There's a lot of commotion lately about Twitter launching
its own client applications of what I would call "house apps" for platforms
like the iPhone, Blackberry and today the Android
. While many developers have
outstanding Twitter clients, the better ones come with a price. Now that
Twitter has introduced more of its own client apps free of charge, those early
third-party apps quickly lose their value proposition. Some believe the trend
could hurt companies like Seesmic or Twitterific. Developers will need to come
up with ways to structure their applications to offer other benefits besides
just connecting APIs. This is no different than what Microsoft did in the early
days. Microsoft grew to domination in the desktop market on the backs of third
party developers. Old applications like Harvard Graphics, WordStar, VisiCalc
and dBASE were the early pioneers before we had MS Office. No one should be
surprised with Twitter's actions, it's part of the software growth lifecycle. Developers
will adapt and Twitter will do what fuels its own business growth. I see no
problem with that.
Google's presentation at the Enterprise 2.0
show in Boston pushed
out more sound bites regarding cloud computing. They made the statement that
innovation in enterprise applications during the next 10 years will happen on
the Internet (in the cloud).
spokespeople like to put forth the vision at these conferences, but I doubt we will
see the obsolescence of Microsoft, Oracle, SAP or other on-premise software during
that same 10 year period. The capabilities of the cloud have from most analysts
viewpoints, caught up with what you can do on the edge. The question is not
about technology however, it's about who carries the asset on their books and
how it is managed. There are many companies with rather significant investments
in "legacy" systems. What may come to a surprise to this generation is much of
that legacy business logic drives corporate differentiation and value creation.
It can certainly be ported to new technologies (e.g., SOA hype), but why bother
when most of these systems are already depreciated and continue to work? There
are still those users who want to "see" the systems running on site,
especially if they are communication systems or data centers. It's up to the business
leaders to make the case for a change from the status quo. Lasting innovation
is driven by market forces, not from the innovation itself.
Jellyfish, an online shopping
cash-back service purchased by
Microsoft last year forms the foundation of a new search engine advertising
model the company is expected to announce at its Advance08 conference this week.
The new MS LIVE platform, called "Live Search Cashback
," will enable allow
users to get cash back from purchases made by participating advertisers on a
variety of merchandise. In contrast to Google's virtual monopoly on the
pay-per-click model, Microsoft will share part of the fee collected from the advertisers
to incent users to move forward with a purchase. Conceptually, this is no
different than a manufacturer offering rebates at the retail point-of-sale
level through the channel and to the end customer. Microsoft takes the risk of
running the ad by changing the model to CPA (cost-per-action) from CPC
(cost-per-click, aka PPC, pay-per-click). Microsoft's recent re-engagement with
Yahoo, specifically its search business, potentially provides advertisers
enough inventory to make this a viable service. Maybe these "stimulus checks"
from Microsoft will keep our economy going this year!
Carl Ichan is moving ahead with a Yahoo proxy battle and a new
slate of 10 board seats including Mark Cuban.
He's shaken up things at Motorola and Time
Warner so he's not the person you'd want to come knocking at your investor
relations door. He picked up 50 million shares last week and has said he will
buy up more shares ($ billion + shareholder already). All he needs to Gordon
(with Capital Research & Management) and Bill Miller
Mason who owns 80 million Yahoo shares and is the company's second largest
shareholder to pull this off. He does not have Microsoft's commitment, but with
a new board and willingness to accept the last offer, the deal may go through.
Yang will have trouble blocking the Power Play shots on goal as Ballmer, Ichan
and Cuban crash the net and head for the onion bag.
Yahoo plans to reject Microsoft's offer of $31 per share for
the company according to developments over the weekend. Yahoo is seeking
something closer to $40/share. Looks like Jerry Yang is going to man-up and
take on Steve Ballmer. Even though Steve is a newbie to big takeovers, my money
is on Mr. Softee getting this deal done. Yahoo does not have a staggered board
meaning that all of its directors are up for re-election at once. They also do
not have preferred shares or any other class of supervoting securities to
protect them from hostile takeovers.
is the last day to nominate competing directors at
Yahoo. According to Yahoo's by-laws, it is easy to push directors out if they
do not get majority shareholder approval. The problem is if Microsoft mounted a
proxy fight, that provision doesn't apply because Microsoft will provide more
nominees than available director seats. The Wall Street Journal suggests that
Yahoo may be betting that Microsoft does not want to go "hostile" since it may cause
deep resentment among the rank-and-file engineers it still needs to continue
the company's success. I don't see any other option for Yahoo at this point,
either way some of the yahoos are going to have to start cleaning out the desks.
The Year of the Rat is often associated with "a time
of hard work and renewal in many ways
," and most would agree that is what
we need this year. I believe we will see many positive things over the horizon -but
first we have to get through some rough waters. That brings me to technology. I
like Tech, but not Tech stocks right now. I know they look real tempting here
and after Microsoft's announcement, Cisco's earnings call and disappointment in
Google's results - the whole sector is down. Who would have thought you could
buy Apple and Google at these prices a couple of months ago? These are not
going to lead the momentum in the first half and after the Goldman Sachs tech
conference later this month, watch out as all the tech investors (big funds)
unload the rest of their positions and get in the early cycle recovery stocks
(retail, banks, financial). Last November, Chambers said the next few quarters
are going to be 'lumpy' and this week he gave guidance of just 10% growth for
the current quarter. The growth in B2B this year will come from applications
and services. Hardware-focused suppliers will continue to suffer declining
margins and channel issues. Look at Motorola shedding its handset business.
Dell is focused on growing their services to compete with HP and IBM. From the
consumer perspective, Apple's MacWorld and introduction of their new iPod and iPhone
failed to excite and it has fallen significantly over the past month. Content
and social networking growth will continue to drive Web 2.0 adoption among
consumers and will spill over into the enterprise. CBS and Facebook recently
teamed up to offer NCAA March Madness
coverage. CBS, like Microsoft, needs to
figure out how to monetize these types of deals. They haven't sold any ads tied
to this site yet. According to a Wall Street article, they only sold about $10
million last year related to their online digital advertising, TV is still
king. This will be a good year for those who are resourceful and well prepared
to take advantage of the opportunities that arise. The Rat is a courageous,
clever and an adaptable "person" - just don't take the bait.
Yahoo cannot survive on its own. Microsoft needs a search
technology boost. The companies have been talking for over a year. Last February,
the deal could have been $60 billion vs. $41 billion on Friday.
Yang is calling in the big guns by reaching
out to Google to see if they can "work together." Google could try to cloud
this deal by crying anti-trust foul. Ballmer today in their analyst call said
that Microsoft acquiring Yahoo would do more for competition than some
arrangement with Google & Yahoo. This makes sense for Microsoft and I would
expect this to go through this year. Microsoft could use this as a platform for
MS Live, think getting more business eyeballs using Microsoft software as a
service technology. Yahoo has some good relationships from a content provider
to major carriers and is a top destination site - much more than MSN.
It would be important to get the Yahoo
software team on board because many new graduates choose to work for a Google
or eBay rather than a mainline software company such as Microsoft. This could
add some pizzazz to Microsoft's offerings. The only problem I see is that
Microsoft will most likely drop the brand altogether within 2 years.
Microsoft beat out Google for a stake in the growing social networking
company. The investment represents a $15 billion valuation which Greenspan
would certainly think exemplifies "irrational exuberance." With more advertising spend moving to the
web, this opportunity represents a way to specifically target users based on
their hobbies, favorite music, location, age and gender - just to name a few.
According to eMarketing, the U.S. advertising market for social networking
sites is forecasted to exceed $900 million this year. The deal for Microsoft is
access to international expansion by Facebook where they will be able to
influence more of how the model develops. According to ComScore Media Metrix, Facebook
experienced over 129% growth in unique visitors year over year compared with
only 23% on MySpace. Microsoft has struggled with their online investments over
the last four years and this represents a way to energize that group. Here's
where the social networking sites have changed the traditional (if we can call
it traditional now) online advertising model. Typically, users are presented
banner and rich media ads depending on what they are doing on a web page or
results from a search query.
Google adwords have led the charge and this is a
very profitable business model today. Customers search for things, ads are
presented, click-through happens and the online cash register rings. On social
networking sites the user's purchase decision has nothing to do with search. It
has to do with what their affinity group is doing, what their friends are
recommending and other online discussion about the goods and services being consumed
by their social network. Both Google and Microsoft are at a strategic
disadvantage here. I will analyze this more thoroughly later. This investment
is also overshadowed by a competitive war between Google and Microsoft. Google
has stepped up its investment and expansion in office productivity applications
offered as a service and Microsoft has stepped up their online advertising
business. Ballmer was asked about this at the Gartner conference. They are
going after each other's core business. The companies in the middle, like
Facebook, will not be collateral damage - they will change the way marketers
think about online advertising.
This is a good write up on long relationship between NEC and Microsoft. In 1979 NEC introduced the NEC 8001 microcomputer based on the 8-bit z80 microprocessor. It ran Bill's BASIC interpreter. This was also the same year that Microsoft moved from New Mexico to Bellevue, Washington.read more
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SAN FRANCISCO - Microsoft held their coming out party for the much anticipated Office Communications Server 2007. Gibson Guitar was one of their beta customers and they were prominently featured in a video - and with a live musician to kick off the show at the Bill Graham Civic Center today. The folks at Gibson even screen painted a custom guitar for the show complete with the Microsoft logo and UC branding - wonder who gets that guitar? Bill talked about the megatrends he sees: performance of hardware, digitization of the economy, broadband/mobility and of course software breakthroughs. He showed a chart with the first computer that caused him to drop out of school - the Altair computer kit. That was in 1977. There were about 1500 people in attendance and many of the sponsors were part of the "ecosystem." The press coming out in the news today claims the death of the PBX and communications as we know it. Bill and Jeff Raikes want the partners to come into the Microsoft fold and leave their worries behind.
Bill was careful not to totally dismiss or make irrelevant these important communication partners. There is much to consider when looking at a total software solution for communications.There is still networking and quality of service considerations, after all OCS is still VOIP and real-time voice communications needs to be tuned for a network. Just like a twelve string guitar - voice + data. You have to have them perfectly in tune otherwise, you're not going to like what you hear. read more
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As RIM continues to grow, most well capitalized companies lose
their chance to acquire it. You begin to only have Cisco, Microsoft, IBM and
maybe Motorola or Nokia with the financial ability to do so. Ostensibly,
Microsoft buying RIM makes sense. One reason: RIM is growing; Microsoft is not.
With RIM's licensing model they aim to be the Microsoft of the wireless
messaging world and have made remarkable inroads over the years. RIM creates
the dominant platform in wireless messaging and a stable technology stack that
other vendors can build and sell hardware and software. (Sound like somebody you know?).
RIM's email technology is built for the server and should be
part of an operating system. Why would you want to handle messaging with the
dependencies on the medium in which those messages travel? That's what RIM does
when they install the server software in enterprises and in telecom carrier
data centers. By integrating RIM messaging software in the OS, the solution
becomes more economical and easier for IT to manage.
Developers writing software for the PC market are riding an
anemic market in terms of growth. Not so with messaging and unwired devices. There
is more innovative development of wireless applications as the number of
installed devices reaches prodigious proportions. The only challenge I've heard from developers
is writing code for RIM is burdensome compared with writing on Microsoft platforms.
Assuming Microsoft keeps the RIM operating system around (another blog topic
indeed), they would need to include a robust RIM SDK and developer plug-in to their
much-acclaimed Visual Studio.
The naysayers claim that Microsoft would have never let a
real acquisition target get to $40B before taking it out. Also the
incompatibilities between the two operating systems make it like mixing oil and
With $61B in cash, Bill and Steve have a fat wallet but that
doesn't mean the money is burning a hole in their pocket. Could this a pairing
off? Can Microsoft with RIM compete with Apple and Google in the long run? I'm not sure buying RIM is enough. Google
appears to be getting into the phone business as well. Think Gmail messaging on
a Google platform funded by the Google ecosystem.
This week Chambers and Ballmer sat down before a group of journalist and tried to convey a sense of how the companies will work together.
As noted in the media, this is an unusual PR stunt. Presumably giving in to pressure from key customers about working both companies on real business issues the very next day it was business as usual. Seems like the customers will be the ones left confused. As world collide, the customers become the last child, just a punk in the streets.