The MicroISV Digest

The MicroISV Digest for the week ending September 14th, 2009.

(If you have an announcement of interest to your fellow microISV, indies or startups, please email me at bob.walsh@47hats.com with the word digest in the subject.)

News and Announcements

  • Dan Gravell, elsten software, is looking for feedback on its music management application, bliss. They are also looking for beta testers. (via BOS)
  • Milos Tanasijevic has launched DupeTrasher, that will identify and locate duplicate files on your Windows PC. I’ve got 4 pcs and three networked hard drives I need to run through this! (via BOS)
  • Scott Carpenter, InvoicePlace, found a nifty interactive “expert system” online for (Australian) startups/microISVs who need to broaden their working knowledge of Intellectual Property Laws as they pertain to them. 1Place expert system ( via TechNation Australia.)
  • Atul Godbole, LogicNC Software, has launched Crypto Obfuscator For .Net. Here’s the gist: “Crypto Obfuscator combines powerful techniques such as symbol renaming, control flow obfuscation, resource and assembly encryption and decompiler & disassembler protection to provide the very best protection to your .Net code against reverse-engineering. Additionally its metadata reduction, assembly & resource compression and dependency embedding functionality simplifies and reduces the deployment of your software.” (via email)
  • In show #37 of the Startup Success Podcast Bob and Pat talk with Ginevra Kirkland, Six Apart Community Manager, about how to care for, nurture, advocate for and grow an online social community. Ginevra has been a Community Manager at Six Apart (makers of the TypePad blogging service) for over five years and is way ahead of nearly all of us on the Social Media curve. Note: Ginevra was kind enough to offer a 15% off discount code for TypePad for Startup Success listeners.

Relevant Blog Posts, Podcasts, Videos and Articles

  • Brian Swanson over at Purple Ant pointed out a post over at Rands in Repose: Your People. I gave it a quick read, stopped, and read it a second time with my brain set to ‘record’. Also check out from the same source: Managing Humans. And the Nerd Handbook!

Further (mostly relevant) Reading

Finally!..

  • On a very personal note, after 2+years of working on this idea, the private beta for http://startuptodo.com (a training/productivity community for startups and microISVs) began today. Wish me luck!
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Bob WalshThe MicroISV Digest

Launching Software Products: Niche vs. Mass Market

By Brett Ryckman
Product Developer
www.brettryckman.com

Which market segment to target? Do you go after “mass” markets, focusing on a broad set of customers, or target “niche markets” — or do both? Software companies creating new products or just starting-up must make these complex and perilous decisions. What must you consider in those decisions? Wikipedia states:

The mass market is a general business term describing the largest group of consumers for a specified industry product. It is the opposite extreme of the term niche market.

A niche market is the subset of the market on which a specific product is focusing; therefore the market niche defines the specific product features aimed at satisfying specific market needs, as well as the price range, production quality and the demographics that it is intended to impact.

Often this is an inherent decision. If your company produces bank security software for ATMs, your market is already well defined. Companies with broader products or aspirations have more of a challenge. For example, if you have a Web CMS product, do you target anyone that needs a Web Site or just attorneys or accountants, then tailor your product for those professions?

The lure of mass market revenues is so great that many software companies cannot resist. Unfortunately, mass-market products typically require vast resources to develop and market.

In The Business of Software, author Michael Cusumano provides an example in recounting the adventures of SkyFire, a maker of wireless networking software. First, several years of development time were required for SkyFire software to work on any type of device and any operating system. Second, the mass market for wireless products was slow to adopt and then still in its infancy. Rather than going after a few niche markets and deliberately growing into the mass market, SkyFire went straight for the masses. The company spent most of its time and resources making the technology suitable for a general-purpose solution. In 2001, the money ran out, and SkyFire closed shop.

Bigger Isn’t Always Better

One thing is certain, niche markets are certainly easier to overcome than mass markets. I think a lot of companies initially lean toward the mass market because of the revenue potential. I often hear comments from executives like, “There are 15 million small businesses out there so if we can just get 1-percent of them, we will be golden.” Well, it is true mass markets have much greater sales potential, but that is counterbalanced by the extensive resource requirements for developing and marketing the solution. (Even if you raised 6 million in VC funds).

Market segment decisions also affect how software companies should price software. Software that is targeted at niche markets tends to be more expensive than software that is targeted at wider audiences. This is partly driven by lower demand, which requires higher pricing. Niche software may be designed and tailored for a particular industry, and therefore not easily replaced by a generic or mass market product, even at a lower price. With larger per sale dollar amounts, the sales cycles are often longer for the niche software vendors, a factor which must considered in revenue forecasting.

It is also not uncommon to have niche providers competing with the mass market vendors. In the CRM software arena large vendors such as Salesforce.com and ZohoCRM are competing in a wide range of industries and niches. For example, niche software vendor Dendrite, which makes CRM software for the pharmaceutical industry, often finds itself competing with the big boys such as Siebel and SAP.

Niche software vendors often look outward in the market to determine what competitors are charging in order to position their own software pricing. This view includes large vendors that have low prices. The niche vendors may think “Hey, Salesforce.com is charging $45 per month, so we need to be at that price point." The failure to see the mass market difference may lead to their downfall.Without sufficient customer volume, the low profit from low prices may result in insolvency.

Large CRM vendors must devote substantial resources into being “all things to all people.” The niche vendor can really develop industry-specific features to meet their customers’ needs, giving them a competitive advantage. Salesforce.com has attempted to hedge that by developing the “App Exchange” which allows companies to develop or install sub-sets of applications tailored for their industry into Salesforce’s application.

Catching the Long Tail

Targeting niche markets is commonly referred to as “Long Tail” marketing. The concept originally debuted in Wired Magazine, in October, 2004 by Chris Anderson. He argued that products that are in low demand or have low sales volume can collectively make up a market share that rivals or exceeds the relatively few current bestsellers and blockbusters. His research showed that a significant portion of Amazon.com’s sales come from obscure books that are not available in brick-and-mortar stores.

The same concept of “Long Tail” can be applied to software vendors. Companies can develop long-tails by creating software products that solve specific problems or fill special needs. The historical approach to software is to overdevelop features to address enough customers’ needs so that they sell millions of licenses to the mass market. This trend is dying as more and more niche software vendors enter the market, offering customers a greater selection of specialized products. This is partly due to a significant reduction of the barriers to entry, thanks to Web-based software platforms such as software as a Service (SaaS) and the widespread market acceptance of Web-based software.

Niche Markets Pros and Cons

Pros

  • Targeting niche markets allows focus and specialization in that sector
  • Easier to take a large market share in a niche market
  • Typically it is less expensive to develop software targeted to niches
  • Easier to market the software in a niche with less competition ñ without having to go up against the large vendors like Microsoft or Seibel.
  • Target a niche, exploit the lack of competition, and you can gain a large market share.
  • Gaining a large market share makes your company an attractive candidate for acquisition by a larger provider looking to get into that niche market.

Cons

  • You might put the golden handcuffs on. Once you have established yourself as a niche vendor, it may be difficult to transition into mass markets. Strong brand perceptions are hard to change.
  • May limit how big you can grow
  • Some niches may require large resources to develop
  • May takes significant resources to penetrate a particular niche market

Conclusion

The allure of mass markets may be irresistible, and can lead companies into peril. In reality, start-ups and companies that currently do not have mass-market products should think carefully and cautiously before going there. Research shows that generally a software company is better positioned for success to start in a niche market, prove itself, and grow its way up to the masses.


About the author:
Brett Ryckman is a product developer and entrepreneur. Recently he founded DisputeSuite.com, a software as a service (SaaS) vendor that was acquired less than a year after launch. Prior to launching DisputeSuite, Ryckman worked as a web & UI designer for companies such as Kforce, Verizon, Catalina Marketing, and Perficient. He currently showcases his work at http://www.brettryckman.com.

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Bob WalshLaunching Software Products: Niche vs. Mass Market

The MicroISV Digest

The MicroISV Digest for the week ending September 7th, 2009.

(If you have an announcement of interest to your fellow microISV, indies or startups, please email me at bob.walsh@47hats.com with the word digest in the subject.)

News and Announcements

  • Steve Cholerton, Arten Science, has one of his products up for a prestegious UK award. R10Cipher is a finalist in the 2009 UK IT Industry Awards, in the Information Security Product category. Way to go Steve!
  • In show #36 of the Startup Success Podcast Bob and Pat talk with Michael Grosse, First Vice President – Wealth Management, of Morgan Stanley Smith Barney on the realities, perils and opportunities that come with startup funding. This is a whole new level of play for most developers, and Michael gets down to specifics of what happens after you get the money.

Relevant Blog Posts, Podcasts, Videos and Articles

Further (mostly relevant) Reading

  • Paul Graham doesn’t post that often, but when he does, it behooves you to read it. His latest, The Anatomy of Determination is in my opinion a must-read if you want to venture through the heart of darkness to emerge successfully on the other side.
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Bob WalshThe MicroISV Digest

The MicroISV Digest

The MicroISV Digest for the week ending August 31st, 2009.

(If you have an announcement of interest to your fellow microISV, indies or startups, please email me at bob.walsh@47hats.com with the word digest in the subject.)

News and Announcements

  • Sven Heimberger, Next Iteration Ges. f. Software Engineering mbH, is looking for feedback on their site and new software, Instant Review for Visual Studio. (via BOS)
  • Stack Overflow is more than just programming answers: check out “Developing a software idea into a business” and especially Clay D. Nichols answer. (via BOS)
  • [A last minute add] David House, Well Built Software, Llc., has just released a FogBugz iPhone client named Bugztopia. It features multiple account support, automatic filter lists, customizable issue list and all of the action types for issues including resolve, close, email, reply, etc. Available on the AppStore for $4.99 – or email David (david@wellbuiltsoftware.com) and he’ll send you a promo code.
  • In show #35 of the Startup Success Podcast Bob and Pat talk with Matt Mickiewicz, founder of 99designs. 99designs is shaking up the graphic arts industry for emerging and established companies. Matt candidly talks about how 99designs is structured, their strategic direction, and how a crowdsourced business works. Matt’s also the cofounder of SitePoint – a leading IT/graphics site.

Relevant Blog Posts, Podcasts, Videos and Articles

Further (mostly relevant) Reading

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Bob WalshThe MicroISV Digest

The MicroISV Digest

The MicroISV Digest for the week ending August 24th, 2009.

(If you have an announcement of interest to your fellow microISV, indies or startups, please email me at bob.walsh@47hats.com with the word digest in the subject.)

News and Announcements

  • Want a free copy ofMicroISV sites that Sell“? Then be among the first 100 people to sign up and attend Wednesday’s Web Site Critique Webinar. Think of it as an hour long free class on what your web site shouldn’t look like. Join Dave Collins, SharewarePromotions, and I August 26 at 5:00 PM UK time (Noon Eastern, 11am Central, 10 am Pacific).
  • Tom Gallard, Stratford Software, has released Driving Test Cancellation Checker – a .NET application that allows UK users to book an earlier driving test. Now if Tom would only apply his skills to California’s own DMV!
  • Marc Durdin, Tavultesoft Pty Ltd, has launched KeymanWeb. KeymanWeb is a web-based universal keyboard, letting people enter text in over 600 languages and can be easily integrated into any web application. The KeymanWeb Demo Site lets you write emails, search the web, and tweet in hundreds of languages.
  • Jay Cincotta, eSymmetrix Inc., is looking for feedback on his new case study video about their .NET development tool, Gibraltar. Gibraltar combines the functionality of ELMAH, log4net, perfmon and other tools in one easy-to-integrate package. (via BOS)
  • Pamela Slim, Escape from Cubicle Nation, will be holding a day-long seminar on just how to break the chains that are keeping you in your soul-destroying corporate bondage and finally take the plunge to start your own company August 28th in San Francisco. Pam is an extraordinary coach and the person you need in your life if you are stuck where you don’t want to be. Highly recommended. Details/costs here.
  • In show #34 of the Startup Success Podcast I talk with Nathaniel Talbott, founder of Spreedly, a subscription management service for startups. If your startup works with subscriptions instead of sales, managing those subscriptions quickly turns into a major undertaking. Nathaniel talks about how Spreedly came about, how he bootstrapped from consulting to startup, one way to keep partner disagreements to a minimum, and more.

Relevant Blog Posts, Podcasts, Videos and Articles

  • At a loss for an idea to build a startup around? 6 Awesome Apps Begging to Be Developed over at ReadWriteWeb might spark an idea or two.
  • If that doesn’t, here’s two takes on Y Combinator graduating class of the summer of ’09. I don’t think copying what these companies will work – they already have a head start – but their examples may inspire you.

Further (mostly relevant) Reading

  • Tweets, like headlines and haikus require a certain finesse to write. Jakob Nielsen’s Alertbox this week, Twitter Postings: Iterative Design give you a good demo of how a few light touches can make your tweets stand straighter and work harder.
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Bob WalshThe MicroISV Digest

The MicroISV Digest

The MicroISV Digest for the week ending August 17th, 2009.

(If you have an announcement of interest to your fellow microISV, indies or startups, please email me at bob.walsh@47hats.com with the word digest in the subject.)

News and Announcements

  • Neil Davidson, CEO of Red Gate Software and organizer of the Business of Software Conference, has launched a no-strings attached startup incubator program in Cambridge, UK for UK and European startups. Details here. Way to go Neil! Hopefully more companies in this business on this side of the Atlantic will do the same.
  • Join Dave Collins, SharewarePromotions and I for a hour-long Web Site Critique Webinar August 26 at at 5:00 PM UK time (Noon Eastern, 11am Central, 10 am Pacific). Dave and I will fold, bend and mutilate your web site – all to help you improve it and gain more customers.
  • Pamela Slim, Escape from Cubicle Nation, will be holding a day-long seminar on just how to break the chains that are keeping you in your soul-destroying corporate bondage and finally take the plunge to start your own company August 28th in San Francisco. Pam is an extraordinary coach and the person you need in your life if you are stuck where you don’t want to be. Highly recommended. Details/costs here.
  • Alex has launched TestLab² a new software testing service geared towards small and medium sized projects.(via BOS)
  • Nick Koranda has launched MeMo, a new virtual assistant service that transcribes your called-in appointments and tasks into Microsoft Outlook items and SMS text reminders, and is looking for some feedback on his site and product. (via BOS)
  • In show #33 of the Startup Success Podcast Pat and I talk with Jeff Haynie, founder of Appcelerator, an open-source web technology for building native code desktop, mobile and web applications. Jeff explains the technology behind Appcelerator, why it’s Open Source licensed and his startup’s strategy for making money.

Relevant Blog Posts, Podcasts, Videos and Articles

Further (mostly relevant) Reading

  • Nothing of note.
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Bob WalshThe MicroISV Digest

Product Support or Process Support?

By Jerry Weinstock
CRM Innovation, LLC

CRM Innovation builds solutions that enhance the functionality of Microsoft Dynamics CRM (Customer Relationship Management). Like all aspiring entrepreneurs I wanted to create a company where we could write great applications that required little or no support and that would sell themselves online while we slept. So now back to reality and the actual question at hand – How to provide an appropriate and relevant level of application support without going broke.

Support for our current products

First a little bit of background to help position and personalize the dilemma. The first several products, AutoNumber, InLine Help,  we created for the Microsoft CRM application to extend its functionality required them to be installed on the customers’ Windows Server where CRM is running. Try as we might we haven’t been able to test internally all the different combinations and permutations of client environments, in particular it seems that the degree that Windows Server 2008 is locked down the more challenging it became. Therefore we would invariably get a support call to assist in the installation process as errors were being thrown. Not typically an issue as they are usually resolved in less than 30 minutes with a screen share. Generally we receive few calls after the initial support call except for those that were inquiring about functions that were generally not well described or we missed in our documentation. In summary most of the questions if not all are product support based since the applications’ are entirely self-contained applications that run within the CRM application.

Subsequently, we released a product which is a Software+Services application that lets a non-technical person create a form for their website to push data directly into their CRM system. Web2CRM then took us one step removed from the CRM application. Now we had a hosted application that connected with the company’s CRM server to retrieve website visitor form information and push data into CRM. So we eliminated the installation issues since it is a hosted application but do get some questions about getting a new account setup and sometimes what are the right credentials to enter into our system so it can access the client’s CRM system. Almost without exception if we had more details in our documentation we would eliminate most of these calls.

The support challenge – our upcoming product

The product we are about to release takes us out now two steps – Data2CRM is a visually intuitive import and migration manager S+S solution to get data into Microsoft CRM from other data files (CSV, Access, SQL) or transfer data out of a to-be-discontinued CRM system into MS CRM. Our application will now connect to two different systems – the customer’s source data files and their CRM system. We are stuck in the middle.

Support is complex

If you have read this far then you are ready to help out with the question at hand – How to provide appropriate support for Data2CRM. The objective is to differentiate between ‘product support’ and ‘process support’. The goal is to handle the product functionality issues differently than the import process issues and perhaps position/price the support types differently.  Since the product will be fairly intuitive (validated by our focus groups) any issues will likely be related to difficulties in importing actual data. In other words separating ‘product’ from ‘process’ will be more difficult to do than our other products where we provide free unlimited email and phone support as necessary.

The support team will need to be prepared to handle data-source related problems such as server/database connections via SQL or ODBC,  data transformations and submission rules. Users will likely ask for assistance with connection problems that are outside the scope of Data2CRM itself. We may end up being asked to essentially ‘teach’ users on how to do a import themselves.

Our audience

We are focused to selling through a channel of Microsoft CRM Partners and as a consequence should be very knowledgeable about the CRM product and likely have used similar products to ours to import data. However, end users may purchase directly from us or also use the product themselves even though they bought it from through their partner who might have provided guidance initially for its first time use.

Support costs impact product pricing

Possible ways to proceed –

  1. Without free support and charge for everything?
  2. Include 1 free incident and charge for everything after that?
  3. Attempt to differentiate between product and process support and charge for the later? How do we define the difference?
  4. Provide free weekly open webinars with training and Q&A and then charge for direct assistance after that?
  5. Charge differently for partners vs. end users?

When we do this how do we consistently differentiate between product and process support? Is there is some test script the user has to run first and if it fails then the error is on their end and support is chargeable?

How can we escalate questions to paid support when the same person is going to answer the question – i.e. for that issue I cannot talk to you for free you will have to pay to continue the conversation?

How do we do this and still remain customer friendly?

How do we not over price our product by budgeting for free support that we really shouldn’t be giving away?

Our plan

The questions and possibilities I posed in the previous section are questions every microISV has to ask and answer for themselves on Product Support vs Process Support. The approach we will test when we open it up the product for beta testing to our partner is to provide weekly, free, open one hour webinars for partners and end users. We will also include one free product support question and charge for process support questions that are customer environment specific. We haven’t worked up the litmus test question to define Process Support. That is a challenge yet to be overcome.

What’s your plan?

———-

My name is Jerry Weinstock, Business Development Manager and founder of CRM Innovation in Lenexa, Kansas. We are a Microsoft Gold Certified Partner for the Dynamics CRM and build solutions that enhance it’s functionality.

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Bob WalshProduct Support or Process Support?

The MicroISV Digest

The MicroISV Digest for the week ending August 10th, 2009.

(If you have an announcement of interest to your fellow microISV, indies or startups, please email me at bob.walsh@47hats.com with the word digest in the subject.)

News and Announcements

  • Pamela Slim, Escape from Cubicle Nation, will be holding a day-long seminar on just how to break the chains that are keeping you in your soul-destroying corporate bondage and finally take the plunge to start your own company August 28th in San Francisco. Pam is an extraordinary coach and the person you need in your life if you are stuck where you don’t want to be. Highly recommended. Details/costs here.
  • Join Dave Collins, SharewarePromotions and I for a hour-long Web Site Critique Webinar August 26 at at 5:00 PM UK time (Noon Eastern, 11am Central, 10 am Pacific). Dave and I will fold, bend and mutilate your web site – all to help you improve it and gain more customers.
  • Dave Cholerton, Arten Science, have released version 1.8 of their bulk emailing software for Windows and Mac OSX. R10BatchMail now supports multiple email attachments and name merge capability.(via email)
  • Anthony Williams, Just Software Solutions Ltd., have released the Linux port of their just::thread C++0x thread library. This library is an implementation of the multithreading portion of the upcoming C++0x standard, and is now available for gcc 4.3 on Linux as well as Microsoft Visual Studio 2008 on Windows. (via email)
  • You know your software is successful when other people start making software to complement yours. Enrico Berti, Napkee Labs, has released Napkee – which takes mockups created in Balsamiq Mockups and renders them to to HTML/CSS/JS and Adobe Flex 3 in one click. Awesome! Kudos to Peldi Guilizzoni, founder of Balsamiq for helping another startup founder make it.
  • Kurt Huber, Accounting ASAP, has just launched its new web-based accounting set of applications for small business. Accounting ASAP is designed be as simple to use as possible, yet still handle most accounting tasks needed by small business, such as Accounts Receivable (Invoices and Receipts), Accounts Payable (Purchases and Payments), General Ledger and Financial Reports. (via email)

Relevant Blog Posts, Podcasts, Videos and Articles

  • One of my favorite must-RSS sites is back from Limbo: Richard Buggy has reanimated Planet-MicroISV, a blog aggregation site for all good things microISV.
  • Jeff Atwood over at Coding Horror has come up with one hell of a good post you should read: Software Pricing: Are We Doing It Wrong? Jeff argues that low software prices like that for the iPhone are force multipliers far more powerful than most software vendors realize.
  • Speaking of Escape from Cubicle Nation and Pamela Slim, Pam interviewed me for her Escape from Cubicle Nation Podcast this week: I think we covered several good topics for startups and microISVs.

Further (mostly relevant) Reading

  • And finally, in the public interest, or at least the interest of everyone reading MicroISV Digest who spends far too many hours at a keyboard, take a moment and read this Business of Software thread: A Developer with Neck and Back Pain. Besides the real experiences of some of us, you’ll find several very good links to resources for avoiding career-ending neck, hands and back issues. They are real and if you’re a developer the sooner you take them seriously, the less pain you will feel.
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Bob WalshThe MicroISV Digest

Of interest for .NET microISVs/Startups…

If you are interested in getting some quality time and support for your startup or microISV .NET app, check out the upcoming Microsoft BizSpark Incubation Week for Windows 7, to be held at Microsoft Technology Center, Reston, VA Monday 8/24/2009 to Friday 8/28/2009. This event is ½ day of training, 3 ½ days of active prototype/development time, and a final day for packaging/finishing and reporting out to a panel of judges for various prizes.

This event is a no-fee event (you pay your own travel expenses) and each team can bring 3 participants (1 business and 1-2 technical).

To nominate your team please contact Sanjay.Jain@Microsoft.com or Ashish.Jaiman@Microsoft.com. More info here.

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Bob WalshOf interest for .NET microISVs/Startups…