[Beowulf] SGI and Sun: In Memoriam

Joe Landman landman at scalableinformatics.com
Thu Apr 2 05:24:05 PDT 2009

Kilian CAVALOTTI wrote:
> On Wednesday 01 April 2009 17:48:56 you wrote:
>> A point I
>> didn't make in my blog post on this stuff is that the academic side,
>> while a nice market to play in, isn't terribly profitable.  You have to
>> give "killer" discounts to play in many cases.  Which in the case of a
>> low margin commodity business, is, in a real sense, a killer.
> But aren't those killer discounts paid back in image building and 
> advertisement savings? It would make sense for companies to invest in some 

Not always ... or even frequently.  Most university folks can't (as part 
of their employment) explicitly endorse a product or brand ... so we 
couldn't get "Joe Schmoe from University X" to say how wonderful our 
systems are.  Aside from that, there are the ethical problems with 
buying endorsements ...

> academic partnerships/projects, to make the buzz, and build up an image of 
> performance, reliability and trust. Something along the lines of: "see, this 

These are two different things, and I agree with the latter.  We work on 
lots of partnerships/projects ... lots of bidirectional stuff.  This 
benefits everyone.  Not from advertising per-se, but from continuous 
exposure to problems of current research interest, at the hands on 
level.  This helps us focus our thoughts, our offerings on what 
researchers need, by getting us to speak and work with researchers.

But this has nothing to do with discounts.

> prestigious university/institution is using that company's product line, and 
> they must know what they're talking about, so I should do it too."

... this doesn't usually work so well.  Argument by authority often 
fails in these circles :)

More to the point, every customer is quite different in needs, and often 
need specialized things.

> That seems to me like a short-term profitability loss, but a long-term gain 
> since it could drive more sales.

Well, the (somewhat flippant) point I'll make about this is that it is 
hard to pay rent, staff, and suppliers in good-will, visibility, and 
reputation.  All of them want cold hard cash.  So if you buy all your 
business ... that is, you pay your customer to take your 
hardware/software/services by charging them less than it costs you, you 
are losing money in net in this process.  For some companies, losing 
money on each and every sale is the norm.  They just don't last very 
long.  Like SGI.

Until our landlords and suppliers take reputation as a basis for 
compensation, we still need to collect actual money.  More to the point, 
if every University requests/demands a discount, how is offering it to 
one and taking a loss on the product/offering going to help you make 
money to keep the lights on, pay people, ...  when all of them ask for 
the same thing?  Sadly, it won't.

What I am suggesting is, that if you like your suppliers, you might want 
to consider keeping them in business.  Which means not requiring huge 
discounts as incentives to buy.  A way to do this is to pre-define your 
budget to them, and tell them you want to maximize your value in this 
budget.  Value is not simply the inverse of price (though many 
university purchasing agents would like to believe this and only this). 
  Value it fit to mission, capability to pursue other missions, etc.  It 
is many things.  If you give the vendors a fixed number and say "do the 
best you can do in this number", most will do their best, and still be 
able to pay rent if you buy from them.

Conversely, if you don't have a fixed number in mind, select (and pay) a 
small HPC shop to help you with design and config.  This will help set 
budgetary expectations.  And you can then run the aforementioned process.

It is of no value to universities and companies if the latter are driven 
out of business because they can no longer afford to service the markets 
of the former.

> Cheers,

Joseph Landman, Ph.D
Founder and CEO
Scalable Informatics LLC,
email: landman at scalableinformatics.com
web  : http://www.scalableinformatics.com
phone: +1 734 786 8423 x121
fax  : +1 866 888 3112
cell : +1 734 612 4615

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