Monthly Archives: August 2014

29
Aug

IBM has not exited the midrange enterprise server market, just the X86 segment

Posted by | Categories mature tech business | Tagged , , , , , , , , , ,

On August 22, 2014, IBM® announced a program to encourage Big Data and Cloud app development by Linux ISVs for its Power Systems servers. So it should be safe to say, despite selling their X86 hardware server business to Lenovo, IBM is still very much committed to a business strategy segment built around computing hardware architecture.

The notion of encouraging 3rd party application development for IBM’s branded hardware makes sense, but the past history of how well IBM has executed on similar opportunities is spotty, at best. The biggest example of IBM missing on these efforts, of course, can be found in the history of what once was known as the “IBM PC”, which is presently referred to simply as “PCs”. After first opening the market for an operating system, at the application layer, for its X86 processor architecture, in 1981; then partnering with Microsoft® for the O/S, and, later Intel® for mass production of chips running the supporting X86 firmware; IBM found itself exiting the entire business a short 6 years later in 1987. Somehow IBM failed to deliver on the promise of this device, to its own detriment.

Similar patterns of awkward relationships with third parties can be found in the history of what was once IBM’s core revenue segment — the mainframe computer. Almost all of the 3rd party developers for IBM’s mainframe platform have vanished. A brief look at the website of one of these, Cullinet (actually Cullinet came to life on hardware manufactured by GE, but later received a port over to the IBM mainframe) provides the telltale markers repeated many times, by other 3rd party ISVs writing solutions for IBM’s mainframe platform, over the years.

At the same time, the history of the core components of IBM’s Power System Server hardware (principally AIX) has been less than a complete success. Perhaps the promise of attractive margins is worth the effort represented by a program like the one IBM announced on August 22, but if IBM reverts to its familiar pattern of positioning its own mainframe computer line as a better solution to this midrange, distributed computing platform, the program results are likely to be disappointing.

Once again, watching the rollout of this program should be high on the list of activities worth some time for anyone with a substantial interest in IBM.

Ira Michael Blonder

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

28
Aug

Despite diminishing consumer interest in tablets across global markets, Intel remains focused on capturing more share

Posted by | Categories mature tech business | Tagged , , , , , ,

Anyone paying a recent visit to Intel’s homepage will note the promotional emphasis on tablet computers built on Intel’s processors. Despite holding the position of an “also ran” in the processor market for tablets, Intel still stands to benefit should it successfully capture share ion this market from its competitors (Qualcomm, NVIDIA, ARM licensees, etc). On July 24, 2014 IDC reported an 11% year-over-year growth, for merely the second quarter of 2014, in the global market for tablet computers to 49.3 million units. So there is clearly an opportunity here for Intel.

Intel’s path forward in the tablet processor market is more a two lane highway than a country walkway. One lane remains consumers after Windows 8.1 tablets, while the other lane is occupied with Android tablet OEMs dissatisfied with ARM architecture and/or how this processor platform has been implemented by Qualcomm, NVIDIA, etc. Earlier this year Microsoft was reported to be working with Qualcomm on a “Surface Mini”, but on May 20, 2014 Bloomberg published an article by Dina Bass and Ian King, titled Microsoft Said to Back Off Plans to Debut Smaller Surface, which reported this project had been put on the shelf. Intel processors power the new Surface Pro product line. Each of Microsoft’s OEMs have come to market with Windows Tablets. In each case Intel chips power these devices.

But the Android lane is presently wide open. The success of Intel’s strategy for the global market for Android tablets is, to some extent, dependent on its ability to convince Android firmware developers to switch over to Intel chip architecture.

Intel’s tactics align nicely with Microsoft’s efforts in this market. We wrote earlier in this blog about a partnership between Microsoft’s MSDN business and Xamarin. Xamarin’s counterpart in the Intel version of this tactic is Unity Technologies. Tellingly, readers visiting Unity’s website will note the same benefit statement promoted by Xamarin, essentially “write code once for any platform you’re after”. But unlike Xamarin, this benefit statement is not broadly applied across the whole range of software running on iOS, Android, or Windows, but specifically at game developers (who happen to be, one can argue, a big driver of consumer appetite for tablets).

It will certainly be interesting to measure Intel’s success, over time, in this effort.

Ira Michael Blonder

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

27
Aug

Perhaps the Uptick in PC Sales Markets are Experiencing Will Last Longer Than Expected

Posted by | Categories Investors | Tagged , , , ,

On August 21, 2014, Trish Reagan and Cory Johnson of Bloomberg discussed HP’s latest earnings report during Bloomberg TV’s “In the Loop” daily show. Johnson summed up cautious remarks expressed by Meg Whitman, HP’s CEO, during the webcast of the earnings conference call. Johnson quoted Whitman providing color to the 12%, year-over-year, increase in HP’s sales of PCs as attributable to a burst of buying from companies needing to migrate from Windows XP as the result of Microsoft’s decision to sunset support for this computing platform. Johnson quoted Whitman cautioning her audience the uptick was a unique event, and not to be taken, necessarily, as a signal of a sustainable trend. Johnson called the performance a “one time thing”.

But, perhaps, the uptick in PC sales promises to continue longer than even Whitman has led analysts and investors to expect. After all, during Microsoft’s most recent earnings conference call, Satya Nadella, CEO described the 2014 holiday shopping season as an occasion for shoppers to finally have an opportunity to acquire Windows PCs at price parity with Google Chromebooks.

Nadella based a prediction of lower average sales prices (ASPs) for PCs based, in part, on the lower licensing costs Windows OEMs will likely face as they preload the O/S to their hardware. In turn, these lower licensing costs, Nadella predicted, would be one of the benefits of a new version of the Windows operating system, which he reported to be in the process of being rewritten.

This new version of Windows, in this writer’s opinion, is a “one size fits all” effort for this desktop computing O/S. In other words, Microsoft should be able to distribute the cost of building one O/S, which will run on each of the form factors it targets, across the entire effort, and, thereby, lower costs to its OEM customers. A number of posts have been published, recently, to this blog discussing the likely impact of this new operating system, which Nadella described as capable of supporting the entire range of computing form factors Microsoft presently supports, from the same code.

If a new version of Windows is available for consumers for this year’s holiday season, the increase in unit sales while likely benefit Lenovo and Dell, as well as other so-called “Wintel” OEMs.

At the same time, it is also worth noting Microsoft’s intention to sunset support for Windows Server 2003. Data center sales deliver a bigger revenue contribution for HP, IBM (soon to be Lenovo), and Dell, than consumer PCs. So some segment of the enterprise computing market will likely start migrating out of Windows Server 2003 and up to a platform Microsoft continues to support.

Johnson also remarked cautiously on the decline in profits HP reported for this most recent quarter. In this writer’s opinion it should be easier for HP to return to earlier levels of profitability a quarter or two from now. The real challenge for HP was to return to growing sales. With this most recent quarter they have met the challenge, albeit just barely.

Ira Michael Blonder

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

26
Aug

A Final Word on Why the Debut of a New Windows O/S Should be a Very Positive Event for Microsoft

Posted by | Categories mature tech business | Tagged , , , ,

A surprising portion of analyst commentary on what the impact may be from Microsoft’s scheduled late September announcement of a new operating system has been decidedly pessimistic. But these analysts may be missing some points worth considering.

A recent example of some of this negative predicting can be found in an article published on August 19, 2014 to the Seeking Alpha web site. This article, written by Onuora Amobi, titled Microsoft Investors Need to be Skeptical About Windows 9, contends “Windows 9 will probably be a stop-loss Operating System, as opposed to true innovation.”

Anyone listening to Microsoft’s most recent earnings conference call would likely be very skeptical of Amobi’s contention. If Satya Nadella’s comments can be taken as reliable pointers as to where Microsoft is headed with this next release of its operating system, then we are looking at a piece of software incorporating an enormous amount of innovation. How else to explain the future promise of substantially less effort to upgrade systems or to add new functionality, which will be represented by the debut, perhaps in late September, of one operating system to service all of the device form factors marketed by Microsoft, from PCs, to tablets, to smart phones and even game controllers?

At the same time, the critically important question of quality of user experience, which Microsoft has always fought very hard to ensure, will certainly be made easier to achieve with Windows Threshold, or whatever, ultimately, Microsoft decides to name its new O/S.

Beyond Nadella’s remarks, there is ample indication Microsoft is entirely capable of delivering on this promise. As published recently to this blog, there have been a couple of recent examples of solutions, for developers working with C#, capable of delivering on this objective. One of these can be found in a partnership between Xamarin and Microsoft’s MSDN developer subscription business unit (Xamarin, in fact, is actually being promoted to the Android and iOS developer communities, as well), and the other in something called a “universal App”, which was introduced at Microsoft’s Build 2014 developers conference. In both cases the objective is to provide developers with tools to substantially reduce the amount of effort required to apply the same code to multiple computing device form factors.

In this writer’s opinion, the impact of a new operating system meeting the specifications Nadella spelled out will be very great, indeed.

Ira Michael Blonder

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

25
Aug

Has Microsoft Alerted Media As To Its Target Market And Its Niche for Windows Phone?

Posted by | Categories smart phones | Tagged , , , ,

A recent review of a new HTC One, this one running the Windows Phone 8.1 O/S, points to more work for Microsoft Public Relations (PR).

The title of this review is HTC One for Windows: Another Great Phone You Probably Won’t Buy. The writer is Joanna Stern, and the publication is the online Wall Street Journal.

Readers unable to read the entire article are encouraged to watch the 3 minute video embedded in the article. Why the writer would choose Time Square as a fair location to collect a sample of public opinion as to the popularity of Windows Phone (or the lack of it) eludes this writer. But, to give Stern the benefit of the doubt, perhaps someone in Microsoft’s PR team has identified mass market smart phone consumers as the target market for the Windows Phone 8.1 O/S.

If this is the case (and one must ask, with so many of these “reviews” producing nothing more positive than “it’s a great phone, but no one will buy it”, over and over again) then someone at Microsoft should take corrective action to ensure PR communicates the right message to the media.

In this writer’s opinion, the target market for a comparatively expensive smart phone like the HTC One, with the Windows 8.1 O/S, is enterprise business users (inclusive of the “fringe” created by the consumerization of IT and the BYOD structures enterprise businesses have constructed to support it). After all, what’s a tourist in Times Square going to do with Office? Office 365? Enterprise Search (for which Cortana will play a big role)? Yammer?

One can argue these consumers will be attracted to the camera on the phone, but the camera is not one of the “mission critical” features of this smart phone. The Apps we just mentioned, and to name but one more, Remote Desktop Connection, make up the solution for the burning need this target market has for the Windows Phone. In this writer’s opinion, making the rounds of mass media every time a new feature is added to the Windows Phone O/S, or even to inform them about the debut of the Surface Pro 3, only serves to render Microsoft’s products something less than what they ought to be.

Ira Michael Blonder

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

22
Aug

Have We Crossed the Windows Threshold?

Posted by | Categories PCs and Laptops | Tagged , , , , , , ,

On August 15, 2014 Mary Jo Foley published an article on ZDnet titled Microsoft to deliver Windows ‘Threshold’ tech preview around late September.

Subsequent to the release of Foley’s article, a lot of follow up articles were published on the same topic on familiar PC computing hardware blogs, including PCWorld, Computerworld, CNET and more.

But a core point of interest for most commentators, a rumored capability of this new Windows O/S to auto discover the computer hardware upon which it is running and to serve an optimized User Interface (UI) for it, popped up in the press months before Foley’s article was published.

This post is not a history lesson about rumored features of Microsoft’s next O/S, so it makes sense to take a moment to provide backdrop for why this topic is worth commenting about here.

Bottom line: “Windows Threshold”, and its capability to auto-sense hardware, promises to deliver substantial reductions in Cost of Goods Sold (COGS) for Microsoft. Satya Nadella, CEO, alluded to the promise of a reduced COGS based on one version of Windows for any/all hardware platforms during Microsoft’s most recent earnings conference call.

We assume our readers will be interested in any feature powerful enough to enable Microsoft to preserve gross margin, but still substantially reduce COGS. After all, without this feature Microsoft would continue to require separate versions of its O/S for different hardware platforms — Windows Phone, Surface, XBOX, and PC.

Back on April 2, 2014, in a video webcast of an interview between Charles Torre, a Senior Quality Engineering and Designer at Microsoft and Kevin Gallo, Director of Program Management, Windows Phone, Microsoft, mention was made of a “Universal App” process.

This webcast, titled What’s New for Windows and Windows Phone Developers, is devoted to a discussion of this new App development process, which Gallo defines as “an App designed to run across many different form factors, PC, tablets, Phones. The App adjusts itself so that the UI and the interfaces work across all of those different devices . . . ” (quoted from the webcast of Torre and Gallo’s discussion, which was held at Build 2014).

As we noted above, the big deal about this feature is the room it may provide to Microsoft, and to its OEMs, to offer consumers PCs at substantially lower cost, perhaps on par with the street price for typical examples of the Chromebook platform Google has developed and most prominent PC OEMs have opted to produce.

If this holiday season does provide the venue for a market debut for these lower cost computers, it may not be a stretch to see Microsoft reclaim some of the ground it appears to have lost to Chromebooks at the low end of the consumer PC computing market.

Disclaimer: I’m long Microsoft and have no position in Google as of the time of the publication of this post

Ira Michael Blonder

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

21
Aug

Microsoft Appears More Comfortable When Promoting Products to Developers

Posted by | Categories Communications | Tagged , , , , , ,

While one can argue Microsoft’s marketing communications targeting computer tech consumers often miss the mark, their promotional efforts targeting developers fare better. A good example can be found in a recent entry to the Office Blog, titled Connect and collaborate with the powerful tools in Office 365 for Enterprise.

Where the current video advertisement campaign for Surface Pro 3 fails to marry the showcased product with the human archetype a lot of the advertisement’s audience dreams of becoming, this short post does a better job of connecting these marketing dots.

The “dreamer” aka “Human as visionary” is certainly an attractive archetype for developers who build applications, and the business stakeholders sponsoring them. The editorial content of this ad explicitly presents the connection between this personality type and its various iterations across a presumed organization (or business), all the way from the CEO at the top, through the developers responsible for building the solution, and, finally, to the “workers” (perhaps end users?) who will consume the solution as they go about the task of successfully completing their work.

While the editorial content explicitly presents this connection, the method leaves something to be desired: “The CEO has a big dream. He is passionate about towers and wants to build the tallest one possible. He needs help to collect and share his ideas, and he needs a way to unite people under his cause. The CEO could benefit from Yammer.” The presentation is clearly a simplification. The reader can’t be expected to do much more than smile at such an attempt to present a rationale for collaboration.

But one of the videos embedded in this post, Office 365: Visionaries need great productivity and collaboration tools saves the day, for this writer, and provides the subtly the complete communication piece requires to make a lasting impression on readers.

It is a pity this same finesse could not have touched the video advertisement campaign for the Surface Pro 3. Regardless, it is highly likely Microsoft’s prime audience — enterprise business technology consumers — will find this post, which is good news. After all, this prime audience is more likely than average computer tech consumers to subscribe to Office 365.

Ira Michael Blonder

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

20
Aug

Microsoft Struggles to Promote the Surface Pro 3 to a Mass Market

Posted by | Categories Communications | Tagged , , , ,

On August 10, 2014 Microsoft debuted a new set of video ads for the Surface Pro 3. A lot of the ad content is comprised of a feature comparison between the Surface Pro 3 and Apple’s MacBook Air. A lot of opinion has been expressed about this set of ads as simply the latest example of an ongoing comparison, dating back to the late 1990s, when Apple kicked it off with its infamous Mac vs PC ads.

Does Microsoft stand to benefit from this approach? In this writer’s opinion the answer is “no”. The original Apple campaign was likely effective as the result of a successful effort to bridge the gap between product and consumer. The “Mac” of the ad amounted to one type of person (consumer), while the “PC” was a radically different type of person. The ad then left the viewer to identify with one, or the other. Much has been written about the success of this campaign, so there is no need for us to spend time exploring it further here.

The current comparison is strictly product to product. One can argue the music background on the first of the new ads, with its female vocalist, is suggestive of a personality type, but the actual content is strictly feature to feature review. But, this writer would argue, PC consumers buying Macs are buying them more for what a Mac says about someone who owns one, than the actual features of the device. Sadly, the round of ads from Microsoft fail to speak to this human behavior pattern.

These ads may run against the grain of enterprise IT organizations, which would be very unfortunate. These organizations are most likely to motivate corporate users to scrap orders for MacBook Air laptops and replace them with orders for the Surface Pro 3. Enterprise customers are accustomed to evaluating products head to head (so-called “best of breed” comparisons are the norm), but strictly on a feature basis, without any attempt to add tone to the presentation by associating buyer type to products.

Bottom line: these ads attempt to plant one foot on either side of a gap between consumer and enterprise IT. This posture is not sustainable. The next round should position the product on one side of the gap, and preferably the enterprise IT side, where Microsoft has more friends.

Ira Michael Blonder

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

19
Aug

Microsoft Provides Incentives for iOS and Android App Developers to Implement Xamarin with Visual Studio as their Platform

Posted by | Categories Cloud | Tagged , , , , , , , ,

iOS and Android App Developers comfortable building solutions with C# should consider adopting Xamarin with Visual Studio as their coding platform. Microsoft is offering some financial incentives for these early stage ISVs to adopt Xamarin. Additional information about these incentives can be found on a page of the Xamarin site, titled “MSDN”, which publicizes the Microsoft offers.

Xamarin is one of a number of cross platform development offers. The biggest difference between Xamarin and its competitors, in this writer’s opinion, is the role C# plays for the Xamarin solution. C# sits at the center of the Microsoft application development paradigm. But from the promotional content on Xamarin’s site, one would also think C# is the best method App Developers can implement to maximize the value of App architecture by reducing the time required to implement the same App functionality for iOS, Android, and Windows.

The Mono Open Source implementation of Microsoft’s .NET framework is also sponsored by Xamarain, so the role Xamarin can play for Microsoft, should they magnetize critical mass across the App developer community, should be very clear. Without developers it is not likely Microsoft will successfully capture more of the mobile App market than it currently has (generally acknowledged as somewhere under 5% of the global market).

Xamarin appears to be winning over some important adopters. A quick glance at the corporate icons on the bottom of the first page of the Xamarin site attests to adoption from some very large enterprises, including Dow Jones, Kimberly Clark, McKesson, Bosch Siemens, and NBC Universal. Quick adoption on the part of enterprise business and comparably sized organizations in the public sector would make sense given the dominance of the “Microsoft stack” across these organizations.

Of course, magnetizing significant numbers of App developers from IT, and their partners servicing Line of Business (LoB) units within the same enterprises with Xamarin may ultimately prove to be good news for Microsoft’s latest product with a claim to a fast launch — the Enterprise Mobility Suite.

At a minimum, anyone harboring deep skepticism about Microsoft’s chances of establishing a legitimate position in the mobile App market may want to re-think his/her position.

Ira Michael Blonder

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

18
Aug

Do Better Informed Consumers Deliver More Sales Than Their Less Informed Peers?

Posted by | Categories Communications | Tagged , , , , , ,

Implementing a strategy to better inform customers about specific differences between one’s product and a product manufactured by a competitor includes a tacit agreement to compete to be the best. ISVs should carefully consider the ramifications before implementing this strategy. With the exception of clones and direct copies, no two products are the same, nor are they ever targeted at the same consumer. So this strategy may not pay off as expected.

Anyone visiting Microsoft.com recently will notice a number of direct comparisons between the Surface Pro 3 and Apple’s MacBook Air, and the soon-to-be-released (this writer, who owns a Windows Phone 8.0 Nokia Lumia 925, would hope) Cortana personal assistant and Apple’s Siri. The underlying premise supporting this type of marketing communications is product equivalence. The Surface Pro 3 and the MacBook Air are two versions of the same solution, as are Cortana and Siri.

But, we argue, this underlying premise is a fallacy. Dr. Michael Porter has written about this competitive approach, and unfavorably. Dr. Porter’s ideas on the topic have received commentary in this blog before, so there is no need to revisit them. It may suffice to simply equate this approach with a “zero sum game”. One competitor wins everything, while rivals receive nothing at all. When the results are combined, the total is a zero — no one really wins.

One may argue this effort has a highly successful ancestor — the television ad campaign Apple undertook in the first year or two of the new century. This campaign purported to be a competitive comparison between Mac and PC, albeit in the form of two personae — one guy representing the Mac, and another, stiffer, bespectacled, stouter, more formal guy representing the PC. Regrettably, this argument doesn’t work.

The ad is actually a caricature of the “head to head” product comparison communications method. The subtle suggestion, of course, points back to the presumed male viewing the ad, to whom a question will likely appear (seemingly out of the blue), “do I want to be the Mac, or do I want to be the PC?”.

Unfortunately, the comparisons on Microsoft.com do not possess this same subtly and can only be construed as direct product to product comparisons. In the opinion of this writer, they are not likely to be persuasive and, even if they are, they will not likely lead to a lot more profitable sales.

Ira Michael Blonder

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