Musings of an Internet Marketing Consultant
Musings of an Internet Marketing Consultant

Monday, December 05, 2005

My Musings on Alec's Musings on Om and Andy's Musings

Alec Saunders wrote a post today on the publisher/partner relationship between a platform developer (such as Microsoft or Skype) and the third party partner ecosystem that is available to expand the use of the platform through the collective intelligence that can be leveraged beyond the basic platform's marketing and developer resources. His perspective comes from thirteen years of product and partner relationship management at Microsoft; my perspective comes from six years with a software publisher that had a love/hate (or maybe "hate/love"?) relationship with Microsoft. For a success story he specifically refers to a Microsoft partner relationship that I always viewed as a model for how to deal with this situation, namely, Symantec's. Skype is now wrestling with similar issues.

Having personally been on the "other side" of this picture in the early 1990's when working at Quarterdeck who had a multi-tasking environment (DESQview) that Bill Gates considered a serious threat to Windows in the late 80's and early 90's, Quarterdeck's approach contrasts starkly with how Symantec handled the situation as new MS-DOS versions were introduced that entrenched on utility publishers' market space. Quarterdeck had a memory management utility that won several awards as the top selling utility in the pre-Windows 95 world (two are sitting in my office here). Quarterdeck also licensed Mosaic code from Spyglass (in fact, prior to Microsoft obtaining their license). But Quarterdeck management had such an emotional neurosis about Microsoft such that they failed to see the business opportunities. Some lessons learned:

1. Quarterdeck's memory manager (QEMM) was always "two versions" ahead of the MS-DOS memory manager with many features that provided more benefits to the user, especially those who were doing installations in the emerging office/home network space of the day. (Networking PC's was still a bit of a black art in those days.) Had they taken a business-like approach in their Microsoft relationship they also could have built a much stronger business (and maybe even avoided the 1994 restructuring in which I participated). Meanwhile Symantec built a model business relationship that has allowed them to be a market leader even to this day.

2. Quarterdeck was so hung up on fighting software piracy (we figured there were ten copies of QEMM out there for every legal copy -- and those were pre-Internet days when BBS's had their own form of peer-to-peer sharing), that they missed and did not understand the Internet model of frequent beta releases and building awareness in the user community through an electronic "word of mouth" approach. As a result Netscape won the initial battle of the browser war (Microsoft had not quite had its "come-to-the-Internet" revelation at that point) because Mark Andreeson and company understood the Internet "culture". Today I would maintain that Quarterdeck's memory manager market success in those days can be attributed to the number of "pirated" copies out there being "evaluated" by tech geeks and the resulting recommendations in their viral network. Today we can see a valid effective compromise in that one can generally trial software prior to making a purchase; in fact, this model allows one to use Jeff Sandquist's seven day rule in determining the software's or service's value.

3. The Stac patent suit and resulting $85 million award against Microsoft did create a precedent for showing that, if you build a good enough product (in their case disk compression), you did have a valuable asset that even Microsoft would have to pay for. Subsequently Microsoft became much more aggressive in buying technology -- Front Page is a great example where Microsoft did not have the time or resources to develop an HTML editor. They bought Vermeer, a small start-up company, that could only really succeed rapidly enough through Microsoft's marketing power and distribution channels.

As a result I would recommend for Skype and its partners:

1. Build a partner "trust" relationship that provides insight into Skype's development road map but allows developers to build true value-add. It has been know for quite a while that Skype would have a video product so this launch should not be a surprise to Festoon and DialCom. Microsoft did have evangelists who specialized in building trust relationships; Rick Segal was the Quarterdeck evangelist at one point; he had a personal relationship with several of the senior Quarterdeck restructuring management team of the day. His blog today reflects much of his experience with these types of programs. Unfortunately there was a legacy cultural block at Quarterdeck to building on this.

2. Build value-added premium services into your "third party" product. For instance, the Skype video only allows one-to-one video while Festoon provides multi-party video conferencing. (QEMM always got 50% more valuable memory freed up than any DOS memory management feature did; thus it could much more readily address the networking space missed by the MSDOS memory manager.) Of all the products reviewed on Skype Journal, my one criticism is that, with few exceptions such as Verosee, the developers do not give enough thought to providing a true value-added premium offering that solves a real user problem. (As an aside I am as sceptical as Alec on the acceptance and use of video in the IM and real time communications markets; until there is a "killer" problem to address, it's a nice-to-have but not required feature, based on my experience with the web conferencing market.)

3. Incorporate into your offering a business model that encourages evaluation but requires payment after seven to 15 days. This gives enough time to determine if there is value and if it will be used on a regular basis. Verosee has done a great job at that; the offerings are easy to access and easy to purchase after a 15 day evaluation.

Skype has many assets: over 50 million registered users, an API toolkit that has been well received and the level of "geek enthusiasm and energy" that we used to see in the Quarterdeck market ecosystem. However, as Stuart Henshall at Skype Journal has discussed, now they need Product Management and Third Party Partner programs that build trust while allowing all parties to generate business success. The immediate challenges for eBay is to introduce a management style and company culture that encourages innovation but also establishes trust while at the same time creating a revenue base that justifies a $2.6B plus bonuses purchase price. And, who knows, maybe Skype (eBay) will buy some of these auxiliary product or service companies to build out their offering.

One final aside: Quarterdeck's web browser had a few unique features that have gradually been incorporated into Internet Explorer. The final (and to me most valuable) "unique" feature will be incorporated into Internet Explorer 7 next year: tabbed browser windows -- a variation on this was in the Quarterdeck browser developed in 1995. (And a feature that has given Firefox a huge boost in acceptance.)

And two ironic closing notes: (i) I seem to recall that in 1995 Alec Saunders was the MS Internet Explorer product manager and (ii) Symantec bought the residual of Quarterdeck in 1998 to address a market-driven need for access to its last valid utility product, CleanSweep.

Update Dec. 6: This post has been republished at Skype Journal as part of a series with Andy Abramson's original post and Alec Saunder's post referenced above. It puts the entire picture in better context. Also Alec has written a commentary summarizing this post.

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