Channel Strategy for IBM's New OS/2

November 1994

Count on seeing a lot of OS/2 in the next few months. IBM's new version of its PC and server operating system software will be promoted by an unprecedented amount of activity (about $50 million worth of advertising), as the product rolls out to full availability the week of November 7 (just a few days late, see IBM Opts for Quality Control below).

But IBM is insuring that wherever you buy software, you'll see plenty of OS/2, and see it in a very positive light. It has extensive activities currently planned for the channel (VAR's, distribution, resellers, superstores, and retailers), focused on:

• Awareness Generation: through the use of multiple mailings to the channel.

• Channel Education: via videotapes, printed material, an 800-number, and on-site training in selected resellers for their staff (superstores, distributors, aggregators, software retailers, retailers).

• Marketing Materials: materials for the channel to share with the customer, ranging from demo diskettes to specification sheets, and family flyers like the new "32 Bits about OS/2".

• Merchandising Materials: Customers will be greeted by such point of purchase materials as full-color shelf markers and end-caps, to draw attention to OS/2 Version 3 and give information about the product's features -- and what's packaged with it (e.g., the applets and the Internet On-Ramp).

• Incentives: IBM will be incenting more than 100 of its reseller partners at more than 1500 locations with cash and other prizes, including a trip to Maui.

This means that when a customer enters a store (or is called upon by a corporate reseller's outbound sales force), there's an excellent chance that the channel will be thinking about OS/2 Version 3 as an excellent choice. That's exactly what IBM has in mind. It needs to build mind share quickly, while it has market attention -- and before Microsoft begins to build the launch ramp for Windows 95 (when it will get much harder).

Microsoft is responding exactly as you might expect. Bill Gates says the only OS/2 Version 3 he recognizes is the one called NT; he claims he couldn't use the OS/2 name for the NT product only because IBM owned the name . He laughs at everything from the ads to the name. Microsoft considers OS/2 dead meat and they treat it that way. The market's not so sure.

IBM reports that demand is excellent right now, as it shifts its focus, broadening its OS/2 approach from the corporate market, where it's already strong, to the consumer and SOHO markets, and the Internet user. We suspect that this will be a harder sell, since this customer basically buys computers to run applications and OS/2 still can't offer the abundance of applications that Windows can. Of course, every one of those Windows 3.1 and 3.11 applications runs just fine under OS/2. IBM is also strengthening its approach to the corporate customer by adding a LAN client.

Expect to see lots of OS/2 when you're out doing your computer Christmas shopping. In fact, you've probably already noticed some of that $50 million in modern, fast-paced ads on your TV screens, aimed at consumers, and very different than anything IBM's ever done before.

IBM Opts for Quality Control

In the initial phases of shipping Warp (IBM's newest version of OS/2, Version 3), a minor bug was discovered. Although the bug would affect only very small numbers of customers in relatively unusual circumstances, IBM didn't want the product to go to high volume distribution in that condition, so manufacturing was briefly stopped while the software was fixed. Updated versions of Warp were quickly in the channel and Warp was delayed only a few days.

Unfortunately, early press reports of the bug and its repair were printed under headlines that blared "IBM Halts Manufacturing of OS/2," which while certainly correct, were probably not a fair presentation of what was actually going on.

The fix (and explanations of what happened) are widely posted on bulletin boards and on-line services. We think it only appropriate that a second round of press stories are now commending IBM for its good citizenship in acting promptly and in its customers' best interests.

IBM tells us it's been inundated with customers thanking it for proceeding cautiously and being willing to take a little heat as a trade-off for customer quality. One large customer even called to say that this IBM decision had convinced his organization to select OS/2, since it was attention to quality and customer issues that really counted.

Comments or Questions: Send Email to opinions@wohl.com

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Entire contents © 1994 by Amy D. Wohl. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden.