Paul Wallbank – Brilliant Communications

Tag: cloud computing

  • Microsoft’s search for a strategy

    Microsoft’s search for a strategy

    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.

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  • Democratising the internet of things

    Democratising the internet of things

    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.

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  • When margins collapse

    When margins collapse

    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.

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  • The fight for cloud computing’s sweet spot

    The fight for cloud computing’s sweet spot

    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.

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  • Could Windows 10 be Microsoft’s last desktop operating system?

    Could Windows 10 be Microsoft’s last desktop operating system?

    On Tuesday Microsoft are expected to announce their new Windows 10 operating system at a media event in San Francisco.

    If the rumours are true, then the new system will be launched almost exactly two years after Windows 8 was released amid hopes that it would stem the PC industry’s decline.

    Windows 8 didn’t deliver with most people being frustrated with the system’s inconsistent interface that tried to be unified desktop, laptop and tablet operating system which managed to be unsatisfactory on all of them.

    As a consequence, users avoided Windows 8 like the plague with industry analysts Netmarketshare claiming most of Microsoft’s customers are buying systems kitted out with Windows 7 or just sticking with decade old Windows XP systems.

    Courtesy of Netmarketshare http://www.netmarketshare.com
    Courtesy of Netmarketshare http://www.netmarketshare.com

    Making matters worse for Microsoft is the decline in personal computer sales in general with IDC estimating global shipments of both portable and desktop system will drop 3.8% in 2014.

    These declines are already well established in the trends being seen in Microsoft’s business with the company’s Windows division showing an accelerating decline in profit margins.

    Microsoft Windows division financial performance
    Microsoft Windows division financial performance ($ million)

    Should that decline continue with Windows 10, it may well be that Microsoft will have to consider the future of product.

    As it is, the market may be deciding for them as users increasingly switch to tablets and smartphones. We may also see a wave of cheap Chinese made laptops running versions of Google Chrome or other Linux based systems also threatening the existing PC sales base.

    Either way, a lot rides on what Microsoft announces in San Francisco this week. It could be the end of an era that defined the mass adoption of computers.

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