Paul Wallbank | Paul Wallbank - Communications Professional

Apple’s long game

Apple are playing the long game with their internet of things strategy so they aren’t panicking into a smart watch

It’s always risky to make predictions about Apple, particularly when they are silly. The company plays a long game and isn’t known for panicked releases of me-too products.

Time is ticking for Apple to announce an iWatch, say analysts is a good example of a silly prediction about Apple’s future products and something that’s quite rightly criticised by Daring Fireball’s John Gruber.

As I’ve pointed out before, the watch market is tiny compared to the smartphone with the entire global wristwatch industry’s sales making up only one-seventh of Apple’s iPhone sales.

Part of the problem with stories like CNBC’s is the tech media’s focus on consumer goods, particularly in the internet of things and wearable technology markets.

Analysts like those quoted in CNBC’s story fall for this fallacy and overlook that the IoT market profits are going to come from the backend, B2B applications of the technologies.

With Apple we’re already seeing this with iBeacon being deployed in sports stadiums and shopping centres – Apple’s recent partnership with United Airlines to provide inflight entertainment is another step towards locking up business deals.

There’s no doubt those business deals will flow into the consumer market and an iWatch may well be part of Apple’s longer plan to lock customers into their products.

However claiming Apple have 60 days to launch an iWatch is plain silly, particularly when you have a company with a track record of not being panicked into launching me-too products and playing the long game.

Can the community secure the Internet of Things?

Can the community secure the internet of things? Cisco’s Christopher Young believes so.

As more devices become connected Cisco Systems hopes the security issues can be addressed by the developer community.

“The Internet of Everything is not only turn every company into a technology company but its going to force every company to truly become a company that delivers security,” says Christopher Young, Senior Vice President of Cisco’s Security Business Group.

Speaking at the Australian Cisco Live! Conference in Melbourne today, Young described how business is going to have to change the way it treats the data it collects from sensors.

“Not just in consumer security,” continues Young. “If I’m using technology or I’m delivering a service that’s leveraging technologies like cloud or connected devices and creating information about individuals or organisations through these connected devices then a consumer or enterprise is going to expect a level of security.”

Young sees three major ways that security is becoming more challenging for organisations; changing business models, a dynamic threat landscape and increasing complexity.

The latter point is the area that focuses many executive’s attention in Young’s experience with audiences he speaks to nominating complexity and fragmentation as their greatest concern.

“They get so many products and so many devices and so many tools and so much complexity they really don’t know, in so many cases, where to focus their efforts.”

Young cites Cisco’s Chief Security Officer, John Stewart, that the most fundamental security defence is getting the basics right.

Earlier this year at the release of the company’s 2014 security report, Stewart spoke to Networked Globe on how businesses are struggling with the complexity they face.

“Even the most sophisticated and well funded security teams are struggling to keep on top of what’s happening,” Stewart said.

This problem ties into the other areas that Young identifies, particularly the ‘industrialisation’ of the malware world.

“We have more well funded, more innovated, more determined adversaries than we’ve ever had as an industry.

“It used to be some high school kid in his room trying to infect a bunch of machines with viruses or some guy from Nigeria sending you an email asking you for a hundred bucks and he’ll give you a thousand bucks later.

“The world we live in today has nation states and criminal syndicates and very well funded, very sophisticated attackers so hacking has become an industrialised activity.” Young says, “here’s supply chains involved, there’s support agreements written; the bad guys will even sell each other a contract.”

Young’s views echo those of Sophos Labs’ Vice President Simon Reed who said last year that “now there’s money involved, there’s serious effort, the quality of malware has gone up.”

Part of the solution Young sees involves getting the community involved which is the motivation behind the Cisco Security Challenge announced last week.

“You can only just guess and imagine what all the different security challenges will look like in a world that’s just starting to get formed.”

“Let’s get the community involved in trying to solve some of the problems that we know are going to be inherently introduced by IoE.”

Tomorrow Starts Here

Managing big data is one of the future skills of business.

Today was the main day of the Melbourne Cisco Live Conference; the company’s annual Australian event.

Much of the talk was around the Internet of Everything — which will be the basis of subsequent posts — with a constant theme around the explosion of data.

A favourite statistic was that of Cisco’s Executive Vice President who pointed out that US Department store Walmart collects 2.5 Petabytes of customers data every hour.

The reason for this was pointed out by GE’s Australia and New Zealand CIO, Mark Sheppard, who pointed out that twenty years ago jet engines had few sensors while today they have hundreds, a point also made by Team Lotus’ Engineering Director Nick Chester to Networked Globe.

Chester observes that when he started in Formula One racing two decades ago, there were four or five sensors on a racing car; today Lotus’ vehicles have over two hundred.

All of these sensors are creating massive amounts of data and the big challenge for businesses is to manage all of this information, something we’ll be exploring over the next few weeks.

ABC Nightlife Computers – The end of Windows XP

Windows XP, the Privacy Act and an Internet Magna Carta are what we’ll be looking at on Tony Delroy’s Nightlife.

Paul Wallbank joins Tony Delroy on ABC Nightlife across Australia to discuss how technology affects your business and life.

For the March 2014 spot we’ll be looking at the end of Windows XP, Australia’s Privacy Act, the web turning 25 and the call for an Internet Magna Carta.

If you missed the show, you can listen online at the Tony Delroy’s Nightlife homepage.

One of the show’s listeners, Linda, called in about asking for Apple Mac security software; two free products for OsX users are Sophos Home Edition and Avira Free. While Macs are less prone to malware than Windows systems, it’s still a good idea to be protected.

Another listener, Grant, described a problem with his computer which sounds like it’s infected with something. We recommend the free Malwarebytes as the first step to fixing the problem.

The end of Windows XP

After 13 years, Microsoft is retiring Windows XP; what does this mean for those of us still using it, or for our banks who still use it in their ATMs? Some of the questions we’ll cover include;

why is Microsoft pulling the pin on Windows XP now?
what happens on April 8 when Microsoft stops support?
are Windows XP users still protected from viruses?
what’s this story about bank ATMs running Windows XP?
the web turned 25 last week. Didn’t it turn twenty a year or so back?
inventor of the web, Tim Berners-Lee, called for an Internet Magna Carta last week; what does he mean?
could such an idea work in today’s globalised world?
on similar topic, the new Privacy Act came into effect last week; what does this mean for the average person?

We’d love to hear your views so join the conversation with your on-air questions, ideas or comments; phone in on the night on 1300 800 222 within Australia or +61 2 8333 1000 from outside Australia.

Tune in on your local ABC radio station from 10pm Eastern Summer time or listen online at www.abc.net.au/nightlife.

You can SMS Nightlife’s talkback on 19922702, or through twitter to @paulwallbank using the #abcnightlife hashtag or visit the Nightlife Facebook page.

Alibaba goes to the US

How much will Alibaba be worth on US stock markets?

One of the questions in the online business world for the last year was were would Chinese Internet giant Alibaba decide to list – the US or Hong Kong?

Listing in Hong Kong would have been a coup for the Chinese territory and possibly marked a shift in Asian web properties away from listing in the United States.

As it turned out, Hong Kong’s listing rules were too stringent for Alibaba’s Jack Ma who wanted to retain a controlling stake in the business in a way that isn’t allowed on the HK stock market so the company is going to the US for its IPO.

Jack Ma and Ailbaba’s rise is a fascinating story partly told by Porter Erisman in his Crocodile on Yangtse who was interviewed for Decoding the New Economy last year.

Alibaba’s listing on a US exchange, the announcement isn’t clear if its the NASDAQ or NYSE, will also be a test for the valuation of Asian internet properties in Western stockmarkets.

With revenue of around a billion dollars this year, a Google like P/E of 30 would see the company valued at around $30billion, although there could be arguments that a Facebook like valuation of 100 times earnings might be more appropriate.

Regardless of how much it is valued, Alibaba is going to be blazing a trail for Asian and, specifically, Chinese companies over the next few years.

Synergies aren’t easy money

Avis are finding Zipcar’s synergies aren’t as great as they hoped, perhaps they’re looking in the wrong place.

Last year car rental giant AvisBudget acquired the vehicle sharing service Zipcar, at the time it looked like the established player was buying in the tech smarts of younger startup.

Citing ‘synergies’ at the time of a takeover is always a warning sign that a corporate acquisition may not go well and so it has proved with Avis’ efforts with Zipcar as travel news site Skift reports;

Speaking at the J.P. Morgan Gaming, Lodging, Restaurant & Leisure Management Access Forum in Las Vegas earlier this week, AvisBudget CEO Ron Nelson said fleet-sharing has turned out to be more complicated than the company thought because there’s a cost tied to moving the vehicles from one location to another.

That’s a strange statement as a casual observer would be forgiven for thinking that if any organisation understood the costs of moving vehicles around it would be a car hire company.

Apparently that’s not the case and the ‘synergies’ from acquisition will be pushed back to 2015.

Synergies are elusive things and it may well prove that Ron Nelson would be better served by examining how Zipcar’s technology, algorithms and flat management structures can be applied to a more staid organisation like Avis.

The real value in companies like Zipcar and Uber is the way they are applying technology to moving physical goods around – it’s no surprise that Uber’s Travis Kalanick describes his ambition for the future of his company as being the Amazon for logistics.

For Avis, Zipcar’s opportunities lie in more that just enhancing the company’s fleet utilization; understanding the marketplace and predicting demand is where the real gains could be made.

Eliminating the donkey work

Ross Mason, founder of Mulesoft, sees Big Data as one of the challenges facing business

Mulesoft founder and CTO Ross Mason worries about how companies are going to manage the data generated by the Internet of Things.

“I don’t think we’re ready for the amount of data that these devices are designed to build up,” Ross observes in the latest Decoding the New Economy video.

Ross’ aim in founding Mulesoft was to eliminate the donkey work in connecting IT systems and he sees the data moving between enterprise applications being a challenge for organisations

“We have energy companies that have connected their smart grid systems to their back end systems and most of them delete almost all the data because of the cost of storing that much data without doing anything with it.”

“Big data is still in the realm of we’re figuring out the questions to ask.” Ross states, in echoing the views expressed by Tableau Software founder Pat Hanrahan a few weeks ago.

“There’s a little bit of hype around big data right now, but it’s a very real trend;” Hanrahan said. “Just look at the increase in the amount of data that’s been going up exponentially and that’s just the natural result of technology; we have more sensors, we collect more data, we have faster computer and bigger disks.”

The interview with Ross covers his journey from setting up Mulesoft to the future of big data and software. It was recorded a few days before the company announced a major capital raising.

Mulesoft’s elimination of software ‘donkey work’ is another example of how the IT industry is changing as much of the inefficiencies are being worked out of the way developers and programmers work.

In many ways, Ross Mason’s story illustrates how the software industry itself is being disrupted as much as any other sector.

The Internet of Racing Machines

Formula One racing gives us a glimpse of the technologies that will be commonplace in businesses in the near future.

For the Formula One racing circuit, the financial crisis of six years ago was an opportunity to reinvent the sport; today the teams use a combination of technologies to gain an advantage over their competitors.

“A few years ago you wouldn’t have been here today,” Francois Puentes, Head Of Account Management at Team Lotus told a group of journalists ahead of this week’s Melbourne Grand Prix. “F1 was a completely different sport.”

The 2009 financial crisis was the catalyst for the changes Puentes says; “we all sat down as teams at the same table to make the sport more sustainable, this obliged us to run the sport as a business.”

“Before we didn’t know what the unit cost was for a part. We would very often produce two of the same parts without even knowing what was going on.”

To tighten their management systems, Lotus bought in a range of cloud based business software such as Microsoft Dynamics and also accelerated its adoption of computerised manufacturing techniques.

Speeding up development

Lotus employs over 500 people to keep its two cars on the road and most of the vehicles parts are designed and manufactured at its headquarters in Oxford, England. During the season the team’s workshop may produce up to five hundred replacement or redesigned components each week.

This brings together a number of technologies including Computer Aided Design, 3D Printing and cloud computing.

The internet of racing machines

Massive rule changes have also accelerated Formula One’s adoption of in car technology with information being gathered from sensors throughout the vehicles.

During races data is transferred from the vehicles’ sensors by radio for the teams’ crews to analyse performance. This includes information like gear box temperature, tyre condition, and aerodynamic performance data.

Following the race larger volumes of data are downloaded from the vehicle for engineers to tune the car for the next event.

While Lotus has teamed with technology companies like Microsoft and EMC, rival team Caterham partnered with GE whose Global Research team worked to integrate the technologies demanded by the new F1 rules.

Global technology

Caterham’s cars use intercoolers developed in Germany, carbon fibre composites and fibre optic sensors from the United States, and big data analysis techniques developed in India.

Key to gathering that data are sensors throughout the vehicle that capture a constant stream of data about forces acting on the car during the race, transmitting this information in a far more efficient way than traditional methods which relied on load sensors attached to the suspension.

The result is massive volumes of raw data. On the track, Caterham cars generate 1,000 points of data a second from more than 2,000 data channels. Up to 500 different sensors constantly capture and relay data back to the team’s command centre for urgent analysis.

Learning from Big Data

By applying what the company has learned from its Industrial Internet projects, GE was able to help Caterham cut its data processing time in half, leaving the team in a stronger strategic and tactical position.

Thanks to these analysis techniques, the Caterham team can look at slices of its data across an entire season, pinpoint setups that were particularly effective, and identify reliability issues earlier.

Inside the vehicle, GE has also found a way to replace metal pipes with carbon fibre, reducing the overall weight of the vehicle.

These technology developments will continue to find applications beyond the 2014 Grand Prix season.

Carbon composites are being used extensively in the aviation industry and big data analysis is playing an important role in the renewable energy sector.

Lewis Butler, Caterham’s chief designer, says working with GE is helping the team deepen its skills base.

“GE are working with Caterham to help with the manufacturing process and knowledge transfer, and giving Caterham F1 Team the capability to manufacture its own parts,” he says.

All the Formula One teams are using Internet of Things technologies to gather information on their vehicles, Big Data tools to manage that information along 3D printing to accelerate their research and manufacturing processes.

The Formula One world is a glimpse into the future of business as various technologies come together to change the way industries operate.

Paul travelled to the Melbourne Grand Prix as a guest of Microsoft and Team Lotus.

Using data laws to create an economic advantage

Will the EU data laws give European business a competitive advantage?

Yesterday I posted piece on Business Spectator about Australia’s new privacy regulations, little did I know that the European Union Parliament was about to release its own.

The EU regulations look interesting and certainly seem on first look to be far more comprehensive than Australia’s effort that I describe as a toothless, box ticking exercise.

A notable aspect of the EU’s announcement of the new rules is its claim that the updated regulations are expected to generate €2.3 billion in economic benefits each year.

Whether the EU’s rules prove to be an economic cost – as Australia’s effort will almost certainly turn out to be – or a competitive advantage remains to be seen, however the European Parliament is certainly making a case for data security and privacy protection as being an important selling point in a highly competitive digital world.

The competitive advantages between countries and continents in the 21st Century will be vary different to those that determined the economic winners of the previous two centuries.

Technology One and cloud computing’s gold rush

Technology One’s Adrian DiMarco has strong views about the outsourcing industry as he steers his company onto the cloud.

“Consulting companies are a blight on our industry” declares Adrian DiMarco, CEO of Technology One.

A quick way to rile DiMarco is by asking him about IT outsourcing as I learned during an interview at Technology One’s annual Evolve conference on the Gold Coast last month.

The 1600 enterprise clients attending this year’s Evolve conference illustrate Technology One’s growth since it was founded in 1987 out of DiMarco’s frustration with the multinational outsourcing companies.

“I used to work for multinational technology companies and as a young person I really used to want to work for them, I found it very attractive and I expected they’d be very attractive and cutting edge.”

The reality DiMarco found was very different; “I worked for them for years and found the opposite, just how bad and inefficient they were.”

“I really didn’t like what I was working with, the software we were using and stuff and I thought we can do it much better here in Australia. The idea was to build enterprise software.”

Moving to the cloud

Having built that enterprise software company DiMarco now sees his Technology One’s future lying in cloud services and empahises the importance of learning from the industry’s leaders.

“We looked at companies like Google, Salesforce, Facebook and Dropbox. These companies are the undisputed leaders in the cloud.

“One thing that we noticed was that you can’t get Google, Salesforce, Facebook from a hosted provider; you can’t get it from IBM or Accenture.

“The leaders in the cloud build it themselves so they are deeply committed to it, they run the software for their customers and they invest millions of dollars each year in making the experience better.”

“It is clearly what the cloud has always meant to be.”

DiMarco though sees problems ahead as vendors look to rebrand their products and warns businesses need to be careful about cloud services.

“It is the next big goldrush in the IT industry. IT companies, particularly service companies have over the last few years seen revenues decline so in order to find new sources of growth they are all targeting the cloud.”

Accountability and the cloud

The lesson DiMarco learned in the early days of cloud computing was that accountability is necessary when you’re trusting services to other providers.

“We had early customers that went to the cloud; we said ‘look, it’s a great idea and we think it’s the future’. They wanted to go with hosting providers and we thought it was a sensible decision and we saw a train smash, it was a train smash of epic proportions”

“They were running data centres overseas in Europe that had latency issues, performance issues and the customers were paying money after money after money.”

“The customer was getting a terrible performance and there was no accountability.”

“We couldn’t fix it because we had lost control over the customers.”

This lack of accountability is one of the reason why so many IT projects fail DiMarco believes, citing the notorious Queensland Health payroll project.

“Queensland Health again used this fragmented model; the party that built the software, which is SAP, used a third party which was IBM to implement it which meant no accountablity.

:That would never have happened If SAP had signed the contract, if SAP had implemented the software, which they won’t do, they would have known the risks that were being taken and they would have stopped that project and fixed it up.??“That’s the difference between our model and the competitors model.”

“They take no responsibility, they implement these systems, they charge a fee-for-service and they have open ended contracts – that’s how they get to be a billion dollars – and do you know who suffers? It’s the customers.”

Shifting away from consultants

DiMarco sees governments moving away from the consultant driven model that’s proved so disappointing for agencies like Queensland Health which creates opportunities for Technology One and other Australian companies.

“For the last fifteen years we’ve not been able to sell software to the state government. It’s just changing, we’re getting in there now, but it was a terrible problem for us.”

The shift from big consultants is a view endorsed by Sugar CRM co-founder Clint Oram who described how the software business is changing when he spoke to Decoding the New Economy last week.

Oram sees the software market challenging established giants like SAP, Oracle and Microsoft; “in the past it was ‘here’s my software, goodbye and good luck. Maybe we’ll see you next year.”

“If you look at those names, the competitors we see on a day-to-day basis, several of them are very much challenged in making the shift from perpetual software licensing.” Oram says, “it’s been a challenge that I don’t think all of them will work their way through, their business models are too entrenched.”

“Software companies really have to stay focused on continuous innovation to their customers.”

DiMarco agrees with this view, citing the constant investment cloud computing companies make in their products as being one of the advantages in the business model.

Building the Australian software industry

For Australia to succeed in the software industry, DiMarco believes the nation has to encourage and celebrate the industry’s successes.

“It’s about getting people to believe in Australian software. I think the Aussie tech industry needs a lot more successes we can point to,” DiMarco observes. “I think that will create enthusiasm, excitement and a hub for the rest of the community to get around.”

“We gotta get some big scale companies with some high visibility and get them successful.”

For the future of Technology One, DiMarco sees international expansion as offering the best prospects with the company having recently announced a UK management team as part of its push into the British local government market.

Hopefully DiMarco’s UK management team won’t have to deal with the local management and IT consultants as they try to sell into British councils.

David Cameron and the Internet of Things

Britain’s Prime Minister backs the nation’s move into the Internet of Things

Last year I interviewed the CEO of London and Partners, Gordon Innes, on how Britain’s capital is making a bid to become Europe’s Silicon Valley.

At the opening of CeBIT last night, UK Prime Minister David Cameron increased the country’s bid with a plan on building Britain’s capability in the digital industries.

Cameron portrayed the moves as being a partnership with Germany. This may be partly because he was being gracious towards his host and also because the Brits might not see Germany as being a competitor in these fields.

The fields that Cameron highlighted are deploying 5G networks, more efficient use of spectrum and increasing research into the Internet of Things.

A research boost is a notable as it may give the Brits a foothold in an area that’s evolving rapidly as the Internet of Things raises a whole range of security, privacy and governance issues.

While there’s still a sniff of Harold Wilson’s 1963 White Heat of Technology speech in the Cameron government’s policies, at least the British government is articulating policies for the 21st Century.

It may well be that Cameron’s digital revolution will be no more successful than Wilson’s technological revolution fifty years ago, but at least it will be a brave attempt.

Accountability and security

Experian’s massive data breach shows why we, and our governments, have to start taking security seriously.

Security writer Brian Krebs has followed up last year’s story that US credit reporting agency Experian had been selling personal data to Singaporean based identity thieves with the guilty plea from the scheme’s architect.

Krebs points out that the leader of the identity thieves, Vietnamese national Hieu Minh Ngo, could access up to 200 million consumers’ records.

It’s almost impossible to say how much theft, fraud and misery was inflicted on innocent Americans who had their personal details misused by Ngo’s customers.

The amazing thing is it appears that Experian’s executives or shareholders will not suffer any sort of penalty – civil or criminal.

In an age where companies are collecting masses of data on everyone, it’s inconceivable that those trusted to store and protect that information – particularly credit reporting agencies – seem beyond any accountability for failing in their core responsibilities.

There’s also the aspect of undermining the US credit system; if merchants and consumers find they can’t trust credit reporting agencies, then offering or getting credit becomes far more difficult and risky.

Until the management of companies like Experian are held accountable for their incompetence, any talk of safeguarding privacy is empty. It’s why we should treat claims that our data is held safely by government agencies or businesses with a great deal of caution.