Silicon Insider

by Jim Turley
Silicon Insider #18, September 2004

This month's editorial is a sales pitch. I admit it. I'm about to stump for myself, so if you've got a weak stomach, skip ahead, 'cause it's time to blow my own horn.

Many of my best repeat clients are investors or financial analysts. They call me out of the blue to ask, "what's up with today's announcement from XYZ Corp?" We talk on the phone, I give them my view, we play question-and-answer, and they hang up happy, satisfied, and better informed. I bill these calls by the hour, kind of like phone sex. One of my clients even jokes, "talk nerdy to me."

Honestly, phone calls like this are the quickest and easiest way for an analyst or trader to get a "sanity check" on what's happening in the technology and semiconductor sectors. These people are masters at complex finance, but they're frankly not very technical. That's okay, and our conversations give them a private way to increase their knowledge, away from their own clients, bosses, and colleagues. Financial analysts ought to know something about the businesses they cover. The more they understand the better they can do their jobs.

I offer a similar service to managers and executives in some semiconductor firms. They're all great marketing managers or finance officers (or whatever), but they have an incomplete understanding of the business they're in. For them I hold on-site seminars or private "coaching" sessions held off-site. Again, the goal is to get "up to speed" without asking embarrassingly basic questions in front of colleagues or clients.

Sound like something you'd like? Or perhaps a gift for that new manager or department head -- or the whole group in Finance? At Silicon Insider that's what we do. It's technical insight with business relevance, delivered in an easy, accessible, and friendly way. It's amazing what a little knowledge can do.

We now return you to our regularly scheduled programming.

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by Jim Turley
Silicon Insider #16, July 2004

The title of this month's editorial will be evil heresy to many readers. Hell, even I would have sneered at such an obviously misinformed statement not so long ago. Everybody knows that high-tech companies revolve around their talented and gifted engineers. All other employees simply justify their existence while the engineers do the real work.

Maybe it's my advanced age, or maybe it's creeping cynicism, but I've come around to the opposite way of thinking. Clever engineering ideas are easy to come by. I visit, advise, and consult with dozens of new startups. What's more rare is a good business plan and a coherent marketing strategy. In short, making products is the easy part; finding customers is the hard part.

In a world that includes Pet Rocks and three-ton SUVs, marketing clearly trumps engineering. There are any number of startup companies that can make chips that are faster than Intel's latest Pentium or Itanium. That's the easy part. Making people want those chips is a lot more difficult. The "if we build it, they will come" mentality still thrives among the crowded garages and rented office spaces around Silicon Valley. What's less plentiful is a sensible view of what the market will actually bear -- or care about.

TiVo is a classic example. For those who have it, it's the greatest invention since canned beer. For those who don't, it's an overpriced VCR. TiVo, the company, has even stopped advertising; prospective customers just don't "get it." Only by using the machine for a few days do people finally see the light and become enthusiastically zealous converts (and TiVo's best sales force).

There are hundreds of potential TiVos toiling away out there who haven't given enough thought to how (or if) they'll actually sell their brainchild. There's more to it than flashy ads and turgid press releases. True marketing (as opposed to advertising) goes deeper than that: what does the industry actually want? Too often I see PowerPoint presentations that describe some presumed market need or, God help us, inflection point, that the presenter's product neatly satisfies. A tidy scenario, but one that's consistently flawed by circular reasoning. The market "demand" is always defined as "the lack of our product." The market's not actually demanding anything; the presenter is demanding the market's attention. But the market, and we, are profoundly uninterested.

Engineers are wonderful people; don't get me wrong. I used to be one myself. But if GM can put a deliberately ugly yellow body on a Chevy Suburban and get people to pay $15,000 more for it, then one good marketing person is obviously worth a ton of engineers.

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by Jim Turley
Silicon Insider #14, May 2004

Some chip companies get it. Others just don't. Pretty soon they'll all get it because the others won't be around any more. I'm talking about software-development tools, the little minnows that follow around the big fish in the microprocessor industry.

Chip makers make chips, right? They design, market, and sell chips. Based on that simple model one would think that designing better chips would lead to better sales. That's sometimes not the case. In fact, it's often not the case. Chip features, per se, are becoming less important all the time, at least less important to the sales process. What really sells many chips is the software surrounding them.

Some examples are obvious, like Intel's Pentium, AMD's Athlon, or IBM's PowerPC line. Nobody buys a PC (or a Macintosh) because they like the chip's features; they buy it because the chip runs the software they want. These chips are merely appliances; keys for accessing the desired software. This occasionally happens in embedded markets, too, where certain chips provide access to desirable software.

What I'm talking about is different, though. Nowadays it's the development software -- compilers, operating systems, debuggers, middleware, and so on -- that drive many customers' buying decisions. They don't select a chip and then find (or create) software for it. They select the software and then find a chip that runs it. Or, they settle on a particular set of development tools and then choose a processor the tools support.

This is especially true of new, configurable processors (see above) where the tools determine the customer's entire experience. The underlying hardware is comparatively uninteresting; it's the software tools that the customer touches and relies upon. Unless those are impressive -- not just adequate -- the customer won't take the bait.

The processor business is becoming like the perfume business. The cost of the perfume itself is almost irrelevant. What those companies really focus on is their advertising, which is their biggest expense by far and their only "real" product. Chip companies likewise need to focus on the desirability and mystique of their software, and let the chip sales follow. Don't make the mistake of thinking better perfume will lead to better sales. Better software will.

can be.

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by Jim Turley
Silicon Insider #13, April 2004

There's been so much debate, argument, and vitriol expended on the topic of offshore engineering (especially in India) that I almost hate to add to the noise. Almost.

Frankly, I don't see the problem. First of all, the number of jobs sent overseas is miniscule. Political rhetoric aside, the actual numbers are something like a tiny fraction of one percent of high-tech jobs. We're talking about a rounding error, not some enormous tidal wave of economic or social disaster.

Second, industries have always outsourced jobs, and Americans depend on it. When's the last time you bought an American-made television? (Hint: there aren't any.) Or an American CD player? American VCRs, athletic shoes, DVD players, and sports equipment don't exist. Most of our clothes are made in other countries, as are most cars, virtually all appliances, and all electronic items. As Americans, we love offshore labor and manufacturing. Wal-Mart and Target stores wouldn't exist otherwise.

Now, suddenly, when the talk turns to our own jobs -- horrors! -- we get all protectionist. It's okay to export automotive manufacturing jobs but not network router manufacturing? Indian tech support is okay but Indian software engineering is not?

Get over it. A global economy works both ways. If the "invisible hand" of market forces so wills it, our jobs will be done somewhere else, by someone else. It has ever been thus. The hand-wringers and doomsayers shouldn't fall into the trap of believing that they, this time, or this place are somehow unique. The arguments heard today are no different from those coming out of Detroit in the 1970s, or the coal mines of Britain in the 1850s. We can artificially tilt the playing field or we can play the game we claim as our own and promote so heavily abroad.

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