Differentiation, Differentiation, Differentiation

15 September 2010

Just as in the early days of IMS, many of the optical equipment vendors seemed focused on the features of their products. It's bigger; it's faster; it's shinier. Mine comes in better colours. We exaggerate somewhat, but it was striking how little attention was given to the value proposition behind the solution. What's more, few vendors sought to achieve differentiation between each other, or, perhaps more importantly, in terms of the differentiation that can be achieved by their customers, if they adopt their solutions.

Is this an inevitable consequence of a world in which service providers are continually seeking to drive prices lower? One in which purchasing authority seems to be becoming increasingly concentrated in the hands of fewer and fewer individuals - and in which purchasing cycles still haven't been reduced?

We realise we can't have it both ways and that our arguments regarding the commoditisation of application servers would seem to support this, but it's clear that vendors need to do more to really emphasise the value their solutions bring to their customers. In time, of course prices will fall, but the problems arise when price is either the only decision making factor in a purchase round, or when prices remain higher for longer than they should. There is a balance. If you only sell on feeds and speeds, you are immediately saying that you are really in a price battle and you may be neglecting the opportunity to capture additional value through a clear articulation of what you bring to the service provider. Vendors need to make sure that they develop clear value propositions and focus on them with real commitment.