CONTACTS 
0201 - IBM Program Software Development   203 783 7000; 800 627 8363
020101 - Ms. Cathy M. Grosholz; Software Evaluator =203 783 7890
020102 - Software Vendor Operations =fax 203 783 7632

SUBJECTS
SDS Marketing, Sales Strategies
Franchising/licensing
IBM, 910724 (SVR File
#912536)

0406 -    ..
0407 - Summary
0408 -
040801 - Cathy thanked me for my comments on IBM's software evaluation system,
040802 - ref DRP 3 and DIP 3 which submits ref SDS 2.
040803 -
040804 - She provided some explanation for IBM's initial rejection (see below)
040805 - and assisted in arranging a demonstration of SDS with a local IBM
040806 - marketing rep, Chuck Destro.
040807 -
040808 - This is very helpful information.
040809 -
040810 - Follow UP
040811 -
040812 - If I do not hear from Chuck Destro by Friday, I will call him to
040813 - schedule a demo.
040814 -
040815 - Chuck's number is:      510 277 5255
040816 -
040817 - Sent confirming memo to Cathy, ref DIT 1.
040818 -
0409 -
0410 -
0411 - Discussion
0412 -
041201 - Initially Cathy explained IBM is seeking marketing opportunities to
041202 - enhance its large size hardware business, particularly main frames. It
041203 - wishes to offer customers a "total solution."  I explained that IBM
041204 - cannot offer its customers SDS, and therefore it cannot offer a total
041205 - solution because it has no meaningful way to automate the most import-
041206 - ant aspect of business:  management.  Only SDS can do this, and by
041207 - involving itself with SDS, IBM could participate in porting this new
041208 - capability to its main frame systems, thereby realizing its objective
041209 - to give its customers a "total solution."
041210 -
041211 - Cathy indicated IBM is not marketing DOS software.
041212 -
041213 -
041214 - Lotus Notes
041215 -
041216 - I asked Cathy how her understanding squares with the IBM announcement
041217 - in June, by Richard Anderson that IBM account executives will be
041218 - selling "Notes" to corporate customers in order to "...provide more
041219 - complete solutions" (ref SDS 1 line 051129 -- submitted to IBM via ref
041220 - DIP 1), since "Notes" is a DOS product.  This is the announcement that
041221 - informed me that IBM is interested in management support software that
041222 - runs on DOS.
041223 -
041224 -
041225 - Office Systems Group
041226 -
041227 - At one point in the discussion Cathy said a number of years ago IBM
041228 - had a "Desktop Software Group."  It is no longer in business due to
041229 - poor performance.  She speculated that the Lotus situation arose from
041230 - that prior operation.  Cathy plans to track the performance of the
041231 - "Notes" sales in expectation that it will not do well.
041232 -
041233 - At another point in the discussion, I understood Cathy to say that SDS
041234 - was submitted to some folks who report to Richard Anderson within the
041235 - Office Systems Group, and they rejected SDS on the following grounds:
041236 -
041237 -    1.  This group seeks potential sales of $2M within 2 years and it
041238 -        concluded from the fact we have made no sales that SDS cannot
041239 -        achieve their target, even if properly marketed by IBM.
041240 -
041241 -    2.  The arrangement Welch seeks with IBM fits most closely its
041242 -
041243 -                     Cooperative Software Program.
041244 -
041245 -        Under the CSP IBM account executives market a vendor's software
041246 -        (as reported in the news release - see ref SDS 1), and the
041247 -        vendor supports the product with its own forces.  The proceeds
041247 -        from sales are split 25% for IBM and 75% for the vendor.  Since
041248 -        Welch reported only 1 employee in the Submission Agreement, IBM
041250 -        concluded it would be unable to the provide the support.
041251 -
041252 - Initially, I would expect that if SDS presently had sales of $2M there
041253 - would be no opportunity for IBM to participate in its market poten-
041253 - tial, because it would not be necessary.  It is only the need for
041253 - market support that creates a business opportunity for IBM relative to
041255 - SDS.
041256 -
041257 - Second, it is not clear why market potential should be calculated
041258 - solely from past sales.  By such calculus the hoola hoop, pet rock and
041259 - cabbage patch doll would never have been marketed, and once having
041260 - caught on, they would still be going strong.  But neither is true.
041261 - This is not to say that IBM's decision is without foundation, but
041262 - rather that it is heuristic.  The true potential sales of SDS are a
041263 - function of marketing acuity in presenting a magical new power to
041264 - improve innate human capacity to think, plan, remember and communi-
041265 - cate.  This is an IBM strength.
041266 -
041267 - Point 2 presents a false positive.  The support capability for SDS can
041268 - be developed to correlate to the volume of sales that occurs.  The
041269 - first step is to determine whether SDS can perform as claimed, and
041270 - thereby generate a revenue stream to pay for support.
041271 -
041272 -
041273 - Demo for Local Rep
041274 -
041275 - Cathy suggested I deal with a local IBM marketing rep.  She feels they
041276 - may have some helpful ideas or may possibly wish to pursue a business
041277 - relationship.  I understood her to say they might be open to arranging
041278 - for me to demonstrate SDS at trade shows, or other marketing events
041279 - where products are presented.
041280 -
041281 - She said the title of this type IBM slot is a:
041282 -
041283 -        CRMM = Complimentary Resource Marketing Manager
041284 -
041285 - The local CRMM is Gary Osborn; his phone is:
041286 -
041287 -                   415 545 2641
041288 -
041289 - ... located at:   One Metropolitan Plaza on Market Street.
041290 -
041291 - I asked if she would make the initial contact for me, and she agreed
041292 - to do this.
041293 -
041294 -
0413 -
0414 -
0415 - 1355 Cathy called back
0416 -
041601 - She said Gary is no longer doing the marketing job.  Chuck Destro is
041602 - now doing that job.  His number is:  510 277 5255
041603 -
041604 - He has an office in San Ramone and also works out of the SF office
041605 - occassionally.  Cathy said she left a message on his voice mail to
041606 - call me.  If I do not hear from Chuck by EOW, Cathy suggests I call
041607 - him to schedule a demo.
041608 -
041609 -
041610 -