for IBM as a competitor, technically and from a marketing and sales perspective.

I think there are a small number of folks at IBM who compete in a way that I think is -- let's say -- cheesy :-)

[Richard Schwartz]

Cliff, my apologies. I was thrown by the juxtaposition of "and it seems to me appropriate that they do" with the immediately following "However, in IBM's case this is free advice"

I appreciate that you don't think it is smart to use this tactic as a way to keep the conversation going, and in most cases I would agree. It would never be smart as the sole tactic if the customer is actually receptive to listening to IBM's own value proposition. It would rarely even be smart as one of several simultaneous tactics in such cases.

But everyone in the industry knows that Microsoft is a most tenacious competitor, and has done a lot to create intense loyalty with certain customers. (And in a few cases Microsoft's competitive tactics have been authoritatively found to be considerably worse than "cheesy", but that's not the point here!)

It is also undeniable that in certain cases where IBM is the messaging incumbent but Microsoft is the larger platform incumbent, Microsoft is not above taking advantage of intense anti-Notes and Domino feelings amongst their own supporters and assisting them in prevailing over the intenses pro-Notes/Domino feelings of the messaging group.

Thus there is a good number of cases where Microsoft has succeeded in getting customers to cut off all consideration of IBM and any other alternative technologies. As a tactic for keeping the conversation with IBM going with those particular customers, rather than IBM just walking away with their tail between their legs, I would call it not merely smart... but absolutely brilliant.

[cliffreeves]

Boiling all this down, IBM's proposition here is:

EXPLICITLY: I will show for free you how to spend less on MSFT ...

IMPLICITLY: ... so you can spend more on IBM (they are being irresponsible if this isn't what they are suggesting).

My point is that focusing on your competitor's licensing more than you do on your own products is a symptom (not proof, I agree) of a company running out of ways to compete on value.

[Richard Schwartz]

And the fallacy in your analysis is inherent in your claim of "more than you do on your own products". You're deliberately blowing one small thing that one part of IBM is doing in specific cases way out of proportion. You're pretending that it outstrips the focus that IBM put on the proving the value of their own products. Even if that is true in certain specific cases of competitive situations, it falls far, far short of "a company running out of ways to compete on value." The effort that IBM spends globally in one day promoting the value of their products certainly dwarfs the effort that they are putting into this licensing thing in a year.

[Percy Vier]

The service that you are commenting on is a Consulting service. It helps customers to understand their alternatives when negotiating a contract with Microsoft. A MS EA is a bundle of MS products (Windows OS Upgrade, Office and Core CAL) and could include other products. Customers could end up thinking that they are getting for free Exchange or other product included in the Core CAL , or now, in the Enterprise CAL. and due to this not compare products like Domino against Exchange for what is best for their companies. What this consultancy practice does is help customers view they have alternatives by buying the products they really need to Microsoft in different ways and understand if they can save money. By the way, if any of your customers want to do a engagement, they could send me a note to vier@pe.ibm.com. Is about helping customers to evaluate their alternatives, and sometimes save money that customers today need to create mission critical applications or value added projects.

[Charles Robinson]

Cliff, as a customer of both Microsoft and IBM I say "thank you" to IBM, because nobody from Microsoft ever did as much as IBM has in helping me comprehend the Microsoft licensing mess.

IBM also helped me figure out how to replace an iSeries with a BladeCenter, which reduced my expenditure with IBM. At the same time I did some server consolidations and also reduced my Domino licensing.

To you helping customers for free is "revealingly lame", "cheesy", and "bottom-feeding". That as well as IBM's actions shows me which vendor is really interested in my business, not just my money.

[patrix]

Cliff,
I'd like to comment on this:
"My point is that focusing on your competitor's licensing more than you do on your own products is a symptom (not proof, I agree) of a company running out of ways to compete on value."

So what you are saying is that back when MS crushed Netscape buy offering IE for free and bundling IIS with NT they where running out of ways to compete on value? As I see it MS main strategy has always been to erode the competitions license stream and make sure that the equivalent software MS offers for "free" only runs on Windows and thus get the kickback from the Windows licenses.

I salute IBMs initiative. They offer their Open Client solution for OSes they do not own nor control on an open platform (Eclipse). This means they can only keep competing in the future by offering better products and services.

I think Microsoft really needs to rethink their strategy in the business market because Vista and Office 2007 will probably not fly. I was mighty impressed when Microsoft managed to turn on a dime when Internet took of in the mid nineties. They had a flawed strategy (MSN), realized it, and came back with a vengeance. Question is, can they do it again?

Cheers /Patrix

[cliffreeves]

Patrix, there have been long and many arguments on Netscape-IE, and it's sort of off the point.

Regardless of how any of us feel about the rights and wrongs of that situation, it was all about products and value.

That is not the case with IBM's free consulting offer. I'll repeat that, while I don't think it's immoral or illegal, I do think it's poor business for an offer of any kind to focus 100% on your competitor. In this case it's not even a focus on product capabilities, but a focus on a competitor's licensing. Yes, Patrix, that does seem awfully lame to me.

You mention -- actually you salute -- IBM's support of multiple OSes. I have no criticism of it at all as a product and a business strategy, but it seems to me to be driven by business needs rather than goodwill.

To make the point, it's worth revisiting relevant history. When IBM was promoting OS/2 it developed its database and related products only for OS/2, because IBM expected that would help OS/2 win the desktop market. That strategy failed. No criticism intended; I was there, and we certainly gave it a good try.

I point this out only to make it clear that IBM supports multiple platforms because they have no high-volume OS of their own. That's where the market is and they have no choice.

I don't recognize it, though, as anything other than a business strategy. To salute it would be naive.

[cliffreeves]

Charles, I am somewhat abashed by your comment, for two reasons:

1) If MSFT licensing is that hard to understand, then God bless IBM for explaining it to you.

2) If, as a customer, you see that IBM's offer is created solely to help you, and absolutely not because they are a Microsoft competitor, and also not because they would like you to buy their services or products instead of Microsoft's ....

... then I was 100% wrong and IBM is doing the right thing for you.

I must admit that I am sceptical that is their motive, but if you believe it is, then you have chosen exactly the right partner.

[cliffreeves]

Percy, thanks for taking the time to clarify your offering -- and soliciting some business :-)

BTW, does it really require a consulting service -- even a free one -- to explain this:

"Customers could end up thinking that they are getting for free Exchange or other product included in the Core CAL , or now, in the Enterprise CAL. and due to this not compare products like Domino against Exchange for what is best for their companies."

That's not a complex proposition. If that's really what you're covering, you'd do far better sending people to a web page.

I do think you've set your price appropriately, though.

[Wayne Weinheimer]

Wait a second, . . . you mean IBM is trying to sell their services and products, and they're hiding this in a message re: helping with MS licensing? Thanks for this Cliff, I never would have guessed that.

Re: your comment - "Shouldn't IBM be focusing more on its customers than trying tio save them from the predations of IBM's competitors?" (spelling mistake not mine), how different is this from Microsoft's recent campaign about Linux's higher TCO?