In case you have read this blog in the last few years you will have noticed that ever so often there is an article about China winning over in high-tech.

I have a special relationship to China because I lived and worked in Shanghai and Hong Kong for a few years when Hong Kong was still British. Also in the more than 10 years since then I was every year a few times in China for business development assignments.

Now since about 2-3 years things changed as for more and more clients China has shifted from being a country with unlimited growth potential to their number one competitor. And also my attitude to China has shifted from being enthusiastic (I learned some Mandarin even) more than 10 years ago, to doing some business (albeit very hard negotiations and never very profitable) to facing a competitor that is out to kill you and uses any legal and illegal business practices to do so.

I heard that China has taken on about 50 industries where they want to become the dominating force. In order to get there fast, copyright infringements are the way to go which companies like Cisco (Huawei stealing their IOS and copying routers 1:1) or Ericsson (an Ericsson BCS looked identical to that of Huawei) have experienced first-hand. If I tell people that you always loose against the Chinese it’s only a matter of how much, they are mostly puzzled and do not seem to understand. Of course my experience with them dates back nearly 15 years and is therefore further developed going through the three stages mentioned. Most people doing business with China these days and being enthusiastic are in stage 1 still. I am convinced that they will go through the same experience over time. I was thinking what I could tell them to make sure they do not loose out as well and came up with this list:

• don’t shift technology know-how to China even if they demand it and make business dependent on it
• in case they demand it then better do not comply and manufacture elsewhere in Asia, cost-wise there is no reason to be in China any longer
• increase your intellectual property security mechanisms, make sure there is no single point where all infos are stored and can be accessed, also encrypt all data, enforce security policies like a bank
• in order to stay competitive you must keep innovating, while this is sort of a no-brainer in high-tech it is even more so critical if Chinese companies start copying you
• make product marketing and product management one of your key strengths
• do not underestimate the Chinese competitors but study them the same way you study other competitors, always assume that they will soon be able to deliver the same quality products but for much less
• in case the Chinese partners demand something unusual not acceptable to you and insist on it walk out the door, one way that Chinese typically win in negotiations is knowing that Western managers have 3 or a few more months of reporting cycles and need to show results so are desperate, turn this around and make the Chinese feel uncomfortable and desperate, this requires an open-ended long term (years) approach on your side, in case you don’t have that, do not even start negotiating
• try over the years to bridge the intercultural gap, the new generations in China are changing also their attitudes becoming more westernized, it helps if you learn at least some Mandarin, BUT don’t try to do business with it, you do not want to have another disadvantage
• build your strategy not on China alone but have at least one or two other regions where you develop business so that you can shift focus in case it is needed

So what makes B2B marketing different than the well-known, and taught in all marketing classes, consumer and retail marketing? To give the answer right away: it is all about the Door Opener, problem-based marketing, to identify what problems customers have, making them aware of it and then providing proof that you have the best solution to solve it. B2B marketing gives answers to the question “Why do I need it?”, whereas consumer and retail marketing addresses the question “Which one should I buy?”.

Why is it that there is such a fundamental difference between B2B and B2C marketing?

In order to answer this one has to look into the history of marketing.

During the years of the industrial revolution many new mass products were created.  These new products were unknown so marketing at that time had to first explain what it is and why one would need it. This is the same as today’s B2B marketing. Then over time these consumer products were well-known and there was no point in explaining what a fridge or oven or whatever is, and why it is good to have one; people knew that. So marketing shifted away from explaining and moved to differentiating itself and associating the product with an image such as good feelings or celebrities using it. The age of brand marketing started where people bought brands and less so new - unknown - products. Marketing literally forgot about problem-based marketing as it was not needed. Of course for B2B marketers this is untrue since there you need to identify and explain the problem/pain first. Often the customers do not even know about it since they have workarounds. Only once you tell them convincingly that there is a problem and that your solution will provide benefits will they be receptive. Consumer marketing would - and I also hope - not convince a CIO to use a new software across its organization. Of course companies still try to do that and are surprised when the targets protect themselves from vendors’ pleasantries and approaches. To get decision makers to events requires to address issues, problems that they might also face and then offer solutions to it. In my experience the more concrete that is done the better. It then also does not really matter if you have 600 people attending or “only” 60. If among the 600 you have everybody and their son then I highly prefer the 60-people event with very interested people who come to find solutions for current problems they face. So in short its about the quality and not the quantity. Some samples from ads in 1930 I collected below. One ad explains that a fridge allows you to make ice cheaper and more conveniently, another one uses a better can opening mechanism as a differentiator for beer, and one ad for a public rural telephone device says it is easy to use for - even - fruit growers. Back during those times every marketer was a B2B marketer.

Had an interesting meeting yesterday with an equally interesting startup in Switzerland talking also about why it is hard to find good B2B marketers in Europe and if that is maybe the reason also why there are so few good IT startups to be found here.

Reading the book “Selling to the C-Suite” from Nicholas Read and Stephen Bistritz right now, I also came across this exact issue where they write the following interesting lines:

So it’s really not surprising that when we ask marketing directors in B2B organizations to explain their marketing mix, we learn that they are technically proficient at segmentation, database scrubbing, and targeting, as well as in using multichannel print, online, and digital media strategy. The names in the database are usually the right business contacts. And if their performance indicators are to release X number of press releases to analysts and journalists per year, run Y number of conferences and events to achieve minimum attendance goal, and pull Z number of leads from these conferences and trade shows, then most B2B marketing managers end their year feeling that they’ve done a pretty good job. And if they’re working in consumer retail companies, they’d be right. But not if they’re working in B2B. Most people don’t give this much thought because all through their career, marketing leads have been so-so, and they probably think that’s just how it goes. …

And to cut them some slack, how could they ever have been taught it when all the marketing theory taught in today’s schools is based on the household consumer goods model, which dropped the concept of problem-based marketing half a century ago?

So what is good B2B marketing is what needs to be answered next. Stay tuned….

Today I saw a new way of tricking people into opening an email attachment. An email from American Airlines (supposedly) confirming a flight that I (supposedly) had booked in the US was sent to me. Strange thing only that I did not book that flight at all. Obviously someone tried to trick me into opening a zip file attachment.

It is the Ticket_AA.exe that would be the problem if I had opened it. I wonder how many people got this email and what the percentage of people is that actually opens the attachment.

Yesterday IBM announced the acquisition of DemandTec for $440 million. The company has hundreds of customers such as in retail and government helping them analyzing and deriving conclusions from massive amounts of company collected data.

“Big data”  as the name suggests has to do with masses of data collected from just about everywhere. We talk about terabytes and more of data collected from all kinds of sources such as information-sensing mobile devices, aerial sensory technologies, cameras, microphones, RFID readers, wireless sensor networks, social media, buying patterns and so on. The fact that 90% of the data in the world today was created within the past two years makes this an even bigger challenge as it is a constantly moving target. Currently used relational databases and  desktop statistics/visualization packages cannot deal with this unstructured data requiring instead massively parallel software running on large computers often grids of dozens, hundreds or even more of servers.

Its not surprising that Google is into this for quite a while since their search algorithm is doing exactly what big data is all about: collecting massive amounts of data and making decisions (search) based on analyzing them. Google is offering access to compute power now even to enterprises with its service BigQuery. More also in this Google blog.  Google was also there right at the beginning with its framework MapReduce that was then used in projects by others such as Yahoo leading to Hadoop, a story on this you find here.

Data collected are e.g. from web logs; RFID sensor networks; social networks; social data, Internet text and documents; Internet search indexing; call detail records; astronomy, atmospheric science, genomics, biogeochemical, biological, and other complex and/or interdisciplinary scientific research; military surveillance; medical records; photography archives; video archives; and large-scale eCommerce.

A McKinsey report on Big Data mentions e.g. these points:

• The use of big data will underpin new waves of productivity growth and consumer surplus. For example, we estimate that a retailer using big data to the full has the potential to increase its operating margin by more than 60 percent.
• The computer and electronic products and information sectors, as well as finance and insurance, and government are poised to gain substantially from the use of big data.
• Policies related to privacy, security, intellectual property, and even liability will need to be addressed in a big data world.

Today I attended The Green Grid meeting in Paris at the Schneider Electric headquarters.

The Green Grid has made itself a name by being able to have three continents (US, Europe, Asia) to agree on a clear definition on how to calculate the PUE (Power Usage Efficiency) metric. The PUE value is inside a data center the power ratio of the total power used by the whole facility divided by the power used up by IT equipment. A PUE value of 1.3 means e.g. that 30% of the total power used is for cooling, power loss and other facility sources on top of the power used for IT (1.0). So the smaller the value the more efficient the data center. Of course this value depends on when it is being measured. During a cold winter day it will be better than during a hot summer day assuming free cooling is being used. The Green Grid wants data centers to measure the value over a period of 12 months which makes lots of sense.

Now PUE might not necessarily be the best value to use although it is great as mentioned that a metric has been agreed on internationally. There are the following shortcomings:

• PUE does not include information on availability, a more redundant data center would have naturally a higher PUE than a very low or not redundant data center
• total utilization of a data center is also not reflected, a new big data center with few clients can have the most innovative green measures in place but still achieve a bad PUE
• it is also very possible that measures reducing IT load such as consolidation of servers enabled with virtualization increase the PUE
• while electrical energy is important to look at also water used, CO2 production, reuse of waste energy and other resource efficiencies are not reflected
• an older data center will most likely have PUE values that will be higher than a new data center with latest innovative cooling systems used

What will be next in data communications infrastructure innovation one might have asked already a few years ago. With 1G interfaces well installed everywhere and 10G also becoming the norm in datacenter backbones it seems a longer way to reach 40 or even 100G mostly due to physical limitations. While the innovation buzz has shifted in ICT to cloud computing it seems, the good old networking infrastructure vendors have to look for their next spotlight. This could well become Open Flow which promises to provide lower cost networking connectivity. A few startups that are still in developing and/or in stealth mode such as Big Switch or Niceria promise to challenge the established vendors soon.

latest news: interesting is that also IBM, who departed routing and switching as well as optical communications long time ago jumps back onto this opportunity.

The probably most visible European ICT startup ever Skype changes hands again. And this time Microsoft pays a huge premium that most analysts who don’t get the hightech world don’t understand. Of course Skype is not worth 8.5 billion USD, and Microsoft knew that, but this deal was a fight between Google and Microsoft and Google dropped the ball at 8 billion or so deciding to better build than buy.

What will Microsoft now do with Skype? Well that will be interesting to see. They could with their financial power create a very powerful telco where you communicate from your desktop, laptop or mobile with your peers. Microsoft has other technology in the unified communications area and could well integrate this all offering their enterprise customers local as well as wide area networking over the Internet heads on competing with the telcos.

If this indeed happens we will see. Guys like Cringely doubt it. I am not so sure if he is right though… ICT markets keep spinning fast and remain highly interesting.

Today I attended a Panel meeting and lunch at the Swiss American Chamber of Commerce. Topic was security challenges in general and among the speakers was Peter Tippet, VP Technology & Innovation who flew in from the US for this event and who gave a nice speech. Some of the key points he mentioned:

• Data Breach Investigation report (DBIR) collects since 8 years valuable IT threat data
• Verizon is working on 1000 cases per year where security attacks succeeded, the results also go into the DBIR
• 92% of all security breaches come from stealing the password, a simple 2-factor login (e.g. security chip card) would very likely stop most of these incidents
• faster patching would not have prevented any of the investigated cases
• in most cases (70%) the intruders use non-critical business applications to come in and not at all the top applications where most of the IT security money is spent
• Verizon runs the backbone of the Internet if you like by providing 20,000 gateways in 160 countries
• through these gateways they are able to identify 1700 names/day of possible or actual intruders
• they are getting data for prosecuting cyber criminals and did so in 45 successful cases in 2010, 97% of these cases would have been preventable with the right security measures
• his bottom line message was: do more of the very simple things and do them very well instead of trying the sophisticated stuff as most attacks happen not there