Segmenting the server market for XSERVE.
This is a spin-off from the G5 thread. I've put it in here because most people seem to be from a tech-background.
There are many ways to segment a market. Depending upon what you want to do, you can segment a market any way you want, as long as you can profile it properly and the data is accurate.
I'm going to quote Amorph's post here:
[quote]
When you do post this post you're promising, be sure to say what you mean. "The server market" is a lot different from "the UNIX market" or "the UNIX server market," or "the market that ships with UNIX and UNIX-like OS'." If you take the stance that neither Linux or BSD is a proper UNIX (which they aren't), then the BSDish OS X doesn't qualify either. So if you look at someone measuring "the UNIX market" you have to check what they mean by "UNIX."
Also, restricting the analysis to "the UNIX market" comes with a price: Nobody is locked into neat categories, because it's common for servers to run different OS' than all of the machines around them, and most server OS' overlap heavily in terms of what they are capable of. The high end, SVR4-based UNIX market - SGI's IRIX, Sun's Solaris, IBM's AIX, HPaq's Tru64 and HP/UX - is bleeding share, which is going to Windows, Linux and BSD servers. There is also a long-standing and accelerating move from Windows to Linux and BSD. The free UNIX-like OS' are hard to track, because they are frequently installed after the fact on servers that shipped with another OS, and on machines that weren't considered servers when they were shipped: lots of cast-off desktops get repurposed for file, print, and intranet web serving duties.
So when you're looking at how Apple is doing in this market, you have to consider that the server market is very fluid right now, and realigning itself across categories. Things are happening that nobody would have predicted a few years ago, like a resurgence in sales of IBM's mainframe lines. Mainframes were dismissed as dinosaurs, but they're coming back. VMS, which was nearly cancelled a few years ago, now has a sizable chunk of the uptime-critical market, and is enjoying a resurgence as a database platform.
Also, server customers are conservative. Unproven technology and unestablished companies are treated skeptically, because reliability, uptime, and support are not optional in this space. Apple came into the fastest-growing segment of the server market (the low end, UNIX-like/Windows segment) with hardware that had never seen the light of day before backed up by an enterprise support structure that literally hadn't existed the year before, and stamped with a brand that was actively scorned until very recently. Given that, with a few exceptions (mostly in biotech and the sciences, where Apple has a much better reputation), curious IT people are buying an Xserve or two, setting them to non-critical tasks, and watching them. In other words, current sales reflect early adopters willing to try this new thing out despite all the strikes against it (none of which, notice, have anything to do with the Xserve's potential as a server). If the word over time from these early adopters is that the Xserve is compatible, easy to maintain and stable - and that OS X isn't a damn thing like MacOS in the ways that IT people care about - then you'll see sales spike as the wait-and-see, conservative customers (the bulk of the server market) adopt it in earnest and set it to real work. If not, well, no spike in sales, and Apple goes back to the drawing board.
<hr></blockquote>
Okay, I haven't had time to really digest this (post) yet, but the topic deserves it's own thread. (UBB doesn't have a split function I guess).
Really quick questions:
1. Where does Apple fit in? Is it competing within the PC server market only? How big is this sandbox and who's playing in it already?
2. How does your vision of the server market differ from professional industry analysts and can it be profiled?
3. Based on yours or any other market analysis, what is Apple's strategy for growth?
These questions are for me and anyone else.
amorph-- stay cool
<img src="graemlins/smokin.gif" border="0" alt="[Chilling]" />
[ 12-08-2002: Message edited by: MacLuv ]</p>
There are many ways to segment a market. Depending upon what you want to do, you can segment a market any way you want, as long as you can profile it properly and the data is accurate.
I'm going to quote Amorph's post here:
[quote]
When you do post this post you're promising, be sure to say what you mean. "The server market" is a lot different from "the UNIX market" or "the UNIX server market," or "the market that ships with UNIX and UNIX-like OS'." If you take the stance that neither Linux or BSD is a proper UNIX (which they aren't), then the BSDish OS X doesn't qualify either. So if you look at someone measuring "the UNIX market" you have to check what they mean by "UNIX."
Also, restricting the analysis to "the UNIX market" comes with a price: Nobody is locked into neat categories, because it's common for servers to run different OS' than all of the machines around them, and most server OS' overlap heavily in terms of what they are capable of. The high end, SVR4-based UNIX market - SGI's IRIX, Sun's Solaris, IBM's AIX, HPaq's Tru64 and HP/UX - is bleeding share, which is going to Windows, Linux and BSD servers. There is also a long-standing and accelerating move from Windows to Linux and BSD. The free UNIX-like OS' are hard to track, because they are frequently installed after the fact on servers that shipped with another OS, and on machines that weren't considered servers when they were shipped: lots of cast-off desktops get repurposed for file, print, and intranet web serving duties.
So when you're looking at how Apple is doing in this market, you have to consider that the server market is very fluid right now, and realigning itself across categories. Things are happening that nobody would have predicted a few years ago, like a resurgence in sales of IBM's mainframe lines. Mainframes were dismissed as dinosaurs, but they're coming back. VMS, which was nearly cancelled a few years ago, now has a sizable chunk of the uptime-critical market, and is enjoying a resurgence as a database platform.
Also, server customers are conservative. Unproven technology and unestablished companies are treated skeptically, because reliability, uptime, and support are not optional in this space. Apple came into the fastest-growing segment of the server market (the low end, UNIX-like/Windows segment) with hardware that had never seen the light of day before backed up by an enterprise support structure that literally hadn't existed the year before, and stamped with a brand that was actively scorned until very recently. Given that, with a few exceptions (mostly in biotech and the sciences, where Apple has a much better reputation), curious IT people are buying an Xserve or two, setting them to non-critical tasks, and watching them. In other words, current sales reflect early adopters willing to try this new thing out despite all the strikes against it (none of which, notice, have anything to do with the Xserve's potential as a server). If the word over time from these early adopters is that the Xserve is compatible, easy to maintain and stable - and that OS X isn't a damn thing like MacOS in the ways that IT people care about - then you'll see sales spike as the wait-and-see, conservative customers (the bulk of the server market) adopt it in earnest and set it to real work. If not, well, no spike in sales, and Apple goes back to the drawing board.
<hr></blockquote>
Okay, I haven't had time to really digest this (post) yet, but the topic deserves it's own thread. (UBB doesn't have a split function I guess).
Really quick questions:
1. Where does Apple fit in? Is it competing within the PC server market only? How big is this sandbox and who's playing in it already?
2. How does your vision of the server market differ from professional industry analysts and can it be profiled?
3. Based on yours or any other market analysis, what is Apple's strategy for growth?
These questions are for me and anyone else.
amorph-- stay cool
<img src="graemlins/smokin.gif" border="0" alt="[Chilling]" />
[ 12-08-2002: Message edited by: MacLuv ]</p>
Comments
<img src="graemlins/smokin.gif" border="0" alt="[Chilling]" />
[quote]Originally posted by MacLuv:
<strong> ... I've read your post and I'm actually preparing a case right now... as people like bashing brains in here i'm trying to make it as "airtight" as I can-- I'll post another thread when it's done. It will address a lot of stuff mentioned in this thread. I've been working on this for a long time, actually, so we'll see what happens. </strong><hr></blockquote>
[ 12-08-2002: Message edited by: MacLuv ]</p>
When you do post this post you're promising, be sure to say what you mean. "The server market" is a lot different from "the UNIX market" or "the UNIX server market," or "the market that ships with UNIX and UNIX-like OS'." If you take the stance that neither Linux or BSD is a proper UNIX (which they aren't), then the BSDish OS X doesn't qualify either. So if you look at someone measuring "the UNIX market" you have to check what they mean by "UNIX."</strong><hr></blockquote>
Trying to segment the market by your methodology would take forever, confuse decision makers/analysts, and cost too much money to maintain perspective.
Gartner's says the market is:
High End Platforms
- High-End Availability Servers
- High-End Operating Systems
- High-End Unix Servers
- Mainframe Computers
- Supercomputers
Mid-Range Platforms- Mid-Range High-Availability Servers
- Mid-Range Intel Servers
- Mid-Range Operating Systems
- Mid-Range RISC Servers
- Server Appliances
Storage-- AS/400
-- Linux
-- Unix
-- Windows 2000
-- Windows NT
- Storage Components
- Storage Systems
Server Operating Systems- AS/400
- Linux
- Mainframe
- Network Operating Systems
- Unix
- Windows
IDC segments the market by $$ as follows:Appliance/Entry: ~ $100,000
Mid-Level: $100,001- $ 1 Million
High-End: above $1 Million
<img src="graemlins/hmmm.gif" border="0" alt="[Hmmm]" />
[ 12-08-2002: Message edited by: MacLuv ]</p>
<strong>Gartner's says the market is:
IDC segments the market by $$ as follows:
</strong><hr></blockquote>
The contemporary working definition of "market" is buyer based rather than product/service based. This is why Apple's own product line-up is semi-divided between consumer and professional. It is also why there is no Unix market or server market per se. The Gartner and IDC lists are simply product descriptors of what the market(s) has purchased.
It is also fair to say that agressive marketing strategies don't even consider corporations as adeqaute definable markets. That is, the only true market is the individual. Identify the individuals in businesses making the purchasing decisions much as one would define "single, african-american, female, 25-28yo, Knoxville, TN, $40-50k, etc." when doing bulk mailings.
All of this is not to say that the Gartner listing isn't useful. It most certainly is. But, it is a product list and not a market segmentation.
The 970 is more important to IBM than it is to Apple. If one truly wants to know why the 9xx series of microprocessors is so important to them then I would suggest categorizing the Gartner list by buyer descriptors AND what you think their purchasing trends will be over the next 2-3 years. It would be a fun excercise and for help you might want to look at IBM, Intel and AMD's most recent 10-k SEC filings.
<strong>
<img src="graemlins/smokin.gif" border="0" alt="[Chilling]" /> </strong><hr></blockquote>
Gratutious use of smileys. Kids today lack discipline I tell ya.
<strong>
All of this is not to say that the Gartner listing isn't useful. It most certainly is. But, it is a product list and not a market segmentation.
</strong><hr></blockquote>
<img src="graemlins/bugeye.gif" border="0" alt="[Skeptical]" />
This is market segmentation by Gartner's.
[ 12-11-2002: Message edited by: MacLuv ]</p>
<strong>
It is also why there is no Unix market or server market per se. The Gartner and IDC lists are simply product descriptors of what the market(s) has purchased.</strong><hr></blockquote>
[EDIT] see my post below.
[ 12-09-2002: Message edited by: MacLuv ]</p>
You've started a very interesting discussion about Apple's future marketing and product strategy. It is especially intriguing because IBM has their own agenda in going up against Intel and AMD. So, it just isn't Apple vs. Microsoft anymore but IBM vs. Intel.
Everyone on these boards would be served well if the discussion continued. But, personal attacks aren't necessary to that end so perhaps you miss understood me. I'll try it again...
Is there a market for unix boxes? Absolutely. But, the machines themselves are not the market. The market is defined by those who buy the things.
Many people find it hard to understand this simple little fact about a market. Actually, many corporations have the same problem and when they fail to comprehend it or believe it then they usually don't last long.
Theodore Leavitt once made the astute observation that the decline witnessed by railroad companies was due to their inability to recognize that they weren't in the railroad business but the transportation business. His point being that "transportation" would have enabled them to react to changes occuring in the market . The market being those purchasers seeking/needing long-haul transportation.
The definition of a market isn't debatable among the contemporary academic and business communities. However, I suppose there are those for which ignorance is a virtue will posture otherwise.
I'm a large corporation. I really need high powered supercomputers for serving data like Sun makes. A bunch of other corporations like me demand this as well. Sun create a computer that fits our needs, and thus our demand has spawned a product that in turn has become a marketplace.
It's fine to list out the different options available to people. But those in and of themselves are not the market. They are the product as A Random Walk has said. But if you look at the main heading you have High End, Mid-range, etceteras. These could be considered markets I guess. Lots of corporations are demanding high end, expensive supercomputers. Now there is a market for a high end, expensive supercomputer. But without demand for that product, the product alone does not define a market.
It should really be approached the other way... that is what do people want, as opposed to 'what do we have that we can give people'. It's really, really late, so with any luck, this made sense and was relevant.
However, you're both mistaking TARGETING MARKETS with MARKET SEGMENTATION or MARKET PROFILING. When you look at who's going to buy what, you're looking at a TARGET MARKET. The target market is unique to the business. The MARKET SEGMENT or PROFILE covers the industry as a whole--created when "specialty" or "niche" markets become "commodity" markets--like the PC market.
The point of this thread was to show that the UNIX segment is indeed the UNIX segment--there are no segments that I know of that include hybrids. When Gartner's releases data showing HP capturing X share of the UNIX market, that's that. It's not up for debate.
If people wish to speculate who should be buying what, then we're talking about targeting. And unless we know the business' motivation/strategy, there's no point of even attempting to target a market. At least I'm not going to waste my time. There is another way to find out a company's target, by "reverse engineering" a marketing plan, for example. This is easy with consumer products, not so easy B2B.
<img src="graemlins/smokin.gif" border="0" alt="[Chilling]" />
[ 12-09-2002: Message edited by: MacLuv ]</p>
The classic definition of a market is simply the place in which goods and services are bought and sold. The most common current examples are farmer's markets and super markets. (Old references live on in the suburban retailer names such as Wal-Mart and K-Mart.) The market was not the fruits and vegetables nor even the buyers but the environment.
The definition changed during the 19th century and the beginning of the industrial revolution. Companies focused on the product because the art of production was all important. Thus, the market did indeed get defined by the product.
But, this change was directly related to the fast and rapidly changing market conditions brought on by the revolution. It was also abetted by the fact that the classic market was no longer the place or the means by which goods were bought and sold. A more current example is the dot coms. Investors dumped money into companies defined buy a product/service without bothering to verify whether there were any actual buyers.
Additionally, nearly all high growth industries start out as product focused- including the PC industry. But, the companies that last and survive through the inevitable period of consolidation are the ones who are the first at becoming market focused.
Anyway, 45 years ago General Electric switched the definition of a market again by making it customer focused. It makes sense when one thinks about it because by the mid 20th century the effects of the IR had infiltrated all mature industries and future growth was not going to be realized through efficiencies in manufacturing. GE decided that markets are defined by the wants and needs of the customer. They decided to deliver products to serve these needs rather than products they could mass produce the easiest.
Since GE began their quest, the trend has been toward ever more precise market definition. It has gotten to the point that the market is equal to what the customer is feeling on a certain day at a certain time. After all, my needs are different before my morning coffee than they are afterwards.
Technically, there is only one market. All other markets are segments of this uber market. Business and academic thought for the past 45 years is that the all segments are defined by the wants and needs of the customer and not by the product or service. Some even believe that segmentation that is not based upon the individual purchaser will put a company at a competitive disadvantage.
Macluv, I do understand the difference between targeting markets and market segmentation. Your confusion over market vs. product is a result of not being current with the business world practice and academic writings on the subject. It's a fair mistake.
BTW, this is still an excellent thread Macluv has started. I am not as familiar with the PC industry as I am with others, but fully intend to try to answer his original questions. They'll probably be way off but at least I'll give it a shot.
-A Random Walk
[ 12-09-2002: Message edited by: MacLuv ]</p>
[quote]Originally posted by ARW2:
<strong>
The classic definition of a market is simply the place in which goods and services are bought and sold. The most common current examples are farmer's markets and super markets. (Old references live on in the suburban retailer names such as Wal-Mart and K-Mart.) The market was not the fruits and vegetables nor even the buyers but the environment.
</strong><hr></blockquote>
The classic definition is still the current definition--in theory. This is Marketing 101. The "environment" you are trying to define still included buyers and sellers and a product. You've left out the most important part about market definition 101-- a customer must have the means and desire to make a purchase. This is true of any market. Period.
[quote]<strong>
The definition changed during the 19th century and the beginning of the industrial revolution. Companies focused on the product because the art of production was all important. Thus, the market did indeed get defined by the product.
</strong><hr></blockquote>
The market still does get defined by the product. That's why you have a UNIX market. Only service markets get defined by the customer. That's why McDonald's has a Happy Meal.
[quote]<strong>
But, this change was directly related to the fast and rapidly changing market conditions brought on by the revolution. It was also abetted by the fact that the classic market was no longer the place or the means by which goods were bought and sold. A more current example is the dot coms. Investors dumped money into companies defined buy a product/service without bothering to verify whether there were any actual buyers.
</strong><hr></blockquote>
You're trying to associate bad market research with the evolution of complex/global markets. One has nothing to do with the other.
[quote]<strong>
Additionally, nearly all high growth industries start out as product focused- including the PC industry. But, the companies that last and survive through the inevitable period of consolidation are the ones who are the first at becoming market focused.
</strong><hr></blockquote>
All industries start as niche industries until the market becomes saturated. Then the market becomes a commodoties market. All industry is dependant on the market's needs. Whether it is focused on those needs is not the job of the marketeer, but the sales force.
[quote]<strong>
Anyway, 45 years ago General Electric switched the definition of a market again by making it customer focused. {...}
</strong><hr></blockquote>
This is sales, not marketing. Focusing on the customers needs, not the product, is a sales device. This has nothing to do with marketing practices. *further basic elaboration* A good sales/marketing design will evaluate the relationships developed by sales and determine a best approach marketing strategy. Relative to scale.
[ 12-10-2002: Message edited by: MacLuv ]</p>
Incredible post...more than you probably realize. Good luck to you and I hope you can get this thread writing about the specific business strategies of IBM and Apple.
-A Random Walk
<strong>Macluv,
Incredible post...more than you probably realize. Good luck to you and I hope you can get this thread writing about the specific business strategies of IBM and Apple.
-A Random Walk</strong><hr></blockquote>
ARW-- You have a pleasant, positive demeanor.
TY