Apple is the No. 1 Client Device

A report out by Canalys on the final quarter of 2011 puts Apple ahead of HP as the preferred client device amongst corporates and consumers. Who would have ever thought that? Apple as the domain of geeks and marketing agencies is officially a thing of the past. Ty, you were right all along.

Some will say that this is wrong accounting as it includes iPads and iPhones in the total - but this is the entire point about the rapidly shifting client device market in corporations, the device is fast becoming the choice of the user not the company.

Bring Your Own Device (BYOD) is a real phenomenon and it is helping Apple become a corporate standard in a world traditionally dominated by PCs and Microsoft. 

Learn a lesson, everyone. There is not a penny of discount given for Apple products whether it be an iPod, iPad, iPhone or a Mac and they are top of the range end user prices. The PC market has been long rated as a commodity market and wags will tell you that Apple would never become a corporate standard as resellers and Apple itself never negotiate. That's another myth busted as Macs continue to grow and take market share off all the main players like HP, Dell, Lenovo and the rest. The PC market is no longer a price sensitive, high competition market - Apple have redefined the way to sell.

How did Apple do it? By winning the hearts, minds and wallets of real users through innovation, ease of use and entire new ways to buy products and applications. Incredibly, real users have gone back into corporations and not asked but demanded that their tablets, smartphones and, now, Macs be attached to the network even if they foot the bill themselves.

Microsoft, HP, Dell, everyone, never saw this coming that not just Apple but their operating system would take a massive chunk of the world dominated by the PC. Recent figures released by Microsoft show that they can no longer rely on consumers for their profit - now they are being squeezed in corporations.

The pace of change is incredible and none of the mighty companies saw it coming. Apple is the No. 1 client in corporations.

Pinch yourself, it's real.

Apple Doubles Everything

In stark contrast to Microsoft's earnings announcements, there were considerable crowings at Apple. Microsoft showed that without a strong enterprise performance, their overall numbers would have looked pretty grim and now it seems there will almost certainly be my predicted earnings drop in 2012 at some point.

But Apple just plough on. In fact revenue over doubled comparing the last quarter to the same last year with 118% growth to record over $46bn in revenue. And profit rose the same degree to $13bn and they added $17bn of cash in the quarter too.

Over 37m iPhones were sold and 15m iPads putting Apple back at No. 1 in both categories while Macs shipped over 5m units rising a steady 21% as the PC industry took a noticeable dive in shipments and earnings.

Considering there is a pipeline of amazing new products on the horizon, Apple's future looks very rosy. There may be a few green faces in Seattle. After a long and clever plot, Apple is now a serious product in the eyes of corporations despite the fact it is expensive and it doesn't run Windows.

Now who would have predicted that 10 years ago? OK, other than Ty.

Is Microsoft doomed in its Current Form?

It seems Microsoft has had a dose of reality in the last week. At the Consumer Electronics Show in Las Vegas, Tami Reller, the CFO of the Windows division, has warned that PC shipments will be lower than an already gloomy forecast in this quarter. In her case, she put this down to supply problems in the Thai flood regions where the high waters are still causing havoc to component makers, particularly on hard disks. Some UK distributors have plenty of servers but no disks which will impact their sales in the next few months.

Finally, it seems that the penny is dropping at Microsoft. Their figures are actually dependent on the shipment of PCs to a very high degree. I have illustrated before that Windows itself and Office Productivity products constitute the majority of the revenues and profits generated at Microsoft and these numbers are directly dependent on the number of client devices sold into homes and corporates. As PC sales alarmingly decline, so will Microsoft revenues and profits - in their very heartland.

Microsoft is a well spread company, for sure. But with servers taking a decline lately, Windows Server, already under severe attack by Linux, is also suffering. All this is occurring as Apple see sharp increases in the sales of its PC-like devices while tablets and smartphones continue to boom - all these devices coming with largely Apple and Google operating systems.

The threat also is that corporations are wising up. They have paid through the nose for arguably second rate products in their companies for too long. PCs which seem to fail conspicuously in less than 3 years, an operating so clunky it takes 5 minutes to load up each morning, office productivity tools which seem to suspend and crash for no perceivable reason, occupying ever expanding disk space.

Apple may charge top dollar for their hardware but you get a robust operating system, rich in features and free utilities of high quality which takes seconds to load up or resume, no matter what state you left it in. And office suite software is far cheaper with a breadth of products available at below £20 a pop - except Microsoft Office for Mac which is £189 but at least half the price of the PC version and many times better.

The fact is that tablets and smartphones are changing not just the array of client devices and how we use them for home and work but they are changing the way we buy software. Suddenly, we have a plethora, a vast hypermarket of innovative, low cost and clever software available to us that costs just a few pounds to buy. And we buy tons of the stuff. Finally, we are finding there are alternatives to the status quo that has frankly held us back for years in terms of real productivity.

Steve Jobs called it the post-PC era. I would liken it to the IT version of a 'renaissance' as people dream up all sorts of clever software and just punt it out in volume.

But there is a new trend. Bring Your Own Device (BYOD) is the consumerisation of IT. This is the concept that we buy our smartphones and tablets, even PCs ourselves and bring them to work as devices of choice to work with and demand access to the corporate networks and all its facilities and data. In the old days, at job offer time, we were told you would get a salary package and then a PC and phone would be provided. Already in the US, job offers go out with no PC or phone provided but the recruits are invited to bring their own.

This is one reason why Apple as a PC, tablet and smartphone provider and its counterparts in the tablet and smartphone arena are doing so well in the corporate world as users rebel against the constraints of the old PC world and flourish in the new post-PC era.

These are worrying trends for Microsoft. I heard of story of a Microsoft executive going into an Apple store to bait the salespeople with a new Nokia Lumia with its noddy-like tiling on the front having already arrived late and behind the market. It must have been a pathetic sight as an army of Apple customers looked up from their iPhone 4S devices and thought, 'whatever'.

This is part of the problem with Microsoft. This ingrained belief of impregnability and that users really have no place to go, so they swallow whatever Microsoft do and say. It's a Windows world, it's an Office world. The Spanish bank BBVA has proved that this is not necessarily the case in choosing to migrate its entire 110,000 staff to Google Apps for Business after a successful trial - encouraging all their employees to ditch the past. They have embraced the advantage of the Cloud to run their company by allowing the web to be the platform, not the PC which unshackles users from being given sub-standard machines and to choose a device of their own.

15 months ago, I bought the top of the range Lenovo Thinkpad - a great machine in terms of weight, PC sexiness and performance. Its battery life was always rubbish even though it was advertised as 10 hours and even though it runs Windows 7 its performance has degraded over time as I have found with every PC I have ever owned - it's as if they get fatigued from running rubbish software. Yesterday, as I walked into the atrium of a Microsoft building, it literally died. One minute I was looking at the presentation I was about to give, the next it was blank and dead. It still is dead.

In supreme irony, I had my Macbook Pro tucked in my bag (having not wanted to antagonise by using it) and latched onto the guest wifi and loaded up the same presentation from Dropbox. In seconds, without skipping a beat, I hooked up to the projector using my convertor cable and without pressing any button the projector and resolution was detected and my presentation was given. Jaws hit the table when they saw the Mac and I expected to get escorted out by security but when they saw how their own software behaved on a Mac with so many more options on how to run a slideshow from a PC and time your delivery, they were impressed.

But they still don't get it. Even when the graphs point out the clarity of the numbers and trends, they don't seem to get the fact that their very heartland, the core product set of the company is under persistent threat not by their customers but by users. No amount of canoodling with the CIO will make a difference. Users are rewriting corporate policy and deciding the future IT strategy.

I predicted that Microsoft will make a profits warning in 2012 and Keller's announcement prior to Q2 results was seeding some bad news. At some point, a hole will appear in that lucrative area that Microsoft has depended upon for years. If nothing else, the price of MS Office has to collapse in the future - nobody is going to pay the kinds of prices of the past for that product for the future. 

I predict that Microsoft will survive but not in the same form. It will have to radically change and find new ways to make money. Right now, it's not at all clear how they will do that. Is it time for management change? Maybe that's the starting point. 

But what do I know?

Apple will Fail, Microsoft to Come Back?

In a boring conversation over Christmas, a friend of mine said that Apple will take a dive this year as, in his theory, they have saturated demand for their tablets and smartphones and their PCs will never get taken seriously by corporates. Meanwhile Microsoft will resurge back to normal growth rates, was his other prediction.

Of course, he's right on all counts.

Or is he? Having been recently converted to Apple, first via tablet, then iPhone and now the Macbook Pro, I have suddenly realised that as workers we have been held back from many productivity aids and better software over the years. As a for instance, this year over the Christmas period, I recorded and published a talking book of bedtime stories for my young boy which he can now read and listen to at his leisure from an iPad or one of our iPhones or any device that reads ePubs.

Apple Pages, at £13.99 for the software on a Macbook Pro (full end user licence cost), allows you to write the document while the free GarageBand software on the Mac allows you to record an audio file. You just add the media file to your Pages file and then export to ePub format. The recordings took 15 minutes each and the rest was done in minutes. The look on my little's boys face to see his pictures in the book and hear my voice telling the story? Well, priceless.

But this has nothing to do with business, has it? Oh yes it has. This week, my firm will use my Macbook to write several briefing and training documents about Cloud Computing which we will add audio files to and then export them to ePub format. We can then make them available to all tablet users as a multimedia document which they can listen to on the fly. Imagine you are an IT salesperson awaiting a first appointment with a client to talk about Virtualisation or the benefits of Cloud, these documents will be 15 minutes long as audio files to give first, invaluable briefings to make salespeople sound authoritative. And they can leave them with their clients.

What my friend fails to realise is that the PC market is plummeting - even servers - but Notebooks in particular are nose diving at over 50% per quarter. Vendors like HP, Dell and Acer question the viability at the low end as they can't make products cheap enough for the corporate market. Meanwhile, the software is still buggy and expensive and it does much the same as it always has done with precious little innovation over the last 5 years, particularly from Microsoft.

In the face of this, smartphones and tablets are rising at an exponential rate as the phenomenon of Bring Your Own Device (BYOD) takes off at work where our own devices are attaching to secure networks. And people using these devices buy their software in a different way - over the Cloud and for a few pounds a shot. And there's tons of it.

The revolution is here, have no doubt. And Apple PC's, in the face of the PC decline, are growing at 27% per annum in terms of shipments and revenue. Yet you can't get a bean of discount for love nor money on these expensive products.

Why are companies now paying top dollar for Apple when they are forcing PC vendors to crumble? Simple, the PC market never has really been about price. If you want capability to do a job, people are prepared to pay. The Sony Vaio is touted as the pinnacle of PC's in terms of graphics and portability but have you seen the Apple Mac Air? There's no real comparison.

But Apple is an island in the world of computing dominated by Microsoft so corporates will never buy, will they? Oh, but they will. Microsoft Office for Mac is vastly superior to the PC version and it's half the price. You can now get it as a client for MS Office 365. If you want full PC compatibility then for £67 you run Parallels virtual machine and then port all your MS licences across, automatically by wifi - Apple does it for you.

Of course, I don't think Apple will dominate the corporate market but I think the PC has had its day in the current form. The way in which companies invest in software will change as the Cloud drives prices down and multiple devices will be used to run the same piece of software with files sourced from one spot for all.

This is not a world described by PCs or Microsoft and so either these companies will have to adapt or get left behind. Apple may not win the end battle but they have shown that end or client devices can be anything going forward and users are defining what is paid for them against the corporate mandates. 

Steve Jobs said it before he died, we are in the post-PC era and you don't have to look far to see executives and consumers using the same devices running lots of software that has been suppressed for years by the narrow minded view of the world by mammoth software companies.

2012 will be a year of innovation and the year that the PC market accelerated its decline at the cost of new devices. Apple will get a share but look out for more innovative products and lots of great software at affordable prices. 

If Apple has done this one thing, then it has put value back into the valueless object that was once a PC.

BYOD Threat to Enterprise Security

BYOD or BYOT (bring Your Own Device or Technology) is a huge trend in corporations. As yet CEO/CIOs don't really understand the full implications or don't care that much, according to some research, but the growth in smartphones and tablets being brought into the enterprise network set up promises to be one of the biggest threats to security in the coming years.

Imagine the CEO's iPad going missing complete with an auto-connection to Dropbox on several applications and some local files with only so much as a 4 number PIN protecting it if anything at all. It couldn't happen? It has - the European President of a $24bn global company did just that. And not a single IT person could do a thing to prevent any data loss.

Apple now has thing's like Mobile Me and Find the iPhone with iCloud as back up which start to solve some of the issues but realistically they go nowhere near the kinds of security set up required to satisfy Corporate or Public Sector Governance on data controls and security. As the astronomic growth in smartphones and tablets continues unabated, this is going to become a major issue going forward.

Enter Bradford Networks from the US. This company has a specific solution for the BYOD craze and it's Network Sentry product addresses this issue. 

Bradford Networks' Network Sentry product manages IT assets like iPads and provisions customised security policies to control things like unauthorised network access especially in the case of a device falling into the wrong hands. Bradford Networks have specific market sector solutions for the enterprise, healthcare and education. It may mean some sacrifice in privacy for users as the product monitors activity but in reality corporations need to wrestle back control of the security of data and Bradford Networks offers a resilient way of doing this.

Bradford Networks has also joined in the SaaS market - not Software but Security as a Service with its Bradford.cloud solution for Managed Service Providers (MSPs). What Bradford.cloud does is to provide a protection layer on Private Cloud networks provided by MSPs so they can understand what devices are connected to the Private Cloud and manage their security from a single console.

Bradford Networks are at the forefront of delivering the highest level of security to enterprises both on premise and in the Cloud and have a unique answer to the growing question on security the BYOD brings for resellers and Managed Service Providers.

For further information, call +44 207 193 2356.

Microsoft fails - Apple wins?

Yesterday I explored the hypothetical case of Microsoft collapsing. While I am not a Microsoft 'Arnageddonist', as I think $60bn of cash should buy them some path to safety, I do argue in my 5 predictions for 2012 that Microsoft will see revenues and profits stall in 2012 as pressure grows on Windows sales as PC shipments continue to fall while there will be increased pressure on Office products due to corporates questioned pricing models and the rise of new alternatives plus less PC shipments to sell them on. I do believe Microsoft needs a radical change in plans and I think that requires new management throughout. It has to break out of the rut its in. It may not be so vulnerable in large corporations but in the higher margin heartland of SME and consumer, Microsoft is at extreme risk to the likes of Apple and Google.

A sobering thought - 97% of UK companies are classified as SMEs, employing the largest share of the workforce and there are millions of consumers out there. That is where Google will sustain its attack in the places where free and low cost products and services are readily accepted. Microsoft are incredibly vulnerable down there in its long tail of untouched users.

But if Microsoft were to fail, would Apple gain and become the flag bearing IT giant of the future? Right now it is the US' most valuable company with more cash than the US Treasury. Not bad for a company that almost expired around 10 years ago. So would Apple be the company to take over Microsoft's mantle of IT giant and dominant force in the IT industry?

I don't think so. However, I am a recent convert to Apple and I love the company and the products. I am fully kitted out with Macbook Pro, iPad2 and iPhone 4 with IR keypad and somewhere we still have an iPod and iPod Shuffle. Now the whole triumvirate of products are bound together by iCloud which backs me up.

The clue was in the series of products. Apple has a strong base, which is how it came up by stealth on Microsoft, in the consumer market. This can also be a curse as the need to sustain the longevity of products and find the next new ones is a ceaseless and sapping task. Smartphones has been a productive area but there is intense competition from all angles and Apple cannot always sustain it's position on mere gadgetry. Just this morning, I am experiencing battery drain on what is now my third iPhone to show the same problem. Quality needs to match usability once the fad value is over.

And iPad. What a fantastic product. In the heat of taking it on, I off loaded around 80% of my work onto the device, forsaking my PC. Full of warm feelings, I switched my PC to Apple Macbook Pro and it has been a huge success for me. So much so that I now only use my iPad2 for around 10% of my work - mainly blogging and viewing documents.

The usefulness of tablets needs to be enhanced if they are truly going to take up the long term slack in the PC market and Apple's growing market share in the business world actually threatens the iPad in the same market.

In the final analysis, Apple is a superb innovator in the user experience and will always have its place as an end device of choice amongst users. The brand is cool and the products are always one step ahead. That may change but the wave is worth riding. But beyond that, Apple has no real binding to the mainstream infrastructure that sits at the heart of networks and computing today. It doesn't make servers or network stuff, not much software for interactivity, it's pretty much an end device company only and proud of it. It's operating system is different to the standards and there is always the annoying incompatibilities at the edge of things that just irk the corporate user and makes the full user experience just short of the nirvana expected for the outlay.

Should Microsoft falter then Apple will indeed benefit but it will not be the defacto standard that Microsoft has been. But what it will do is to continually challenge the status quo and set standards on the user experience that have been sorely missing from the Microsoft world from which we are slowly emerging. I think it will also, along with Google, challenge the absurd amounts of money we have all continued to pay for ropy old office productivity products that really are not that special. In fact, there will be a real software revolution as more products appear for less cost doing more.

Steve Jobs called this the post PC era and he was right. Microsoft will stumble and it will be the mark of the management to see if it can make this just a minor slip up or whether it will be a slow decline or the collapse that some foretell. Whatever happens next has to be good for the industry and even if they do not emerge as giants, we have a great deal to thank Apple for in shaking us all out of the malaise of accepting second best as the only way.

In my other predictions for 2012, along with MS issuing a profits warning before the end of the year, I predict Groupon will fail and get bought for a fraction of its IPO price, aggregators will rise as a force in computer channels as the Cloud takes a grip, corporate AppStores will arise in the face of the BYOD phenomenon and Google will see sales of its Google Apps for Business rise to between $500m and $1bn of annualised sales by the end of 2012.

New Cloud developments? Keep a close eye on two companies called Okta and independenceIT. 

Buying Software in the Future

Steve Jobs was an incredible man - I think we all agree on that. But to my mind, amongst all his innovations and acumen what he did to converge the mobile and computing market was stunning. I think it was just the first steps in an exciting journey.

Recently, the CEO of Tech Data asserted that smartphones were the products to watch in the next year or two and he knows a thing or two about products as his company sells around $25bn of Hi-Tech kit a year. So it seems the world is set to ride the tsunami of mobility products - smartphones and tablets to the fore.

This has been much the domain of the consumer until recently when we all started to turn up to work with these products that we bought with our own money and insisted they should be put on the network and to heck with the security risks. This 'Consumerisation of IT' or 'BYOD' thing is becoming a huge issue but it brings opportunity.

So what did Steve Jobs do that was so amazing? Well Vodafone and the likes had toyed with sending applications and things to the phone for a while but it was all a bit disjointed and ineffective. Jobs turned it all on its head. He brought the world of computing to the mobile industry by not just inventing a great smartphone but by re-inventing how applications were to be delivered to the phone and he encouraged hundreds of companies, small and large to develop Apps. And he cut out the phone companies from the action. And he cut out the channel from the action too. It was all owned and delivered by Apple - just as he had done with iTunes, the App Store revolutionised the way software is delivered first to phones and then to tablets - and where next?

Unlike Microsoft who opened up the PC market for everyone to develop in, Apple opened up the phone but took on the role of software distributor by providing the only outlet to get the product. And it takes a sizeable cut of the sale for doing so - much more than a distributor would. By creating this bond with its customer, Apple has also become the fastest growing Cloud storage company in the world when they delivered iCloud. Suddenly the bonds with Apple get stronger and it spreads across the spectrum of Apple iPhone, iPad and Mac computers. This is a superb business model for the future as you can just layer on more products and services easily.

So is this the template for the future of PC software purchases? As yet there has been no great move by a single large company to try to emulate Apple but there are few parallels in the PC industry other than Apple themselves. This leads me to think that the software hypermarket company of the future has yet to emerge.

I can imagine a company setting up an AppStore software hypermarket and aggregating as much software as possible for consumers and small businesses to buy - both traditional perpetual licence software and Cloud based. Such a company could cut out traditional channels as Apple have done. It's not as easy to do as Apple have farmed their own base in doing so whereas there are loads of PC vendors out there. 

That's why I think the software store of the future will be independent of vendors and potentially not of the channel today. Now who could that be? Amazon? Google? Wal-Mart?

Calx Europe is a Business Acceleration company specialising in working with vendors and channel to develop and implement strategies in the Cloud market. Call +44 (0) 207 193 2356 for a no obligation discussion.

Has The iPhone Changed The World?

The Apple iPhone is a remarkable device. It certainly saved Apple from a long, slow death but it has arguably changed our view of mobile phones forever, moving away from the world dictated to us by the Scandinavian and far eastern manufacturers. But in the world of mobile, has the iPhone really reinvented the model?

To be sure, the iPhone has changed our perspective in many ways. As you would expect, Apple brought us an easy to use, sophisticated user interface, as they brought windows to the world of PCs long before Microsoft did. Apple also destroyed the mobile store model as they invented the concept of an online mobile store that allowed not only ringtones but applications, music, movies and much more to be bought and downloaded on the go. They also brought us a flat-pack price model even if you have to pay a premium for the phone. There is no doubt the world they brought us on the mobile is here to stay as others rush to follow and the growth of 'Smartphones' as they are called is causing a rise in network traffic.


This rise in traffic is enormous but smartphones are not the lone or even the biggest contributor to the rise. Netbooks, laptops and the growth in the mobile browser, peer to peer data calls, application downloads, multimedia streaming and other things are contributing to a truly phenomenal rise in data traffic on mobile networks. As subscription penetrations reach saturation point, the pace of innovation keeps the market driving forward and for the first time last quarter the market reached $10bn in revenue in the US alone. By 2010, the global codified information base will exceed 1 'yottabyte' or 1,000 billion terabytes (a terabyte being 1,000 gigabytes which is 1,000 megabytes). The future we will be fast talking about 1 zettabyte (1,000 exabytes or squillions of bytes to the rest of us). We are talking more data than bank bailouts here - at last a number bigger.


We are entering the 'yottabyte era' as some call it and the one thing you can depend upon is that the mobile network providers are not ready for it. The financial strain of keeping up with this incredible growth in data is enormous and with the laughable prices of Government tenders around the world for airwave licences, it has not been easy for companies to make enough profits to keep reinvesting at the right pace to get ahead of the traffic growth.

With the exponential growth in mobile applications, mobile media viewing and advertising expected mobile operators are going to have to accelerate deployment of new 4G technology, they are going to have to take some of the load off networks by implementing femto or Wifi technology faster, get a better grip on managing the network and optimising it, look to standards on broadcasting mobile video rather than let it grow itself without control and look to get smartphones defined properly.

It's a hard job and very cash consuming but we are only now seeing the kinds of possibilities that mobile technology really offers. It's a far cry from the bricks that we used to use as mobile devices when, from a small, flat device, I can browse my emails, make video calls, view films, listen to music and browse the internet, all for a flat monthly charge.

And it has only just begun.

Cost Savings Actions in Isolation

I read a recent snippet by an academic, Mitchell Lee Marks of the San Francisco State University, who said of the vogue policy by US CEOs in the face of the recession to enforce pay cuts rather than redundancies on staff that, 'Initially, this sounds good to people because we're all chipping in. There's a sense of loyalty. But what if you don't win the war?'

It's a great point. It was illustrated recently by US giant, FedEx, who, in December, asked senior Executives to take a 7.5% pay reduction and US based salaried workers a 5% cut in salaries. It affected 36,000 staff in all and CEO, Fred Smith, promised that it would see them through the bad times. By April, things had got worse and sure enough, FedEx let go 1,000 staff this month.

Fred Smith was dutifully trying to save jobs by avoiding making redundancies. He stripped out a good portion of the payroll cost and still it was not enough to save the jobs. In fact, Mitchell Lee Marks would argue that this actually has a bigger destabilising and demoralising effect on the company. It leaves staff with the rightful feeling, 'Why did we make that sacrifice? What did it achieve? Do management know what they are doing?' Further, studies have shown that while salary cuts are termed as short term measures, too often the money is not given back at a later date.

Cost Cutting in Isolation

It's a noble thing to join staff into the problems that business face particularly in the recession. It is also a noble thing to avoid redundancies if at all possible and asking or even forcing staff to take a pay cut is better than losing jobs.

Or is it?

The problem here is what is trying to be achieved. When executives abdicate responsibility for their actions to accountants and cost-cutters, then only numbers hold any credence. The role of the cost cutter is to 'cut the cloth to fit' and that's exactly what they do. But there is a problem here. If all that you do is cut cost and do not adjust or re-align your business then you are only risking prolonging the inevitable - either you sink or you have to make bigger cost reductions or the dreaded 'death by a thousand cuts'.

What I mean is, if you do not change the goals of your business, then all you are doing is reducing your capabilities which becomes a self-fulfilling spiral downwards in terms of the business. There is a real risk that you bring on more bad news rather than avoid it.

Aligning Your Business in a Recession

There is a risk of repeating myself from past blogs but there is a lesson to be learned even from a clever giant like FedEx of how to do things poorly.

The very first step you need to make before you make decisions on costs is to know your business thoroughly and that means to have a handle on every deal, every customer and to properly understand how your market is performing, what the salespeople are doing, what the marketing effort is achieving and where it is targeting, and how the business is set up to support it. You need to be clearly aware of what your Value Proposition is to every client in a recession and why they should buy form you.

The biggest competitor to any sale in a recession is NO DECISION and this arrives when either your Value Proposition is weak or the way you articulate it is.

There is zero point in having a salesperson selling into a batch of clients where, say, over 50% of them are struggling in the face of recession and the Value Proposition does not deliver instant impact to their business, preferably to the bottom line. Think about it - if you are asking someone to pay incrementally for something it has to have a positive and instant impact to the business.

You would not try to sell a Ferrari to person laying off staff.

The very first thing that will come out of a detailed analysis of your business is that you can instantly see if the current forecast pipeline of customers are going to buy from you or not - you will see if they are open to the Value Proposition - talk to them personally to reassure yourself. You need to understand who is buying from you and when, then clone that success in more clients who match their profile. Make sure your salespeople are ACTIVELY changing their focus away from clients you have identified will not buy and refocus their efforts on the profile you know that will.

Make sure that your marketing effort is 100% aligned to the goal of the salespeople. The PR, collateral and lead generation engines need to be targeting the customers you believe are open to your Value Proposition so that there is a ready supply of warm leads - and shut down all ancillary marketing efforts which do not support these goals.

Changing Strategy

Sometimes a recession will smack you straight in the face and your realise that the good times are over.

'What we are selling is simply not what the market wants'.

I remember back in the late 90's a company that had made a fortune on the back of detecting issues relating to the mythed 'Millennium Bug' issue of embedded dates in software. They did extremely well. But after the date changed, they simply did not have a business. It seemed pretty obvious to me but they honestly thought that major problems would still exist and their clever software would continue to sell in the same volumes. The senior executives were really surprised when it didn't.

Kudos to them. They recalled all their key executive staff from all over the globe, they shut down their marketing machines and kept a skeleton salesforce and then sat in a building and quite literally re-invented the company with a new set of products, a new set of problems they could solve and an entirely new strategy. They had accrued enough reserves to get by while they did this but then they took their new plan to their VCs and because they had delivered previously, they got more money and started again. Utilising pretty much the same people with a few attritions from those not used to having to sacrifice commissions because of no sales, they not only started sales up again but they actually became a profitably, fast growing company again.

It's an extreme example but when markets change, there is no point in trying to keep doing what you have always done if it is no longer as compelling to clients. It's why many old businesses who fail to adapt to changing markets quite literally Hit the Wall and whither or get bought, if they are lucky.

As I blogged yesterday, recessions can be rewarding in that they can force change, make people think, cause innovation and creativity and can set a business on a new, more lucrative and sustainable pathway. That takes courage and determination and what many businesses will find in such times is that their management are simply not capable of thinking that way and taking those sorts of risks.

For them, cost cutting is simply the only option - batten down the hatches, survive the storm and all will be ok.

New Recession, New Opportunities

It comes as no surprise that many clever start ups arise in the middle of a recession - Facebook, Cisco and my own client, Theorem Inc, did so. Jay Kulkarni, CEO at Theorem, will tell you that the Value Proposition he trades on was honed during a recession. His business supports online marketing and guess what, it is one of the few areas of the Hi Tech market enjoying real growth during this recession. Theorem, because they were born with a recession in mind, are thriving because their Value Proposition resonates with every major business in their market right now.

There are plenty of examples of how companies have re-invented themselves in the rocky grounds of downturns and you do not have to look for to see Apple. Here was a company stuck in a war with Microsoft and Intel and had only a clique of marketshare at around 9% for arguably the best computers in the world. But they were addressing specific needs best and not the broad market where harmony of applications and cost were the vital selling factors. Steve Jobs, on his return to the company, set a new course and looked at how the whole market for mobile media was going to change and bet everything on it. The iPod and iPhone are now almost history but Apple could not be doing better as their strategy has changed to support the whole market.

Strong Message

So the message is clear - do not cut costs just for the sake of it whether that is just switching off lights to salary cuts to jobs. Make sure you are addressing your customers and that your Value Proposition stands the test with clients before you go down that path. If nothing else, you owe it to your employees.

If you do not have the internal creativity, innovation, skills, courage or appetite to do this then it should be your management that suffers first but get help in fast. All that I blog about depends on your understanding of your customers - how and why they buy, how they have changed and their new needs - then aligning your resources to servicing these needs or to find new clients where your products and services resonate.

For those with the courage and energy to do this, cuts will be the last resort while re-aligning your strategy and resources will set you fair for the future. Further, for those with the strength to do this, there is more than enough cash in the market to support you. You just have to know where to look.