Attended a Storage Vendor conference yesterday; won’t bore you with the technology bells and whisles, but I will call your attention to a conversation I had with representatives of Seagate, Samsung and SalesForce.com. Seagate and Samsung have been watching the emergence of Salesorce.com intently, while SalesForce.com is just happy to see these other market participants because the net effect is to validate and support their position. The surprising growth of SalesForce.com in the Small Business (SMB) arena fairly confirms the notion that SMB’s are sick and tired of having to purchase upgrades/revisions, licenses and still more licenses to keep up. In the midst of that conversation, I began talking about the legal market in general and Lexis-Nexis (LN) in particular. At that point each of the other participants in the conversation was quick to point out that leaders in vertical markets make good takeover targets. Samsung for instance was quick to point out the subscription base of it’s e-Discovery service, Applied Discovery, which had processed 1.16 billion pages in 2006, having reached the billion mark in September, a year on year increase of 49%.
And as it turns out, Lexis-Nexis is more aware of these facts than I thought. Their tools are now being directed to users other than just lawyers. Example: CourtLink is being positioned as a new way to use court records. While most lawyers will use these services as intended, many non-lawyers (such as those with whom I work) will see this new way to use court records in a completely new light. In fact, what this really signals is LN’s effort to attract client(s) outside the legal market and build the feature that will make them a more attractive buy-out targe: subscribers. SalesForce.com admitted that the real change in their position can be attributed to addressing SMB’s, though the only way to make the model work would be through high volume. But you have to start with a profitable base first. The Seagate and Samsung representatives agreed. Their higher end products produce the profits that allow for the development of volume products. The grid is simple: the targe is where the lines cross between cost and units sold.
Ultimately, we can all agree that LN has ignored the SMB portion of the legal market because individual players were too small to justify the effort, expense, and attention that LN had to offer. But the reality of business is that you ignore customers at your peril. And in the legal market LN and others like it are just opening the door for corporate America to do what it does so well; buy the leaders and change the business model. When the inevitable happens I’ll be waiting to see how the market takes it all in.