Daily Archives: August 14, 2006

Trend Micro Product Rollout Further Dims IronPort’s IPO Prospects

With more than $100 million in venture funding behind it, IronPort is a heavily bankrolled startup company that provides perimeter security appliances to protect enterprise customers against email- and Web-delivered malware and other malicious content.

As I’ve written previously, San Bruno, Calif.-based IronPort had been expected by its investors to dominate the space for email-security appliances and to eventually enjoy a successful initial public offering (IPO) on NASDAQ. The contingency plan was for the company to be acquired by one of the industry’s security behemoths — Symantec, McAfee, Cisco, or even Microsoft.

Neither exit scenario is looking bright at the moment. The venture-funded startups that pioneered and once led the email-security marketplace have been challenged and surpassed by the major players, who, more often than not, have built rather than bought their way into the market.

Whereas IronPort’s erstwhile primary competitors were fellow startups — Proofpoint at the high end, CipherTrust (acquired by Secure Computing recently, for a price that could not have brought joy to the investors of IronPort) in the mid market, and Barracuda in the SME segment — now IronPort faces industry titans such as Symantec, Trend Micro, and Microsoft, among others. These companies have a lot more marketing muscle, and they have channel partners with more market coverage and relationship cache, than IronPort can ever hope to match.

Today, the road to an IPO got bumpier for IronPort, as Trend Micro introduced several models of its InterScan Gateway Security Appliance (IGSA), which incorporates antivirus, anti-spyware, anti-spam, content filtering, and URL filtering into one relatively easily managed box. Trend’s new appliances are designed for mid-sized organizations seeking a content-security that solution that offers extensive functionality and low-stress maintenance.

The IGSA product family spans six models, with the entry-level offering priced from $4,490

As bigger competitors, such as Trend, strengthen the depth and breadth of their offerings in the messaging- and content-security space, IronPort will have no choice but to modify its product strategy.

What it’s done in the past is increasingly untenable. It needs to remake itself, moving into growth segments where it can dominate again. To reach that objective, don’t be surprised to see the company emerge as an acquirer rather than as an acquired party.

My guess is that its investors, recognizing the circumstances in which the company finds itself, will support any reasonable proposal from the company’s executives to put it on a course that offers more promise than the one on which it is traveling.

Kawasaki’s Job Tip Reveals Inherent Valley Flaw

Guy Kawasaki, former chief propagandist at Apple and now plying his trade as a venture capitalist, offers a useful set of recommendations for job seekers in Silicon Valley. Most of his advice is right on the mark, even though, for the most part, it represents nothing more than common sense. Then again, perhaps common sense isn’t nearly as common as it was.

Still, right at the outset of his guidance, Kawasaki makes an observation that, while accurate, bothers me about the Valley specifically and about the technology industry in general. In his first piece of advice, right at the top of his list, Kawasaki writes:

Love what the company does. Passion for what a company makes or does is the most important factor in getting a job in Silicon Valley. Companies here are built on passion—indeed, perhaps more passion than reality. Hence, they hire passionate people who are already in the Reality Distortion Field. . . .

Passion is important, no question. A group of people who come to work each day imbued with commitment, enthusiasm, and passion will go a lot further than a group that is complacent, disillusioned, and indifferent. Nonetheless, passion has its limits. Sometimes, when passion is misdirected or uninformed by reason, it can become a liability rather than an asset.

All too often, I have seen technology companies where a culture of fanaticism and zealotry prevents the principals and their management teams from reconciling their strategies and tactics to market realities. In fact, companies that suffer from the worst instances of such institutional delusion get to the point where external reality — what’s actually happening beyond the company’s headquarters building or campus — doesn’t figure into the company’s calculations at all.

In these companies, incessant cheerleading, exaggeration, hyperbole, and specious mythologizing completely overwhelm and eventually preclude constructive criticism and honest self-appraisal. As the company withdraws further into its distortion field, it becomes increasingly alienated from its customers and business partners. Inevitably, that tension results in destructive friction, which manifests itself in the loss of customers and partners.

Don’t get me wrong: Technology companies should look for passionate prospective employees. That’s precisely what they do, as Kawasaki says.

The best companies, however, also look for employees whose passion is tempered by a determined pragmatism. Those companies nurture and protect cultures that reward constructive criticism. They constantly look for ways to be improve what they do for their customers and other significant stakeholders, and they always have a healthy respect for their competitors in the outside world. In short, they’re never satisfied, never completely at rest.

I wish sometimes that we had more leaders in the technology industry that were like Bill Parcells and Bill Belichick in the NFL.

I realize there are big differences between running a football team and running a technology company. Even so, it would be refreshing to see more CEOs with the blunt candor and relentlessly self-critical demeanors of those men from the world of professional sports. More modesty and humility would be good to see, and I think it also would be better for the companies that todays technology leaders run.

Unrestrained passion and Panglossian sunniness were essential ingredients for an earlier era of the technology industry’s evolution, but an era of greater maturity calls for a proportional degree of logic, reason, and intellectual rigor. It also calls for an honesty, with one’s self and within one’s company, that isn’t nearly as appreciated as it should be in some jurisdictions of our industry.

No matter, though. Reality will intrude and correct the imbalance — as it always does.

Dell Attempts to Placate Disgruntled Laptop Buyers in China

Dell is facing a wave of fraud lawsuits in China after shipping laptop computers to customers that contained CPUs other than those advertised in the company’s marketing literature.

The company first apologized for what it described as a marketing omission, and now it has offered full refunds to disgruntled buyers. That isn’t enough for some customers, however, who will take the company to court in pursuit of punitive and compensatory reparations.

Dell, yet again, has nobody to blame but itself. The company should know that a technology company — any company, for that matter — must ensure that what’s on the product manifest is what the customer receives when he or she opens the box. In this instance, Dell failed that test, and the resulting backlash is predictable and warranted.

What’s the crux of the current controversy?

Well, according to lawsuits filed on behalf of aggrieved customers, Dell’s Inspiron 640M laptops were marketed and sold as featuring Intel Corp.’s Core Duo T2300 microprocessors, but the computers actually were powered by Intel’s Core Duo T2300E chips. Dell says it switched microprocessors because the latter CPU, which is $32 less expensive than the former, provides better value to customers.

Customers, though, don’t see it that way. They feel they were deceived by Dell, sold computers with less-capable processing functionality than they believed they were getting. Dell counters that there isn’t much difference between the two microprocessors, that the one chosen is more suitable for laptop models, and that the additional features of the Core Duo T2300 are irrelevant to the vast majority of laptop customers.

That might be correct, but Dell is missing the point — and not for the first time.

In business, believe it or not, integrity and trust matter. If your marketing literature indicates that your company’s laptop PC is powered by a Core Duo T2300 microprocessor, that had better be the case. If it isn’t, customers will rightly wonder about other inaccuracies and deceptions that might be embedded in your marketing propaganda.

It’s quite irrelevant as to whether you, as a vendor, believe customers really need the virtualization features the T2300 offers and the T2300E doesn’t. That’s for customers to decide; and they should be able to make that decision based on accurate product information contained in data sheets for your products and those of your competitors.

Dell seems to think an apology, and now a refund, makes everything right, but I’m not sure it does.

I think this issue is a microcosm of the problems at Dell. The company has become complacent, myopic, arrogant, and focused overwhelmingly on its own internal imperatives for operational efficiency and cost savings rather than on making and selling products that satisfy customers.

The company seems to have forgotten that its direct-sales model and build-to-order supply chain were means to an end: customer satisfaction. Now, it seems, the model and the operational methodology have become ends in themselves. Dell doesn’t seem to care what products fall out of the process, or whether customers enjoy using them.

It’s what happens when a company maniacally puts operational process ahead of everything else.