Decoding the new economy

Intel’s challenge to find a new message and market

Can Intel adapt to the post PC marketplace where the old Wintel dominance no longer matters

Twenty years ago people cared about the specifications of their computers and chip maker Intel led the industry with its marketing of 486, Pentiums, Pentium Duos and Pentium IIs.

As we come to the end of the PC era, the consumerisation of technology and the rise of cloud computing mean customers no longer care about what’s inside their systems and Intel is struggling to find a new message.

Over the last few months Intel have been showing off their latest range of Central Processing Units (CPUs) to enterprise and small to medium business (SMB) groups. Last week the company hosted an SMB event in Sydney that illustrated how Intel is struggling to cut through the market.

Speaking at the event was Steph Hinds – an evangelist for cloud computing – who told the story of how her Growthwise accounting practice was flooding out during storms.

Because her systems were on the cloud Steph and her staff were able to work from home and local cafes while the landlord fixed her offices. Had Growthwise been using a server based system the business would have been crippled while her IT people implemented a disaster recovery plan.

Steph’s story in itself illustrated the Clean, Well Lighted Place argument for cloud computing and also showed how Intel is struggling to sell its PC and server upgrade cycle message in an era where that business model is dead.

This didn’t stop some of the other speakers at the small business event trying to sell the idea that upgrading computer systems and retaining an IT support company were essential to small business success but it’s a message that was valid a decade ago.

For Intel the challenge is to find a new message – it may well be that the company’s future lies in supplying the powerful CPUs that run data centres, or maybe the low energy and maintenance chips required to control the billions of intelligent devices that will run the internet of everything.

The company’s launch of their Galileo board – a tiny computer designed to compete in the intelligent devices market with the likes of the Raspberry Pi – is a step in the latter direction and shows Intel is exploring the possibilities.

Wherever Intel’s future lies, it doesn’t lie in trying to sell a business model that is quickly going the way of the Brontosaurus.

During most of the PC era, it was the Wintel partnership that dominated the computer industry, now Microsoft have realised this fundamental market change and started their journey to become a devices and services company.

The challenge now lies with Intel to decide where their journey will take them in a post PC world.

Google, Facebook and the Silicon Valley paradox

The paradox of Silicon Valley is cloud and social media companies want us to use the products they won’t use themselves.

One of the great advertising campaigns of the 1980s featured entrepreneur and Remington Shaver CEO Victor Kiam telling the world “I liked the product so much I bought the company”.

The modern equivalent of Victor Kiam’s slogan is “eating your own dogfood” where businesses use their own products in day to day operations. It’s a great way of discovering weaknesses in your offerings.

One of the paradoxes of modern tech companies is how they don’t always eat their own dogfood when it comes to their business philosphies – they expect their customers to take risks and do things they deem unacceptable in their own businesses and social lives.

The best example of this are the social media services where founders and senior executives take great pains to hide their personal information, a phenomenon well illustrated by Mark Zuckerberg buying his neighbours’ houses to guarantee his privacy.

Just as noteworthy are the policies of Google’s IT department, for past five years most tech evangelists – including myself – have been expounding the benefits of business trends like cloud computing and Bring Your Own Device (BYOD) policies.

Now it turns out that Google doesn’t trust BYOD, Windows computers or the Cloud, as the company’s Chief Information Officer, Ben Fried tells All Things D of his reasoning of banning file storage service Dropbox;

The important thing to understand about Dropbox,” Fried said, “is that when your users use it in a corporate context, your corporate data is being held in someone else’s data center.”

This is exactly the objection made by IT departments around the world about using Google’s services. It certainly doesn’t help those Google resellers trying to sell cloud based applications.

Fried’s view of BYOD also echoes that of many conservative IT managers;

“We still want to buy you a corporate laptop, get the benefits of our corporate discounts, and so on. But even more importantly: Control,” Fried said. “We make sure we know how secure that machine is that we know and control, when it was patched, who else is using that computer, things like that that’s really important to us. I don’t believe in BYOD when it comes to the laptop yet.”

Despite these restrictions on Google’s users, Fried doesn’t see himself or his department as being controlling types.

“But the important part,” Fried said, “is that we view our role as empowerment, and not standard-setting or constraining or dictating or something like that. We define our role as an IT department in helping people get their work done better than they could without us. Empowerment means allowing people to develop the ways in which they can work best.”

Fine words indeed when you don’t let people use their own equipment or ask for a business case before you can use Microsoft Office or Apple iWork.

That Google doesn’t give its staff access to many cloud services while Facebook’s managers restrict their information on social media shows the paradox of Silicon Valley – they want us to use the products they won’t use themselves.

Back in the 1980s, Victor Kiam liked what he saw so much that he bought the company. You’d have to wonder if Victor would buy Google or Facebook today.

Microsoft’s devices and services strategy starts taking shape with the Surface tablet

Does the Microsoft Surface show the company is starting to execute Steve Ballmer’s device and services strategy?

Microsoft’s latest version of their Surface tablet computer is the company’s first attempt at executing Steve Ballmer’s device and services strategy. If the company succeeds, there are some interesting implications for the tablet computer market.

Currently Microsoft is on a worldwide PR campaign to promote their latest range of Surface tablet computers. Last week during the Sydney leg of their tour I had the opportunity for a hands on demonstration of the new devices with Jack Cowett of the product’s marketing team.

The Surface itself is an interesting device with some major upgrades and changes as Microsoft begins to understand the tablet market with the device having more memory, better processors and battery life – although the lack of a cellular version is going to hinder its adoption by the consumer and small business markets.

Devices and services

It’s in the device’s integration with Microsoft’s cloud and communication services where the long term vision, and real story behind the Surface lies.

Most obvious is the bundling of services with purchasers of a Microsoft Surface 2 or Surface Pro getting 200Gb of Sky Drive storage and a year’s free international calls included with the device.

It’s an early taste of how Microsoft can combine services and devices that leverage off their existing position in the marketplace.

While these incentives may not be enough to convince customers that the Windows systems are a better buy than Android or Apple devices, integrating these cloud services makes the computers more powerful devices.

Keyboards as blades

Equally interesting with the Surface, is Microsoft’s devices play with the range of Surface covers that the company is informally calling ‘blades’ – an unfortunate choice of name which will confuse conversations with many IT managers.

Blade covers for Microsoft surface tablets

These covers dispense with the usual keyboard electronic layout with an underlying layout featuring a 1024 sensor pad that give the covers more potential than just being keyboards.

As part of the Microsoft marketing push to show this aspect off, the company has released a blade cover with a sound mixer layout and seeded the devices with various DJs under the banner of the Remix Project.

While the blade covers have applications as sound mixers and keyboards, the number and flexible nature of the 1080 built in sensors will see their application in other areas.

The way businesses have used tablet computers has taken manufacturers by surprise as Google’s Eric Schmidt told last week’s Gartner conference and Microsoft’s devices open up more industrial applications.

Already the medical industry is applying Windows based tablets as Microsoft are proud to show off.

Should third party developers be able to develop their own skins for Surface blade covers then Microsoft may have a killer industrial device that plugs into existing Windows based networks.

Added to Microsoft’s opportunity is the possibility of plugging Surface devices into the internet of everything giving business users direct access to the machines in their organisation.

Should Microsoft be able to capture a slice of these markets, it may well be a pointer for the company’s future in a post-PC world.

Regardless of how well Microsoft do with the internet of everything, the latest range of Surface tablets and accessories shows how the company is executing its strategy of becoming a devices and services company.

Microsoft’s continued evolution

Microsoft are evolving to a changed market, but can they evolve quickly enough to beat their competitors?

Today’s investor briefing by software giant Microsoft shows the company’s evolution as their markets shift.

Microsoft Chief Operating Officer Kevin Turner broke out the key numbers for the company’s revenues which illustrate just how the company’s business model is changing.

Over half of Microsoft’s revenues are coming from enterprise customers and of the product lines, Office unit makes up just under a third, Server and Tools slightly more than a quarter while Windows has fallen to 25 percent.

Despite the decline in Widows’ revenues, there’s no doubt about Microsoft’s determination to drive the PC upgrade cycle through the retirement of Windows XP as Turner explained.

We have a giant XP install base. But guess what? We’ve made so much progress on that XP install base. It’s down to 21 percent worldwide, and we have plans to get that number to 13 percent by April when the end-of-life of XP happens.

A big part of the change is the shift to the cloud with Turner claiming two hundred percent growth in Microsoft’s Azure services.

Despite the change in Microsoft’s focus, the threats remain with Apple releasing both iOS7 and their new range of iPhones along with Google making their QuickOffice mobile app free to iOS and Android users.

While Microsoft are steering their ship around, the incumbents in other sectors are protecting their positions. In an evolving world, survival is not guaranteed.

Intel and the upgrade cycle

Can the upgrade cycle save Microsoft and Intel as the computer market moves against the once dominant duo?

Once dominant PC industry duo Microsoft and Intel have had their positions shaken with the rise of cloud computing and smartphones. Can the PC upgrade cycle help them reclaim their fortunes?

In the early days of the PC industry, chips mattered. Twenty years ago the release of the Intel 486 CPU was big news and careers rose or fell depending on whether an IT manager chose DX-33 or SX-66 chips for the company’s fleet of desktops.

Today few people care enough to get passionate about what’s driving their smartphone or tablet computer.

Intel, who are currently promoting their new range of Central Processing Units, and Microsoft are in an interesting position as their traditional dominance in server, desktop and laptop computers is being challenged by the rise of smartphones and tablet devices.

For most of the 1990s and 2000s the two companies dominated the PC market so completely that the generic term for the sector was ‘Wintel’ – the combination of Windows and Intel.

A core part of the old Wintel business model was the four year upgrade cycle, that most computers would be replaced every three to five years giving Microsoft, Intel and the rest of the IT industry a ready made market for new equipment.

That business model was broken by Microsoft’s disastrous Vista operating system and never recovered as non Wintel portable devices and cloud computing services took away the need to upgrade a server, desktop or laptop computer every four years.

For Intel, matters weren’t helped by their powerful but energy hungry chips not being suitable for tablet computers and smartphones which further eroded their sales as the market moved to portable devices.

Despite those changes to the marketplace, Intel continue to focus on that four year cycle, at their media lunch in Sydney yesterday they emphasised the costs of running older technology.

They do have a point with their claims that servers older than four years deliver four percent of the computing power but consume 65% of the energy, making those antiquated systems far less efficient than newer equipment.

Unfortunately for Intel many businesses will be looking at outsourcing their servers to the cloud when the next technology refresh comes along, so the energy and efficiency arguments are a different matter.

On the desktop, things are somewhat different as most workers still prefer to work at a PC and Intel do have a case for upgrading both business and home systems.

Probably the biggest opportunity will be Microsoft’s pending retirement of Windows XP which will see a wave of business and home users who’ve been content with decade old computers looking at moving off systems that are no longer supported.

Another feature going for Intel and Microsoft are newer computer technologies such as touchscreens and Intel’s own wireless display technology, branded as Wi-Di, which older systems can’t support.

Whether this is enough to entice technology addled consumers and businesses across to new systems remains to be seen, but it’s a challenge for both Microsoft and Intel to reclaim their once dominant market positions.

Navigating the future of accounting and business with the cloud

Cloud computing is changing the accounting profession and many other businesses with it says Steph Hinds of Growthwise accounting

Steph Hinds of Newcastle accounting firm Growthwise is one of the new breed of business advisers using cloud and mobile technologies to change her profession.

At the recent Sydney Xero Conference I had the opportunity to speak to her about some of the ways her business is changing.

The interview with Steph as part of the Decoding the New Economy YouTube channel covers how the accounting profession is changing, what industries are being the most affected and where she sees the growth opportunities for her businesses.

Like many other professional services industries, the big change Steph sees is how accounting is moving from being based upon client transactions to requiring much deeper relationships with clients.

“The transactional model has been commodified completely,” says Steph. ” I started as a trainee accountant and we had those big ledger books and I was coding things and I’d go through cheque butts to enter them into the system.”

“Now all of that work is done for you.”

Like Xero founder and CEO Rod Drury, Steph doesn’t see this change as being generation based with older accountants adopting technologies as quickly as their younger counterparts.

However legacy systems do hobble existing businesses with both Xero and Growthwise finding 40% of their clients are new, startup businesses.

“We’re finding a lot of new businesses are starting up now,” says Steph. “it is so easy to setup in business, we’ve advised a lot of accountants that rather than spending five hundred thousand dollars to buy into a practice, you can spend ten thousand dollars on licenses and a laptop and all of a sudden you’re really in business.”

Changing the building industry

Steph sees the opportunities being in retail, hospitality and trades where being are struggling with paperwork and need fast responses in a customer driven market. The building trades are one of the big areas Steph sees for growth.

“Guys not having to drive to the office to get their instructions and their things for the day, not having to drop off timesheets, getting paid on the spot and billing on the spot.”

“We see traditionally see trades, particularly in the building industry as having cashflow issues and people go bust,” says Steph. “I think this is a huge opportunity to change things.”

Having information is at managers’ and proprietors’ fingertips is one of the benefits of cloud services and Steph also sees the app ecosystem, providing plugins like mobile job management are very powerful.

“The big data angle, for benchmarking – we have real time access to our clients’ data and how they are doing against industry benchmarks and being able to help clients,” says Steph.

Steph Hinds and Growthwise are examples of how the business world undergoing a dramatic change as the information and systems that were once only available to big business can now be accessed by anyone.

The real digital divide lies between the business who are prepared to grab the opportunities and those who are happy doing things the way they’re done today.

Similar posts:

Similar posts:

Similar posts:

Devices and services

Keyboards as blades

Similar posts:

Similar posts:

Similar posts:

Changing the building industry

Similar posts: