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Customers Question Tech Industry's Takeover Spree
crimeandpunishment writes:
"When it comes to the world's largest technology companies, is bigger better? Maybe for the companies, but maybe not for their customers. Tech companies, which have spent $350 billion buying other companies over the past few years, have marketed their acquisitions as beneficial for their customers, offering them a broader range of products, and making it easier for one-stop shopping. But changes in customer service may be offsetting any benefit. In the words of the chief information officer for a large association, 'When the smaller guys are gobbled up by bigger guys, in theory it's supposed to be better, but in our experience it's been worse.'"
When has anything a company has done been for your benefit?
If I were God, wouldn't I protect my churches from acts of me?
This changes everything we know about big businesses and customer service.
Corporate actions that benefit the corporation (shareholders, management) rather than customers. And further benefit the bankers, lawyers, consultants, bankers, lawyers and more consultants.
Who the fuck cares about the customers anymore?
This seems to be a 'duh' article. We've seen this in so many sectors these days - aerospace (YoYoDyne^HBoeing), Banking (Goldman-Sachs), Energy (BP, ExxonMobilShellTexacoAndThousandsOfOtherCompanies). I can't think of any of these industries where customers benefited.
Faster! Faster! Faster would be better!
If people really want this free-market capitalist monstrosity, then they need to accept the fact that what is best for the *company* always comes first. It really irritates me every time I hear people complaining that a corporation is not thinking of its customers first, or its employees... That is not a corporations job. They're one and only job is to make money for their shareholders.
If you don't like this--as you shouldn't--then the system itself is what needs to be changed. Don't blame the individual companies--they are doing exactly what we have set them up to do. Capitalism itself is the enemy.
Sometimes this can be bad for consumers - small companies have to be far more competitive (good for consumers) than large companies. It can also be good for them, if the "gobbling" up refers to a new technology, as a large company can go a long way to promoting something new. (WebM? We'll see.)
IMDB, Zappos, Audible, Woot. What do they all have in common? They're all owned by Amazon, but you'd hardly know it from the outside. Amazon has given these entities quite a bit of autonomy, allowing their existing brand and customer service to continue.
Over seas customer service sucks! and some times they don't have any idea what you saying or what they are saying.
Why can't we use people in prison for low level cheap phone centers?
Takeovers are about reducing competition and increasing market share so the don't need to compete. One serious flaw in capitalism is that companies don't want to compete because it's difficult and generally not very profitable.
If you didn't come to party don't bother knocking on my door. Prince '1999'
This past week I had two very interesting customer service experiences -- interesting because of just how different they were.
I spent probably 5 to 7 hours on the phone with HP technical support last week, trying to get them to assist me with a problem we were having with a pair of ProLiant servers. I was shuffled around to multiple departments (and, judging by the various accents, I would say I was probably shuffled to multiple continents as well), each one telling me that the next guy was the right guy to talk to about our issue (which of course he wasn't). This was for a fairly simple question about the functionality of one of their server administration tools, that no one seemed equipped to answer.
Conversely, we also had a hard disk in a ProLiant server go bad. With the serial and part numbers in hand, I was able to get a replacement shipped within 10 minutes.
The two completely different experiences I had suggests to me that when companies get large, they get very good at handling the common support problems, like bad hard disks. They develop procedures that save both the company and the customer lots of time, and are relatively painless. But what's lost is the ability to handle the out-of-the-ordinary service needs that customers have; the company is just too big, and the support guy (let's be frank, in some call center in India*) just doesn't have the resources or the knowledge to handle the problem. This leads to a frustrating experience -- whereas in a small company, these things tend to be handled quickly, because the support guy can escalate easily.
*HP doesn't even try to hide that their support is outsourced to India. If you log-on to their professional support, you can tell right away by the names.
Nemilar http://www.techthrob.com - Visit Me!
Because, frequently, their English is worse than that of the overseas help desk folks!
Not so much the size as the MO of large IT companies. Create a shell of sales, marketing and consulting while all development, maintenance and support is hollowed out and internally "outsourced" to units in very cheap countries. Even though the quality of all three go down they manage to win bids by in theory offering the same as their competitors for less. In practice it turns out much worse than expect, but that's quickly forgotten during the next round of contracts again with a tight budget.
Live today, because you never know what tomorrow brings
A small company that has a few clients is more likely to provide very good support, as opposed to a large company with many clients. While large companies support large companies well, due to their capacity to effect change at scale, this is not the case of large companies supporting smaller companies. Typically, while say an account manager at a small company might do several things to streamline the benefits that their client(s) see, this may not be the case with larger companies which rely on various processes to get things through the pipe and ultimately down the line to their clients. Everything at scale will fail. One only has to look at government to see that being everything to everyone will ultimately not work. If you require 10 people to sign-off on a PO as opposed to 1 person then it's clear which PO gets completed first. Friction is the enemy of performance and the friend of low tolerance.
You were making some kind of point?
Something like half of all mergers/acquisitions fail to generate the returns expected. In such cases, it's usually the shareholders of the company being bought that reap the benefit (assuming they can dump whatever stock of the acquiring company they receive as part of their payment).
Think about it. It's basically a coin flip that company A buying company B will result in any benefit to the shareholders of A. If shareholders were truly wise, they'd tell management to just give them the cash they would have spent on acquiring a company. They'd make out better in the long run.
-- Fugacity: Confusing chemists since 1908
You're wrong, capitalism is not the problem. The short term, pump-n-dump traders are. No one who owns their own company looks to trim their staff this quarter to make an extra 2 cents a share and short themselves 10 cents a share over the next year. But that's what the pump-n-dumpers are all for.
It may seem better but it's worse. They say it's better but it's actually worse. Or to quote some guy: "in theory it's better, but it's really actually worse."
It wasn't until the late 80's IIRC, that the first software company takeover occurred: PR1ME Computer and MAI Basic4.
Up until then, software companies lived (and died) on their own. Though there was an awareness of takeovers in other industries, there was a pervasive sense that it would never happen in high tech. (At least at the companies I worked at.)
Then MAI Basic4 proposed a hostile takeover of the MUCH larger PR1ME Computer (where I was working at the time.). PR1ME took on a huge amount of debt to raise funds to buy out Bennet S. Lebow (sp?). Then followed several rounds of cost-cutting and layoffs.
I've survived several others since then. In every single case it had NO BENEFIT to the customer that I could see; it was ALL about corporate profits.
Yes, I know anecdote is not the singular of data, but thought I'd toss my first-hand experience into the discussion. (BTW this occurred not very long after Robert Morris unleashed the first internet worm; I was at PR1ME when that hit, too.)
Why can't we use people in prison for low level cheap phone centers?
Because cruel and unusual punishment is unconstitutional...
Why can't we use people in prison for low level cheap phone centers?
"That's an awfully nice computer you just described to me. Sure would be a shame if someone came by and crushed it. Are you interested in an extended warranty?"
"Are you talking to me? Are are you talking to me? I will destroy you!!!"
"Oh hello little girl, sure I'll help you. You know, I'm in here for being a friend to a little girl just like you."
"How the hell should I know, I steal 'em, I don't fix 'em"
Take overs remove competition without competition, there's no need to treat the customer well because there's no need to. Case in point: The big 3 auto makers. For decades they had control of the US market and produced complete crap. It wasn't until the Japanese got here and kicked their asses that they started to get their act together - and then failed and got their bailouts.
Airlines. When an airline has a route completely locked up - they treat you like shit.
Cable companies: local monopolies stick it to the customers because they can.
Car dealerships have a legislated monopoly. Same thing - stick it to the little guy.
Power companies. Telephone companies. ISPs. You name it.
Larger = less competition = screw people because they can.
There are no exceptions.
RIP America
July 4, 1776 - September 11, 2001
Most people only consider one class of "customer" when they make these comments -- those customers that the small company originally had. The small company is by definition, small. The loss of a single customer (especially a larger customer with a lot of licenses) can be a disaster. So they spend a lot of time and money catering to their customers in the form of directed enhancements, timely bug fixes, support staff that know the product (and frequently the OS, other common products, etc that might cause problems with the product). These customers are most certainly going to lose out in terms of support when the small company is no longer small (whether by purchase or just by growing past a threshold). Large companies have a completely different focus on support -- handling the support load efficiently becomes more of a problem than ensuring that every single support issue gets handled appropriately. It turns into a form of the good old 80/20 rule (though I would guess that the numbers aren't 80 and 20).
There is however a second class of customer. This is all of the large company's customers that may not have ever heard of the small company. Assuming that the small company provides a useful service, the large company's customer base will be better off for having it available (and this will typically be the vast majority of the total number of customers, again by the definition of "small" and "large").
Of course, that argument only applies if the small company is actually small in terms of users. The internet has enabled a situation where a financially small company can still be huge in terms of user base, but in these situations there's a good chance that support will actually -improve- under the larger company, simply by the fact that the larger company will (typically) have a larger support staff relative to the total number of users.
And as always, these are "typical" scenarios. I'm aware that there's probably loads of counter-examples.
Funny, our customers say the same thing! When they call for technical support they get someone speaking english with a horrible midwestern american accent!
(We have more clients in the UK, Australia, New Zealand and Canada then we do in the States currently. So even though they are dialing a local in country number, it's being VOIPed to our office in St. Louis, Missouri!)
"The problem with socialism is eventually you run out of other people's money" - Thatcher.
While I am somewhat skeptical of a lot of the take-over-artistry that goes on, regardless of industry sector(there seem to be a number of places where, under the right circumstances, you can make substantial money by causing even more destruction that gets externalized in various clever legal-but-slimy ways. Any circumstances that encourage the best and brightest in finance to act as, in essence, high class smash-and-grab thieves is pathological any way you slice it.) I find the tech takeovers introduce an extra complication:
Software maintenance and development is Hard. Much ink has been spilled on the Best Practices of doing it; but a lot of firms are still just barely hanging on. Any disruption to their development process or roadmap can set them back months or years. Since, in many cases, the point of doing a tech acquisition is to offer a "total package" or a "solution" or a "suite" this means that, in addition to all the institutional and job-loss shakeups, you suddenly have two or more development teams, each bringing its own nasty legacy baggage to the party, trying to mash their products into some sort of "integrated solution".
At best, this is an evolutionary process. Over a period of time, they manage to evolve the products toward one another and eventually end up with something nice and coherent and refactored so forth. More commonly, major differences and glaring integration issues persist longer than the customer would like, and niggling little oddities persist for years. Sometimes, some mental giant decides to solve the hard problem of legacy by throwing one of the products away(generally the one that isn't his baby) and re-writing it from scratch in the idioms of the other product. Hello major feature and stability regressions...
We use Altiris some at work, and they were recently aquired by Symantec *scary background music plays* who has embarked on the "rewrite virtually from scratch" path. They have some sort of pie-in-the-sky vision of a "Symantec Total Endpoint Management Solution"; but, until they get that working, their support for the last pre-takeover version has gone to shit and the N+1 version has massive feature regressions, including stuff we use all the time, all over the place, and is thus unusable to us. Unless they get their act together fast, we may be forced to bail entirely. Win7 finally has something resembling adequate first-party imaging and deployment features, and there are other tools, including some OSS, for system inventory and remote control....
I did level 1 technical support for a big software company (here in the US no less) for a number of years. The amount of information I had on anyone who called was always surprising to me (credit card numbers, what purchases you've made etc etc). The amount of information I could glean from customers just by asking was just as shocking (some of it was required for us to ask! - like collecting a credit card number for a billable case). I'm surprised actually we haven't seen more identity theft because of this.
Would you want a prisoner to know that stuff?
The driver for this trend is obvious. With the brutal cost cutting and streamlining going on across the board (except, perhaps, for the compensation of top executives), CIO's now need to be able to justify their continued employment by telling their CEO and board: "I cut the number of in-house applications from 900 to 150, the number of servers in the data center from 300 to 40, the number of IT suppliers from 23 to 6, the number of supported OS platforms from 12 to 4, the number of database platforms from 8 to 3 (etc)". Fewer sounds better and probably is better, even if those few cost more. Oracle, IBM, HP, Microsoft, SAP, and EMC are good candidates to survive the vendor cut list. Others, not so good.
Is really so 80's. Now shut up and buy this new widget from since there is no one else making them. And you WILL like it, or we will make you buy another in 6 months.
---- Booth was a patriot ----
Interesting that so many have asserted that the purpose for these large-scale mergers and/or acquisitions is to produce value for the shareholders. Any number of economic studies have shown that after a few years, the majority of such result in reduced shareholder value. A handful of executives make a lot of money; the investment bank(s) that orchestrate the acquisition make money; the shareholders on either side, not so much, if at all, unless they cash out quickly.
Having seen several from the inside, there's a secret code. When they say "synergy", they mean they're going to fire a whole bunch of engineers.
I do NOT want Microsoft anywhere near my computer, my game console, my instant messaging system, my email accounts, my banking, my online transactions, ATMs, my cellphone, my car.
DO NOT WANT.
When you acquire a smaller company, I don't start using your products because it now says "Microsoft". In fact, if I'm using a product or a service from a company which you buy out, I stop using said products or services completely. You buy companies, not their userbase.
P.S.: The only Microsoft product I would use is toilet paper. Feel free to put your logo on every sheet.
If all the bank, energy, media, communications, etc. mergers are any indication, I would say the customers are right. We certainly don't need any more "too big to fail" scenarios.
For justice, we must go to Don Corleone
In ANY industry, the bigger the company the worse is the customer service. Period, end of story. No arguing. Customer service from Microsoft or Oracle? Surely you jest. Service from your local pc repair guy? Almost always. Any smart corporation will avoid Microsoft and Oracle product for critical applications. But most corporations are NOT smart.
When a small company gets bought by a big company what the company gains with the funding they loose in the customer service that's just the nature of business in the modern day business market.
http://www.thetechnologygeek.org
There are different sort of takeovers, and they benefit different sorts of people.
For instance, when Microsoft bought FAST and incorporated the search into Sharepoint they made their sharepoint customers happy, however at the same time they ceased all development on the Unix and Linux versions. This merger obviously provided benefits to people, but not necessarily to the customers of the small entity.
As another example, when Oracle bought Sun, service went down hill rather dramatically and costs went up, on the other hand the alternative for Sun was likely bankruptcy so while as a Sun client you are worse off under Oracle compared to how Sun was, you're dramatically better off than you would have been under how Sun would have been.
Then there are win win instances like Google buying YouTube, YouTube is better resourced and still running, Google has a media distribution outlet.
Sometimes you get lose lose situations where a large company buys a small company to kill their product, which means the small companies existing customers screwed and the large companies customers don't get the benefits that increased competition might have brought to them.
Generally speaking of course the people who benefit from any merger are the people who own the companies involved. The people who own the buyer get rid of competition or gain a valuable asset, and the people doing the selling become stinking rich(or at least don't go broke), which is of course the reason sales are made in the first place.
Lets speculate that the world economy comes to a screeching halt. Say 20% what it is now.
If your market share is large, then you will survive and be able to rebuild quicker. Otherwise, if you've got little marketshare and income goes down by 80%, then you'll be battling with freelancers and small partnerships.
Maybe that's why they need a high market share, to be able to cut and rebuild.
We do.
Why isn't Govt offering software development services to small businesses?
I'd like to buy homeland for our 10 million people. http://twitter.com/mahadiga
I know some people who run their own businesses proving you wrong. My sister is one of them, with friends of hers she started an accounting business. She used to work for Ernst & Young but no longer.
Falcon
Should there be a Law?
I'd be thrilled to find a place here where small, independent businesses are actually thriving, but one doesn't exist.
Maybe where you live small businesses may be hard to find but not where I am. My sister runs her own business as do others I know or knew. I'm hoping to start my own small business. Now I know it's hard in some places, like Europe, but not in the US. Here's the small business stats from the US Census Bureau. The stats are a bit out of date, the latest numbers are from 2004 but I doubt the numbers have changed that much since then. One thing I find revealing is where it says "Since 1997, however, nonemployers have grown faster than employer firms." Nonemployers are the self-employed.
Also remember the vast majority of air travel is for business purposes, and those people are under the impression that they *don't* have a choice to just not fly.
Then they aren't paying attention. There's GoToMeeting as well as other ways to hold meeting online. Why businesses don't even need permanent offices now, they can rent temporary or shared office space now. Need to meet a client? Rent an office for a day. That is if meeting in a restaurant or cafe will not work. These offices even have broadband access, heck Barnes and Noble book stores have free wifi.
Falcon
Should there be a Law?
Why can't we use people in prison for low level cheap phone centers?
Prison labor can't be used to compeat against freemen. How would you like to compeat against prison labor?
Falcon
Should there be a Law?
Funny, our customers say the same thing! When they call for technical support they get someone speaking english with a horrible midwestern american accent!
Well dang. That's the most comprehensible accent we have to offer. Don't your customers watch any of our movies?
I have to say that Adobe tech support is quite possibly the absolute worst tech support I've ever seen from a major company.
For me that distinction goes to Gateway. The first PC I bought was from them and every tyme I called tech support, almost once a month in the first year, I'd be asked if I recently installed anything. If so I was told they do not support that, the only way to get the support is if I uninstall it or reinstall Windows and nothing else. They didn't get much more business from me.
Falcon
Should there be a Law?
The airline schedule their own flight on slot allotted by the airport. And the dirtiest secret is that the delay of the airline is generated by the airport firm themselves overselling and over-stuffing slots. Almost always, when no technical problem is involved, you can point the finger at the airport 8which by the way are also often private firm).
Years ago I implemented Brightmail for anti-spam. It worked well and its tech support was fast and knowledgeable. They were purchased by Symantec and support became difficult to reach, and ignorant about the product. Upgrading and maintaining licenses with Symantec became a nightmare, with (then, it's since been corrected) a Flash-requiring web site and paper licenses sent in the mail. Looking ahead and not liking Brightmail much, we purchased Ironmail appliances from Secure Computing. Their support was excellent. Now *they* have been acquired by McAfee, and their support has taken a steep downward turn. We use Zimbra - it's been acquired first by Yahoo, now by VMWare, which isn't bad because we use VMWare, except - VMWare has been purchased by EMC. EMC's labyrinthine support portal and seemingly dozens of layers of bureaucracy are soul-withering to muck through.
I worked for a very small and successful Telecommunications Enterprise Management company for about 11 years (up until a few months ago) called BillingIT.com / Information Strategies Group. It was entirely open source/linux. We had very large clients and processed A LOT of call data for these clients. The company grew slowly over the first 5 years growing only with profit and not via investors or venture capital or any of that nonsense. Then one day the head of the company got sick, the market was crashing left and right and he panicked and sold it to this company called Tangoe, Inc. Tangoe was a "glue enterprise level packages" together kind of company. They outsourced everything and even the stuff they built in house was just gluing other peoples stuff together. They believed this was the way to build a "global enterprise". Tangoe, Inc was never profitable nor any company their board members previously ran. In fact they all went out of business. They believed in order to build a global enterprise you didn't do that by being profitable. It was all about convincing investors to give you money and selling (lying) to your customers. They filled to go IPO a few months ago. I have left the company since and so have all the other senior engineers who built the original BillingIT Infrastructure. Within a matter of weeks things started to fall apart. Customers are suffering and the company is about to implode on itself. However, they might still be able to pull off the IPO and use the influx of cash to last a few months while they try to figure stuff out. Anyway, the point is any company who things they can grow by buying other companies have idiots as their directors. A successful solid company grows slowly and builds a strong foundation on PROFITS...but buying EQUIPMENT and have DATA CENTERS. Not this cloud computing nonsense where everything is outsourced and hosted elsewhere. Companies are becoming "holding entities" and "Frameworks" which don't do anything. As a result they have no product or service and their customers suffer. Just like Tangoe's customers. It's sad really to see a what was a great thing destroyed by some high school level adolescent view of capitalism.
Hello, this is Bubba with tech support. So, what are you wearing?
https://www.eff.org/https-everywhere
Hand in hand.
FRB requires an organisation to grow in order to pay the interest on it's debts. They continually have to generate more and more revenue. So they take out some bigger loans and gobble up competitors and get bigger. Rinse and repeat. Eventually there will be only one corporation, owned by the bank.
The availability of cheap credit is key.
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