Try + buy programs

We no longer do try and buy programs. We’ve found that customers would use our unit to lever our competitors down in price, and extract additional concessions from them. Just walk them by our box with the blinkenlights, and the nice logos … scared quite a few sales reps into submission. Then we get our box back after the other vendor is suitably scared.

There’s no upside for us, at all. So we stopped doing it.

We’ve been asked all manner of interesting requests. Usually customers want maxed out machines … you know, the ones that it costs us a great deal of money to build, and they want to borrow it for a few weeks to play with it. The first time we tried this was a national lab, who proceeded to write a nice report on their evaluation of a competitive box, and mentioned ours in passing. Turns out they had no real interest in the boxes.

This is part of the learning process. Times have changed, economics no longer favor these activities. Customers whom are really interested will take our offer of remote access when units are available. Customers who aren’t really interested? Nope, won’t see anything from them.

Even the remote access folks are a risk. Some times it works out well. Sometimes not so much.

We try to be flexible and enable our customers to test the machines in advance. But we have to do so with an eye towards the bottom line. So we don’t spend time/effort/money on things with zero possibility of a return on investment.

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3 thoughts on “Try + buy programs

  1. I think the try-n-buy scenario where you got burned is indicative of the national labs. I’ve never seen a group try to nickel and dime you to death worse than them. They have killed several HPC companies and have gotten themselves into a huge pickle with SGI but yet they haven’t learned – they are still demanding negative margins because “they are doing cool stuff”. I hate to tell them that “cool stuff” does not translate into profits somewhere else (and you need profits to keep the business alive).

    Someday I hope the national labs get what they deserve – nothing.

    Jeff

  2. BTW – Just wanted to clarify a little on my last statement. That is not all of the national labs – some of the them are very good and understand the landscape from a vendor perspective but can also innovate at the same time (One in particular as of late, has been very good). I’m calling out just the ones that are unbelievably difficult to work with (vendors know who they are, but they may not realize who they are 🙂 ). BTW – I’m including NSF funded labs in this group as well.

    BTW – I’m not really happy with the direction that NSF is taking either. They too are pushing for rock bottom prices for new technology to the point where no vendor can afford to even attempt to bid. I thought NSF might change their tune and become realistic but perhaps the realities of political life have forced them to push in this direction.

  3. @Jeff

    Our initial try and buy effort was with a national lab. Subsequent ones have all been commercial. One of our competitors has such a program, but it doesn’t look like it has been generating more sales for them.

    I agree with you on that some customers don’t understand that without a profit, there is no sense in doing the deal from the vendors point of view. Some academic purchasers still (mistakenly) believe that if you give them a negative margin discount, it will translate into positive margin sales elsewhere. Hogwash. It doesn’t. Everyone wants a better deal. In fact, many of the contracts we see coming out of universities demand “most favored customer” status, binding it into a purchasing contract. Oddly, as a business, we’d like to decide on our own, whom our most favored customers are, specifically focusing upon customers who buy lots of stuff from us. We won’t give this to anyone, and we simply reject such clauses in contracts.

    We’ve had hosted machine providers, financial services, media companies, etc ask us for this. We stopped doing this after the media company tried it two years ago, and declined to buy it. They shipped it back, and in the process managed to kill a few disks. Which they subsequently denied doing, and tried hiding behind the shipping company.

    Try and buy risk is huge. There is no reward you can tack on to the huge aspect to pay for the risk. So at the end of the day, the cost-benefit analysis suggests that no try and buy should exist.

    OTOH, the seriously interested customers have no trouble with remote access. This limits our risk and our downside. Doesn’t require an unfundable reward. So we do this when we can.

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