Microsoft’s Enterprise Mobility Suite Quickly Magnetizes Interest from Enterprise IT

Microsoft® debuted its Enterprise Mobility Suite (EMS) (http://www NULL.microsoft NULL.com/en-us/server-cloud/products/enterprise-mobility-suite/default NULL.aspx?WT NULL.srch=1&WT NULL.mc_ID=SEM_BING_USEvergreenSearch_Intune&CR_CC=Unassigned) in May of this year. During the Microsoft Q4 2014 Earnings Conference Call, Satya Nadella, CEO, referred to this product as a “high value service [running] on top of our base cloud infrastructure”.

Readers may want to take some time to read the white paper offered on the EMS website. Given Microsoft’s longstanding position as the preferred desktop computing vendor for enterprise IT, it is likely EMS, which provides a combination of what Nadella summed up as “identity management, device management and data security into one IT controlled plane and architecture.” will magnetize some significant interest from its targeted market. EMS is a SaaS offering.

According to Nadella and Microsoft CFO Amy Hood, this is the case. Both referred to rapid adoption of EMS. Microsoft stands to benefit in several ways should EMS ascend to a leader position for the market: Certainly, businesses standardizing on EMS will constitute strong prospects for Microsoft’s own mobile devices — Windows Phone and Surface computers. But, further, since EMS is built on three other strategic products from Microsoft’s cloud SaaS portfolio — Azure Active Directory Premium, Windows Intune, and Microsoft Azure Rights Management — sales of EMS will, necessarily, also include sales of each of these components of the overall solution, which will horizontally distribute the importance of this solution, potentially opening consumption by SMBs.

The burning need driving market appetite for a solution like EMS is not new. BYOD and what is referred to as the “consumerization of IT”, as a technology trend, has been going on for sometime, perhaps dating back to the debut of the first Apple iPhones. But a solution like EMS has not been available. Perhaps, one can argue, Blackberry’s Device Management (BDM) solution can be looked at as a possible competitor, but BDM neither includes a native version of the Active Directory component, nor anything like Microsoft Azure Rights Management. No, EMS looks to be very well positioned to be a revenue driver for Microsoft, going forward.

Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

Office 365 Subscription Plans Evolve Into a Promising Revenue Opportunity for Microsoft

During Microsoft’s most recent quarterly earnings conference call numerous references were made by Amy Hood, CFO, and, I believe, Satya Nadella, CEO to Microsoft’s Cloud business proceeding at an annual run rate of $4.4 Billion USDs. This is a substantial number. Facebook’s annual run rate, per their latest 10Q as filed with the US SEC is approximately $12 Billion USDs. Google’s entire “Other” product revenue segment produced $1.6 Billion USDs for the latest quarter, only 9% more than the run rate Microsoft is claiming for its cloud offers (mostly Azure and Office 365).

The rate at which Office 365, specifically, is developing into a promising revenue opportunity for Microsoft should not be underestimated. We have first hand experience with the cost realities. We maintain an Office 365 E3 plan and a Dynamics CRM Professional plan. These combined plans are costing us $90 USDs per month. Assuming we are simply one of literally hundreds of thousands of SMB customers, one can quickly get a grasp as to how large the potential market is for Microsoft for this offering.

But it gets better. One of the most highly promoted features of Office 365, and the basis for a lot of the editorial content enfusing Satya Nadella’s recent presentations, has to do with Business Intelligence (BI) and Analytics. We purchased an Office 365 E3 plan in order to leverage some of these features, for example, SQL Server Reporting Services for SharePoint, and Excel Services for SharePoint. But Power BI (http://www NULL.microsoft NULL.com/en-us/powerbi/default NULL.aspx?WT NULL.srch=1&WT NULL.mc_ID=Unsassigned_BING_USEvergreenSearch_Unassigned&CR_CC=Unassigned), which includes Power Map, Power Q&A, etc, is now an extra cost add on service, which we will need to pay for. At a listed cost of $40 per user per month, we are looking at an almost 50% increase in our monthly subscription cost to add the service.

Are the benefits worth the expense? The answer will, of course, vary from customer to customer. But, for any SMB in a regulated industry, or any SMB doing business with larger companies with an appetite for BI reports, the answer will likely be yes.

Microsoft’s principal competitor for this type of service is IBM. To the best of our knowledge, Google has nothing close.

Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

What’s the Significance of an Enterprise Search Feature Capable of ‘Standing’ the Whole Concept ‘On Its Head’?

Sprinkled within Satya Nadella’s remarks during Microsoft’s Q4 2014 Earnings Conference Call (http://www NULL.microsoft NULL.com/Investor/Events/Presentations/2014/ERFY14Q4 NULL.aspx?eventid=144704) were some words about “Delve”. For readers unfamiliar with “Delve”, this new feature, which is only available via an Office 365 subscription, is a further refinement of something called “Code Name: Oslo”. “Code Name: Oslo” was presented at Microsoft’s annual SharePoint Conference, 2014, as something called “Office Graph”. Nadella noted “Delve will turn enterprise search on its head as information that is relevant to you finds you. Think of this as the Facebook suite for productivity.” The remark is a concise summary of the features of the product, with the allusion to Facebook serving as a placeholder for the Enterprise Social features of the product.

How big a market is there for “enterprise search”, and how does this market differ from the public “search” market? In this writer’s opinion there is a promising market for the type of substantial improvement to enterprise search Nadella cites as likely once Delve hits the “virtual shelves”. Almost every highly regulated business will want to at least take a look at the feature, if not purchase an Office 365 subscription to obtain it. FINRA’s 10-06 regulation, which requires financial services firms to archive Social Media conversations, represents yet another burden on smaller banks, brokerage houses, etc. Given the low per user cost of public Office 365 subscriptions, it may be safe to assume lots of these firms will want to at least take a look at Delve, and, therefore, consume some Office 365 subscriptions. Similar requirements exists for heavily regulated businesses in the health care industry. We can wrap up merely a cursory look at likely markets by including law firms in this category.

Another very promising potential inherent to Delve is any possible hooks to Cortana. Once again, for readers otherwise unfamiliar with Cortana, this product, which was recently announced during a debut of the new features to be included in Windows Phone 8.1, is Microsoft’s entry into the market for voice assistants, and can be seen as a direct competitor to Apple’s Siri and “OK Google”. Cortana has been touted as a method of leveraging Microsoft’s Bing Search Service via voice commands. If Cortana can also connect to Delve, then the whole mobile market for the above mentioned heavily regulated businesses may want to consume this new “Enterprise Search” whiz, as well.

Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

With One Windows O/S for All Screens PC Consumers Should Enjoy Much Lower Acquisition Costs

During Microsoft’s Q4 2014 Earnings Conference Call (http://www NULL.microsoft NULL.com/Investor/Events/Presentations/2014/ERFY14Q4 NULL.aspx?eventid=144704), Satya Nadella presented the notion of one version of the Windows O/S for all screens: tablets, pcs, laptops, smart phones, etc. If true, the reduction in duplication of efforts, functionality, etc. should produce PCs, laptops, etc. at dramatically lower costs for the 2014 holiday season.

Nadella framed this announcement within the context of describing an effort to reduce operating costs, which should make sense to anyone following Microsoft: “[the] [s]econd [principle of how we operate amounts to our effort to] consolidate overlapping efforts. This means one OS that covers all screen sizes and consolidated dual-use productivity services that cross life and work.

In turn, one Windows O/S will provide the added benefit of uniform delivery of features to all screens and devices, at the same time. The imbalance between the Windows feature set for RT and Intel platform devices should be removed. Consumer satisfaction should increase, while acquisition costs, as mentioned above, should be reduced. Finally, release of this new version of Windows will likely be welcome news for consumers from enterprise business who seem to remain unconvinced they have a burning need for a touchscreen O/S like Windows 8.1. The new O/S, as has been reported by the media, will have the ability to “autosense” computing hardware and serve up an optimum user computing environment for a mouse and keyboard user, while still serving up the now familiar touchscreen interface for tablet, smart phone, and laptop users with a touchscreen.

The potential impact of dramatically lower acquisition costs on the percentage of the consumer market deciding to use Windows O/S should be positive, particularly at the lower end, which is the predominant segment for emerging markets. Gains for Microsoft in these segments will likely mean market share has been won back from Chromebooks.

All told, if Microsoft is successful in this effort to consolidate versions of the Windows O/S, and the finished product is well received by markets, the impact on the bottom could be positive.

Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

Google Sites Experience Double Digit Revenue Growth in Q2 2014, from Increasing Sales of Online Advertising

Prominent among the financial detail included in Google’s Q2 2014 Earnings Announcement (http://investor NULL.google NULL.com/earnings/2014/Q2_google_earnings NULL.html) is a 23% increase, year over year (y/y) in the revenue performance for Google sites (Google, Google +, Youtube, blogger, etc), to $10.94 Billion, from $8.87 Billion for the comparable period in 2013.

In a webcast of the quarter’s earning results, Patrick Pichette, CFO, noted the revenue increase was “driven by strength in our core search advertising business”.

It is worth noting, on the other hand, less impressive growth for Google’s “Other Business” segment (which include all of the “other” Google product segments: Apps, Drive, Compute Engine, etc). The final quarterly performance for this business segment remained below $2 Billion ($1.6 Billion, or 10% of total revenue is included in the GAAP financial summary to be found on the Google Investors site). Patrick Pichette points to the Google Play Store as the primary contributor for this segment.

The real story, then is an increased global appetite for paid click advertising. Pichette sums up the quarter’s performance for the global click ad revenue group as a 25% improvement, year over year. This increase is, perhaps, even more impressive as the average Cost per Click (CPC) for advertisers declined, y/y by 7%. The Google Sites segment performance for paid clicks were up 33% y/y.

While Pichette did not offer any metrics as to the level of customer satisfaction with Google’s paid click products, it is likely safe to assume customers are increasingly more satisfied with their return on investment in this type of online promotion. Further, if Google’s performance for the 2nd quarter, 2014, can be seen as consistent with long term trends, apparently click product consumers are deciding to place more ads on Google sites, perhaps at the expense of the Google Ad Network.

This writer has first hand experience with the substantial effort Google has made, over the last 3 years, building a support apparatus for these click products, having been a participant in the Google Agency program. So, from this perspective, the success of these products over the quarter covered by the report is credible. Given Google’s cash on hand, it is probably safe to assume these efforts will continue, and will be further refined to produce even better results, going forward.

But the question looms even larger, post these quarterly results, as to the justification of Google’s market capitalization (approaching $400 Billion, US). As published earlier in this blog, the entire estimated size of the global advertising market cannot support this valuation if the dominant revenue driver is click advertising sales. Neither does the argument “they’ve got the cash, they’ll eventually get it right” hold up, in this writer’s opinion.

Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

Post 2nd Quarter 2014 Results, Does IBM Amount to a Promising Notion?

Despite a reported improvement in Earnings Per Share (EPS) of 34%, for Q2, 2014, IBM (http://www NULL.ibm NULL.com/investor/events/earnings/2q14 NULL.html) remains, in this writer’s opinion, little more than a promising notion of a business capable of producing double digit revenue growth, and even more profitability at some point in the future. Year over year, IBM’s revenue, worldwide, shrunk by 2% at Constant Currency (@CC). The shrinkage rate for some of this company’s products were firmly planted in the double digits (sales of IBM’s Power Systems declined by 29% @CC).

As has been the case for several quarters, the real story for this quarter can be found not in business growth, but in substantial reductions in operating costs. Selling, General and Administrative (SG&A) costs were successfully reduced by 16%, share buybacks amounted to $3.7Bil for the quarter, and $19.5Bil for the last 12 months. The $1Bil workforce re-balancing expense of the prior year was absent from this report, which contributed to the comparative increase of y/y profitability.

Some of the revenue highlights reported by Martin Schroeder, CFO, included 20% growth in IBM’s business in Brazil, and what he referred to as strong sales of the System Z Mainframe and storage systems. Schroeder also referred to the 2% y/y improved revenue from the Japan market as a strong performance for the quarter. SoftLayer®, which is an IBM offering for the global IaaS market saw sales growth of 1%. Another component of IBM’s cloud strategy, Bluemix (http://www-01 NULL.ibm NULL.com/software/ebusiness/jstart/bluemix/) only recently launched, and contributed nothing to the revenue mix for the quarter. Notably, Schroeder reported 40% y/y growth in SaaS development contracts. Sales of Tivoli systems were up by 3%, y/y @CC, which represented the 11th straight quarter of expansion for the product line. Finally, Schroeder reported IBM’s overall cloud business grew by more than 50%, y/y.

With these, at best, modestly positive revenue results, one might ask why the optimism about IBM’s prospects? In this writer’s opinion, the optimism is overstated. Perhaps the answer has to do with IBM’s announced partnership with Apple. Schroeder referred to this global partnership at several points as he reported operating results. For the record, with its large services organization, and stated intention to build its software business, IBM should benefit from any success attributable to the Apple global partnership. But significant gaps between predictions for the quarter for software sales, together with what might be fairly referred to as IBM’s own ambivalence about its semiconductor business (the entire business was put up for sale earlier this year, but IBM has recently announced an intention to invest $3B to research future chip design), might give investors a reason to listen closely to this quarterly report.

Disclaimer: I have no investment in IBM at this time, and no plans to make one in the near future.

Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

Is Enterprise Business Likely to Have Much Interest in an Apple IBM Alliance?

The “Global Partnership” announced on July 15, 2014, between Apple® and IBM may appeal to more enterprise business technology consumers than would otherwise appear to be the case. In a press release titled Apple and IBM Forge Global Partnership to Transform Enterprise Mobility (http://www-03 NULL.ibm NULL.com/press/us/en/pressrelease/44370 NULL.wss), the two companies point to an announced area of focus of this partnership on the enterprise business market for “enterprise mobility”. The plan will be to “[bring] IBM’s big data and analytics capabilities to iPhone®, and iPad®“.

Anyone following one of the partners in this global effort, Apple, and yet another major force in enterprise computing, Microsoft®, will likely remember another recent announcement, this one on the topic of the availability of the Office suite of desktop automation programs for iOS devices (including, once again, iPhone and iPad).

In light of these two recent events, Apple’s iOS platform takes on a unique position for the enterprise as the only mobile platform supporting not only the Business Intelligence (BI) power of Excel 2013, but also all of the power of IBM’s suite of BI tools. In addition, devices powered by iOS will likely fall under the umbrella of IBM’s Mobile Device Management (MDM) solution, MaaS360. In yet another press release from IBM, this time dated June 6, 2014, a public announcement was made of Gartner’s decision to include IBM’s solution in the “Leader” Quadrant of its 2014 Magic Quadrant for MDM – Report: IBM Named a Leader for Enterprise Mobility Management in Gartner Magic Quadrant (http://www-03 NULL.ibm NULL.com/press/us/en/pressrelease/44099 NULL.wss).

Based on the above points, in the opinion of this writer, the Apple, IBM Global partnership looks to be of strong interest to enterprise business here in the U.S. If the initial release of software wins marketplace acceptance, it will be likely the effort will expand, potentially to include follow-on efforts built for OSX desktop Mac PCs.

It looks to be a reasonable assumption the products produced by this Global partnership may take yet more market share from BlackBerry. After all, neither the BI applications promised from IBM, nor the Office suite, will run on any of the current set of BlackBerry Mobile devices. Further, while BlackBerry does offer an MDM solution, unlike the one from IBM, it is to be found in the “Niche Quadrant” of Gartner’s Magic Quadrant for MDM for 2014.

Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

Do Cloud App Consumers Really Want Merely a Simple Online Authentication System?

Anyone following media reports on the security consciousness of consumers of online apps, or the disinterest they exhibit in developing one, will likely be familiar with what this writer considers a long term trend to look for “something easy” to implement, even at the expense of any real promise of security. This trend was on display at the recent Google I/O 2014 Developer event. During the Android Apps for smart phone segment the audience witnessed a streamlined approach to device authentication. The presenter first noted how difficult it can be to repeatedly authenticate an Android smart phone via a PIN method, and then went on to show how the process can be circumvented by a new Android feature built on what could be called “proximity based authentication based on trusted, related devices”.

The presenter demonstrated a successful attempt to authenticate his smart phone via his Bluetooth smart watch. The phone had evidently been programmed to consider the smart watch a trusted object. So, bingo, with the smart watch strapped to his wrist, the presenter quickly gained access to the smart phone without any need to comply with the “complex” PIN method.

Anyone watching the web cast of this presentation will note the audience applause. So, it would appear, at least the app developer community favors this type of simple method of proving a user has a valid access to a device.

Fast forward a month after this event and read an article posted to the Wall Street Journal. This one, titled “The Password is Finally Dying Here’s Mine” (http://online NULL.wsj NULL.com/news/articles/SB20001424052702303984304580027312746874680) was published on July 14, 2014 and was written by Christopher Mims. Mims presents this demonstration as an example of something with a real promise of data security: “It might seem foolish to replace an authentication token that you keep in your head (a password) with one you keep in your pocket (like a phone) but consider: The former can be obtained by hackers, and the latter you can shut down the moment it goes missing.”

This writer has a few questions: 1) Just because an online hacker isn’t wearing my Bluetooth watch, does this mean he/she can’t spoof it? 2) What about a “brick and mortar” thief, who steals my Bluetooth watch and my smart phone and my tablet? What’s to keep him/her away from my data?

Mims goes onto refer to a user’s ability to “wipe” a device, meaning a smart phone, etc. Readers may want to maintain a skeptical attitude of this claim, as well.

Bottom line, given the pervasive insecurity of online data communications, one would hope app consumers (at least smart ones) would favor security over convenience.

Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

Google May Come Up a Big Winner After All in the Cloud IaaS Market

Amazon AWS may be the largest cloud AWS provider, with Microsoft Azure a somewhat distant second, but Google’s Kubernetes may change all of that. This likelihood runs counter to an opinion of this writer, which provided the content of an earlier post to this blog.

The earlier post, titled Is Google’s Compute Engine (GCE) a Direct Competitor to AWS or Microsoft Azure? contended Google’s cloud, IaaS offer, Google Compute was an unlikely direct competitor to Microsoft® Azure, given its lack of direct support for Microsoft’s line of proprietary servers.

There is no indication of any changes to this status quo in an article written by Quentin Hardy and published to the New York Times Bits Blog. Rather, this blog post, titled Cloud Computing Giants Add to Open Source Credentials With Kubernetes (http://bits NULL.blogs NULL.nytimes NULL.com/2014/07/10/cloud-computing-giants-add-to-open-source-credentials-with-kubernetes/?_php=true&_type=blogs&module=BlogPost-Title&version=Blog%20Main&contentCollection=Cloud%20Computing&action=Click&pgtype=Blogs&region=Body&_r=0) presents an opportunity for Google’s efforts in this market of, potentially, much greater magnitude.

As Hardy notes, and Mary Jane Foley confirms in another article on this topic, this time published on ZDnet, Kubernete is Google’s effort to offer the very rich set of tools it has developed to support its Search and eMail products to the developer community via an Open Source approach.

If the initial list of committed partners — including IBM, Microsoft and Red Hat — simply add Kubernete to their lists of supported IaaS components, the rate at which users consume these tools may take on geometric proportion.

In the case of Azure, the Kubernete tool set, per Mary Jane Foley, will be made available within Azure’s lineup of IaaS components for Linux. Since Google search remains Google Search, with every implementation, more consumers will be exposed to Google products, including PPC advertising.

The benefit to Microsoft looks to be the opportunity Kubernete provides, which may transform Azure into a much more appealing solution than has been the case.

In turn, since Amazon AWS has expressed no interest in signing on, a clear differentiator will likely be created between Azure and Amazon AWS.

Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

Do Enterprise IT Customers Respect Technology Tradition?

In a July 10, 2014 memo to all employees at Microsoft, Satya Nadella, CEO (http://www NULL.microsoft NULL.com/en-us/news/ceo/index NULL.html) repeated a position statement he originally voiced on his first day on the job as CEO. This statement positions “tradition” vs. “innovation” for the ISV business: ” . . . our industry does not respect tradition – it only respects innovation.”

At least three questions can be posed based on Nadella’s statement:

  1. Is it safe for anyone interpreting Nadella’s remarks to consider enterprise business customers part of the industry to which he refers?
  2. If this industry only respects “innovation”, how do we account for the perennial success management consulting firms like IBM, McKinsey, Booz Allen, CSC, HP, etc have enjoyed leveraging the famous “3F” rhetorical argument (“Feel, Felt, Found”) as they have pursued opportunities to collaborate with their customers?
  3. How does a very large business, staffed with a high proportion of personnel with a deep background in technology management consulting, implement Nadella’s position statement as an operative principal?

1) Should we consider enterprise business customers part of the industry to which Nadella is referring?

In this writer’s opinion the answer is “no.” Enterprise business customers have a long history of retarding the pace at which they have implemented technology. Perhaps this slow pace is less a matter of respecting “tradition” than it is a matter of operating within the boundaries of a sound risk management policy.

2) What about “Feel, Felt, Found” and the long track record of success of IBM, CSC, the “big 5″, etc satisfying enterprise business appetite for IT project management, and more?

Despite a recent critique of “Feel, Felt, Found” by some of the leading theorists in enterprise technology sales (principally Jeff Thull), this rhetorical argument still provides an important component for what this writer argues are most of the awards enterprise business makes for IT projects.

A recent, highly publicized award by the U. S. Federal CIA to Amazon, and not to IBM, for a private cloud can be cited as an example of a change in direction on this long standing policy. But, this award looks more like an outlier, and not the starting point of a trend with any real momentum behind it.

If we are an ISV implementing a policy of producing innovation, even at the cost of breaking with tradition, then what kind of staff do we need to succeed?

As written elsewhere in this blog, this writer holds the opinion marketing and sales personnel tasked with producing revenue from an enterprise business market will likely succeed if they can demonstrate a thorough understanding of the complex process large organizations must, and do, implement when they face a need to implement computer technology products, services, and even integrated solutions. This understanding, necessarily, must include an awareness of why, a good part of the time, it will not make sense for enterprise business customers to implement innovation, despite conflicts with a sound policy of respecting risk management (synonymous with tradition).

So, in order to achieve an objective of producing a lot of innovation, even at the expense of tradition, a different type of background will likely be required of personnel, if they are to succeed.

Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

Dansette