Vantage point

Thursday, December 22, 2005

Value of Marketing

I met a maths teacher of mine in a book shop last month. He wasn't a school teacher, but someone who trained me and a bunch of other kids for the Indian National Maths Olympiad after I had cleared the Regional Maths Olympiad. We were meeting after almost 8 years, so he had no idea what I did beyond Class 12. He asked me to fill him him in on the various stages of my life since our last meeting. And I did.

When I told him I had taken up engineering after Class 12, there was a slight look of disapproval, because he always believed that we all should take up pure sciences. When I told him about Management, he seemed positively disappointed.

The way a lot of pure science folks feel going the Techie way is a "sell out", a lot of techies feel going the management way is a "sell out". I often get a lot of ribbing from my techie friends, especially those in the software sector, about how "management" or "marketing" are fraud lines of work. They feel that a techie does all the hard work, whereas a Marketing guy pinches the cream, so to say.

It is in this benign ignorance about Marketing that you will find the roots of the Microsoft-hate that pervades the techie community.

In my last post when I said Microsoft "deserves its success", it perhaps left room for some confusion, judging by the mails I got in response, and judging by this half-jocular post Arun made. Some thought I am implying that Bill Gates is the real-life manifestation of a Howard-Roark-John-Galt cocktail.

Far from it.

Saying that he deserves his success is not the same as saying that he is the pinnacle of human perfection. But he deserves his success because he could achieve the combination of technology and marketing in the best possible manner. It's not like others didn't try. It's just that he succeeded.

A lot of people who blast Microsoft seem to think that technology is only about technology. They forget that technology is also about marketing. And marketing itself is a vast, complex and multi-dimensional discipline. Many techies feel marketing is just about advertising. Microsoft's success shows that Marketing is about a lot more than just advertising. Marketing is about mapping the customer's needs. Marketing is about distribution. Marketing is about channel management. Marketing is a heady combination of psychology and economics.

So if you are coming up with something to win a science project contest, then computer science and electronics is all you need to know. But if you want to turn it into a product and sell it to people, you need to know marketing.

The success of any product is thus defined by the sum Tech + Marketing. In terms of Tech alone, Microsoft scores a lot less than some of its competitors. But if you look at the Tech + Marketing sum, you will see they were miles ahead. And so even in market-share they are miles ahead.

Microsoft didn't start off with an advantage as compared to its competition, did it? 25 years ago, it was a tiny company. It was competing in a level playing field. Bill Gates wasn't a millionaire who had the advantage of massive funding. He didn't use violence, or he didn't use the government to create a monopoly, did he? Microsoft came up with a product, designed a Marketing Strategy and implemented it. So did everyone else. Sun did it, IBM did it, And even the techie's darling, Apple did it. Those who think of the Gates vs Jobs battle as a Corporate Meanie vs Techie battle forget that Jobs is also a Marketing guy and not a techie. SO after thus "Great Game of the OS" was played out, Microsoft won.

Fair and square. Greg Chappell would agree.

When Greg Chappell instructed his brother Trevor to bowl that infamous under-arm delivery, it raised a lot of "ethical" questions. But the thing is, he wasn't breaking any rules. So that win was a fair and square one. It may not have been a pretty or a "tasteful" win, but it was fair and square for sure.

Some of Microsoft's tactics are similar to Chappell's under-arm delivery. They may not appeal to your taste, but they aren't wrong.

What is happening now is, the competitors are crying foul because they didn't think of the under-arm trick. But they are pretending that they are actually appalled by the trick itself, and would never have used it even if they had thought of it. Which in my books is the rank hypocrisy that IBM's competitors were guilty of, and which Microsoft's competitors are guilty of.

They go running to the Big Bro, the government, which is given the responsibility to decide what is right and what is wrong. This is changing the rules of the game. Because they did not(rightly) go to the government when the battle was on. They went to the customer. The customer decided. And they lost, Microsoft won.

What they should do is, go back to the drawing board and figure out what they did wrong, and how they were outwitted. In fact I am sure they do go back to the drawing boards. but they also send their lawyers to court to see if they can get in a low blow of their own. And they aren't wrong there either. The anti-trust law exists. So they view it as a legitimate tool in the battle. If Microsoft were losing, it would do the same.

So you see, I am not saying that Microsoft is the best, and that its competitors are evil. Microsoft did what anyone else would have done in their position. And its competitors are doing what Microsoft would have done in their position.

The problem is the anti-trust law itself. The law is not fair. The gives a bunch of folks, i.e the government the right to decide what is a "competitive" practice and what is not. It is also very unfair towards the winner. You don't get punished for trying whatever are deemed as anti-competitive measures. You get punished for winning after doing them.

As a Libertarian I believe the state has no role meddling in business, unless some contracts are broken, or fraud is committed. As a Libertarian I also believe that in absence of any coercion, governmental or violent (same difference ;)), whoever wins the battle in the market is the deserving winner. Yes, some may not find certain tactics tasteful. Some may find that the winner's actions are "bordering on" monopolistic. But remember, according to Libertarian thought, if it is not coercive as described above, it is not monopolistic. The "bordering on" is a pure judgement call.

I, as a Libertarian, don't believe in the concept of "bordering on". It is the statist's domain.