James Harding?s view from the valley (10 September)
Scott McNealy takes the Pepsi challenge, while Microage makes friends and the IT industry makes a mint
Microage is a company that is going from strength to strength, but at first glance it is difficult to see why. It has struggled, but has managed to evolve into a reseller and distributor, much like Tplc is nowadays.
Nobody seems to discuss any possible conflict in a company that sells to and competes with a multitude of US Vars. Most people praise its financial performance and applaud its ability to change as vendors move in to sell directly to its former customers.
While UK companies and observers may be cynical, continually suspicious of firms with dual roles, US vendors love it. IBM has embraced Microage with a grizzly bear-sized hug and pushes the channel player forward as a partner at every opportunity it gets.
?Microage sells our hardware solutions based on Microsoft Windows NT to everybody,? it says ? and it means everybody.
Microage, this reseller/distributor/friend to all, happily goes along with all this, according to its staff. They say it sells IBM hardware to its customers ? everybody. Resellers, users, Curly, Larry, Moe ... whoever.
But surely this one-seller-fits-all approach proves difficult to manage and rather expensive, I posited. Yes, said my contact at Microage, ?but it works out better. We spread our risk and get money out of our end user customers, our reseller customers and even IBM. And when IBM offers to fund half the cost of anything, we go for it.?
Wise words. Microage is not trying to corner one market ? it is just quietly going about getting a piece of all of them.
Sun Microsystems CEO Scott McNealy has been entertaining us all again. It?s not just his jokes about studying golf as his major subject at university. It?s not his casual outlook and digs at Microsoft CEO Bill Gates. It?s not even his teeth, which most multi-millionaires would have had fixed by now.
It?s his continual rambling about Coke and Pepsi. McNealy says people are almost at the stage where they choose between running Solaris on Sparc or Windows NT on Intel in the same way they choose between Coke or Pepsi. He thinks it is a two-horse race. Quite clearly, it is not.
I made the mistake of asking someone at SCO about this. ?I can?t believe he?s been saying that! What?s it all about?? was the reaction. I couldn?t explain why McNealy was making such claims. Admittedly, the incensed one was SCO CEO Alok Mohan, who would have to be incensed for the sake of appearances, but he really seemed genuinely surprised.
?Scott usually makes sense, and I like his jokes about Bill Gates,? Mohan said. Hear hear. Let?s get back to the real issues.
Everybody knows that Sillycon Valley is the place to come to make your fortune in the computer industry. You just shake one of the trees in Menlo Park and a venture capitalist falls out.
Alternatively, become a receptionist with experience in IT and find a good startup. Make the struggling entrepreneur happy by offering to work for an average salary (rather than the usual inflated Silicon Valley rate), and get the company to make up the shortfall in stock options. Then sit back and watch as the options allow you to buy every pair of shoes in Dolcis.
Eventually, the company will be acquired by one of the major players when it can?t be bothered to develop the innovative technology itself. You would be best advised to pick a company with something very slightly innovative in networking. Cisco, 3Com and Bay will buy any company with an innovative name in networking, let alone anyone with a good product.
When the deal is done, your options will allow you to buy every pair of shoes owned by Imelda Marcos.
The Californian economy is booming. The reason is simple ? IT. Gone are the days when firms were measured by how much land they owned, how much inventory they had or how much their manufacturing plants cost. Intellectual property is the main, sometimes only, asset.
This can cause problems. Intellectual property is a grey area which is subject to fluctuations ? the value of your investment in it may go up or down. A ground-breaking product may be worth a projected fortune one week, until Microsoft develops an updated version the next week to make it obsolete. Then it becomes worthless overnight.
You might think this is bad news for anyone who works at an IT firm because it is not the most stable field. Not at all. The most important asset any IT company has is its staff ? their intellects are the most important part of intellectual property, and they know it.
Many gain financial reward by being poached, but even if their IT employers are forced out of business and they are laid off during some downsizing, they will be welcomed by a multitude of companies that are desperate for experience. Fred makes a fortune, can be headhunted and could easily profit if his company fails ? and according to all logic, it should.
Brains make companies here. Keep them healthy and you can easily move on if everything goes wrong because intellectual property is a grey area about grey matter.