I have spent my entire career marketing hardware, software and services for high-tech companies. The debate over hardware vs. software vs. services (“services” often being an afterthought) has been a fascinating discussion for me. Many companies don’t face this problem because they are either a hardware company or a software company by design. However, others find themselves wrestling with this challenge because they either acquire technology that thrusts them into “the dark side” or they add new technology through organic growth that creates the conflict.
I have seen many companies fail to make the transition because they underestimate the true impact of trying to transition from a hardware company to a software company or vice versa. In my opinion, this is a left-brain/right-brain issue. Hardware companies are typically very analytical. Their development cycles take longer – often measured in years, but their sales cycles are shorter – often measured in days. They are focused on speeds-and-feeds, and their competitive analysis is based on specifications from data sheets (often referred to as “specmanship”).
Software companies, on the other hand are highly creative. Their development cycles are shorter. Software-as-a-Service (SaaS) architectures have exaggerated this issue by allowing companies to release software in real-time. It is very common for software companies to have a weekly (or even daily) release cycle, but their sales cycle could take months. Software companies rarely focus on specmanship, but rather on the “solution” and “user experience” of the product.
Much of this issue is due to where the products fit into the solution food chain. Most users don’t think about the hardware that much. As I type this blog, I am less aware of the I/O ports and processor speed of my notebook, but I am keenly aware of the software features I am using to create my document. The hardware products are simply a layer removed from the user experience.
It is very common for high-tech companies to grow through acquisition. In an effort to out-flank the competition or to gain market share, a company will acquire new technology to fill the gap. Relatively speaking, the acquisition is the easy part. Integration of the new company into the larger organization is the difficult part. This can be particularly tricky if a hardware company is acquiring a software company or vice-versa. Management teams often underestimate the challenge of bringing the teams together. Hardware and software businesses are completely different and employees at all levels think, execute and manage differently. Engineers, marketing managers, sales executives, support staff and even finance managers work completely differently. Asking a hardware sales person to sell software is like asking a Spanish teacher to give a lecture on Italian. They know the process, but not the domain expertise.
I am not saying that the process is impossible. There are many examples where companies have been able to market and sell hardware, software and even professional services. However, in each case they were very strategic and diligent in there execution. In every case that I am aware of they have had laser-focused strategies to create focused hardware and software groups. They developed “solutions-marketing” strategies to bring the elements together into an end-user experience that exceeded their competition’s value proposition.
Each time I enter into a hardware vs. software discussion, I am reminded of a boss who put it into perspective for me. He said, “The difference between hardware and software is that eventually all hardware will fail, and eventually all software will work.” This statement is humorous because it is so accurate. It reminds us of how inherently different the two worlds are. They approach the market from opposite ends of the spectrum. If you are trying to manage, market or sell products that are at their core uniquely different, then recognize the challenge and don’t fight a losing battle. Position them differently. Apply the right talent and leave your competition behind.
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