USS Clueless              Voyages of a restless mind

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Stardate 20010910.0602 (On Screen): There is a feeling among engineers in high tech that they should be the star of the show. The idea is that the companies with the best engineering should win. And when, somehow, this doesn't happen they feel betrayed. And the conspiracy theories begin to pop up. Of course, the history of the personal computer is littered with the corpses of products which were technically superior to their competitors but which lost out anyway. The reason? Marketing.

I'm an engineer; I've been one for twenty-five years. And in that time I've learned that marketing is more important -- and more difficult -- than engineering. Quality engineering is easy. This be heresy, but it's true. Quality marketing is rare, and if you analyze those corpses you find every one of them was killed by inept marketing. It's no accident that the two most successful companies in the PC industry right now are the two which have the best marketing: Microsoft and Dell. But when I use the term "marketing", I'm using it in a more general way than many might think. There's much more to marketing than advertisement and sales; marketing is the fundamental strategy which decides what a company will do and how it will do it. Companies which are driven by marketing will nearly always defeat companies which are driven by engineering. A lot of companies which have died early have begun with a cool engineering idea, and once they implement it then they start looking around for someone who might want to buy it -- and that's the wrong way to go about things. That's the classic form of engineering-driven business, and it nearly always fails. You begin by figuring out who your customer is going to be and what he needs, and then you figure out what you're going to build to satisfy that need, and only then do you actually implement. Engineering gets involved in this process to the extent that it tells the marketing department what is possible within the constraints of the marketing plan, but engineering does notdrive this process; it's driven by marketing.

Dell is a case in point. This article laments that Dell didn't get where it is by "technical innovation", which is true. It got where it is by marketing innovation. Dell built its entire business around direct sales, a fundamental marketing decision which then permitted it to optimize its business model in certain advantageous ways. Dell builds nothing for stock; it builds everything to order. What it builds is very good; Dell has a reputation for quality. But because it cuts out middlemen, because it maintains minimal stock of components and of finished product, all of this saves it money and Dell passes those savings on to its customers. That means that it was uniquely placed to capitalize on the PC business when it became a commodity, because commodity products mainly compete on price and no-one in the industry can build and sell a PC for less money than Dell does. So it can afford to sell its computers for a lower price than its competitors and has been ruining them all with a price war.

Michael Dell is a genius; it's just that he doesn't happen to be an engineering genius. He's a marketing genius, and that's much more rare -- which is why it is much more successful. Engineering is easy; marketing is hard. (discuss)