The Technology Brand - the storage anarchist

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The Technology Brand:

Bridging Companies Through Inevitable

Lifecycle Troughs

Reprinted with Permission

on

thestorageanarchist.com

Tom Broderick
July 7, 2002
Copyright © 2002 Tom Broderick – All Rights Reserved
The Technology Brand: Bridging Companies Through Inevitable Lifecycle Troughs
It’s the Products and the Brand, Stupid
When asked what made his company so successful during the 1990s, Dick Egan,
chairman of EMC Corporation, replied, “It’s the products, stupid.”1 In the overall scope of
the industry, however, high-tech has come full circle in the Product vs. Brand discussion. In
the 1970’s technology (product) drove revenues as young programmers fled into the
alternative scene of computing. The 1980’s presented the first real branding initiatives led by
Apple and IBM as the wired world
began to take off in the mainstream,
EExxhhiibbiitt 11:: MMaaiinnttaaiinniinngg BBrraanndd EEqquuiittyy
outside of innovative corporate data
WWhhiicchh lleeaaddiinngg tteecchh ccoommppaanniieess hhaavvee ddoonnee
centers. And by the late 1990’s the
tthhee bbeesstt aanndd wwoorrsstt ttoo mmaaiinnttaaiinn bbrraanndd
notion of brands without viable products
vvaalluuee iinn tthhee ppaasstt yyeeaarr ((0000--0011))??
was upon the world. The results of this
BBeesstt WWoorrsstt
final era could not be more evident as an
11.. MMiiccrroossoofftt 11.. HHPP
ocean of dotcom companies such as
22.. IIBBMM 22.. CCoommppaaqq
Pets.com and Toys.com, with no clearly
33.. DDeellll 33.. CCiissccoo,, LLuucceenntt ((tt))
valued products or clearly defined value
44.. IInntteell 44.. SSuunn
55.. CCiissccoo 55.. OOrraaccllee propositions, failed to become successful
66.. AAppppllee 66.. MMiiccrroossoofftt ventures despite tremendous branding
77.. OOrraaccllee 77.. NNoorrtteell
campaigns.
88.. HHPP 88.. GGaatteewwaayy
99.. AAOOLL 99.. PPaallmm
The dotcom “brand-builders” are
1100..SSoonnyy 1100..DDeellll
not the only collapses, though. In the
SSoouurrccee:: LLiiqquuiidd AAggeennccyy last decade even perennial technology
industry leaders such as Digital
Equipment Corporation, Wang Technologies and Prime Computer could not sustain the
tremendous tide of technological change. So the question remains: what does it take to
maintain long-term growth in the volatile high tech industry? We can start to develop an
answer by analyzing the two differing strategies, brand building and technology leadership
(product), and combining elements of each.
Of course, the notion that both carefully built brand equity and quality products are
important to achieve success seems obvious. In high-tech, however, it has not always been so
clear-cut. Most technology companies are engineering focused, and do not always
concentrate on the needs of the customer at different points in time, or at different points in a
product’s lifecycle. Technically superior products may be required to break into a market and
have initial success, but strong branding initiatives will carry companies through the

1 Egan, Richard, EMC.now, EMC External Monthly Newsletter
Copyright © 2002 Tom Broderick – All Rights Reserved 2
The Technology Brand: Bridging Companies Through Inevitable Lifecycle Troughs
inevitable technology lifecycle troughs and create long-term corporate success. Therefore, I
would postulate that a better discussion would be “it’s the products and the brand, stupid.”

Impact of the High-Tech Product Lifecycle
Much has been written about general product lifecycles and as of late, the
technological lifecycle has also been explored in depth. But often the difficulty in continuous
success in high-tech is directly related to the pace of change in the function and cost of the
products that serve the market. This phenomenon is present in both the consumer market
(personal computers, OS software, cell phones, PDA’s, internet service) and in the business-
to-business market (servers, database software, networking, services).
To maximize continued technological success, companies have to invest massive
amounts into R&D in order to continuously release new products that drive the marketplace.
But Clayton Christensen wrote in The Innovator’s Dilemma, “coping with the relentless
onslaught of technological change [is] akin to trying to climb a mudslide raging down a hill.”2
Still, it is human motivation that drives buying behavior. Even though the ultimate drivers of
brand equity may be different
than in traditional markets,
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“brands that align human
behaviors with a company’s
strategic intent will always
have the greatest marketplace
currency and long-term
viability.”3
mmmm
traditionEaxl hhiibgiht -2t eocuht lliinfeecs ythclee ChasChasChasChas
aMinsd odioverfiedin upeaodli ntbetysc hGonueoto ltofhfgaryet y,a wnM hoeonr e.4 IInnnnIInnoonnvvooaavvttooaarrttssoo rrss AAddAAooddppootteepprrttssee rrEEssaa EErrllaayyrr llyy MMMMaajjooaarrjjiioottrryyii ttEEyy aaEErrllaayyrr llyy MMMMaajjooaarrjjiioottrryyii ttyyLL aaLLtteeaa ttee LLaaLLggaaggggaaggrrddaarrssdd ss
creating real customer value at
each stage of the lifecycle and marketed as such, will endure a life much like a traditional
product; periods of high growth, maturity and decline. The difference is that a high-tech
product must make a jump over a “chasm” created between the early adopter stage and the

2 Christensen, Clayton, The Innovators Dilemma, Harvard Business School Press, 1997, pg. 8
3 Thompson, Debra, Branding Hasn’t Changed Much, MC Technology Marketing Intelligence, April 2000
4 Moore, Geoffrey, Crossing the Chasm, Harper Business, 1999, pg. 17
Copyright © 2002 Tom Broderick – All Rights Reserved 3
The Technology Brand: Bridging Companies Through Inevitable Lifecycle Troughs
early majority. While the innovators and early adopters tend to be cutting edge customers that
simply want the newest technology, the chasm represents the ability of companies to project
the real value proposition of the product as required by the early majority (mass market) in
order to ignite adoption.
Through each phase of the lifecycle the product must be marketed differently, shifting
from a focus on functional attributes, to reliability features, to convenience and, finally, to
price. But this set of criteria only works for a single product in its single category. It does not
address the fact that technological change is constant and rather unpredictable. Thus, when a
company looks at the broader range of its products currently offered and in the development
pipeline, it needs to look at a bigger picture.
Often a company’s or
EEEExxxxhhhhiiiibbbbiiiitttt 3333:::: PPPPoooooooorrrr PPPPrrrroooodddduuuucccctttt PPPPllllaaaannnnnnnniiiinnnngggg
business unit’s broader product
landscape looks like exhibit 3,
which is a poor product-
planning scenario. The second PPPPrrrroooodddduuuucccctttt
product that meets the
GGGGaaaapppp
increasing or completely new
requirements of the market is NNNNeeeewwww NNNNeeeewwww
TTTTeeeecccchhhhnnnnoooollllooooggggyyyy TTTTeeeecccchhhhnnnnoooollllooooggggyyyy
released too late. This creates a
LLLLiiiiffffeeeeccccyyyycccclllleeee LLLLiiiiffffeeeeccccyyyycccclllleeee
gap, or trough, between cycles
that will affect market share
and revenue as competitors
sweep in and recognize the
compromised situation.
“The traditional argument is that high-tech marketing, whether for hardware, software
or internet companies, should focus on hard product news, particularly product innovations,
manufacturing capabilities and distribution.”5 However, even a seemingly strong brand that
is really only built on product differentiation will have a difficult time bridging crests during
the maturity phase of the lifecycle. To combat this, the conventional challenge in high-tech is
to carefully time new products to enable a company to bridge the trough as shown in exhibit
4. But this strategy also has pitfalls. While the product space is continuously covered, as
denoted by the dotted lines, product changes that are too rapid will generate excess inventory,
require massive investment in research and development and can cause convoluted messaging
that will confuse consumers. Multiple products that satisfy similar market requirements make

5 Aaker, David, Want to Give Your Stock a Boost? Then Win Over the Public with a Stellar Brand Strategy,
Business 2.0, September 2000
Copyright © 2002 Tom Broderick – All Rights Reserved 4
The Technology Brand: Bridging Companies Through Inevitable Lifecycle Troughs
for a muddy consumer buying
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decision and a difficult selling
task for the corporation’s
••••CCCCoooonnnnvvvvoooolllluuuutttteeeedddd MMMMeeeessssssssaaaaggggiiiinnnngggg
salespeople.
••••EEEExxxxcccceeeessssssss IIIInnnnvvvveeeennnnttttoooorrrryyyy
••••HHHHiiiigggghhhh RRRR&&&&DDDD SSSSppppeeeennnndddd
This situation may
have added to Cisco Systems’
inventory issue in the fall of
2001. The technology
spending slowdown left them NNNNeeeewwww NNNNeeeewwww
TTTTeeeecccchhhhnnnnoooollllooooggggyyyy TTTTeeeecccchhhhnnnnoooollllooooggggyyyy
with a glut of inventory, not LLLLiiiiffffeeeeccccyyyycccclllleeee LLLLiiiiffffeeeeccccyyyycccclllleeee
only current products, but also
older products that held very
little value on the open
market. Their myopic focus on technological innovation drove Cisco to develop and market
products more quickly than their competition, and obsolescing older products in the process.
The slowdown forced Cisco to take a write off charge of over $2 billion to rid itself of the
incredible inventory burden.

Brand Equity Stems the Tide
The hypothesis comes down to this: high-tech companies must cultivate their brand
equity to not only help improve their currently marketed products, but more importantly, to
enable them to bridge the inevitable trough created between major technological advances.
Intel Corporation is a classic example. “Intel made its name as the best known brand of
microprocessor. ‘Intel Inside’ became the theme of a brand building program of exceptional
power.”6 This brand building enables the company to bridge the quick rate of technological
change in its industry with well-paced product launches, even while facing a formidable foe in
Advanced Micro Devices. But their strategy proves to not only benefit themselves; it also
benefits their customers who use their chips in OEM products. The brand of Intel Inside gives
consumers, who most likely do not know what a processor does, trust in a computing
platform, thus keeping OEMs from becoming glutted with excess inventory each time a new
processor speed is introduced.
The products may be the driving force during an initial technological advance, but to
have true staying power, brand equity must carry companies through the inevitable troughs

6 Reis, Al and Laura, The 22 Immutable Laws of Branding, Harper Business, 1998, pg. 160
Copyright © 2002 Tom Broderick – All Rights Reserved 5
The Technology Brand: Bridging Companies Through Inevitable Lifecycle Troughs
between lifecycles (Exhibit 5). No company can keep up with the relentless pace of
technological change. And if there is no (or negative) brand equity then the company will
suffer dire consequences as its revenues plummet due to price pressure inherent in what will
quickly become a commodity product. The challenge is to plan rational product launch
behavior while stemming the
Exhibit 5: Covering the Gap with Product and
longer lifecycle crests with a
Brand Equity
carefully cultivated brand. Of
course, the product is still a
Brand Brand
Equity Equity major brand equity driver so
companies must be careful not
to try to stem too long a bridge.
Apple Computer is an
New New
Technology Technology example of a company that
Lifecycle Lifecycle
tried to ride its brand through a
long disruptive technological
advance (Microsoft’s ability to
create an operating environment for multiple PC platforms) and failed. The trough was
simply too far to cross. Apple is only now beginning to build its brand again in the mass
market. IBM, on the other hand, is the classic example of a high tech company that built a
strong brand and had reasonable product life cycles. In the early 1990s IBM felt the
onslaught of generic PC companies, which eroded prices to the point in which it was no
longer a profitable business for IBM. However, IBM’s brand equity helped it to ride the
storm and develop its own low cost line of PC products, of which became successful again
later in the 1990s.

Building High-Tech Brand Equity
David Aaker writes about two methods of brand equity development, the house of
brands and the branded house. Aaker falls on the side of the branded house and it is
absolutely critical in high tech. Products and technologies change so quickly that it is
impossible to keep up without confusing the marketplace by a continuous stream of point
products without a cohesive gel to bind them. Instead, a brand revolving around trust, built by
proven success and leadership is essential. “Building and maintaining brand equity in the
high-tech arena requires more than advertising.”7

7 Aaker, David, Want to Give Your Stock a Boost?…
Copyright © 2002 Tom Broderick – All Rights Reserved 6
The Technology Brand: Bridging Companies Through Inevitable Lifecycle Troughs
Traditional drivers of brand equity are the value proposition (product), value delivery,
authenticity brand personality and brand assets.8 In high tech, however, a somewhat different
set of drivers builds brands:9
• Major New Products (and associated value proposition)
• Product Problems (or the management thereof)
• Financial Stability
• Change in Top Management
• Competitor Actions
• Legal Actions
New product introductions are an important aspect of brand as the technical prowess
of a product indicates industry leadership and staying power. Without this track record the
brand cannot carry the trust of future innovative and useful products. Most experienced IT
directors and consumers have been subject to empty or broken promises of upcoming
technologies time and again. When making a purchase decision in high-tech, it is always
more than a point assessment; the decision is in an infrastructure that should last many years
through advancements, extensions and breakthroughs that fit within the scope of the initial
purchase. Technology is not cheap and the investment must be well thought out for the long
run.
Product problems are persistent in high technology. As such, the customer experience
includes dealing with defects regularly. IT is one of the only categories of products in which
it is acceptable to introduce an imperfect product from the start. For instance, Microsoft
releases several code patches to fix each new Windows product after it is released to the
market, and the swift and efficient stream of these patches is crucial to Microsoft’s continued
success. “While marketing communications tell consumers what to expect from a brand, their
experiences with the brand also play a critical role. After all, it is these experiences that
reinforce or undermine brand expectations.”10
The dotcom meltdown in 1999-2000 fortified the importance of financial stability.
Investing enormous resources in solutions from companies that all of a sudden did not exist
burned many customers. “Experts say that because newly cautious customers will view well-
known brands as the safe choice, high tech firms must ratchet up their branding efforts,
marketing some of the less tangible aspects of their companies, such as stability and customer

8 Kopp, Robert, Building Brand Equity Wrap Memo, July 3, 2002
9 Aaker, David, Want to Give Your Stock a Boost?…
10 Schreurer, Richard, To Build Brand Equity, Marketing Alone is Not Enough, Strategy and Leadership,
Jul/Aug 2000
Copyright © 2002 Tom Broderick – All Rights Reserved 7
The Technology Brand: Bridging Companies Through Inevitable Lifecycle Troughs
service.”11 In fact, a study conducted by Liquid Agency, Inc. concluded that financial losses
and stock price declines were the two biggest factors causing high-tech brand erosion in
2000.12
Changes in
management signal the Exhibit 6: High Tech Brand Equity Drivers
health and strategic direction
of high tech companies. Major New Products
Frequent turnover of the top
Product Problems
organizational roles is a clear
indication of turmoil, which
Financial Stability
can affect the stability of a TRUST
corporation. The CEO is (Brand Equity)
Management Consistency
often the most visible
company representative and
Competitor Actions
truly embodies the essence
of the brand. Studies show Legal Actions
that there are several critical
elements of CEO branding at
high-tech companies as defined by customers:13
1. Trust
2. Market Insight and Vision
3. Demonstrated Leadership
4. Management Effectiveness
5. Presence and Profile
6. Charisma and Style
7. Technical Expertise
“The arrival of Lou Gerstner at IBM in 1993 and the re-involvement of founder Steve
Jobs with Apple four years ago both were associated with brand equity improvements.”14 As
such, large-scale purchasers of IT watch the movements of the top corporate personnel closely
to attempt to determine the strategic direction of the company.
Similar to any industry, competitive actions, through product, advertising or even in
the form of lawsuits, can have a dramatic impact on the state of an industry. In high-tech,
however, the pace of change only amplifies the effect of a competitive move as companies

11 James, Dana, Financial Stability Increasingly Key to Maintaining Relationship, Marketing News, Jan 21, 2002
12 Liquid Agency, Inc., Bruised and Battered Brands Report, 2001
13 Ibid.
14 Aaker, David, Want to Give Your Stock a Boost?…
Copyright © 2002 Tom Broderick – All Rights Reserved 8
The Technology Brand: Bridging Companies Through Inevitable Lifecycle Troughs
will do everything from sue for monopolistic behavior (Netscape vs. Microsoft) to attempt a
coup by developing an industry standard for a particular technology (EMC’s FibreAlliance).
Obviously, the result of such actions can be catastrophic to brand equity as customers lose
trust in the brand due to the perception of increased risk. In many ways the investment in IT
is like an investment in a stock – increased turmoil in a market space increases the risk
premium and, in effect, prices the perceptually weaker companies out of the market.

Applying the Brand Equity Drivers to the Product Lifecycle
High-tech companies need to
Exhibit 7: The High-Tech Consumer Cycle
realize that there is a major difference
between what they sell and what other
industries market. The products they Awareness
develop overwhelm most market
majority buyers. Even the savviest IT
Need Development
Director may not know that the fibre-
channel switch they just purchased
moves data at 400 MB/second (and
TRUST (Brand Equity)
more importantly, what does that
mean for them). Certainly the parent
of two children cannot tell the
Purchase Decision
difference between one graphics card
and another. No, high tech marketers
must realize that the concept of brand
Consumer Experience
equity over the long term comes down
to one obsession: trust.
Positive Negative
As Christensen writes, when a
new technology comes to market the
populace is rather unsophisticated •In high tech there is no recovery when the
towards it and its initial customers are experience is negative and there is a
primarily innovators who care less competitive product on the market
about risk and more about the “next
new thing.” Trust is still the primary
concern, but for this class of buyer, trust is a result of a net new technology, not a result of the
drivers important to consumers later in the lifecycle such as financial stability or management
turnover.
Copyright © 2002 Tom Broderick – All Rights Reserved 9
The Technology Brand: Bridging Companies Through Inevitable Lifecycle Troughs
At a high level the consumer cycle for each type of buyer is the same (Exhibit 7). The
consumer must become aware of the product through advertising, word of mouth, standards
development or sales calling. Then they have to realize that they have a need for the product.
New innovations in high-tech are sometimes tricky because the product has been developed
for a need that may not be even known as yet.
Trust must then be built through one or several of the drivers associated with the
pertaining stage of the lifecycle. Once trust is developed, a purchase decision is made and a
subsequent customer experience ensues. If a positive experience occurs the customer will
more than likely come back to the company to make another purchase decision. If negative,
then brand equity must be built again before another buying decision will be made.
To further drive trust in a brand, high-tech companies must recognize that there are
two distinct types of brands, innovative and evolutionary. Both types of brand go through
each of the stages of the lifecycle and experience periods of introduction, rapid growth,
competitive turbulence, maturity and decline as customers become more sophisticated to the
technology and competitive influence changes buying behavior.
Innovative
brands change Exhibit 8: Brand Lifecycle and Consumer Impact
customer behavior. Source: MC Technology Market Intelligence
This is successful in
the beginning stages
of the lifecycle
because its drivers are
technology-centric.
But this is not
permanent, as
customers will soon
force brand evolution,
which has a “lower
behavioral impact on
a population and is
typically an extension
of something familiar,
something that already exists.”15

15 Thompson, Debra, Branding Hasn’t Changed Much, MC Technology Marketing Intelligence, April 2000
Copyright © 2002 Tom Broderick – All Rights Reserved 10