Mature ISVs converge and compete on the “productivity” theme

Microsoft, Google, and the recently announced joint marketing effort by Apple and IBM, are all presenting solutions to the consumer market for computing solutions around the theme of “productivity”. But, in stark contrast to how this type of competition plays out around commodity hardware (smart phones, tables, PCs, laptops), each of these ISVs is working hard to articulate a niche, highly differentiated message.

Satya Nadella, CEO of Microsoft mentions “productivity” as early as two and a half minutes into the forty nine minutes of the Microsoft Cloud Briefing (http://news NULL.microsoft NULL.com/2014/10/20/cloud-event-webcast/) event, which was held on October 20, 2014 in San Francisco. The core, mission-critical foundation stone of this brand message is, as follows: in 2014 there is simply too much information. Too much information results in no information (kind of like Samuel Coleridge’s line from his Rhyme of the Ancient Mariner, “water, water everywhere, but n’ary a drop to drink”). So the real imperative driving (and you can substitute your favorite mature ISV on this one) product marketing for computing is acquiring, understanding, categorizing, and prioritizing all of this information, behind the scenes (via machine learning) so an individual can do something with it.

Whether the solution is Delve, or Google Now, or Watson really doesn’t matter. Each of these intelligence platforms is out there to service individual needs to better manage information in a world where, literally, one thousand times the amount of information is available, at comparatively little or even no cost. Each of the competitors in this market is betting on the enormous value of this low cost pool of information, once it is packaged effectively, for consumers.

It’s refreshing to see how none of these competitors has reverted to a “competition to be the best” strategy. The market for the type of computing capability behind the notion of “productivity” as each industry spokesperson articulates it, promises substantial revenue. Treating it as a commodity would be real fool’s play.

Ira Michael Blonder

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

Microsoft’s October 20, 2014 Cloud Briefing includes some fine tuning for its “Mobile First, Cloud First” message

In the first few moments of Satya Nadella’s opening remarks at Microsoft’s Cloud Briefing, October 20, 2014 attendees were treated to a finely tuned presentation of the now familiar “Mobile First, Cloud First” market message. Nadella prefaced his remarks by referring to this brand message as “our world view”. He then defined “mobile first” as “the mobility of the individual experience”. Anyone familiar with Microsoft’s products, and how they have presented their offerings to consumers since they launched as a business in the late 1970s will note how this terse and absolutely to-the-point phrase binds 2014’s market message to the unique themes this mature ISV has articulated throughout its tenure as a business in the public eye.

Windows was first presented to consumers as a uniquely promising method for people to deliver a highly personalized experienced from small computing devices (which, themselves, were called personal computers, (PCs)). Different versions of this same opportunity could be distributed across organizations via the purchase of numbers of PCs. In fact, this purchase cycle occurred, and, now, PCs are ubiquitous.

Now the personal computing experience has evolved into the “individual experience” of Nadella’s opening remarks. His definition of the “mobile” venue for this individual experience provides him an opportunity to demonstrate why Microsoft’s commitment to delivering as consistent a computing experience, as possible, across the set of computing hardware an individual may implement during a typical day of activity, is so important. In turn, the effort to deliver this consistent computing experience from smart phone, to tablet, to desktop computer, to lap top, leverages scale.

By the time the audience digests all of this information, which Nadella communicates in less than 2 minutes of his opening remarks, it is likely clear why the Windows 10 Operating System (which was introduced only a month prior to this event) must be the same OS for each of the form factors we just mentioned.

By the time he mentions “cloud”, the importance of SaaS, and the power it contributes to this effort to deliver a uniform computing experience across the entire range of computing form factors should be clear.

In this writer’s opinion, Nadella’s ease in articulating this message, with authority, will contribute, positively, to enterprise business computing consumers. This is the correct market for Microsoft to pursue. Therefore, it makes sense to monitor, over time, how thoroughly this market assimilates the themes Nadella is presenting.

Ira Michael Blonder

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

Let’s not underestimate the importance of hybrid cloud computing to Microsoft’s recent successful business quarter

During Microsoft’s recent Q1 2015 earning conference call, Brent Thill of UBS asked a question at the start of the analyst Q&A. This question provided Satya Nadella with an opportunity to present something about the importance of hybrid cloud computing to Microsoft’s success for the quarter. When asked what makes Microsoft’s cloud experience different from its peers, Nadella answered:

“As it turns out the technology that we build for our cloud is what we incorporate in our server products, in fact our R&D expense is the same expense. And that’s made our server products very competitive. And so again those our traditional competitors we’re seeing significant share gains across the entire infrastructure line of our server products in particular. And we hope to architected our cloud very differently. We are the only hyper scale cloud provider that also thinks of our server product at the edge of our cloud.” (quoted from a transcript of Microsoft’s Q1 2015 earnings conference call as published on Seeking Alpha (http://seekingalpha NULL.com/article/2592085-microsofts-msft-ceo-satya-nadella-on-q1-2015-results-earnings-call-transcript?page=6&p=qanda&l=last))

The reference to “server product at the edge of our cloud” introduces hybrid cloud computing — where on premises and cloud servers are architected into a coordinated, comprehensive computing solution — to this otherwise purely financial discussion of Microsoft’s business performance for the quarter.

Microsoft certainly is uniquely capable of demonstrating the veracity of Nadella’s point, at least with regard to its more obvious cloud competitors — Google and Amazon. Noticeably absent from the comparison was IBM, which, (along with other mature ISVs firmly established in the typical data center for a large enterprise business), is, truly, an example of the only competition Microsoft is likely to face for this application of client server computing. Neither Google, nor Amazon supports an installed base of on premises client server computing for their own IP, so they cannot compete with Microsoft in the hybrid cloud computing space.

Regardless of who else offers solutions capable of satisfying enterprise business consumer appetite for this type of computing method, the appetite is nevertheless real and strong. A lot of research is available on the topic from most of the most popular analysts, but for readers otherwise unfamiliar with market demand for this type of computing platform, take a look at this blog post published yesterday, by Richard Fichera, and Analyst at Forrester® (http://blogs NULL.forrester NULL.com/richard_fichera/14-10-24-microsoft_and_dell_change_the_privatehybrid_cloud_game_with_on_premise_azure?cm_mmc=RSS-_-BT-_-65-_-blog_2625).

In this writer’s opinion a lot of the momentum in Microsoft’s cloud earnings report can, and should, be attributed directly the role played by Microsoft’s installed base of hybrid cloud systems. We have first hand, absolutely current experience with SharePoint and how organizations are implementing Office 365, SharePoint Online, in conjunction with SharePoint on premises. These organizations represent, literally, thousands of users. Therefore, the financial impact of this customer base should not be underestimated.

Ira Michael Blonder

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

Apple is likely to hit serious headwinds rolling out two innovations

Update: as of Monday morning, October 27, 2014, Bloomberg reported CVS had joined Rite-Aid is nixing Apple Pay

Apple doesn’t appear to have a lot of history successfully accomplishing change management campaigns, but, in this writer’s opinion, two recently debuted Apple iPhone and iPad innovations — a software reconfigurable SIM card, and Apple Pay ™ — will need change management to deliver on their promise.

It’s only been a a couple of weeks since the last of Apple’s big annual events, the presentation of new iPads in advance of the holiday buying season, but negative industry feedback has already hit the press for both of the above mentioned innovations. Rite-Aid corporation, which, currently, maintains a US network of 4.6K retail locations (https://www NULL.riteaid NULL.com/about-us/our-story) recently announced its intention to block consumers from using Apple Pay at the check out counter. AT&T also just announced its intention to stop its mobile smartphone subscribers from using the SIM reconfigurable feature built into the iPhone 6 family of smart phones and the iPad Air ver 2 mobile-connected tablets.

But both of these features are truly innovative, right? So what’s the problem? Perhaps adding some definition to the worn-out abstractions “innovative” and “innovation” helps here. Arguably products, services and even solutions cannot be judged to be “innovative”, or examples of “innovation” if they fail to streamline what this writer would refer to as the “total 360 view” of how they might be applied, implemented, and even planned for.

Apple’s software reconfigurable SIM card, and its NFC Apple Pay ™ hardware actually amount to a stake in the ground into two markets product marketing may not have planned for Apple to enter — mobile telecom, and retail point of sale (POS). But neglecting to plan for these points of entry can lead up to the kind of abrasion the public is witnessing, given the press announcements from AT&T and Rite-Aid. The phenomenon is a bit like Tesla’s changing fortunes as it finds itself dealing not only with issues familiar to automobile manufacturing, but the broader issues of employment, and the actual sales structure for satisfying consumer needs for the automobiles produced through the manufacturing effort. Tesla’s issues arose when it decided, and publicly announced its intention, of selling automobiles direct to the public, leaving out the car dealer middlemen used by every other automobile manufacturer.

In this writer’s opinion, the apparent holes in Apple’s product plan for these two new features of both its smart phone and tablet offers represent a breakdown in innovation. The holes should be filled in before Apple proceeds further. Disrupting industries and supply chains requires a lot of change management. If nothing else, these issues point to a big, new, opportunity for adoption champions to help Apple fill in the above mentioned holes.

Ira Michael Blonder

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

Google’s earnings for the latest quarter miss analyst estimates, leading to some negative sentiment on the long term health of its ad business

On Thursday, October 16, 2014, Google reported earnings after markets here in the US closed. Fiscal performance for the latest quarter failed to meet analyst expectations, for both sales and net income. A lot of business writers produced copy on the topic of whether or not Google’s performance for Q3 2014 says something about the future of their core business — meaning pay per click (PPC) advertising.

We think the quarter’s performance does say something on the above mentioned topic. Click advertising, with Google at the helm, has been a big example of how to move the kind of “lowest common denominator” marketing communications found everywhere on television, to the web. Instead of evolving into a tool promising big returns to average advertisers (meaning SMBs), PPC advertising has become even more difficult to capitalize upon, especially for intangibles.

This trend doesn’t look to change anytime soon. A big factor putting “meat to this motion” is the obsession of Wall Street with explosive growth. The only venue where advertisers can expect explosive growth in the number of ad impressions, is mobile computing, which is dominated by small screens (smart phones and tablets). So click ad campaigns have to be built to look good on “cards”, etc.

But does anyone looking for a complex solution to a business need think about surfing the “mobile web” from a smart phone to find a solution? We don’t think so. Apparently a lot of Google’s advertisers agree. The company reported an over twenty five percent drop in the rate of growth at which its paid click business is growing (17% for the current quarter vs 25% for the same quarter in fiscal 2013), year-over-year, for the 3rd Quarter 2014. This drop might not look like a big deal to Google fans, but to anyone considering the quarter from a perspective to render an opinion as to the long term viability of the click ad business, “it ain’t looking too good”.

We don’t think Google is especially pleased with its core business, hence all of the efforts it continues to make to horizontally stretch the horizon of its business into completely disconnected product paths. Maybe someone will sum all of this product marketing chaos into the picture of a “right move”, but we don’t think this likely until one of these forays into the “wild blue yonder” of tech product land takes off.

Will it be robotics? Self Driving Cars? Cheap DNA tests? Smart Phones as eye glasses? We’re not sure, but stay tuned. Google is sure to go there, and go there before anybody else. At least as long as they have the cash to pay for the ride.

Ira Michael Blonder

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

It takes more than design components to produce online editorial content likely to attract habitual use from readers

Medium (http://www NULL.medium NULL.com) and Tumblr (http://www NULL.tumblr NULL.com) both offer visually strong statements to readers. The editorial content published on both sites, from a visual perspective, can be said to be a consistent combination of very prominent images and text laid out with special fonts and background color. Ostensibly the presentation should drive engagement. But readers are likely to experience difficulty getting to the content they want as the result of less than ideal curation efforts. In the case of Tumblr, less than ideal curation, in this writer’s opinion, will likely lead to lower revenue.

There is no search box on Medium. Perhaps this is intentional. Tumblr has a search box. Running a query for “tech” brought up an enormous page of en vogue “cards” (if readers aren’t acquainted with “cards” they are the now familiar graphical branding for information on most smart phone displays and tablets with browsers trapped in mobile view only). While the presentations may captivate attention, a running list of semantic abstractions — “futurescope”, “thetechgets”,”prostheticknowledge” — are completely opaque, leaving readers with a simple binary choice: either jump in and search around on a hit or miss, or just pass. This writer opted to simply pass. It’s likely a lot of other readers will take the same course of action, if their reason for landing on Tumblr is to find something specific, rather than just searching around.

Missing a likely subtle nuance about the differences in behavior exhibited between business users after some specific information, and folks wandering around a super store, passing down aisle after aisle simply checking things out, is a real reason why, in this writer’s opinion, online promotion opportunities are just not magnetizing interest from any manufacturers of products requiring a considered purchase decision from prospects. Everything is boiling down to an appeal to folks buying toothpaste (and similar absolutely tangible commodities). This is not good, long term, for the health of the online click ad business.

From the appearance of content as published on Medium, in this writer’s opinion, Evan Williams and Biz Stone (both played a part in the original Twitter effort) wanted to represent a clique on line. Information is certainly not easy to find on the site. This is a shame. There is a lot of very useful content on Medium. It’s just hard to get at it.

Ira Michael Blonder

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

Once scoffed at as a shrinking and increasingly irrelevant market, enterprise business maybe a blue sky opportunity driving HP’s decision to split up

Have tech consumers located in enterprise businesses become the new, blue sky frontier for mature ISVs? If Professor Emilie R. Feldman is correct, then the answer is “yes”. She contends Meg Whitman’s decision to retain operational management control of Hewlett Packard, Enterprises is an example of just this strategy at work.

Readers can listen to a 20 minute discussion with Professor Feldman on this topic by downloading a podcast from the Knowledge@Wharton website. The podcast is titled HP and the Case for Corporate Spinoffs (http://knowledge NULL.wharton NULL.upenn NULL.edu/article/hp-and-the-case-for-corporate-spinoffs/). Bottom line: just 3 years ago, lots of cloud computing champions (and even, as we wrote back on December 11, 2011 in a post to this blog titled VCs that Know Nothing, the VCs financing their early stage cloud efforts) scoffed at enterprise markets as dinosaurs galloping towards extension. But Professor Feldman’s conjecture, if correct, about just why Meg Whitman decided to hold onto the throttle for the enterprise half of the business split, illustrates just how rich a pot of business enterprise markets actually represent to mature ISVs.

In late 2014 a lot of business discussion, and just how to value mature ISVs, amounts to close scrutiny of margins. As Professor Feldman notes, the margins enterprise business consumers are willing to support when they purchase products and services are just much higher than the margins the other side of HP’s business split, meaning the PCs and Printers business, is likely to produce. What’s driving this stampede to higher margin business is, of course, investor demands for not only healthy sales growth, but, even more, sales growth based on profits.

Prominent cloud ISVs, including Google and Salesforce.com (though Amazon.com hasn’t got a seat at this table), have either released recent products clearly designed to deliver revenue at better margins, or transitioned business management to people with deep experience successfully selling to enterprise business consumers. This is a healthy turn of events. There is never anything wrong with making money, and changing direction to pursue buyers with deeper products certainly amounts to a smart move. This writer suspects even Amazon.com will have to join this stampede sometime soon.

Ira Michael Blonder

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

SaaS offers running in the cloud, with full featured client side apps, hit some marketing head winds

As of mid October, 2014, two recent well publicized online security events — one related to Dropbox, the other to SnapChat and an app named SnapSaved — illustrate cloud hosts attempting to distance themselves from app developers providing the SaaS offer in the wake of a public online security event. If they succeed, app developers look likely to hit some marketing head winds.

The odds of this outcome went up when the ISV responsible for SnapSaved.com came forward and disclosed its intentional effort to compromise online security and privacy for consumers of its app. The details can be found in an article written by Mike Isaac, titled A Look Behind the SnapChat Photo Leak Claims (http://bits NULL.blogs NULL.nytimes NULL.com/2014/10/17/a-look-behind-the-snapchat-photo-leak-claims/?ref=technology), which was published on October 17, 2014. Consumers will not likely be reassured as the result of this admission of culpability.

Whether the intentions of the unnamed management team at SnapSaved.com were honorable, or not, has no material importance. But their admission to intentional malicious activity, together with their ability to execute on their objective with an app conforming to SnapChat’s specific requirements for interoperability is of critical importance. Leaving aside the question of how this admission will likely impact on individual consumers of the app, and of SnapChat, itself, let’s focus on likely reaction from larger organizations and the IT teams supporting them to this event. It’s likely larger organizations will take a harder look at their BYOD policies and procedures in the aftermath of these both of these events. Larger organizations do not want to work with lots of technology providers. So the tactics implemented by DropBox and SnapChat to distance themselves from culpability will not help either of these cloud offers to add further momentum to the pace at which consumers from enterprise business sign on and start using services. In fact the opposite is likely to be the case.

One glimmer of opportunity from these otherwise glum and business-depressing events amounts to whether or not EMM solutions like Microsoft InTune can be configured to manage just how consumers interact with an otherwise limitless list of apps, from an equally limitless list of ISVs, within the confines of specific corporate networks. If these EMM solutions can be set up to manage app consumption, independent of the cloud hosting the apps, themselves, perhaps enterprise IT organizations will have more of the stamina to brush off these events as anomalies likely to vanish in the future.

Ira Michael Blonder

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

When features reverberate from product to product, consumers are likely to become indifferent while markets take the on ramp to commodities

Over the last year, or more, the same computing hardware feature set — very thin portable computers with ultra sharp displays, light weight, and rapid boot times — has reverberated across devices from different manufacturers targeted to the same market. This type of condition is a harbinger of product marketing producing commodities, leaving little room for brand differentiation. It’s time product marketers did their homework. Consumers are not likely to be lulled into complacency and just continue buying new versions of devices they already own.

Apple’s recent debut of the “new” iPad Air 2 (http://www NULL.apple NULL.com/apple-events/2014-oct-event/) is a case in point. The web site promotion for this device emphasizes features already claimed by Apple competitors, principally Microsoft, for its Surface Pro 3 2-in-1 computing devices.

But if I’m someone who recently bought a Surface Pro 3, does Apple product marketing really believe I’m going to chuck my investment of somewhere between $1 and $2K, or more, to buy yet another product claiming to be the thinnest device ever? If they do, I’m afraid they’re not likely to successfully achieve their objective. As Dr. Michael Porter has illustrated, competition to be the best is a comparatively low profit, zero sum game.

What the Apple iPad Air 2, and Microsoft Surface Pro 3 MARCOM illustrates is a disconnect between personal computer product marketing and its targeted customer base. To be fair, the video included with Microsoft’s Surface Pro 3 debut did include several portraits of how customers are actually using the first and second generations of Microsoft’s Surface. Post Surface Pro 3 launch, Apple purchased a series of online ads, which were displayed on the New York Times web site, providing much of the same information about organizations using iPad tablets. But connecting with your customers and coming to market with inherently unique products, which, in turn, deserve a fitting MARCOM statement conveying what’s unique, and different about them, is something altogether separate from a set of portraits of how customers are using your light, very bright, and thin ultra portable personal computers.

Actually, connecting with customers, as a short video presentation titled Managing the Uncertainty of Innovation (http://t NULL.co/4UBy6ICae9) illustrates, is the kind of high-value activity early stage ISVs can and should use to mine for truly unique product notions.

No doubt the iPad Air 2 has some truly unique capabilities, which can be compelling for a specific audience/market, but the current promotion about the product isn’t getting this message across. The same opinion covers current promotional efforts for the Surface Pro 3, and even very high ticket software — Microsoft’s Delve, IBM’s Watson, and Salesforce.com’s entry into the same space.

Bottom line: “the same space” is a mirage. No two “spaces” are ever the same. Product marketers need to find out just what “space” they want to target and then go for it.

Ira Michael Blonder

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

Intel announces the debut of Core M Processors

During Intel’s Q3, 2014 Earnings Conference Call (http://www NULL.intc NULL.com/eventdetail NULL.cfm?EventID=149397), CEO Brian Krzanich announced the debut of the Core M line of core CPUs. The first devices powered by this new processor platform, per Krzanich, will come to market before the end of October, 2014. Computing devices powered by these processors, Krzanich noted, will feature “full core performance”, and a “fanless design enabling breakthrough designs and form factors”.

These processors appear to share a lot of the features of i3/i5/i7 cores powering Microsoft’s Surface 3 Pro tablet. Chip architecture permits a “razor thin design” (~9mm) and extended battery life (up to 9 hours). The graphics performance of the chipset has also been enhanced and optimized for online content.

The promotional content on Intel’s web site on this Core M chipset (http://www NULL.intel NULL.com/content/www/us/en/benchmarks/two-in-one/core-m-two-in-one-performance-video NULL.html) continues themes Microsoft employed during its debut of the Surface Pro 3: 2-in-1 devices are portrayed as viable replacements for “laptops”, which are characterized as slow, heavy, and inefficient. With these devices consumers will no longer have to purchase tablets for entertainment, and PCs for work: both functionality will be available from these 2-in-1 devices, and, Intel contends, with superior performance.

There is little indication this writer could find on Intel’s web site, or elsewhere, about specific devices running on one of these CPUs. Price point will certainly be an important consideration for Intel OEMs, so the early examples of devices powered by Core M processors may tell us a lot about just where Intel has assumed devices powered by Core M processors will be positioned in the market.

Emulating last year’s hot features — ultra thin form factors, long battery life, lightweight devices with high definition displays and graphics — may not amount to much in 2015. If the ASPs consumers end up paying for these devices hover around the price points for Microsoft’s Surface Pro 3 devices, we think market demand will be a lot less than hot, and restricted to the high end of the BYOD, consumerized IT segment.

It would be nice to see these processors powering devices in the $300 – $600 range. But, as of the date of this post, we have no examples to point to of what the street price will look like for them.

Ira Michael Blonder

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

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