Market SegmentationRobin Purohit

VP of Product Management

VERITAS Software

Who am I

• 13 years experience as developer, architect, strategic planner, PM

• Telecommunication, Enterprise Computing, Networking, Storage HW and SW

• 4 years @ VERITAS as PM• Currently manage 75 person PM org

– Planning– Cross-functional Program Management– Technical Marketing

Product Management at VERITAS

• 4 year transition from– Evangelism to business leaders– No process to formal Product Life Cycle– Technology focus to market focus– Reporting to engineering to company function

• Yes, we’re hiring

Market Segmentation & Business Planning

• Brings focus to complex, data-rich problem– Ensures a customer-centric view of business opportunity and

strategy

• Clearly maps our targets by – Common customer characteristics– Channels– Competitive Landscape

• Invaluable throughout the product lifecycle– Prioritize development– Choosing Partners– Marketing Messages– Pricing– Sales Training

Market SegmentationCommon Pitfalls

• Inwards Looking:Segmenting by Product Offering

• Relying on 3rd Parties:Using Industry Analyst Segmentation

• Treating Segmentation as Static:Being unaware of changing market conditions

• Public Communication:Telling the press, partners how clever you are

Market SegmentationBest Practices – Robin’s View

• Assess the Market Stage• Develop a strawman with secondary research• Dispassionate primary research• Let a customer centric segmentation reveal

itself• Determine most attractive attack points by

knowing who you are• Validate with analysts,x-functional team

….Ideally before significant R&D investment

Assesssing the Market StageUsing a Market Life Cycle Model

Early Adopter Early Mainstream(Market Intro)

Mainstream(Growth)

Mature(Sustaining)

Decline(EOL)

Market Creation Mkt Development Mkt Exploitation Market Sustaining Market Exit

? Where is the general market

? What market dynamics create new opportunities

? Where is the general market

? What market dynamics create new opportunities

Assesssing the Market StageFibre Channel Storage & 3COM circa 1997

Early Adopter Early Mainstream(Market Intro)

Mainstream(Growth)

Mature(Sustaining)

Decline(EOL)

Market Creation Mkt Development Mkt Exploitation Market Sustaining Market Exit

Serial Storage

External Storage

Internal SCSIStorage

Internal Extended SCSI Storage

• Storage Densities

• Media Rich Applications

• Data Explosion

NetworkedStorage

Strawman SegmentationFC Propositions

• Sources to develop strawman– Industry groups– Peer discussions– Technical press– Early Adopters within Video Production/Broadcast

• Strawman Market Segments within Enterprise Universe of Customers– “Data Sharing”– “Shared Consolidation’– “LAN-Free Backup”

What the Research Revealed• Process:

– Mediated blind focus groups to develop impartial view– Not extensive : 8 cities provided enough to develop

an intuitive view of the market

• Results– Mainstream Market in infancy of education– LAN-Free Backup was only compelling reason to buy– Skepticism buying solution from a network vendor– Competitors highly fragmented and lacking credibility

Self-AssessmentNew Market, No Credibility

• Internal soul-searching and executive interviews– Where is the company’s strengths?– Where is the company going?– What is the sense of urgency to develop a new market?– Is this a sufficient new economy to be worthwhile

• Conclusions– Solutions delivery to create value

• Develop new storage industry partnerships• Evangelize & educate to software vendors

– Pre-mature for primary high volume channel • OEM best fit• Recruit a small highly set of new storage savvy VARS/OEMs

– Aggressive M&A exploration to acquire credibility– Multi-100M$ product opportunity with first strike potential– Strong brand could accelerate customer interest

Refined SegmentationOEM Channel

• Through direct discussions with OEM prospects– PC Server– UNIX Server– Enterprise Storage– Disk Drive

• Challenge– Existing OEM channel served PC Servers, but

UNIX and Enterprise storage were critical• Primary focus on PC Server• Identify VAR based solutions providers with UNIX/Storage

Market AttackPricing Dynamic & Strategy Refinement

Early Adopter Early Mainstream(Market Intro)

Mainstream(Growth)

Mature(Sustaining)

Decline(EOL)

Market Creation Mkt Development Mkt Exploitation Market Sustaining Market Exit

Serial Storage

NetworkedStorage

OEM

Recruit Solution Partners forLAN Free Backup

Price Insensitive

Price Sensitive

License technology ASAP to build market

Pursue significant M&A to acquirebest technology vendors

How did the market play out?3COM imploded, but….

Early Adopter Early Mainstream(Market Intro)

Mainstream(Growth)

Mature(Sustaining)

Decline(EOL)

Market Creation Mkt Development Mkt Exploitation Market Sustaining Market Exit

LAN Free Backup

Enterprise RAID/UNIX

Storage Network Infrastructure

Packaged solutions

Internal DiskNew Threats in 2002

• IP-Storage

• Hybrid devices

How to use Segmentation acrossMarket Life Cycle Model

Early Adopter Early Mainstream(Market Intro)

Mainstream(Growth)

Mature(Sustaining)

Decline(EOL)

Market Creation Mkt Development Mkt Exploitation Market Sustaining Market Exit

Identify valueone customer at a time(price high to cover costs)

Identify compelling reason to buyone vertical at a time(price as part of solution costs) Throw out the segmentation

and chase the money(price to win)

“Tornado Phase”

Re-segment to : - exploit niches if you lost (compete on price) - identify untapped value and customers (premium price)