The "800 lb. gorilla" is one of high-tech's most stalwart clichés because our industry obsesses about market leadership and stratification more than most. Think Microsoft in operating systems. Cisco in networking. Or Intel with microprocessors. Big gorillas get all the big media love. The sheer size of these giants gives them tremendous influence. The industry reverberates at their every move.
Below this class of silverbacks exists a broader range of smaller gorillas that exert great influence within their own domains. While their market niches may not have the same swagger as networking or operating systems, they nevertheless cast large shadows.
Smaller high-tech gorillas often have four things in common:
1. They compete in relatively large (more than $1 billion) vertical or niche markets.
2. They define the business-to-business markets in which they compete.
3. They have an incredible sense of timing with the right product at the right price.
4. They continually refine their products to meet customer needs and stay ahead.
Here are some good examples:
One would think workforce management is the domain of the big ERP and HRMS systems from the likes of PeopleSoft, Oracle and SAP. But when it comes to the real nuts-and-bolts tasks of paying, scheduling and attendance tracking of workers, Kronos actually dominates that space. More than 20 million of the world's workers bring home the bacon thanks to the Kronos "frontline labor management system." While few people have heard of Kronos, nearly everyone who punches a time clock has been touched by the company. It helps companies manage every phase of labor – including salaried, hourly, remote, mobile, and contingent workers – through one system.
The ERP and HRMS vendors were forced to cede this niche and "play nice" with Kronos because of the company's relentless investments in R&D each year, with customers leading the product direction. Kronos simply out-engineers and out-innovates everyone, keeping at least several technological generations ahead of its much larger competitors. The result is a quiet, publicly traded gorilla with more than $450 million in revenues and a worldwide workforce of 2,700 people.
SolidWorks is the dominant player in the mainstream 3D CAD software market. Their software helps engineers and product designers develop products quickly and cost efficiently. So how did SolidWorks – a company that has been shipping product only 10 years – become a major player?
In the 1980s and 90s, CAD software required very expensive workstations and was used exclusively by engineers. Only large manufacturers could afford it. Then SolidWorks suddenly came along and introduced the world's first powerful 3D CAD software for Windows PCs, turning the industry on its ear. SolidWorks' ease of use, low price point and tremendous functionality helped the company develop an incredibly loyal user base.
Ten years later, competitors are still catching up to SolidWorks' functionality, and the company continues to innovate. In fact, with the latest version of the product, SolidWorks incorporated more than 250 customer-specific requests.
Although many people may not have heard of this 400 lb. gorilla, SolidWorks has more than 400,000 users in more than 100 countries. More than 600 partners are aligned with SolidWorks worldwide. This software has inevitably touched your life…from the design of the spring that makes the point pop out of your ballpoint pen…to your bike, your coffee maker or…the enormous boiler system in the power plant that supplies electricity to your home and office.
eWeek recently wrote "Few vendors in the security industry are better known or have more widely deployed products than
Check Point Software Technologies Ltd. The Redwood City, Calif., company helped popularize the notion of a network firewall, and 11 years after its founding, 100 percent of the Fortune 100 uses some product from Check Point."
Indeed, at a time when "security" has become Microsoft's new mantra and Symantec has acquired just about every other security vendor, Check Point has steadfastly defended its firewall market niche with an astounding 87% market share, according to Infonetics. Like Kronos and Solidworks, Check Point achieved gorilla status by inviting its customers into the product development process. And like SolidWorks, Check Point did it indirectly. Check Point's true customers are the legions of networking resellers who loyally sell Check Point products as part of their value-added solution. VARs love Check Point because the company treats them well and makes them look good.
As a result, Check Point has grown into a $500 million company, has withstood a constant competitive barrage and built a passionate network of more than 2,200 Check Point partners in 88 countries.
While everybody claims market leadership today (try searching for "market leader" on Google News http://news.google.com/news?q="market leader"&num=50&hl=en&ie=UTF-8&safe=off&sa=G&scoring=d), there are few actual gorillas of any size. By listening to its customers, these three companies were able to deliver products that met specific customer needs – helping customers do their job better, cheaper and more efficiently. The result? True leadership in sizable "under-the-radar" market niches.
- Jeff Aubin, VP and Steve Hodgdon, SVP, Strategic Services
