THE FUTURE OF THIRD-PARTY VENDORS IN THE HP3000 USER MARKET by Eugene Volokh, VESOFT Published by The HP CHRONICLE, Dec 1983. Published by INTERACT Magazine, Jan 1984. Published in "Thoughts & Discourses on HP3000 Software", 1st ed. It is a fact of life that, for a variety of reasons, computer vendors cannot completely satisfy the software or hardware needs of their users, and a niche for third-party vendors will thus develop. The HP 3000 market is no different, with many system software, application software, and hardware products provided by independent vendors, often in direct competition with HP itself. This article will present my vision of the future of third-party vendors and vendors and third-party products in the HP3000 user market. WHY THIRD-PARTY VENDORS? HP seems to have everything going for it. It dwarfs all the independent vendors selling in the HP3000 market put together; it has more money, more R&D people, more salesmen, more technical information, a larger distribution and support network, and more loyal users than even the most successful of third-party vendors; by rights, it looks like it should have crowded all the small guys out of the market long ago. However, this just isn't true. Not only are there hundreds of third-party vendors providing hardware and software in the HP3000 market, but many are competing (quite successfully!) against HP. Examples of this abound; QEDIT, ROBELLE's text editor, has a loyal following that rivals that of HP's own TDP; Quasar (QUIZ, QUICK, QTP), Infocentre (GENASYS), Gentry (REX, PAL), and Cole & Van Sickle (PROTOS) are all thriving, even though they are competing with HP's own RAPID/3000; I have seen more sites using ASK Information Systems' MANMAN than HP's own MM/3000, and Qualex tape drives and United Peripherals disc drives sell well even in direct competition with HP 7976's and 7933's. What is it that the third-party vendors have that permits them to compete successfully with a company much larger than they? The reasons are several: * "Reverse economy of scale" - independent vendors have quicker reaction times than HP. Fourth-generation languages, application packages, reasonable (i.e. not EDITOR) text editors, and 6250 bpi tape drives were all introduced by independents before (often long before) they were sold by HP. Thus many of the companies were so firmly entrenched in their particular market by the time HP entered it that they could not be easily dislodged. * "You can't please everybody" - HP sells one fourth-generation language, one manufacturing package, one text editor, and one word processor; it can't afford to sell more than one of each. However, this one product won't be what the user dreams about; each user will have some features, often very important features, that aren't included in the HP product, but may be included in a product provided by an independent vendor. * "HP stands for High Prices" - HP has always sought to compete with other vendors on the basis of reliability and quality, not price. Often this works because a $50,000 product that does the job is a better buy than a $10,000 product that doesn't; however, when equally powerful and reliable products are available, low price sometimes wins against loyalty to a single vendor. THREATS TO THIRD-PARTY VENDORS The life of a third-party vendor is no bed of roses, needless to say, and has not gotten much better recently. There are several major threats to the very livelihood of independent vendors: * HP - every vendor must have spent many a sleepless night worrying that if his product was so wonderful and sold so well, wouldn't it just be a matter of time before HP stepped in and tried to sell a similar product? In fact, this has come to pass for many vendors, especially since HP's recent push into office-automation and application software; all the vendors that I mentioned above, who successfully compete with HP, have not been completely unscathed by the entry of HP into the market. Although they still have many customers and are growing at an acceptable rate, life for them is nowhere near as easy as it was before HP stepped in, and some of the less profitable and less successful vendors were and will be pushed out of the market sooner or later. * The single-vendor shop - many HP customers have an almost blind loyalty to HP. In my years as an independent vendor, too often have I heard "sorry, we don't buy third-party products." This attitude, although sometimes justified by the desire to have a more easily supportable system, is usually quite incorrect because it deprives the user of the many advantages that can be derived from independent vendor products. However, condemning it won't make it go away, and every third-party vendor must live with the fact that a substantial part of the HP3000 market is forever barred from him. Furthermore, all sites have some degree of bias in favor of HP; therefore the independent vendor must always be demonstrably better than, not just as good as, HP. * Removal of problems solved by the products - many products solve certain problems that, with time, may become less pressing or disappear entirely. For instance, application packages have sold well because you could, for $50,000, get what would cost you $100,000 to create yourself. However, if a fourth-generation language (HP or third-party) is available that will let you build the package for $40,000, the vendor application package is no longer a good buy. Similarly, systems software that was designed for speed may no longer be as useful when you can buy a 44 or 64, on which even un-optimized programs can run fast enough. THE FUTURE In the above two sections, I have outlined the opportunities that third-party vendors can exploit, and the threats that they must battle with. The various ways that the opportunities may be exploited and the threats fought will create several characters that a third-party vendor can become: * The Superman - this is the vendor who will make a product so overwhelmingly superior to everything that HP or any other competitor has or can hope to have, that he has would-be customers begging him to sell them his product. This guy has no problems, and is sure to make millions of dollars. However, although you will see some truly superior products that receive universal acclaim, Supermen will be rather scarce. * The Undercutter - Undercutters use reverse economics of scale to build products cheaper than HP does. Present-day undercutters are companies like DIRECT, which builds an inexpensive HP 2622- compatible terminal, and Qualex and United Peripherals, which started out as Innovators (see below); but now that HP is in the market, compete with them on the basis of price. I do not envy the lot of the undercutter; the fact of the matter is that price is not as much an issue as he might like it to be, and many users are willing to pay more to get something from HP, a company they know and trust. * The Improver - this fellow creates a product that improves the functioning of an existing HP product, thus exploiting the market already built by the HP product. Examples of this are Adager Software Pty, whose ADAGER improves IMAGE, and VESOFT Inc., who makes MPEX, which improves MPE. Since HP is not perfect, there is always a market -- often a very lucrative one -- for such products, and as new HP products come out, I am sure that there'll be many third-party products that fix problems and add features to the new HP products. * The Innovator - Innovators make their living by staying one step ahead of the competition and introducing their products and making their pile before the competition moves in. Quasar made millions this way on QUIZ, QUICK, and QTP, and other vendors, like ROBELLE, Qualex, United Peripherals, Cole & Van Sickle, and Gentry have prospered through innovation, too. The future of HP system software holds a niche for each of the aforementioned kinds of independent vendors, and it seems certain that as the HP3000 market will grow, they will grow with it, providing more and more useful packages for HP3000 users.
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