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SaaS, cloud computing, virtualisation – few people in the real world know what these terms, so beloved of the IT industry, actually mean. But it seems a few CIOs could be a tad confused, too. At least, that is, according to a cover story in the September edition of Computer Business Review (CBR), a trade publication, which presents fundamentally conflicting views about the definition of cloud computing from two people in the business. One suggests it is no different from SaaS.
This ought to worry companies like Hewlett-Packard, which have staked much on the expectation that cloud computing will be the ‘next big thing’ in IT. Given the economic headwinds, companies need to know exactly what they’re spending their money on. Any confusion is likely to delay their investments even longer.
I picked up a copy of the excellent CBR at the IP’08/VM’08 show in Earl’s Court, London, and it turned out to be the highlight of my day. If fuzzy explanations are prevalent among some of the IT companies, then some cloudy judgement was on display here. Speaking as a journalist who’s been round the tradeshows circuit a few times, I firmly resent attending so-called ‘keynote presentations’ that amount to little more than elaborate sales pitches. If the likes of Avaya and Symantec can’t rise above this, they shouldn’t be invited to speak again.
Obviously, as a journalist, I’m looking for points of contention, but I would hope any diligent CIO would also want to see debate around the issues affecting the industry during a keynote session. He can get the sales pitch when he wanders around the exhibition floor.
That wasn’t the worst of it, though. To the deserved embarrassment of the conference organisers, a keynote presentation from Microsoft CEO Steve Ballmer, due to be beamed through on videolink, never happened (at least not when scheduled), owing to a technical fault. Sorry, but I can’t see anyone buying into these products if they fail to work at an event showcasing their brilliance. I’m sure I wasn’t the only one who was lured to Earl’s Court on the promise of Mr Ballmer’s contribution. I just hope his presentation – which was due to be recorded and screened earlier today (I missed it) – didn’t partly dwell on the wonders of videoconferencing.
Fewer banks, fewer customers for tech companies. That’s the quick sum-up of the latest dramas on Wall Street. Shares in Dell, the world’s second largest PC maker , fell more than 10% yesterday – hitting a 7 year low – after it said that fewer people than expected would buy its products this quarter. Lap-tops, as we noted in our previous post, will continue to grow. But Dell still makes more PCs than lap-tops, so its overall business will take a hit as the slowdown gathers pace.
Other tech stock prices have been tumbling this week, not so much because of Wall Street’s woes but because the stronger dollar means less value from overseas sales. Apple, Oracle, IBM, and Google are all down, while the NASDAQ was off nearly 5% yesterday in its worst day of trading since the terrorists attacks of Sept 9, 2001. But these kind of declines won’t last. True, the financial sector accounts for as much as 20% of the sales for some of the bigger tech players, but despite this week’s turmoil, banks aren’t disappearing. And true, the crisis on Wall Street will mean that servicing debt will get more expensive as the credit crunch rumbles on, but if the dot.com crash taught one thing, it was the meaning of financial discipline.
But back to lap-tops again. It’s worth noting that Apple has captured more than 10.6% of the US market in the second quarter of this year, up from 6.6% a year earlier. This puts it in fourth place, behind Dell, H-P, and Acer, which sustained a drop in share to 14.4% from 18.6%. The news has done nothing for Apple’s shares, which are down $3 to $124 this morning, compared to $170 just a month ago. A mark of just how skittish the current market remains, good news or bad.
“You actually spend more time in your browser than you do in your car,” Brian Rakowski, group product manager for Google’s browser project, told Reuters yesterday. If that’s really true, I had to take Google’s new baby out for a test drive. So, I’m using it as I type, flipping between tabs to pick up the graphic (left) and checking the general Chrome chatter.
Like most Google products, it’s clean and neat and somehow cuddly with its soft blue colours. It swept up my zillions of bookmarks, but I can’t find my RSS feeds. An attempt to chase these down through the help button was unsucessful. This glitch aside, there are two main improvements to browsing that Microsoft should study.
First, Chrome’s opening screen gives you a snapshot of all the sites you’ve recently visited so you can go right to your favourites and second, it prompts you as you type the name of the site you are going to, the way email programmes do with recipients’ names. Nice.
One of the Google video promos promises you more stability – that is, if you are doing your online banking on one tab and working on another, a crash on the bank site won’t slow down your labours one tab two. I’ve never had this problem with IE7 or Firefox so we’re back to cuddly, the missing RSS feeds and whether the quicker browsing tricks are enough to make me switch.
I suppose the thing that’s making me keep IE7 as my main motor for the time being was something unrelated to Chrome itself. It was a tick box under the download for Chrome. I nearly ticked it until I had a closer read. It said:
Optional: Help make Google Chrome better by automatically sending usage statistics and crash reports to Google.
Needless to say, I didn’t tick the box. I think Google knows enough about me already.
Following reports the whole project was malfunctioning, Android has turned up alive and ticking. Articles in several leading newspapers over the last few days have suggested the first mobile phone using Google’s operating system will hit the shelves before the end of the year. Germany’s T-Mobile could be the first operator partner, and Taiwan’s HTC the handset manufacturer.
Reactions to the stories have been mixed, and I’m siding with the sceptics at this stage. While I wouldn’t write off a company like Google, I remain to be convinced the ‘gPhone’ will make anything like as much impact as Apple’s iPhone.
On the upside, HTC is fast becoming a force to be reckoned with. It recently made gains in the smartphone market at the expense of Nokia, the Finnish market leader, and its latest handsets – including the HTC Touch and Diamond – have generally been well received.
But as far as I’m concerned these phones belong in the same category as the Nokia N95 – exciting, but not groundbreaking in the manner of the iPhone. Sure, there are reasons to doubt the iPhone will do all that much for operators’ service revenues in the long term. But the frenzy that greeted the launch of the iPhone 3G does suggest millions have already been sold. When figures are revealed in a few weeks, I suspect other handset manufacturers will be sorely embarrassed.
As for the gPhone, there is some troubling hearsay. Word has it the Android’s application store will make the iPhone’s look like a ransacked corner shop, because it will give software developers more freedom. But the arguments that Apple is restrictive have been a constant refrain over the years, and they haven’t stopped it running off with a huge market lead when it comes to products like iTunes.
What’s more, it’s apparently T-Mobile that will host the applications store, and not Google, and I can’t think of any mobile operator in the world that shines in this area.
Let’s face it, the gPhone isn’t going to be as ‘open’ as Google makes out. Another rumour is that Google will install its advertising software on handsets and grant users discounts if they agree to receive free promotions. But this is a very unproven business model, and it’s one that could generate friction between Google and its operator partners – just as Apple found out when it forced operators to split service revenue generated by the original iPhone. Given the current economic gloom, Google couldn’t have picked a worse time to launch an entirely new business based on advertising revenue.
Alarmingly, there has also been a suggestion that gPhone users will not be able to use any email system apart from Gmail. That’s certain to meet with a backlash. People are as reluctant to change their email addresses as they are their phone numbers – Gmail has a very small market share precisely because it was so late off the starting blocks.
Perhaps the biggest problem here is the involvement of several parties. Apple has been criticized for being a control freak, but its hardware and software come from its own R&D labs. It only has to find an operator partner and its brand reigns supreme. Google, on the other hand, is a non-entity outside internet search, desperate to become known for its other achievements. How does it do that without upsetting HTC?
As many new smartphones now have GPS software included, does this spell the end of the nifty GPS device? Our colleagues over at economist.com take up the story:
NORTH AMERICAN sales of GPS devices quadrupled between 2006 and 2007, to 10 million. The industry may sell 20 milion more this year, reports the USA Today. The devices are especially popular with business travellers, and with good reason: In an unfamiliar city, it’s incredibly useful to have a device that helps you find your way around. Need to take a client to a great restaurant? Need to find a branch of your hometown bank? Need to get from Point A to Point B in time for an important meeting? GPS devices make all of those tasks easier.
The cell phone totally changed the way people thought about voice communication—suddenly you could talk to anyone anywhere, not just in the office. The digital video recorder totally changed the way people watched television—suddenly you could watch your favorite shows anytime. Now, the portable GPS device is changing the way people think about navigation—suddenly you can find your way around anywhere. The hotel concierge, tourist map, and hired guide are looking increasingly outdated. Why pay for a different guide for every city when you can just bring your GPS system and have maps and points of interest at your fingertips?
But despite its recent successes, the GPS device industry does face a serious threat: the smartphone. Service providers are increasingly offering customers access to GPS functionality on their phones, and, as the USA Today article mentioned, “An army of start-up software companies is aggressively pitching [navigation-related] products to the wireless carriers in hopes of being able to sell to their customers.”
The GPS-enabled phone does seem to be the wave of the future. Still, obstacles remain. Current cell phone GPS systems are often slow and hard to operate. I’ve found dedicated GPS devices to be faster and more user-friendly. They generally have more points of interest pre-loaded, too. But in the end, this is likely to come down to a classic technological argument: should we use many electronic devices, each with a different function? Or should we use a single device that tries to incorporate many functions? It’s a tough question. Business travellers should choose wisely.
Yahoo! is facing an unprecedented brain drain, according to an story in today’s Guardian newspaper, as employees defect to rivals or simply decide they’ve had enough.
The latest to leave is one of the struggling dotcom’s most recognisable faces, and his resignation letter is bound to keep him in the public eye for a good while longer. Stewart Butterfield (pictured), the founder of photo-sharing site Flickr, must have raised a few chuckles (although probably not from his Yahoo! bosses) by writing entirely from the perspective of a veteran tin-metal worker disillusioned at his employer’s loss of interest in its core business as it transforms into a much bigger industrial concern.
Amusing though the letter is, I’m not entirely sure what Mr Butterfield’s getting at. Yahoo! never really had a core business of which to speak – it started out as a jack-of-all-trades portal – and the Flickr site Mr Butterfield developed was always a fringe interest, as an article in this week’s Economist points out.
If it’s any consolation to Yahoo!, Google has also lost a few executives of late – and that can hardly be down to any disappointment in the company’s financial performance. The trouble with dotcommers is that many aren’t motivated by stock options and free dental care. They just want to work somewhere cool.
If you’re not an employer, there’s nothing necessarily wrong with that, you might think. Except, of course, when the financial community can’t distinguish between what’s ‘cool’ and what’s ‘commercially viable’. As we’ve seen before, that’s too often been the case.
Apple’s latest cult gathering gets underway in a few hours, at which – it is widely anticipated – high priest Steve Jobs will offer up a new version of the iPhone to his slavering acolytes. This time, however, any technical wizardry is likely to be overshadowed by details of the commercial arrangements.
The religious-like fervour stems from the expectation that the second-generation iPhone will work on third-generation (3G) mobile-phone networks. Dull as that might sound, it’s important to some because the first version could only connect to the internet on slower mobile networks, or using WiFi – a technology that isn’t readily available outside coffee shops, airports and five-star hotels (which probably suits some iPhone users just fine).
Cheerleaders for 3G – who naturally include the cash-splurging operators – have been singing the same ditty for the past few months: that the iPhone met with a disappointing reception in Europe (where it has sold just a few hundred thousand units since going on sale late last year) because of competition from other handsets that are ‘3G-capable’.
Pretty much piffle. Deutsche Telekom, France Telecom and Telefónica didn’t tell iPhone customers they were getting a 2G internet service. They sold the device as a ‘mobile broadband’ gadget, just as vendors of the new version will. Some technophiles might have held off buying an iPhone after reading the network specifications. But most did for one overriding reason: it’s too darn expensive.
Which brings us on to the rather more interesting aspects of the launch. First, as is already well known from the spate of press releases dispatched by new Apple partners over the last few weeks, exclusivity has gone out of the window. It seems there are few big operators left that aren’t going to be selling the iPhone.
Second, while the original partners were tied uncomfortably to Apple, the next batch appears to have been cut loose. Revenue-sharing agreements look like an endangered species. And as they dwindle, so will the high upfront costs attached to the device. Some operators may even discount the iPhone to zero to spur adoption.
That doesn’t, of course, mean the iPhone will be cheap (according to the Guardian newspaper, UK customers getting them for nothing will have to pay at least £75 a month in service costs). But it does show Apple trying a different tack. And, frankly, it has little choice. IDC data shows its share of the US smartphone market fell last quarter from 26% to just 19%, and it is well off hitting its target of 10m unit sales by the end of the year (it is thought to have sold around 5m so far).
So is the iPhone finally due to go mass-market? Personally, I think prices need to fall a lot more for that to happen. But Apple’s targets are actually pretty modest. Simply introducing the iPhone to new geographical markets will spark some uplift in sales.
A lot, of course, will be down to the operators. The iPhone has gained a reputation in existing markets of being a luxury toy for wide boys and geeks. Altering that perception will take some clever marketing.
All dressed up and no place to go? Microsoft’s deadline for its US$41.2bn bid for Yahoo! has come and gone and the company remains undecided about what to do now. The fact is that the world’s biggest software company needs to act if it wants to prevent itself sliding into the status of a yesterday’s man in the fast-changing tech world. It’s shares have dropped 20% this year and last week it announced a 11% fall in quarterly earnings. It’s not even certain that an agreed purchase of Yahoo! – a clear second to Google in the online world – would return Microsoft to a growth path.
The company, however, is sitting on an embarassment of riches thanks to its near monopoly of the PC operating environment to date. It’s net cash as of March 31st was a stunning US$11.8bn, up from US$7.6bn a year ago. In its latest quarterly statement, Microsoft stated that about 9% of its pre-tax earnings came from investment income. If it can’t find a home for this money, it’s going to become a bank, not a technology company. In the meantime, it remains a very rich groom indeed.
While not exactly blue skies, there was a distinct lack of storm clouds in Oracle’s third quarter results released this week. True, the company came in at the low end of its own expectations, saying that software licensing revenues were up 16% for the quarter ended in February. It had been hoping for a jump of between 15-25%.
But Oracle’s recent acquisition strategy is providing a nice updraft. With a much stronger application software than IBM - and a wider middleware line-up than SAP - Oracle is now the only company other than Microsoft able to sell a full “stack” of software to corporate customers.
The results speak for themselves - new database and middleware licenses were up 20% in the quarter. And overall, Oracle took in $1.3bn in net income, an increase of 30%, on revenues which grew 21% to $5.3bn. The company’s CFO says that its taking more time to close deals these days but predicts that current quarter will see sales growth of 10-20%.
If the US is on the brink of recession, maybe someone should tell the folks at Oracle?
There’s been a lot of activity around mobile software platforms and application development this week. Microsoft has made its Silverlight web platform available on some of Nokia’s phones, Google has revealed that its own Gears platform can now be used on Windows Mobile devices and Apple is getting ready to launch its software development kit for the iPhone later today.
It makes the mobile sector sound like a rich emporium for the end user. But it really goes to show just how fragmented the industry has become. Take the iPhone, for example. It may be a great-looking device – possibly even a revolutionary design – but it presents third-party application developers with a tough choice. Do they invest precious time in writing a version of an existing application for the iPhone? Or is it better to invest those resources in coming up with a new application for a Symbian handset?
Making that decision probably means spending even more time analysing the market and trying to figure out whether the iPhone will become a serious rival to Symbian smartphones. And meanwhile the customer is left waiting.
Sadly, things look set to get even worse with the summer arrival of Android, Google’s hyped operating system for mobile phones. Android is eagerly awaited by those who reckon it will lower pricing and improve the experience of using mobile applications. Yet it’s described as “another bloody platform” by Carl Uminski, the chief technology officer of Trutap. That’s telling, because Trutap is exactly one of the third-party application developers Google would assume is on its side.
Uminski’s not the only one feeling exasperated. Charles Wiles says he’s working to bring Windows-compatible software to Android and other capable web browsers. Who is he? The product manager for Google Gears.
