Sep 012015

“It isn’t easy to create apps for the real world,” is the opening line of this morning’s VM World conference in San Francisco.

That line encapsulates the challenge facing almost every company, not just tech companies like VMWare, in the face of shifting marketplaces and technologies.

One of the biggest business shifts is the move to mobile technologies. This isn’t just changing marketing and user experiences but also changing companies’ operations as staff increasingly use their own smartphones and tablets to work.

Managing a shifting market

That shift though is not simple, as ZD Net reports Facebook’s move to ‘mobile first’ was a tough path in the words of the company’s senior engineer Adam Wolff.

“I think everyone would say it was worth it, but it was extremely painful,” Wolff admitted, explaining each sub-team was building in their own ways because there was no one to crossover with necessary knowledge.

Facebook has probably been the most successful company is dealing with the mobile shift and their difficulties despite their massive resources show just how difficult it is for companies to change not just their technology, but their business processes and in many cases the entire mindset of the organisation.

Those pain points in transitioning between ways of doing business is where opportunities lie, for VMWare they are seeing IT departments struggling with the development and deployment of apps along with the security risks of staff bringing their own mobile devices.

Happy coincidences

For VMWare, this is a happy coincidence in that their main business of computer virtualisation is as much at risk from the shift to cloud computing and mobile applications as any other business. By offering the tools for companies to manage that shift, they can retain their place in the market.

The threat though is this space has many other contenders – not least Facebook itself with its open source React platform the company developed out of its experiences in developing its mobile product.

One of the strengths VMWare has is being an incumbent, which is why they are pushing their ‘hybrid cloud’ offerings where companies use both their own data centres along with the public cloud providers such as Amazon and Microsoft.

Stuck with sunk costs

For large corporates with huge sunk costs in their own infrastructure and those with security or operational reasons for keeping some of their functions in house that hybrid strategy makes sense as it’s unlikely any board or CIO is going to happily burn their existing systems and process down and go to a ‘pure cloud’ or mobile strategy.

While catering to that market is lucrative for the moment, the longer term risk is that the next wave of large corporations – and today’s high growth businesses – are pure cloud companies.

For the companies catering to the old ways of doing business, for the short term there’s profits to be made in the pain points from an evolving marketplace but in the long term it’s how well businesses are placed for the world the end of that transition that will guarantee their survival.

The process facing software companies like VMWin dealing with as business shifts is a challenge faced by almost all industries, the question is how to adapt to a very changed way of working.

Jul 092015
Nokia Lumia 920 has an impressive camera

Yesterday we looked at how Sony claim to be sticking with mobile phones, today Microsoft CEO Satya Nadella has announced major cutbacks for the Windows Phone division with Mary Jo Foley reporting in ZDNet that the company’s Finnish operation – containing the bulk of the Nokia operations the company acquired two years ago – is to lose half its staff.

Microsoft’s strategy around Windows Phone has always been problematic but should the company be winding down the product then it leaves a hole in the strategy of running Windows on all devices.

The bigger picture however may be that Nadella recognises the mobile phone hardware market offers little in profits and growth compared to the company’s cloud services and the potential for IoT products although the CEO claims devices are still part of the future.

In the near term, we will run a more effective phone portfolio, with better products and speed to market given the recently formed Windows and Devices Group. We plan to narrow our focus to three customer segments where we can make unique contributions and where we can differentiate through the combination of our hardware and software. We’ll bring business customers the best management, security and productivity experiences they need; value phone buyers the communications services they want; and Windows fans the flagship devices they’ll love.

The culling of Microsoft’s product lines may well focus the company ahead of Windows 10’s launch however it also risks leaving critical gaps in the market.

Jul 082015

“We will never ever sell or exit from the current mobile business,” defiantly states CEO and president of Sony Mobile, Hiroki Totoki, in an interview with Arabian Business.

“Smartphones are completely connected to other devices, also connected to people’s lives — deeply.” Totoki continues, “and the opportunity for diversification is huge. We’re heading to the IoT (Internet of Things) era and have to produce a number of new categories of products in this world, otherwise we could lose out on a very important business domain.”

The smartphone has become the remote control for the smarthouse and connected car and that doesn’t appear to be changing as Totoki acknowledges.

For companies like Sony it’s difficult to see the advantage of running their own hardware as it’s the software stack that matters in controlling the platforms with that battle long being settled as a contest between Google Android and Apple iOS for the user market.

For Sony, the challenge is to find a niche to join players like BlackBerry’s QNX, Windows 10 and the other systems carving lucrative, but less visible, market sectors.

Should Sony find a niche, it’s unlikely to based upon hardware unless they can find a modern equivalent of the 1970s Walkman.

Whenever a corporation’s executives make a declaration like Totoki’s, it’s probably worthwhile for staff members in the affected divisions start brushing up their resumes. It’s not a good sign.

Regardless of Totoki’s fighting words, it’s difficult to see how Sony’s mobile division can survive as a consumer vendor.

It’s likely Sony will have to find something other than smartphones to be a Trojan horse into the Internet of Things.

Apr 202015
Local village

One of the tech buzzwords, or acronyms, a few years back was SoLoMo – Social Local Mobile. In reviewing the slides for the Future Proofing Your Business presentation next week, the term came up in one of the notes.

It’s interesting look at the fates of the three different concepts over the past few years; mobile has boomed and redefined computing and social has become big business with Facebook growing into a hundred billion dollar company.

Local though has struggled with Google, Facebook and a host of smaller and newer startups struggling while the Yellow Pages franchise dies. Despite the power of maps and geolocation, local just isn’t doing as well as the other two.

This could be down to the difficulty in harvesting the massive amounts of disparate data available to any service trying to draw an accurate picture of what’s in the neighbourhood.

Google Places tried to standardise that information for local businesses but the complexity of the service and its opaque, arbitrary rules meant adoption has been slow and merchants are reluctant to update details in case they fall foul of the rules.

Local services’ failure to take off has also had a consequence for the media as its in hyperlocal services that publishers have possibly their best opportunity to rebuild their fortunes.

That failure to properly harness mobile has also hurt merchants as many local operations are struggling to find useful places to advertise given Google Adwords and Facebook can be extremely expensive places to advertise.

So the mobile space is still ripe for a smart entrepreneur – a new Google or Facebook – to dominate.

Feb 012015

Last week Google and Facebook announced their quarterly results with the search engine giant continuing its worrying slowing of advertising revenue. The respective changes of the two online services show how online advertising is changing.

While Google slows, Facebook is showing accelerating growth for its advertising, driven mainly by mobile users, illustrating the shift in internet usage from desktops to smartphones.

In its 2014 New Digital Consumer report, market research company Nielsen observed that US consumers in 2013 were spending more time accessing the internet on their smartphones than on personal computers; PC use had fallen seven percent to 27 hours a week while mobile use had surged 40% in 2013 to 34 hours.

Television still remained dominant with the combination of live and time shifted TV viewing making up 144 hours of the average American’s week, although it did fall slightly.


Those figures are a year out of date and there’s no doubt the numbers have accelerated since then. One of Tim Cook’s triumphs at Apple has been the release of the iPhone 6 and the larger form factors in the current generation of smartphones is a response to consumers’ demand to watch video on their devices.

Bigger Android, Windows and Apple smartphones will only seen even more people using their mobiles to watch video and surf the web.

Which puts Google’s predicament in sharp focus; we are definitely in the post-PC world yet their revenue still overwhelmingly comes in from desktop users while Facebook’s is increasingly coming from mobile consumers.

A strength Google has is that its revenues still dwarf the social media upstart’s – Google’s income is currently six times greater and its gross profit margin doubles that of Facebook’s – giving it plenty of leeway to change.

The question is where do the new revenues come from? Probably the biggest opportunity Google missed was in replacing the Yellow Pages franchises with their own local small business listings with Google Your Business (aka Google Place and Google Plus for Business) being lost in a confused and bureaucratic corporate strategy.

Compounding the problem for Google in the small business space is Apple’s entry and while Apple Maps is no contender against Google’s far superior product, an integration with Apple Pay would give Apple far more rich data to enhance listings with – not to mention more of an incentive for merchants to sign up.

With the changing web, Google are going to have to change as well. If advertising is going to remain the mainstay of their business then the company needs to find a way to capture smartphone users.

It could be worse however, a report from consulting firm Strategy Analytics estimates print media’s share of advertising revenue fell another seven percent this year. Time is running out for newspapers.


While print is ailing, the advertising battleground is mobile digital although TV still dwarfs the market. How this evolves in the next five years will define the next generation of media tycoons.

Dec 192014

Earlier this week BlackBerry released its Classic handset – the device the company hopes will rekindle its fortunes in the smartphone market in appealing to the thousands of loyal corporate users still wedded to their old devices.

For BlackBerry the stakes are high with the handset business still being worth over half the company’s earnings last financial year, although hardware revenue dropped 43% to $3.8 billion over that period.

“Handsets are still an important part of our business in terms of revenues,” BlackBerry’s President of Global Enterprise Services, John Sims told Decoding the New Economy in an interview last month.

The main market for the Classic are the corporate users still sitting on their old handsets, “there are tens of millions of BlackBerry users who are still sitting on their old handsets.” Sims said. “The classic, when it comes along is targeted at that market. We know people are waiting.”

“When you get on a plane people start taking out their devices I can guarantee you’ll see BlackBerry Bolds with almost every person in business and first class. They may have another device too – a Samsung or something as well.”

Sims’ belief was that bringing back the shortcuts and keyboard of the older devices would encourage users wedded to their old devices to buy the new smartphone.

The first response to the new BlackBerry Classic hasn’t been enthusiastic with Larry Dignan in the Canadian Globe and Mail describing it as “a curmudgeonly phone” – a worrying description coming from the home team. Dignan goes further in questioning BlackBerry’s hope the Classic will attract the users it needs.

BlackBerry remains convinced that its hardcore enterprise users are crying out for the unique set of features only it can offer. But after using it for several days I don’t think the Classic is old fashioned enough to please traditionalists, and its callbacks to a dead era of smartphone mobility are more than enough to cripple the device for new users.

For BlackBerry, the success or otherwise of its handsets is going to be critical in the company’s transition to a security, software and internet of things business. The early indications are that the company has a struggle ahead.

Nov 252014

“I had what my wife describes as non toxic form of midlife crisis,” says Don Katz of Audible, the company he founded in 1994 and remains CEO of today. In an interview with Decoding The New Economy, Katz describes a startup journey that covers all the bases.

As Rolling Stone’s European correspondent Katz was engaged to write a book in the early 1990s about how digital technologies were changing music and what he realised was the industry was about to go through a fundamental change.

“I had a wonderful career as a writer, I was a long form magazine writer in the glory days of ten thousand word articles,” Katz says of his life in journalism. A book commission lead him to research the future of digital distribution of written works.

Survival in the digital economy

One of the driving ideas was how creators can sustain themselves in the digital economy, “my content was already being ripped off on the Unix internet and I thought ‘how will the profession creative class sustain themselves if there’s no ability to control the distribution?'”

Having founded Audible in 1995 at a time when few people were downloading or even using the net, Katz was in the box seat of the first tech boom and subsequent tech wreck in 2001.

At the peak of the dot com boom  Audible was floated on the NASDAQ stock market, “In 1999 good companies that were leading categories went public and got massive amounts of free capital.” Katz recalls, “It was one of those weird moments, there were 1500 publicly listed internet companies at the beginning of 2000 and there were 140 by 2003.”

Surviving the dot com bust

Katz puts the company’s survival during that period to a conservative attitude towards capital and the alliances he had created with the industry’s major players — at one stage Microsoft held a 37% share in the company and Katz was one of Steve Jobs’ confidants during the early development of the iPod.

Eventually one of those alliances became critical when Katz became bored with running a listed company, “it was an amazing adventure being a public company CEO for nine and a half years. It was very exciting and an honour to serve shareholders.”

Katz’s patience ran out with being a public company CEO when automated trading came to dominate the daily operations of management, “suddenly you had this metaphysical sense of ‘who are you working for if someone wants volatility?’ That suddenly got old.”

Audible already had a relationship with Amazon who had taken five percent of the business in 2000  in return for bundling audio book links on the ecommerce giant’s book pages. Katz also found Amazon founder Jeff Bezo’s long term view towards investment and returns a much more satisfying business model than the day to day grind of meeting short term shareholder demands.

In early 2008 Amazon bought Audible for $300 million and retained Katz as the company’s CEO.

Building new startups

For new startups, Katz advises “make an absolutely fearless inventory of what you know is true about this idea and what you’re good at and what you’re not good at.”

“You need to have people you can trust and believe in. Beyond that, be very sober about business models that are sustainable. There’s a lot mistakes that people make where you’re solving a problem in a piece of a value chain that isn’t sustainable. It’s easy to get confused about who the customer is.”

“Figure out who the real customer is. Sometime people overplay the fact that the customer is the capital, the capital will come if people have the innovation and the passion.”