Expert's Panel

A collection of timely and important topics posed to our panel of experts.

How do you sell over "bundling" or give-aways from the big gorilla?

 (ep1060)
1. Actually the U.S. company we are referring to is not bad in this regard, the Japanese companies are. Also, in the U.S. "bundling," if improperly handled is illegal—it is something called "tie-in" sales. If it is not a practice forcing you to buy other products, but just adding other products in the package for free, then it is not illegal.
2. Bundling by the big gorilla is a fact of life. That's why Applied Materials is buying companies. That's why LAM Research, although slower at it, is trying to get companies. You have to figure out how you are going to play in that game. Mattson, for example, went on a buying spree with a game plan of having a mix of products that allowed them to play in a pond where there were a small number of suppliers with a large number of products. The only ways I know of beating this type of competition is having a story that is so good.
3. There may be a third way. If you have an influential person who is in the customer's house; is a champion for your product; and is a real believer. This person can be used for powerful leverage, however, this is a distant third possibility.
4. Novellus may be an example of the strategic partnership or alliance. They put together a nice copper consortium of themselves and a couple of other companies to attack a particular application in the market place. You don't necessarily have to be as large as Novellus to do that.
5. Novellus has what you might call a configurable consortium. It is variable or configurable depending upon the process solution they are trying to deal with. For example, if you were to go into Novellus' demo labs you will see not only Novellus' machines for CMP, you will see Speedfam machines. In order for most process companies to win today they have to sell a guaranteed process which, by definition, says you have to be compatible with the pre-process before what you do and the post-process after what you do. Depending upon what Novellus is trying to do, they strike these relationships with smaller companies which allows them to compete with Applied. I think KLA-Tencor being the big gun on the block in the metrology area has developed a wide range of internal capabilities. There are pockets of small companies that are trying to beat KLA and they go into Applied and ask that company to help them out. So it can work both ways. Think about trying to make yourself look bigger than you really are by alliances.
6. You know what the guys who work for the gorilla companies say to their boss? How the hell do I compete with these little guys who are flexible, have these various account relationships, and can deep discount products? So they are complaining on the other end to and that may be your answer. You can relationship sell as good or better than the big guys. There is always someone in account that doesn't like the big gorilla because of arrogance or some other reason. It is harder to have good relationships with big vendors than it is with small ones.
7. Building upon what was just said, that is a good message. "We care about you—you are important to us." Sometimes the big company, true or not, projects a perception that the medium and smaller customers are not important to them.