Steve Jobs – NeXT marketing strategy video 1991

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Steve Jobs – NeXT marketing strategy video 1991

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Transcript:

Hi for those of you that don’t know me my name is Steve Jobs and this is the first of one of many chalk talks we’re going to have this year together the subject of this one is really important which is who is our target customer why are they selecting our products over our competitions and what distribution channels are we going to use to reach these customers a lot of light bulbs have come on over the last 90 days I’ve had the good fortune to be with a lot of you out in the field meaning customers getting first-hand information as to what they’re doing with our products you have fed a lot of information to the management of this company we’ve done a lot of thinking and looked at the data and all of a sudden out of this data some very very important things have come to light I want to share them with you today we’ve had historically a very hard time figuring out exactly who our customer was and like to show you why when we first look at the workstation marketplace looks something like this and the biggest player as you know in the workstation marketplaces son second biggest player is HP Apollo third biggest player is deck and IBM with the RS 6000 is now in the game as well and then outside the workstation marketplace the very large market for PCs and mackintoshes the traditional personal computer market now we looked at the workstation marketplace and we said wow we have multitasking we have great networking just like the workstations we use unix we have a pretty good development environment so we’re a lot like these folks but then again these folks don’t really care about user interface or at least they haven’t been able to execute on it if they do they don’t really have great third party application software and these are not machines for mere mortals so we’re not like them at all and then we look at the PCs and we do strive to get a suite of application software that allows us to be just like these folks we do strive to attain ease of use and actually are easier to use than even a Macintosh today so we’re a lot like these folks but then again we have multitasking and networking that is an order of magnitude beyond what you can do with a pc today so over the last year we’ve oscillated back and forth between thinking that the PCs and the max were our competitors and this is where we want it to be or the workstations were our competitors and this is where we want it to be in essence are we an easier-to-use workstation or are we a more powerful PC and had it not been for a revelation if you will five or six months ago we probably would still be oscillating today and what that revelation was was that somebody turned up the power of our microscope a little bit and we saw something very important and what we saw was that the workstation marketplace is really not just one workstation marketplace but two there is a traditional half which is what we’ve come to know and love science and engineering which does indeed look just like this but there’s a new half emerging which we’re calling the professional half that is professionals that are not scientists and engineers who want the power of workstations and inside this marketplace there are several submarkets publishing the high end of the publishing market tech pubs medical a lot of database driven applications higher education etc etc etc legal markets in here many many markets are in here and what’s very interesting is son is the only company that seems to have eked out a beachhead over here and our data says that in 1990 son sold around 40,000 computers into this market and had about an eighty percent market share so the entire professional workstation market in 1990 was about 50,000 units and son had the majority share that’s why we didn’t see it before it was such a small blip compared to the workstation marketplace or of course the PC market place that it did not show up on our radar screen but we’ve seen it now and it’s good that we have because this is a marketplace that we can dominate and it’s a marketplace that’s going to be very large the market research data that we have and also our gut feelings from many many years in the industry say that this market place in 91 is going to grow to about a hundred thousand units in size it’s going to double this year and next year in 92 it’s going to triple to about 300,000 units that is a substantial marketplace what is also exciting about this marketplace is that a hundred percent of our volume goes in here in other words if we could ship 50,000 computers into all these markets this year we would have a fifty percent market share of one of the fastest growing segments of the entire computer industry now let’s examine why this thing is going to grow what is going to cause this thing to grow from fifty to a hundred thousands of 300,000 units clearly it is not these people deciding to not to stop being engineers and go to business school and re-emerge over here that’s not how it’s going to grow it’s going to grow from two factors number one these folks moving in PCs and mac owners deciding that they need more sophisticated networking more sophisticated development environments etc deciding they need to step up to workstations and one other class of users there’s a lot of people now using 3270 terminals or terminal emulators hooked up to a mainframe for database driven applications more and more they are deciding to move their applications onto a powerful desktop workstation connected via networking to the mainframe so that they can get the application out of the mainframe and onto the desktop for more rapid development for a better user interface and for better economics so these two factors are what’s going to cause this market to increase almost an order of magnitude in size over the next 24 months and we can get half of it now one of the things that is very interesting is that Sun is today the major participant in this marketplace with an eighty percent market share and I personally don’t see too many other people being able to move into this market place over the next few years I believe Sun will remain our major competitor the funny thing is while we’re convincing these people using PCs and Macs and these people using 3270 terminals or equivalents to move in to the professional workstation segment Sun is if you will our friend because they’re going to spend their marketing money to convince people to move into this segment but the minute they’ve made their choice to move into the segment whether we’ve convinced them or sun is convinced them sun and next our mortal enemies and the good news which we’ll talk about in a minute is that we’ve had a chance to suit up against Sun with our new products about 15 times in the last 90 days and we’ve won 15 out of 15 now we want to address what is compelling these people to move into this new category of professional workstations and secondly once they’ve decided to make the move into the category why are we going to beat son let’s take a look there’s three primary reasons the first one is that every single customer we’ve talked to here has the need to write one custom application they’ve got one mission-critical app that they’ve got a right and so the development environment becomes critical in addition to that these applications are very Network intensive so they need very sophisticated networking capabilities which they cannot find in pcs and macs and third these applications primarily our database driven which means that they want to write the application on the desktop machine but this application on the desktop machine through the sophisticated networking is going to communicate with SQL databases running in either an IBM mainframe or running oracle or sybase on a sequin machine something like that so they need the sophistication of the networking and the ability to seamlessly talk to databases running on large servers and the development environment and the networking and the database sophistication together are things they cannot begin to get from these class of products so the first thing we’re seeing is the custom app is the key thing that’s driving these people to upgrade from pcs and workstations and even down here we see the same thing people that have mission-critical apps they need to do deciding they don’t want to write the application itself on the mainframe and use it via a terminal but rather they want to write the application in a much better development environment where they can create the app much faster with a much better user interface much more cost effectively and talked to the database on the mainframe through sophisticated networking so custom applications is our number one reason driving people into this category now the second reason is one that may come up initially or it may come up in a secondary way for the first sale of products to the customer or it may even come up in a secondary sale three to six months down the road and that is the desire to use great productivity apps that’s number two great productivity apps as an example when it comes up in the first sale many times people will want their employees to be using the custom app ninety percent of the time but still need productivity apps ten percent of the time but more likely they will start to understand that they want to put our work stations on the desks of a wider audience than just need to use the custom app they’ll want to include more administrative personnel more marketing personnel have them all in the same network so that they can share the interpersonal computing that our system provides and productivity apps will come into play to the extent that we have even better productivity apps that are available on PCs and to the extent that those productivity apps use the network so they can’t I people together we’re going to win perfect example is of course Lotus improv another example is full WYSIWYG WordPerfect a third example will be of course our advanced version of Adobe Illustrator the chips in the next 60 days so having better productivity apps will be important to the primary sale I believe what we’re starting to see first Boston is a good example in the financial services market that I forgot to draw of a company where we sold 40 or 50 computers to primarily for the custom app in one group three four months later a second group comes back and wants to buy over a thousand computers for another group that is more concerned now with great productivity apps as the computer starts to spread more idly in the organization the third reason that people are moving in which is one that I think will not become paramount in 1991 but within 24 months will be the largest reason people are buying our computers is interpersonal computing improving group productivity and collaboration through the use of sophisticated desktop computers and right now when we first meet a customer we tell them about interpersonal computing I’m sure most of them would rather hear about the custom app solutions and the great productivity apps that we have but as these customers become educated in the sales cycle I’m sure all of you have seen the value of interpersonal computing rise in their eyes and as we are successful customer by customer over the next year to 18 months interpersonal computing will be something that rises on the customers agenda of what’s important even as we walk in the door as Regis McKenna once said the best marketing is education and as we accomplish that education more and more customers are going to be asking us about interpersonal computing versus us having to educate them now interpersonal computing is something that again relies on a very powerful desktop computer and very sophisticated networking neither of which are available in these classes of machines so to the extent that an organization wants to use interpersonal computing again they are compelled into the professional workstation category now one of the things we pretty much know is that everyone who is considering a purchase of next computers at one point or another in the sales cycle calls up son they’d be foolish not to unfortunately the reciprocal is not yet true our goal is to make it so that everyone who is considering a purchase of a son calls us up and you’ll see more and more of our marketing targeted to try to make this happen as the year rolls on so let’s say son or next spend their hard-earned marketing dollars and sales energy and convince a customer to move into this category and the customer being a smart one calls up the other company so that son and next are always competing for every order what are our key competitive strengths against son it turns out that they are exactly the three things that are driving people into the category in the first place we couldn’t ask for a much better situation let’s examine them custom applications it turns out that our development environment is vastly superior two sons and this is being decided not by us but by our customers best technical people when they returned from our software camp our best competitive weapon to illustrate this point is to get our customers best two or three developers to spend a week and to come to Redwood City or Pittsburgh and go through our developer camp they will go back raving about next step and telling their own management that next step will allow them to build their custom app three times faster than Sun we’ve had a lot of experience in this so far and I think one of the things we need to do is to use our software camp more we’re not seeing enough corporate developers through the software camp we’re not getting potential customers to send their best technical people through our software camp either soon enough in the sales cycle or at all and it’s an area where we could really get more benefit secondly once they’re in this category comparing us with Sun the comparison of productivity apps really tilts in our favor the productivity apps suite that we now have and are in the process of getting dwarfs that of Sun not only do we have more apps that are easier to use for this customer but we have the breakthrough ones we have the Lotus improv we have the WYSIWYG WordPerfect etc etc so once they’re in this category the productivity apt comparison is no longer against these guys it’s against Sun and we’re winning hands down the third interpersonal computing a demo will communicate very rapidly how superior next is in interpersonal computing and we will be supplying you videotape of demo that we’ve been using a lot i would suggest you use it to show your customers and i would suggest that you get the software that’s on this videotape learn how to demo it yourself very rapidly we have been able to convince customers that because of our multimedia features and our ease of use features these people can use interpersonal computing on our system to achieve a far superior result than they can with sons so these are the three competitive weapons that we have against son and as we use them to move people into the category they are already very well positioned to see us in a favorable light once they’re inside the category so I hope this gives you a feel for what we’ve learned in the last 90 120 days I have no doubt that we will continue to learn more and more together at an ever accelerating rate as we get more and more customers we’ve been listening a lot to them and we intend to listen even more to them to continue refining this professional workstation market definition and what is important to these customers and our competitive position against our number-one competitor son I hope this is proved useful I’m really excited to hear some of your comments and thoughts about what you think of all this and of course more and more information about how we continue to refine in the future thanks a lot give me some feedback if this is a successful way of communicating and I’m sure I’ll see most of you soon and I’ll see you all at the retreat thanks you

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Posted by Ian

Ian has marketed for some of the world's best-known brands like Hewlett-Packard, Ryder, Force Factor, and CIT Bank. His content has been downloaded 50,000+ times and viewed by over 90% of the Fortune 500. His marketing has been featured in Forbes, Inc. Magazine, Adweek, Business Insider, Seeking Alpha, Tech Crunch, Y Combinator, and Lifehacker. With over 10 startups under his belt, Ian's been described as a serial entrepreneur— a badge he wears with pride. Ian's a published author and musician and when he's not obsessively testing the next marketing idea, he can be found hanging out with family and friends north of Boston.

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