A positive approach to Pandit effect!

A person has 2 choices. It is either follow or create a new path. Those who select the latter will always make history. This will have an impact in all the areas including marketing. Let us take the curious case of Santhosh Pandit. There are Discussions on whether this guy is a retard or if he is acting like one and making us retards. Neither! But he is acting like a retard and teaching us a lesson or two! His movie became successful in Kerala, during the Deepavali season and his competition was 3 super star movies: 2 from Tamil and 1 from Hindi. This negative publicity is not a novel idea. Many people have already benefited out of it. ‘Silsila’ by Harisankar is another famous (or notorious?) example from Malayalam. ‘Friday’ by Rebecca Black is an English album in the same genre. There is a Tamil movie ‘Yaruku Yaro’ acted by Sam Anderson, but failed to exploit the publicity and make money.

These successful people explored a new area in the market, and got the benefit they deserve. Here I am trying to present some market makers and their story in our Software industry. There is nothing in common between Pandit or his movies and the people in the below stories, except they exploited a new marketing technic and made their marks in the history.

When the programming language BASIC was developed and shipped with IBM machines, it was not separately sold. The contract was between Micro-Soft (now, Microsoft) and IBM. No users need to buy that language, instead IBM provided it. Then, the release of DOS revealed a new marketing area unknown to IBM and other hardware manufacturers: direct licensing by the software developers, rather than shipping it with a machine. Thereafter the contract was changed and it became directly between the users and the OS developers. And as history proves, Microsoft excels in that. What made them to think in a new way? They found a potential market in software industry, which no one else thought about till then.

But when Linus Torvalds developed (or ripped off from Minix) his Linux kernel and Richard Stallman founded his Free Software Foundation, they were creating a new era in the software marketing. In this new area, their major earning was not through license, but through support. And by doing this, they got some additional benefit for making the source open – some moral supports from the development community. Essentially, this marketing technic provided them a top position as well as a saint image for keeping the source open for free modification.

Another technic widely used in industry is the term licensing. Consider the conventional way i.e., perpetual licensing, we pay for software and the license is for a lifetime. But who will use that old one for all his ventures? In a year a new version will come out and at least after 2 versions, he has to renew it to prevent the kick out from his business. Now for a new version, he has to pay a big amount again. The term licensing will help the developer to purchase the current version for a year or so and he can go for a new version when the license expires (suppose at least one new version is available in next year). This is beneficial to both the customer and the company. Customer feels that the software is required for 6 months and he can pay only for that period. This will increase the number of purchased software as the cost comes down and increase the net revenue of the company. Most of the antiviruses are having term licensing.

Google’s business is another example. They started with a search engine. They have no ‘donate’ button as Wikipedia. Then how they earn money? Google’s real business is not searching, but advertising. Any site can be registered to Google AdSense and they get benefitted for the advertisement Google put up in their site. And Google is providing more options for the same. They say: “You create a free site/blog using our infrastructure; we put advertisement and give you money for making a successful site/blog”.  Almost all of their businesses are running in this way, viz. Google.com, YouTube, BlogSpot, Google Sites etc.

Another kind of business is offering other companies’ freeware or shareware. One such software is Adobe Flash player. Let me make this clear with an example. Adobe has software called Adobe Director (previously owned by Macromedia). The corresponding content player is Shockwave player. Adobe Director is licensed and Shockwave player is free. But the revenue of Shockwave player is more than 5 times of Director! The business is offering third party software. While installing Shockwave player, it will offer some third party software and get money from them. Currently almost all the freeware will ask to install ‘Free’ Google toolbar. Google will pay them for each installation of their toolbar. Google will get good penetration, so that they can ask more money from those who put ads. And the freeware which install this toolbar get money from Google. Google is not the only one with this offer. Norton will give money for offering their virus scanner, which will scan PC and give alert, but don’t cure. Likewise many companies are supporting well known freeware of other companies for offering their software.

We have many more examples. Amazon and eBay – online marketing, Flipkart – cash on delivery, Facebook – social network, twitter – micro blog, Justdial – B2C search engine etc. All marketing technics were new once and the inventors of these technics made and are still making good profits out of it. Those who opened new areas and create success stories rarely got expelled from that area. So, while thinking of a marketing idea, think whether you can find a good place, if you follow the current strategy else make a new one. The target is fixed, not the path! The already existing path may be congested, but not your new one. People may call you Santhosh Pandit in the beginning, but you will be a Bill Gates one day!

Microsoft, IBM, Adobe, Google and Norton are either their registered trademark or trademark in the US and/or other countries.

YouTube and BlogSpot are either Google’s registered trademark or trademark in the US and/or other countries.
Director, Flash and Shockwave are either Adobe’s registered trademark or trademark in the US and/or other countries