Conference hydra::amiga_v1

1613.0. "How Marketeers see boxes" by CSSE::WARD () Fri Aug 19 1988 14:01

Newsgroups: comp.sys.amiga
Path: decwrl!labrea!agate!eos!ames!oliveb!sun!pepper!cmcmanis
Subject: Product Marketing Tutorial (was Re: The Amiga is Loosing Ground...)
Posted: 17 Aug 88 21:14:12 GMT
Organization: Sun Microsystems, Mountain View
 
[well, it was in response to my posting ...]
I wrote : 
> the Mac II and the 386 clones they have to be in the same league. 
 
In article <2167@ssc-vax.UUCP> (David Geary) responded with :
 
>    They may not be in the "same league", however, they do compete
> *directly* against the Amiga in the marketplace.
 
David, and to others reading this, from a marketing perspective they 
do not compete. The marketing people (and myself) divide computers up
into several classes, and primarily these classes are delimited by 
PRICE. They are subdivided by PERFORMANCE, and then further subdivided
by CAPABILITIES. When a person is going to make a computer purchase
they do have REQUIREMENTS, STANDARDS, and a BUDGET. (you will note the
inverse relationship here) And a customer will (by definition) buy the
system that has the best CAPABILITIES and PERFORMANCE and are within
his or her BUDGET. Taking this to a real world example, suppose that
a customer has $16,000, wants to do desktop video and publishing, and
wants to do 60 frame/second animation. He considers all of the machines
that fit within his budget and buys a Mac II or 386 clone. He has to
because it is the best match for his criteria. Now give the same person
a budget of $5000 and he buys an Amiga. The difference is his budget.
The fact that earlier the Amiga could do things that a $20,000 system
couldn't was more an indication that the Amiga was underpriced than 
anything else. If the customers REQUIREMENTS were that the computer
support a multitasking operating system that could run in 1 megabyte
of memory it would eliminate the Mac II and the 386 boxes from the 
competition, but here the difference is the REQUIREMENTS. Which are 
fundamental to any computer marketing strategy. This is all basic
product marketing stuff. Every engineer should have at least some 
understanding of it if they want to build products that fall into
a saleable category. The other case would be to build a $5000 video
game machine (which one company in Ventura did once) And while it
admirably met the REQUIREMENTS and PERFORMANCE, specs of the customers
most had budgets under $500 and all had budgets of under $1000 at 
the time. So no one bought it.
 
> The Amiga line needs a high-end machine, like the A3000.
 
This statement needs to be backed up with "Here is are the REQUIREMENTS
and STANDARDS the customer has set forth, and here is their BUDGET."
Looking at the Mac II and 386 customers one could reasonably guess
that some (but not all) of them would have bought an Amiga if the
Mac II or 386 box was not available. And that their budget was 
more than $10,000 for the complete machine. Now working backward from
that you try to decide how many would have bought an Amiga and therefore
the size of the market, then calculate the gross margins needed on the
box to pay for the development, and figure out what the target unit cost
should be (in this case probably $2000) And after preparing for what 
Apple and IBM will drop into the pipeline in the 12 to 24 months of 
development time you figure out what features it will need, and then
you spend the 20 million or so to get it developed. (I'm using a projected
market of 100,000 units in the first year and a development margin of
$200 (which means that after cost of parts, labor, overhead and support
there is $200 profit from the sale of this mythical box to pay off that
development debt)) Not an easy job but that is why you need a strategic
marketing group. 
 
>BTW:
> 1)  Where IS the A2500UX?
> 2)  Where IS the A2500AT?
Where should they be? Both were displayed as "technology previews" by the
German arm of Commodore, neither was announced as a real product. My 
guess is that by Christmas you will be able to buy the add-in products 
to make your system into one of these but I don't expect them to be marketed
as a seperate Amiga per se.
 
> 3)  Where IS the A3000?
Deep in the subconcious of Dave Haynie I suspect. Actually, it is probably
in development, and if they started last year I would expect it by Christmas
of *next* year. 
 
> 4)  Where IS NeWS on the Amiga?
Ameristar has it and was showing it off at Siggraph. Why not ask them?
 
> 5)  Where IS X windows on the Amiga?
Dale was doing the same for X11, again he should answer if he chooses to.
 
> 6)  Where IS Un*x for the Amiga?
In a trashbin somewhere? :-) If you want UNIX why not buy a Sun? Even with
an Amiga 3000 there is no way Commodore can make a better UNIX system than
the Sun 3/60. You're looking at $10K either way. And the Sun comes with 
ethernet. If you want UNIX cheap why not buy a UNIX-PC from AT&T? The 
question is "What is your REQUIREMENT, and what is you BUDGET?" If it's
UNIX and $2K then buy a PC clone and get MINIX for it. Hell, get the 
BridgeBoard and run MINIX on it! Better yet, get the AT bridgeboard and
run SCO Xenix on it! The point is, it is pretty silly for Commodore to
try to become a UNIX supplier. They don't have the resources to support
two OSes and frankly I would rather not see UNIX and have AmigaDOS well
supported than to see UNIX and AmigaDOS supported poorly or not at all.
 
> 7)  Where IS an inexpensive laser printer for the Amiga.
It's at a computer store near you, it's called an HP LaserJet II and it
costs less on the street than an AtariLaser. Jade computers was selling 
a Genicom Laser printer for $995. Is that inexpensive enough?
 
> Or, maybe something a little easier:  where is 1.3 of the Amiga OS?
Actually, that is the toughest since the only answer is that it is stuck
in a broken release process as Commodore trys to become a software company
too.
 
> Hey, if Commodore can't get 1.3 out the door within a *reasonable*
> amount of time, how are they going to get Unix out the door within
> the next millennium?  
 
You answer your own question, they aren't. Why wait? If you really want
UNIX buy a UNIX box. If you want a UNIX box that does desktop video 
well, you either have to pay a lot or wait, what other choice do you
have ? Do you have any idea how many people it takes to port, customize,
and maintain a UNIX port to internal hardware? Do you know how many 
people Commodore has working on software only ? I think that is a pretty
good definition of a millennium.
 
> How are they going to produce new hardware (A2500, A3000, etc)? 
 
That is what they are set up for, I suspect this is what they will do best.
They do have a problem with getting "finished" hardware into production it's
true. 
 
> How are they going to support NeWS, X Windows,
> ad on infinitum (and ad nausea, too).
 
They aren't, they will rely on third parties like Ameristar and Boing Inc.
 
> My whole point in starting this discussion is this:  when the Amiga
> first came out, it was *better* than anything you could buy for
> under $100,000,000,000. (You mean you didn't read the first few
> issues of AmigaWhirld?)  Now the gap is closing, and, you can
> actually get something *better* for under $100,000,000,000.  I'd love to
> see the gap widen again.  Plain and simple.
 
Only way to do this is pick a new market. See once the secret is out that
people will pay for the ability to do 3d animations on their desktop,
a company like Apple with 600 million in cash in the bank simply says
"Hey, lets spend 15 or 20 million and see if we can't get some of this
market." And they did, and they did. 
 
--Chuck McManis
uucp: {anywhere}!sun!cmcmanis   BIX: cmcmanis  ARPAnet: cmcmanis@sun.com
These opinions are my own and no one elses, but you knew that didn't you.