Nov 112014
Microsoft CEO Satya Nadella

The decision of Microsoft to offer its Office tablet apps for free last week has had the desired effect with them rocketing to the top of the charts as people enthusiastically grab them.

Microsoft’s decision pretty well locks its resellers into the loss leading strategy the company flagged last week in China, with the tablet apps available for free its hard for retailers and integrators to be charging for the desktop version.

That loss leader strategy has been further laid out by CEO Satya Nadella at a function in London yesterday where he described their cloud and mobile first strategy, something he also discussed at a briefing to ‘a small gathering of journalists’ last week.

Nadella’s vision isn’t really anything new; it differs from Ballmer’s ‘devices and services’ strategy but the thrust of the business was always going to be on cloud services and the company’s Azure services regardless of any conceits around tablets or professional offerings.

Of the three key areas Nadella identifies — Windows, Office 365, and Azure — two of them are problematic; the Office 365 for reasons already mentioned and the Windows product line.

The ‘Windows everywhere’ strategy, which also happens one of Ballmer’s earlier initiatives, is doomed as the operating system is not suitable for smartphones or lightweight internet of things devices.

Even if Windows was successful on smartphones or could be successfully ported to low powered smart devices, the margins are tiny compared to the traditional desktop market that was so profitable for Microsoft in the past.

All of which brings Microsoft back to Azure; it’s clear the cloud service is the future of the company but the margins are dire except for some relatively niche areas like collaboration software.

Mantras about ‘productivity’ count for nothing as every software and cloud computing company cater for the B2B market is delivering a service that claims to improve customers’ productivity. That Office is declining as a profit centre only makes things harder for the company.

If anything, Nadella’s discussions illustrate the company is still casting around for the next big profit centre. As the Windows and Office franchises decline, time may start to run out for the current management just as it eventually did for Ballmer.

Giving away Office apps may lock some users into the 365 service and could prove moderately profitable, but last week’s moves indicates a much smaller future For Microsoft.

Nov 092014
Smart rubbish bins in Barcelona

Last year Alicia Asin of Spanish sensor vendor Libelium spoke to this site about her vision of the internet of things improving transparency in society and government.

A good example of this democratisation of data was at the New South Wales Pearcey Awards last week where the state’s winners of the Young ICT Explorers competition were profiled.

Coming in equal first were a group of students from Neutral Bay’s state primary school with their Bin I.T project that monitors garbage levels in rubbish bins.

The kids built their project on an Arduino microcontroller that connects to a Google spreadsheet which displays the status of the bin in the school’s classrooms. For $80 they’ve created a small version of what the City of Barcelona is spending millions of Euro on.

With the accessibility of cheap sensors and cloud computing its possible for students, community groups and activists to take the monitoring of their environment into their own hands; no longer do people have to rely on government agencies or private companies to release information when they can collect it themselves.

Probably the best example of activists taking action themselves is the Safecast project which was born out of community suspicion of official radiation data following the Fukushima.

We can expect to see more communities following the Safecast model as concerns about the effects of mining, industrial and fracking operations on neighbourhoods grow.

The Bin I.T project and the kids of Neutral Bay Public School could be showing us where communities will be taking data into their own hands in the near future.

Nov 072014

So it turns out Microsoft’s river of gold with productivity software was a transition effect with the company now offering the product essentially free on iOS and Android devices.

While the profits in that product line were nice while they lasted we may start seeing Microsoft’s revenues, which have stood up pretty well in a changing marketplace, start to decline rapidly.


Nov 052014
In 2001 Microsoft released Windows XP

Two of the key indicators that your business model, and industry, is being threatened is declining sales and margins.

A good example of this is the story Microsoft are urging their Chinese resellers to use Office 365 as a loss leader to get their foot in the door with customers.

Not so long ago Microsoft Office was a huge cash generator for the business; now it’s a loss leader.

If anything this shows how the margins in the software business are being eroded by cloud computing. Businesses like Microsoft and its resellers that have grown fat on big margins now have to evolve to a very different marketplace.

This means a very different way of doing business, a different way of delivering products and much more streamlined operation that doesn’t need battalions of highly paid salespeople and managers. In fact those managers and salespeople become a very expensive legacy item in a cloud computing world.

Microsoft are by no means the only company to find themselves giving away once profitable products in order to maintain their market position but when that starts happening it’s clear the time has arrived to find a new line of business.

In Microsoft’s case that’s been a pivot to the cloud, however the company will never find things as lucrative as the good old days when software was sold in boxes or licensed out with impossible to read agreements.

Funnily, the same thing is happening in the telcommunications world. It’s an interesting time to be in business.

Oct 292014

One of the great market battles of the PC era was the fight between the ‘best of breed’ software designed to do specific jobs well — Lotus 123, WordPerfect, and Harvard Graphics — versus the bundled ‘suites’ led by Microsoft Office.

Bundled suites of programs offered a common platform and cheaper price over buying products individually.

In the case of Microsoft Office, it also helped that the software giant was aggressive in undercutting the market and leveraging the deals it had made with hardware vendors and system integrators.

The winner of that battle was Microsoft as it turned out customers preferred the cheaper price points of the bundled packages and the common software platform made it easier to share data across the applications.

In the cloud computing field that fight is happening again as Zach Nelson, CEO of Netsuite, describes; “I think the next battle is going to be the same battle that happened in the client-server world. Is it the best of breed cloud apps or is it the suite?”

Nelson believes the suite vision will win out, “the suite is going to win again for exactly the same reasons why the suite won in the client-server world — it’s very hard to synchronise data between applications.”

Given Netsuite’s business, as its name suggests, is in providing a suite of software it’s no surprising that Nelson believes their way of doing business will prevail. Those providing ‘best of breed’ stand alone cloud applications naturally disagree.

Chris Ridd, Australian General Manager of accounting service Xero, disagrees with Nelson’s view. “With cloud and open APIs you have the holy grail of interoperability,” Ridd says. “In the 1990s the open systems were too early and didn’t work as well as they do today.”

Ridd also points out that Xero has over 350 add on services, ” I don’t think any suite can deliver that” he says.

History is on Nelson’s side but it may be that in this case history doesn’t repeat as the technology has moved along and now stand alone apps are what the market wants.

Time will tell although its unlikely whichever prevails will have anything like the success and market domination of Microsoft Office during the PC era.

Oct 142014

Last week we looked at the way we organise information is changing in the face of exploding data volumes.

One of the consequences of the data explosion is that structured databases are beginning to struggle as information sources and business needs are becoming more diverse.

Yesterday, cloud Customer Relationship Management company Salesforce announced their Wave analytics product which the company says “with its schema-free architecture, data no longer has to be pre-sorted or organized in some narrowly defined manner before it can be analyzed.”

The end of the database era

Salesforce’s move is interesting for a company whose success has been based upon structured databases to run its CRM and other services.

What the company’s move could be interpreted that the age of the database is over; that organising data is a fool’s errand as it becomes harder to sort and categorise the information pouring into businesses.

This was the theme at the previous week’s Splunk conference in Las Vegas where the company’s CTO, Todd Papaioannou, told Decoding The New Economy how the world is moving away from structured databases.

“We’re going through a sea change in the analytics space,” Papaioannou said. “What characterised the last thirty years was what I call the ‘schema write’ era; big databases that have a schema where you have to load the data into that schema then transform before you can ask questions of it.”

Breaking the structure

The key with programs like Salesforce and other database driven products like SAP and Oracle is that both the data structures — the schema — and the questions are largely pre-configured. With the unstructured model it’s Google-like queries on the stored data that matters.

For companies like Salesforce this means a fundamental change to their underlying product and possibly their business models as well.

It may well be that Salesforce, a company that defined itself by the ‘No Software’ slogan is now being challenged by the No Database era.

Paul travelled to San Francisco and Las Vegas as a guest of Salesforce and Splunk respectively

Sep 152014

The future of retail is being fought out on three fronts believes eBay’s Michael Camplin  — global, local, mobile and data.

At eBay’s Commerce Innovation Showcase at its San Jose head office Champlin shows visiting partners, media and government officials part of the payments giant’s vision for that future.

“It’s about connecting buyers and sellers across the globe,” says Champlin. “Local is important for us because even with the growth of the online ecommerce revolution that we’re in the middle of right now we still see 75% of commerce happens within fifty miles of the customer and 90% of that happens in bricks-and-mortar stores.”

“So to be able to connect buyers and sellers in those local stores is a major push we have at eBay.”


The first presentation in the tour demonstrates a day in the life of an eBay customer from the bedroom of a fictional customer, Reese McLaren, a funky young guy shopping for new equipment ahead of a camping trip. Champlin illustrates how Reese can order, pay and collect through a store’s integrated online service from his home.

On the other side of the transactions, store employees use the PayPal apps like Red Lazer and Braintree to complete the order. A key part of that is using beacon technologies to log a customer into the store to alert staff that a customer has arrived to collect an order.


At the next stage of the tour, we visit some demonstration stores; first we start with the Burger Bistro where eBay’s Eric Armstrong shows how restaurant’s point of sale system is integrated with PayPal services, showing waitstaff who is logged in through the company’s app.

Integrating PayPal’s services into the establishment’s point of sale system means customers can order through the PayPal Wallet service and waitstaff know if a customer has paid through the app.


The app also speeds up settling customers’ bills as diners can pay the check through their phone and not bother with using cash or swiping credit cards.

One key point with PayPal Wallet is that users can enter any payment form that suits them and choose whichever option suits them at the time including direct bank transfers and credit cards.


Another area that PayPal are pushing out are coupon offers. At present the company is subsidising them as they test how the services work. The objective is to offer a digital equivalent of everything people currently have in their wallets.

For staff, eBay are offering the ability to bring your own device for point of sale systems with cloud base apps turning staffs’ tablets and smartphones into POS terminals.



Tying into the Point of Sale capability is the PayPal Now service that allows establishments to swipe credit cards directly into the app through a dongle that reads the chip or stripe. Despite the rise of online payment services, swiping credit cards is still the main way US customers pay their bills.


Despite the continued popularity of credit cards, eBay are hoping to move customers over to the online services through ease of service; the one stop authentication service means customers are logged into the payment platform as soon as they check into a location.

One area PayPal sees great opportunity in stadiums and major events where attendees automatically check in and can then access food and souvenir stands without having to re-authenticate or authorise each purchase they make.


A key part of eBay’s retail strategy is the use of beacons to monitor customers entering establishments. The one illustrated is the PayPal beacon that was a limited release earlier this year. The device doesn’t have its own battery, instead relying on a USB socket for power.

Two weeks after this tour Apple launched its Pay service with its range of integrated APIs to offer many of things shown in this showcase. eBay and its Braintree subsidiary was conspicuously missing from the listed partners.

For PayPal and eBay the field has suddenly become more competitive, this is a sector that is now at the forefront of the battle between today’s internet empires.