Why Status Sells Better Than Service
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H     ere's one of the great paradoxes confronting American business today: Why is it that consumers seem willing to spend huge gobs of money to buy status but are incredibly tight-fisted when it comes to paying for service?
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It's on track to meet sales targets, but profits might not keep pace.
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As competition heats up, we may enjoy better rates and service.
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The satellite radio provider has gotten ahead of itself, but selling now would be a mistake.
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Amazon disappoints the market, but it could be the sale that you've been waiting for.
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The Story: Look in the mirror, Mr. or Ms. IT buyer. You?ve got more muscle than ever ? and you did it without steroids.[ Slideshow: 2007's top underreported tech stories ]                                                    Despite the wave of consolidation sweeping the industry, buyers have actually gained more leverage than ever when it comes to making deals with their vendors, notes a PricewaterhouseCoopers analysis. ?Software buyers need to realize that the pendulum is beginning to swing in their favor and that there are an increasing number of alternatives in today?s software market,? concurs Gartner analyst William Snyder (no relation to this writer).There are a lot of reasons for the swing, but one certainly stands out: The shift to SaaS (software as a service). The poster child for this phenomenon is Salesforce.com. "Both its development and delivery models are having a disruptive effect on the entire CRM market,? notes Forrester Research analyst Bill Band. But it?s not just Salesforce: By 2011, Snyder says, fully 25 percent of all new business software will be delivered as a service as Salesforce and other vendors push upstream from the small-business market. Already, SaaS providers make up the majority of sales for several segments of human resources applications, and is well-established for supply-chain management.[ InfoClipzflash video primer: Software as a Service ]SaaS is just the first wave of services that are pushing pricing power over to buyers: The more recent move to Web services and the beginnings of SOA (service-oriented architecture) deployment are encouraging the use of modular software, which in turn cuts development costs, makes it harder for vendors to sell expensive suites, and lessens the need for expensive consulting services.And yet another factor is upping buyer?s power, notes Gartner?s Snyder: the emergence of third-party support options that are reducing software?s TCO (total cost of ownership). ?Maintenance services have been a quasi-monopoly for software vendors,? he said. ?For many years, only the software vendor had rights to the source code of the critical components of the system. This made it impossible to go to an open, competitive market to obtain upgrades, services and support, which in turn made it impossible to negotiate maintenance fees.?Interestingly another software trend ? the growth of virtualization ? is beginning to affect pricing for hardware, particularly servers. A report by Infiniti Research suggests that server shipments will start declining in 2008: ?The server market of tomorrow will be a value game and not a volume game.? And that means better pricing for hardware, too.Don?t let your head swell too much, but Gartner vice president Mark McDonald credits ?savvy CIOs? for containing costs that were once out of control. ?They?re saying, ?I want you to implement in a way that gives me the advantage over my competition? ? and they?re not accepting the traditional vendor model, which favors homogeneity and the economics of scale.?The Bottom Line: Chances are that you?re looking at SaaS, Web services, SOA, virtualization, open source, and other technology-delivery methods for a variety of specific reasons, without realizing the cumulative effect is to give you more pricing power. Now that you?ve got the power, use it.Complete list of 2007 underreported tech stories: 1.? Java is becoming the new Cobol 2.? Sun Microsystems is back in the game 3.? Hackers take aim at Mac OS X 4.? There are some threats you can worry less about 5.? Companies may have found a way around H-1B visa limits 6.? Open source?s new commercial strategy 7.? End-to-end Ethernet finally arrives 8.? Blade servers arrive for the masses 9.? BI is dead; long live BI 10. Balance of power shifts to software buyers
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Open source doesn't necessarily automatically translate into better paid support for customers.  But it does offer a lot more options and aligns customers with vendors more tightly.
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The buy high-sell low strategy may be a recipe for disaster for your average investor. But for companies, it has been a way to improve reported profits.
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Sales were stronger than expected, but the company is filling orders faster than they are coming in.
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The stock market is often driven by emotions, not data. Learn to recognize that, and you can profit from it.
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Why you need to consider companies not listed domestically.
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LinuxWorld If that's selling out, we want to sell out more often
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As the number of vendors touting hosted applications grows and the sophistication of their offerings increases, the choice between hosted solutions and on-premise solutions is no longer just a debate between competing vendors. Itâs become a real internal discussion within the enterprise.
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Enterprises are focusing the customer experience like never before. In fact, over 80 percent of those recently surveyed by Forrester Research say that customer satisfaction will be more important for them this year than last. Almost none indicated that it would be less important in the coming months.
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After reading Bruce Mohl's article on how people are having a hard time reaching customer service reps, I have to agree in thinking that some companies are making it harder on purpose so that the consumer will give up (" Maytag guy wouldn't have left you on hold ," Feb. 21 ). I recently spent 45 minutes trying to get ...
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A new study shows airline and hotel websites may sell better than online travel agencies. Who knew?
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Why the physics of small caps lead to greater returns.