NVIDIA Rolls Forward With Cloud Applications for Its Technology

In late March, 2014, NVIDIA and VMware announced the addition of NVIDIA GRID as an available application via VMware DaaS. On April 7, 2014, NVIDIA announced a win with Adobe’s Creative Cloud SaaS offer. NVIDIA GPUs now power the GPU-accelerated video features of this service from Adobe. But is there an important revenue opportunity looming from these wins?

Adobe’s Q1 2014 earnings report (http://wwwimages NULL.adobe NULL.com/www NULL.adobe NULL.com/content/dam/Adobe/en/news-room/pdfs/201403/Q114Earnings NULL.pdf) included mention of 22% growth in the number of paid subscribers to its Creative Cloud service for the quarter. A quick check of plans indicated a healthy $49.00 per month, per user, charge for the complete Creative Suite, including Premier. The NVIDIA GPUs are powering part of the premier component of the suite. So this win looks promising for NVIDIA.

The VMware DaaS offer is distributed through a channel strategy. The channel partners appear to be largely assembled from managed services providers and ISPs. So it’s difficult to estimate the revenue potential of the VMware win. But VMware is only one of three Virtualization options for NVIDIA’s Graphics-Accelerated Virtual Desktops and Applications (http://www NULL.nvidia NULL.com/object/enterprise-virtualization NULL.html) offer. Other options include Citrix and Microsoft. Therefore, NVIDIA has the distribution capability, in place, to satisfy consumer demand for 3D desktops, etc. as cloud services.

It’s also important to note the lack of competition in these markets. AMD’s Radeon Graphics Card Cloud offer is limited to the gaming market, which NVIDIA includes as one of the verticals addressed by NVIDIA GRID. But Radeon neither has a DaaS offer, nor a relationship with Adobe for its Creative Cloud offer. Intel, the last presumed competitor to NVIDIA in these markets, has chosen to address the hardware market for what it refers to as Gaming Innovation (http://www NULL.intel NULL.com/content/www/us/en/intelligent-systems/upping-ante-gaming-innovation-brief NULL.html?wapkw=cloud+gaming).

In sum, NVIDIA looks to have secured a unique market niche with these two prominent wins. Given the publication dates of these press releases, it’s not likely the May 8, 2014 quarterly report will include any substantive results, but it will, nevertheless, be interesting to hear what they have to say about the two deals.

Disclaimer: I’m long NVIDIA

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 Windows Phone 8.1, Microsoft Sees an Opportunity to Emphasize the Personal in the Consumer PC Experience

As Joe Belfiore, Corporate Vice President, Operating Systems Group (PC, Tablet and Phone) states at the start of his keynote presentation at Microsoft’s Build 2014 Conference (http://channel9 NULL.msdn NULL.com/Events/Build/2014/KEY01), one of the drivers for the Windows Phone O/S was to produce an experience “a little bit less like technology, and a lot more about you”. Belfiore then claims “we think Windows Phone is the world’s most personal smart phone”.

This preamble leads up to the public debut of Cortana, Microsoft’s personal assistant feature, which will be a very prominent new feature of Windows Phone 8.1 when it is released to the user community this summer. As Belfiore demonstrated, Cortana represents a substantial enhancement to the voice-activated capabilities of Windows Phone. The added power of this personal assistant amounts to a combination of a presumably embedded Bing client, and a set of data collection and analytics features designed to quickly put together a richly featured profile of the owner of the Windows smart phone.

All of the above is very significant, but I want to use this post to illustrate an important component of the Microsoft® computing brand. As I wrote in 2012, in a post to this blog titled Microsoft Understands the Evolution of Personal Computing from Desktop Computers to Handheld Devices, consumers now refer to PCs, but rarely to “personal computers”.

This evolution of consumer awareness of the “personal computer” into simply the “PC” amounts to bad news for product marketers of PC products, applications, etc. In its ad for the SuperBowl, in 1984, Apple at once echoed a comparable emphasis on the personal, but combined it with a notion of the Macintosh as the computer of “the revolution”. The outcome of this marketing communication effort is history.

But Microsoft certainly has an opportunity to reclaim the personal. Belfiore’s presentation of Windows Phone 8.1 at Build 2014 continues the branding effort for Windows Phone as the Personal Smart Phone (synonymous, for me, with the notion of computer), which I picked up back in 2012. This is good news for the Windows Developer community. It would be helpful if the Marketing Communications team could come up with a better method of delivering the same message to consumers.

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

IBM Acquires Silverpop — Just How Big a Market is Online Product Promotion?

On April 10, 2014, IBM® published a press release about its intention to acquire Silverpop (http://www-03 NULL.ibm NULL.com/press/us/en/pressrelease/43513 NULL.wss). Perhaps it will be useful for readers to consider the importance of this acquisition from a couple of different angles:

  1. How, if it all, could Silverpop (http://www NULL.silverpop NULL.com) leverage other components of IBM to deliver substantial return on this investment?
  2. How big a market are we talking about when we consider Silverpop’s niche?

1) Does Silverpop’s stated business model promise to leverage other IBM components? and does this synergy look like a promising, substantial, net positive contributor to IBM’s bottom line?

The answer to the first question is “yes”:

  • Silverpop presents what I would read as the core of its market message in a short video available for viewing on its web site. This video (which speaks to the efforts of marketing communications teams within a larger business) contrasts the telltale emblems of a mediocre marketing campaign (without Silverpop), to a personalized campaign, targeted to prospects (presumably with Silverpop’s software). IBM’s Watson could be the perfect complement for Silverpop, promising to provide a much higher level of personalization than could be achieved via other methods.
  • Cognos, and other pieces of IBM’s data analytics offer can add more value to Silverpop as clients look for metrics on campaign performance, and more
  • finally, a quick glance at Silverpop’s client list reveals a number of firms where IBM’s consulting teams are likely to be already established, and trusted providers.

Should IBM provide Watson and its data analytics tools as a backend to Silverpop, then corporate marketing communications should be able to produce, over time, a number of useful case studies, success stories, etc. illustrating how this backend played an essential role in the effort.

How big is Silverpop’s market?

The answer to this question is, in my opinion, “not big enough”. I point to an article written by Jack Hough, and published on the Barrons web site late last month: Google, Facebook, Twitter: Not Enough Dollars to Go Around (http://online NULL.barrons NULL.com/news/articles/SB50001424053111903536004579459602820639332). Keep in mind: Silverpop’s niche is a subset of the online advertising market, and, necessarily, of a much smaller size. Further, Silverpop has a couple of competitors in its market, Marketo and Oracle’s Eloqua. So, even if one assumes Silverpop emerges as the market leader, the actual contribution to IBM’s broad revenue performance may not be substantial.

Bottom Line

Nevertheless, IBM needs methods of demonstrating the power of Watson and its data analytics tools to the much larger enterprise business market for business intelligence solutions. The Silverpop acquisition promises to give them another show piece for this effort.

Disclaimer: I have neither a position in IBM, nor any verified statistics to substantiate claims I make in this post

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

Are Valuations of Cloud IaaS Offers Too High?

Are valuations of Amazon, Google and even Microsoft too high as the result of overly optimistic revenue growth assumptions for GCE, AWS and Azure? A brief look at why the value of any one of these offers may elude SMBs, reveals why inflated expectations may be at play here.

Reason #1: Marketing Collateral is Opaque for Average Business Users

It’s not likely a CIO from a $100 Million SMB is going to make much of the information Amazon provides on its Amazon EC2 Instances (http://aws NULL.amazon NULL.com/ec2/instance-types/) web page. When the sheer opacity of this promotional information is put together with a complete absence of easily accessible human support (I challenge the reader to find a telephone number for questions on any of the pages of the presentation), the inescapable conclusion is the target market for this type of an offer is a very small set of very large organizations in the public, private, and not for profit sectors.

How much of this very small market (composed, admittedly, of consumers with very large internal appetites) will any one of these competitors seize, and for how long? I argue all three services are completely targeted at the very same market.

Reason #2: Monthly Costs Are Too High for SMBs. Better Offers Are Available Elsewhere

For an average $100 Million SMB looking to use one of these three offers to provide a flexible, virtualized server platform for a big Microsoft® application like SharePoint® 2013, on premise, the monthly costs are simply too high. Amazon AWS, per a look at their publicly posted pricing schedule for IaaS compute instances on April 10, 2014, charges just about $1.28 per hour for the horsepower required to drive server, Search services, SQL services, etc. For 7×24 up time, we’re looking at $928.00 per month operating costs (this estimate is based on AWS’ “Windows with SQL Standard” offer and an m3.xlarge instance, which includes 4 CPUs and 13GBs of RAM).

It won’t take many months of this type of cost for the expense of opting for this support method to exceed the cost of purchasing an HP Blade Server with comparable specifications for physical support of the application on premise. Better yet, this same SMB can purchase vSphere from VMware and run its own internal private cloud IaaS off of the HP Blade Hardware.

Conclusion

Leading competitors for cloud IaaS offers are still focused on the very top of the market, without really viable offers for the vast market opportunity below. Unless/until these offers emerge, on premise alternatives still look like the preferred approach for SMBs.

Disclaimer: I’m long Microsoft, have no position in Amazon, Google or VMware.

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

Opening Day Keynote for Microsoft’s Build Conference, 2014 Follows a Familiar Pattern

In keeping with a pattern displayed during the opening day Keynote presentation for Microsoft’s 2014 SharePoint Conference in Las Vegas, the kickoff Keynote for Build, 2014 included some impressive statistics. These included the following claims:

  1. 1.5 Billion People Use Windows Every Day
  2. The Fastest Growing Smart Phone OS
  3. The #2 Smart Phone OS in Latin America, Central & Eastern Europe and Middle East and Africa
  4. 95% of Steam Gamers Running On Windows
  5. 443% Increase in Monthly Paid App Revenue

While each of the above numbers is impressive, readers need to keep percentage claims in perspective. In my opinion, claims 1), 3), and 4) are the most important.

Why Pt. 1), “1.5 Billion People Use Windows Every Day” is important

Regardless of anyone’s “explosive growth” claims for any competing O/S, or even suite of business tools (Word Processor & SpreadSheet & Presentation Package), a foundation of 1.5 Billion people using windows is simply unbeatable. As long as the foundation is preserved, once Microsoft produces an attractive tablet, smart phone, even a cloud suite of tools for consumers and business users, the product will be certain to produce substantial revenue for the company. In my opinion the Surface 2 tablet, latest Windows Phone O/S and Office 365 are presently achieving my objectives of market acceptance in April 2014.

Pt. 3) “The #2 Smart Phone OS in Latin America, Central & Eastern Europe and Middle East and Africa”

Any forward-looking analysis of the worldwide market for small, smart, mobile devices, includes a prominent role for emerging markets. So Microsoft’s position in each of these markets is acceptable, and promises to provide a lift for future sales. But the profitability represented by each of these markets is another subject, which I don’t want to present in this post. One last point I want to make on this statistic: Nokia’s announcement of an Android smart phone is important. The #1 Smart Phone OS in each of the above markets is Android. A price competitive Nokia Android smart phone from Microsoft will be a welcome addition to the product mix.

Pt. 4) “95% of Steam Gamers Running on Windows”

Microsoft has a very strong base of consumer appetite for the XBOX device and games built for the platform. As Microsoft reworks the branding on the XBOX device as a very attractive home entertainment solution, too, so much the better. Once again, the imperative is to retain the base of gamers while building out this new market.

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 Google’s Compute Engine (GCE) a Direct Competitor to AWS or Microsoft Azure?

Google publicly introduced its Google Compute Engine (GCE) (https://cloud NULL.google NULL.com/products/compute-engine/) as an actual product back in December 2013. A lot has been written about GCE since its debut, with specific reference to this product as a direct competitor to Amazon AWS. But the lack of support for any Windows O/Ss, databases, etc (at least as far as I could find) says they are in a market of their own.

Virtual machine offers for operating systems are limited to two Linux distributions: Debian, and CentOS. Where Amazon offers RDS for managing Oracle, and even SQL Server in the cloud, GCE does not offer a competitive solution. Neither has GCE magnetized a level of support from the developer community to successfully compete with AWS. Quite a number of third party Apps are available for AWS, including quite a few useful for managing SAP database products.

So what should anyone following the cloud market for IaaS and SaaS solutions make of the dramatic price reductions Google recently announced for GCE. I think it’s a mistake to plan on a lot of pressure on AWS from these price reductions. I think it makes more sense to read the price discounting as emblematic of difficulties Google has experienced spreading the word on GCE and capturing a sufficient share of the market for these services. Perhaps it’s safe to say Google GCE has simply been successful magnetizing interest from the Open Source community, all the way from early stage ISVs to larger organizations like the Institute for Systems Biology portrayed in a case study on the GCE web site.

In contrast, AWS has been adopted by organizations, here in the US, of considerable size, not the least of which is the Federal CIA. A lot of this success is likely attributable to the availability, through AWS, of support for databases, and related applications, written for Windows computing environments.

It’s likely Google will expand the list of GCE available VMs to include support for the Microsoft Windows computing paradigm sometime soon. But in the meantime, Azure looks a lot more like a direct competitor to AWS than does Google GCE

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 Behind Amazon’s AWS Activate Offer?

Back on October 13, 2013, Amazon debuted its AWS Activate (http://phx NULL.corporate-ir NULL.net/phoenix NULL.zhtml?c=176060&p=irol-newsArticle&ID=1863248&highlight=) offer. This program includes promotional credits, developer support, training, coaching, and a special toolbox along with the usual community support offer. There are two tiers of service: “Self Starter” and “Portfolio Package”. The latter refers to early stage businesses working with a set of venture capital firms.

All of the above makes sense. But early stage ISVs can’t, enmasse, simply sign up for the AWS Activate offer. An application is required for one of the tiers offered — “Portfolio Package”. The other tier — Self Service — also requires an application and isn’t available to some current AWS customers.

So how does Amazon benefit from the program? Some of the information required to answer this question can be found in a blog post written by Werner Vogels, CTO of Amazon and published on the same day as the press release. The title of the post is AWS Activate – Supporting Startups on AWS (http://www NULL.allthingsdistributed NULL.com/2013/10/aws-activate NULL.html). The post lists several successful businesses, including Pinterest, Spotify, Etsy, and Instagram. In the last paragraph of the post Vogels lists some other prominent businesses, not the least of which is Netflix, who are using precisely the same services as the ones offered in the AWS Activate service.

The real benefit to Amazon is, of course, the substantial usage charges the successful businesses listed on Vogel’s page pay for the use of the AWS services once they graduate from the program. Assuming the list of moderately successful businesses continuing to use, and pay for, AWS services post incubation stage is an order of magnitude greater than the handful of their enormously successful cousins, then it’s clear Amazon is benefiting substantially from the program. It may be safe to say most of the success of AWS, itself, as a profitable business unit within Amazon can be directly attributed to the kind of early support services and tools offered in this program.

At another level the AWS Activate service can be seen as Amazon’s effort to do its part to reduce the complexity of its IaaS and SaaS offer. Perhaps the approach they’ve taken with the AWS Activate service should serve as a model for competitors looking to make their own effort to ease the entry of new customers to their own Cloud offers.

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

Microsoft Introduces a Comprehensive Control Panel for Azure at Build 2014

Microsoft introduced a comprehensive control panel for Azure at Build 2014. This panel is presented in a video on MSDN Channel 9 titled Azure preview portal (http://channel9 NULL.msdn NULL.com/Blogs/Windows-Azure/Azure-Preview-portal). The narration is provided by Vishal Joshi, Principal Program Manager, and Azure Lead at Microsoft.

Microsoft has branded this new control panel as an effort to reduce the complexity of Azure. The Azure preview portal is presented along with a blog post written by Scott Guthrie, Executive Vice President, Cloud and Enterprise Group. Guthrie’s post is titled Microsoft announces new cloud experience and tools to deliver the cloud without complexity (http://blogs NULL.technet NULL.com/b/microsoft_blog/archive/2014/04/03/microsoft-announces-new-cloud-experience-and-tools-to-deliver-the-cloud-without-complexity NULL.aspx).

The video presentation captures the very wide reach of the controls, but doesn’t convey a less complicated process of managing infrastructure, processes, and people. Guthrie’s short post juxtaposes the inevitable complexity of a service like Azure, along with the preview panel as a method of at least simplifying the administrative experience for the user. When both the post and the video are considered, the new branding could use some further work.

On April 15, 2013, in a post to this blog titled How Important is the Useful Quotient for Elastic Cloud Services Like Amazon AWS? I stated my opinion of the imperative for AWS (and Azure, as its direct competitor) to simplify the management requirement for SMBs and other prospects lacking the highly technical internal resources otherwise required to get the service to work for them.

So Microsoft’s stated intention to remove the complexity of the process is a good start. But neither the video, nor Guthrie’s blog post actually convey any less a complicated experience. Microsoft apparently recognizes this obstacle. Hopefully in the near future they will present more examples of how they have worked to remove the complexity of managing Azure.

Should they manage to put together a set of tools accessible to SMBs, then the sales gains for the service look to be substantial. In my opinion much of the potential market for Cloud IaaS/SaaS offers has still not been reached.

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

Gartner Releases Its First Quarter, 2014 IT Spending Forecast

On March 27, 2014, Gartner, Inc. published a press release announcing public availability of its 1Q14 IT Spending Forecast (http://www NULL.gartner NULL.com/newsroom/id/2698017). The release mentioned some report findings:

  1. The top end market for “mobile phones” (Gartner’s term) continues to contract, while most of the growth in overall users is to be found at the low end, with smart phones powered by Android a clear leader
  2. The continued shrinkage in the number of PC users will carry with serve to further define the remaining market. This segment will be “more engaged” (quoted from Gartner’s release), which I interpret to mean more inclined to purchase higher end PCs
  3. The market for tablet computers and what Gartner refers to as “ultramobiles” will be characterized substantial growth (the “Tablet (Ultramobile)” category looks to nearly double in size from 2013 – 2015. This growth is not treated in the release, but is very much the subject of another Gartner release, this one dated March 27, 2014, and titled Gartner Says Worldwide Traditional PC, Tablet, Ultramobile and Mobile Phone Shipments are on Pace to Grow 6.9 Percent in 2014 (http://www NULL.gartner NULL.com/newsroom/id/2692318)
  4. Enterprise Software sales will grow the most, 6.9% year-over-year, and 12% from 2013 to 2014

1) Continued Shrinkage in the market for top end smart phones

Nothing new here, though I would caution interested readers to avoid the pitfall of assuming this, necessarily means lower sales growth for Apple’s top of the line smartphones. We need some glimpse into iPhone sales into the China Mobile market before we can reach a defensible conclusion on this one.

2) Buyers acquire fewer, more powerful and full featured PCs

If the PC sales forecast included in this report proves true, then a lot of the low end devices PC OEMs have pushed onto the market (as tablet competitors) may end up sitting on shelves. Acer and Asus may feel more of the pain. But HP has made some potentially risky changes in online buying options for the SMB and Home markets, which could contribute to some problems for them, as well (I will write a post to this blog shortly with further detail).

3) Tablet and Ultramobile computer sales look to be very robust for the year

The forecast of the number of new units sold is very impressive, but the actual dollar impact on overall IT spending from this segment is comparatively insignificant. Despite explosive growth, Gartner sees 4.4% growth, year over year from the devices segment. So is there much money to be made in these devices? From these figures I would say it make sense to answer this important question with some caution.

4) Enterprise Software Sales are the fastest growing segment

The big news here, which is to be found in the note at the bottom of the release, is the growing enterprise appetite for databases and analytics. This may very well point to good years for Mature ISVs, including Oracle®, Microsoft®, IBM®, EMC and SAP. Microsoft’s Cloud offers — Office 365 and Azure — may also continue to record very healthy sales figures, while IBM scrambles to increase its cloud real estate in a catch up mode.

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

Establishing a Reliable Notion About Enterprise Adoption of Cloud SaaS Offers

There are at least two useful perspectives anyone with an interest in the cloud computing trend ought to sample. The first of these is to develop a clear understanding of consumer appetite for these services. But the second, with equal importance, must include a correct understanding of why and how providers also benefit from the trend.

I think it’s safe to say the public is comfortable with the first of these perspectives. As well, a lot of the analyst community spends quite a bit of their time writing about, and discussing the explosive appetite cloud consumers have for these services.

But, I argue, a matching amount of time is not being spent exploring why mature ISVs have a comparable appetite for the same method of delivering software to customers. Back in 2012, in a post to this blog titled Cloud Computing and Software as a Service are Examples of Computing Products that Conform to Razorblade Product Design, and, in a few other posts I wrote around the same time, I presented my notion of why ISVs opting to deliver product via SaaS cloud offers stand to benefit, substantially. A component of this interest, on the part of ISVs, of course, will be to heavily promote cloud computing trends. Unfortunately, this promotion may create a false sense of the velocity of consumer appetite. So it is imperative for anyone following the trend to keep both points of view in perspective.

What’s prompting me to pick up on this point, now, is a disconnect I perceive between IBM and Microsoft with regard to the actual velocity of consumer transition to cloud computing SaaS offers. As I wrote earlier this month, in her presentation at Mobile World Congress, 2014, Ginni Rommetty, CEO of IBM®, referred to analyst estimates about speed at which enterprise computing applications are migrating to the cloud. Ms. Rommetty, as I wrote, mentioned a likely scenario where 15% of enterprise applications would be served via cloud, SaaS methods by sometime in 2016. Of course, 85% of enterprise computing applications will still be served on premise, if this projection is correct.

Turn to a presentation by Dr. Qi Lu, EVP, Applications and Services, for Microsoft® at Morgan Stanley’s T&T Conference, held during the first week of March, 2014. Dr. Lu notes: “One is computing moving to the cloud, and this is a once in several decade paradigm shift from mainframe to client server, client server to the cloud. That’s a massive change, creating a lot of opportunities for different types of products, and business objects. That’s number one.”

I strongly recommend anyone interested in this topic carefully investigate Dr. Lu’s and Ms. Rommetty’s claims before reaching a conclusion. The question is a complex one. It makes sense to maintain a skeptical stance when presented with simple answers to the question. I can provide additional recent pointers on this topic upon request.

Disclaimer: I’m long Microsoft, but have no position in IBM

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

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