"The die is cast," declared Julius Ceasar, anticipating Microsoft's fateful decision to protect its Windows cash cow at all costs. Years later, as Joe Nocera eloquently opines in The New York Times, Microsoft has tethered itself to its Windows operating system and almost certainly lost its way on the Internet as a result:
...Windows is already dying a death by a thousand cuts. Yes, Microsoft still makes billions by selling pre-installed Windows via computer manufacturers. But ever-so-gradually, the Internet is upending its business model just as surely as it has upended models for the music, television and newspaper businesses....Bill Gates saw this coming many years ago.... But in the subsequent decade-plus, the company has been unable to keep it from happening. Think about it: do you really care anymore which operating system you use?
Microsoft opted to try to harness the web to accompany its desktop monopoly, but the web is too big to serve as handmaiden to any one company's monopoly. Microsoft needs to learn to serve the web, not the other way around.
The more Microsoft seeks to protect its past (i.e., desktop monopoly and all the revenue that comes with it), the less relevant it will be to the future. Microsoft hopes to straddle the two, and maybe it will succeed. But it's desktop anchor may well end up sinking the ship.
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Over the weekend two new open-source startups caught my eye (and my inbox): OrecX and Transverse. The first is notable for its demonstration that open source is ready for niche applications. The second? Well, the second is notable because after reading through its website I still have no idea what it does.
OrecX is a Chicago-based company that has created the first open-source call recording software company, targeting small businesses. According to the company, "Voice recording is high in demand to create an element of professionalism and quality customer service but because of its cost, it's been out of reach for many businesses."
Fair enough. So, OrecX aims to use open source to lower the cost of tailored voice recording solutions, which are normally priced at $1,000 to $4,000. I doubt many companies will actually customize OrecX's solution, preferring instead to tap into the cost savings, but that is one valid way to leverage open-source software.
Another way is that which Transverse, an Austin-based company, has chosen. Transverse is focused on expanding revenue opportunities for telecom providers with its Customer Asset Management solution and blee(p) platform
Hmm...what does that mean? From the company's website:
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A few months ago Sam Lawrence of Jive Software spent some time grading Forrester and Gartner as analysts. His verdict? Neither does a fantastic job, but Forrester is much better at servicing a small but growing vendor like Jive.
My own experience with analysts is mixed. Analysts tend to be great at predicting the past, but far less adept at predicting the future, which is actually what customers expect from them. If you look at such things as Gartner's Magic Quadrant, it is great at showing where the industry was, rather than where it's going.
The problem is that analysts like Gartner get their information from the vendors that subsidize their research, as well as from CIOs. Neither is a good indicator of where the market is going.
As Billy Marshall classically wrote, the CIO tends to be the "last to know" about new IT initiatives. As for the vendors, the only ones with enough cash to subsidize research are the same ones that have a vested interest in protecting existing cash cows. In other words, the past.
Analysts, then, are a lagging indicator of success. They tell an enterprise buyer from whom she should have purchased software and hardware a few years ago, not where she should invest IT dollars tomorrow. As an example, despite the massive influx of open-source vendors in the enterprise, Gartner persists in believing that open source is years away from making a dent in the enterprise, and you'll rarely find an open-source vendor in a Gartner Magic Quadrant. Here's a recent Magic Quadrant for Business Intelligence. No open source need apply.
Putting open source aside, some analyst research is so egregiously off that it's almost comical.
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While unit sales of mobile handsets are growing, as Ars Technica reports, the leading mobile operating system, Symbian, is on the decline. Perhaps it's time for Symbian to accelerate its plans to open source the operating system?
Symbian's dominance in the smartphone space has been taking a hit lately at the expense of other platforms, including Windows Mobile, the iPhone, and open-source alternatives that reduce licensing costs and offer more flexibility. Symbian's business model and development strategy were out of step with the direction in which the industry was collectively moving....
This prompted Symbian's move toward open source, one that seems to be progressing slowly, perhaps due to the search for an executive director for the Symbian Foundation. With Google starting to get its act together on Android, as well as LiMo, Wind River, and other Linux alternatives kicking in, Symbian doesn't have much time.
Symbian needs to not only improve its operating system (OS) story with open source, but it also should look at how it can facilitate the mobile web, similar to what Google is doing for the "PC web" with Chrome. Given my involvement with Volantis, an open-source mobile content optimization company, it's perhaps not surprising that I believe one step would be to blend Symbian's OS with an open-source mobilization effort like Volantis' Ubik.
In other words, take two steps forward - open OS and open mobile content - at the same time to leapfrog other competition content to take just one step forward (open OS). When competing with Apple, in particular, which has made the mobile web less "mobile" with the rising iPhone, Symbian needs more than just an OS.
Google recognizes this with Android and is heavily investing in an application market. Symbian doesn't have the focus to be able to worry about applications, at least not now. It could, however, open the web. Ubik (or some other solution) could help.
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- LiMo,
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I loved this presentation by David Heinemeier Hansson of 37Signals. His topic? How to make money as an online software company.
His verdict? Charge for your product, but be careful whom you charge.
Chris Anderson elaborates on this theme:
37Signal's secret is not to target consumers (who don't like to pay) or big companies (that's a crowded space). Instead, they target the "Fortune 5 Million"--small companies with specific needs that are underserved...
It's interesting how closely some of Heinemeier Hansson's ideas map to the commercial open-source world, in which charging for one's value is, as Roberto Galoppini suggests, not always straightforward.
Why? Because proprietary vendors have long conditioned customers to expect to get charged for the wrong things or, at least, to expect to get charged too much for the right things. Larry Augustin suggests, in response to a post of mine, that "one of the things companies using an open-source model need to do is make sure they get paid for up-front costs up-front." Easier said than done.
As Larry summarizes, enterprises have been conditioned to expect their vendors to dump all the risk of a software decision on themselves. They try to "get back" at the vendors by writing punitive terms into license agreements (e.g., acceptance periods that make revenue recognition difficult), requiring the vendor to jump through demos and pilot hoops upfront at the vendor's cost, and more.
Hopefully, as enterprises come to invest more trust in the open-source vendors, some of these practices will fade and the process for selling software services will level out. In the meantime, however, Heinemeier Hansson has it right: you need to charge for your product, and usually whom you charge is much more important than what you charge.
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Valleywag is reporting that Michael ("Monty") Widenius, primary author of the original MySQL database and one of the company's founders, turned in his resignation to Sun yesterday. For those inside the MySQL team at Sun, this will likely prove bittersweet.
Bitter, because Monty has been such an important architect to the MySQL database's technical success. Sweet, because Monty sometimes took public positions against MySQL AB, the company that has been attempting to profit from the database.
Monty was involved in Drizzle, the MySQL fork that need not have been (and, in my opinion, should not have been). Monty publicly came out swinging against MySQL's plans to offer commercial extensions to the core MySQL database, contradicting and complicating the company's decision.
At this point, however, Monty has done the right thing with his dissent. He has taken it outside the company, as Arjen Lentz, MySQL's twenty-fifth employee, did before him. Arjen continues to be both a promoter and critic of MySQL, but is able to do so publicly without the constraints of an employee agreement.
I assume Monty will do the same, and rightly so. I'm sure MySQL/Sun will welcome Monty's feedback on both product and revenue strategy. But it will be a bit more palatable to have that coming from outside the company, rather than appearing to come from inside the company, in contradiction to the company's public position.
I, for one, wish Monty the best. He has been a great asset to MySQL as an employee. No doubt he will continue to be such as an interested observer outside the company. So what's behind Door Number Three, Monty?
There's a lot of great commentary out there on Google's new Chrome browser, but the most insightful and incisive review I've seen thus far is Andrew Orlowski's piece for The Register, wherein he calls out Chrome as a "Trojan Horse for...Google Gears."
Today, Chrome is simply a technology demonstration - and I can't see Firefox users with their carefully-cultivated selection of add-ons, or Opera users, making the jump any time soon. But Chrome is a Trojan Horse for bundling Google's Gears onto your PC - and in the hope that manufacturers look to Google services for new Eee-type lightweight PCs, perhaps running something like gOS, the Ubuntu-derivative.
Gears is simply designed to make Google's online services more attractive, and makes it looks like Google's is setting the standard: leading where everyone else follows.
No one thought this was just about building a better browser. In that department, Firefox is and will remain the hands-down favorite for anyone not shackled to Internet Explorer (and Firefox is much faster for most applications). Indeed, I suspect that Firefox still has a big hand to play on its own as the standard platform for Web applications.
But Google is about to crank up its Microsoft-killer strategy a notch. Adding a retail component--built on top Ubuntu, most likely--would be the finishing touch. But long before Google takes that road, it needs to get application developers in its corner. Enter Chrome.
It's an interesting play, and certainly one worth watching as the juggernaut of the desktop (Microsoft) dukes it out with the juggernaut of the Web (Google). Fun times.
I never expected Hulu to work out, but according to ReadWriteWeb's review of a recent report from LiveRail, it may actually be doing better than YouTube in terms of online video monetization.
Why? Because Hulu is apparently able to sell ads against 100 percent of its video inventory, while YouTube is struggling to hit 3 percent. User-generated video content, it would appear, is not nearly as lucrative as selling advertising against professionally-generated video content....
Hulu has better content, and higher quality of video, even though it has far less overall content. According to LiveRail, Hulu hosts 88 million videos, compared to YouTube's 4.2 billion. When I want a Saturday Night Live sketch, however, I find it on Hulu, not YouTube (at least, not for long on YouTube).
Less content, but better, seems to pay, at least in the video world.
Even so, is it just a matter of time until higher bandwidth commoditizes video, as well, to the point that it will be as "worthless" as text? Maybe. At that point, it would make a lot of sense to bundle in pricing for video with my monthly ISP subscription. I'm happy to pay. I just don't want to have to think about it. Make online video payment as easy as paying my cable subscription.
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For many companies, one million users is a big deal. For Microsoft, however, it's a rounding error.
As reported by The Register, Microsoft announced that it has managed to attract one million users from "schools, businesses and home[s]" to its Office Live Workspace Beta experiment, which allows people to run scaled-down versions of its popular Microsoft Office products online. For those skeptical of Microsoft's excitement at moving people off its lucrative desktop monopoly, well, you're right to be so.
Microsoft has little interest in a world without a strong desktop theme, as Techcrunch suggests. So, while it may trumpet "One Million Users!!!" for this Office Live Workspace Beta, you can bet Microsoft executives are internally crowing that the company still has something like 1,000 percent of the desktop market.
That's where the money is, until Google Docs and Google Chrome start to take a serious bite. At that point, and only then, will we see Microsoft make serious efforts to push this one million users to 100 million.
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Just four days after Red Hat closed its second quarter, the company has announced the acquisition of Qumranet, an open-source virtualization company, positioning the open-source leader to close many more successful quarters to come.
Red Hat acquired Qumranet for $107 million in cash, according to the company, which is surprising, given Qumranet's comparative lack of revenue, having only released its product in September of 2007.
Such is the importance of virtualization. I'd argue that Qumranet was worth the hefty multiple.
In a statement, Red Hat claims that it "can now deliver what virtualization-only vendors cannot: a comprehensive solution integrated with the operating system, which can drive down IT costs while simultaneously enhancing the flexibility and responsiveness of IT infrastructure." Nice, but the the more interesting news embedded in the Qumranet acquisition is the Windows management technology that comes with it:
The Qumranet acquisition also extends Red Hat's virtualization solutions for managing Windows desktops. SolidICE is a high-performance, scalable desktop virtualization solution built specifically for virtual desktops, not simply a retrofit from server virtualization solutions. SolidICE is designed to enable a user's Windows or Linux desktop to run in a virtual machine that is hosted on a central server.
Qumranet has been making waves for its innovative VDI (virtual desktop infrastructure). Qumranet's SolidICE makes it easy to "offer remote PCs access to virtual desktops via a Web browser," including Windows desktops.
In other words, Red Hat just got in the Windows game without having to get its hands dirty with the Microsoft operating system.
It will be interesting to see what Red Hat will do with the proprietary Qumranet technology. I'm also looking forward to seeing how Moshe Bar and the rest of the Qumranet management team fit into Red Hat's corporate structure. (Moshe is a longtime entrepreneur who had previously been behind Qlusters.)
Finally, I still want to know why the Qumranet team decided to take its name from where the Dead Sea Scrolls were discovered. Inquiring Bible-savvy minds want to know. :-)
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