Paul Wallbank – Brilliant Communications

Category: Investment

  • IT industry feuds are buried as business models collapse

    IT industry feuds are buried as business models collapse

    The collapsing personal computing and server markets are forcing once powerful competitors to bury animosities and feuds as industry giants face a troubled future.

    Samsung’s exit from selling desktop computers illustrates how quickly the PC industry is collapsing which underscores Michael Dell’s urgency in his attempts to take Dell Computer private along with the spectacle of once hostile competitors like Oracle and Microsoft embracing each other.

    Earlier this week Microsoft Australia hosted a briefing at their North Ryde office to show what the company is doing with their Azure cloud computing service, which is part of the company’s quest to find revenues in the post-PC world.

    Microsoft are quickly adapting to the new marketplace. This week in Madrid, the company hosted their European TechEd conference where they showed off their Cloud First design principles of software built around online services rather than servers and desktop PCs.

    One important part of Microsoft’s cloud strategy is establishing pairs of data centres to provide continuity to the various zones, including China, across the globe. Each individual centre is at least 400 miles apart from its twin to avoid interruptions from natural disasters.

    Interestingly, this is the opposite of Google’s data centre strategy and quite different from how Amazon offers its data services where customers can choose the zones and level of redundancy they want.

    There’s no real reason to think any of these three different philosophies are flawed, it’s a difference in implementation and each approach brings its own advantages and downsides which customers are going to have choose between.

    While Microsoft is showing off its new direction, HP CEO Meg Whitman was in Beijing proclaiming that “HP is here to stay” and laying out the company’s path to survival in the post-PC world.

    Like Microsoft, HP is putting bets on cloud computing and China, Whitman emphasized the work she’s been doing engaging with Chinese companies while promising “a new style of IT” and that “HP is in China for China.”

    A key difference to Microsoft and Dell is that HP is doubling down on its desktop and server businesses with a focus on selling into the Chinese market. This is a high risk move given China’s investment into high speed networks and the global nature of the cloud computing movement.

    One of the boasts of Whitman and her management team is that HP have added a thousand Chinese channel partners over the last twelve months, this is an effort to replicate Microsoft’s market strength in mature markets which has given the software giant breathing space against strong, cashed up competitors like Google and Apple.

    Whether this works for HP in China remains to be seen, in the meantime Microsoft are trying to move their huge channel partner community onto the cloud with various offerings that give integrators who’ve traditionally made money selling servers and desktops some opportunity to sell online services.

    A selling point for Microsoft is yesterday’s announcement they will offer Oracle databases on their Azure platform. The ending of animosities between Microsoft and Oracle is an illustration of just how the collapse in the PC and server markets is forcing market giants to forget old feuds and build new alliances.

    With the server and personal computing markets being turned upside down, we’re going to see more unthinkable alliances and pivoting corporations as once untouchable industry giants realise the threats facing them.

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  • Telling the broadband story – the government makes its case

    Telling the broadband story – the government makes its case

    Further to yesterday’s post about NBNCo’s inability to tell a story, I received a polite message from the long suffering staff at the Minister’s office that pointed me to some of the resources that NBNCo and the Department of  Broadband, Communications and Digital economy have posted.

    Here’s the list of case studies and videos;

    http://www.nbn.gov.au/nbn-advertising/nbn-case-studies/

    http://www.nbnco.com.au/nbn-for-business/case-studies.html

    http://www.nbn.gov.au/case-study/noella-babui-business/

    http://www.nbn.gov.au/case-study/seren-trump-small-home-based-business-owner/

    All of these case studies are nice, but they illustrate the problem – they’re nice, standard government issue media releases. The original CNet story that triggered yesterday’s story tells real stories that are more than just sanitised government PR.

    It also begs the question of where the hell are all these people successfully using the NBN when I ask around about them?

    What’s even more frustrating is the Sydney Morning Herald seems to get spoon fed these type of stories.

    The really irritating thing with stories like yesterday’s SMH piece is that it’s intended to promote the Digital Rural Futures Conference on the future of farming being held by the University of New England.

    Now this is something I’d would have gone to had I known about it and I’d have paid my own fares and accommodation. Yet the first I know about this conference is an article on a Saturday four days out from the event. That’s not what you’d call good PR.

    The poor public relations strategies of the Digital Rural Futures Conference is a symptom of the National Broadband’s Network’s proponents’ inability to get their message out the wider public.

    When we look back at the debacle that was the debate about Australia’s role in the 21st Century, it’s hard not to think the failure to articulate the importance of modernising the nation’s communications systems will be one of the key studies in how we blew it.

    Despite the best efforts of a few switched on people in Senator Conroy’s office, a lot more effort is needed to make the case for a national broadband and national investment in today’s technologies which are going to define the future.

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  • Australia’s economic rigor mortis

    Australia’s economic rigor mortis

    This is worth watching, Dow Chemical CEO Andrew Liveris and Australian Business Council chief Tony Shepherd spoke on Sunday with Alan Kohler on the ABC’s Inside Business.

    At 5.40 Andrew Liveris says Australia is suffering a state of economic rigor mortis – “we’ve lost the ability to innovate” – with no plans and a great complacency. It’s something all Aussies should reflect upon, although don’t expect these blokes to be any help.

     

     

     

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  • You can’t buy cool

    You can’t buy cool

    In many ways it was Yahoo! who pioneered Silicon Valley’s Greater Fool Business Model during the dot com boom of the late 1990s.

    The Greater Fool model involves hyping a website, online service or new technology in the hope a hapless corporation dazzled by the spin will buy the business for an improbably large amount.

    Fifteen years later many of those services are closed down or languishing and the founders who were gifted millions of dollars by gullible boards and shareholders have moved on to other pursuits.

    The news that Yahoo! has sealed a deal to buy blogging site Tumblr for $1.1 billion dollars shows the company’s urge to buy in success remains under new CEO Marissa Mayer.

    It’s difficult to see exactly what Tumblr adds to Yahoo!’s wide range of online properties except a young audience – exactly the reasoning that saw News Corporation’s disastrous investment in MySpace.

    What’s particularly concerning is a comment made by Yahoo!’s CFO Ken Goldman at JP Morgan’s Global Technology Conference last week.

    “So we’re working hard to get some of the younger folks,” Goldman said on a webcast from the J.P. Morgan Global Technology conference in Boston.

    It’s all about trying to “make us cool again,” he said, adding that Yahoo will focus on content that’s “more relevant to that age bracket.”

    So they are spending a billion dollars to “make us cool again” – it’s disappointing Marissa Mayer has allowed middle aged male executives to run free with the shareholders’ chequebook in a quest to rediscover their youth.

    Like most middle aged life crises, it’s unlikely to end well.

    For Tumblr’s founders and investors things have ended well. It’s time to buy those yachts and fast cars those middle aged execs covet.

    In the meantime the quest for internet ‘cool’ – whatever that is – will move onto whatever online service teenagers and twenty somethings are using.

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  • Snapping out of Australia’s China Dreamtime

    Snapping out of Australia’s China Dreamtime

    Australia’s leaders need to snap out of their China dreamland analyst Patrick Chovanec told the Australian Davos Connection’s China Forum two weeks ago.

    What triggered this comment was a speech by Australian Treasurer Wayne Swan to the Financial Services Council in Sydney last September where the Treasurer compared China’s economic performance to sprinter Usain Bolt;

    It’s like Usain Bolt easing off a bit at the end of the 100 meters because he’s 10 meters in front and has already smashed the world record.

    “My response was that if that’s the way Australia’s leaders are thinking about China’s economy, if that’s the dreamland that they are in, then they need to snap out of it really fast,” Chovanec said in his keynote.

    “Because China is facing a very serious and potentially disruptive economic adjustment. A realistic idea of where this adjustment is going is essential to countries like Australia.”

    Chovanec’s view is that China cannot sustain current growth rates by “providing the fodder of the consumerist economy.”

    This was borne out in the Global Financial Crises where exports fell from 8% of GDP to 2%. To make up for the drop the PRC government stimulated the economy and investment went 42% of the economy to half.

    It was this stimulus that drove the soaring commodity prices in recent years and underpins the Blue Sky Vision of Australia’s political and business leaders.

    The establishment view is that China will move from infrastructure spending driving the economy to a consumption driven society.

    Moving to a consumption driven economy though means a very different Chinese society which means a different group of winners and losers, Chovanec warns.

    He also doesn’t see urbanisation as the real driver of the Chinese economy, “If you look around the world, urbanisation has not always driven economic growth.”

    “It’s based on a premise that moving people from a rural environment to an urban environment generates productivity gains.”

    “Now for China over the past thirty years that has proven largely true,” says Chavonec, “but going forward most of that hanging fruit has been picked.”

    “In order to realise productivity gains, China is going to have to discover new areas of competitive advantage.”

    The biggest risk that Chovanec sees at present though is the level of bad debts in the economy and the rate of credit expansion with a trillion dollars pumped into the Chinese economy over the last quarter.

    “You’re getting less and less bang for the buck from credit expansion.”

    Chovanec doesn’t see China’s future as bleak though, “the China growth story doesn’t have to be over.”

    “There are a lot of sectors in China where there’s real potential for true productivity gains – agricultural, logistics, health car, services, consumer branding, retail.”

    “The challenge for China is not that the growth story is over but the engine of that growth story is going to have to change.”

    Dealing with those changes is also a challenge for countries like Australia who have staked all on the current growth story.

    Chovanec’s wake up call to Australia’s leaders is timely – the question is how quickly they can wake up to the changes in China.

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