It’s been quiet here and at my other blog, Managing Business Problems. Sorry about that. When I joined Enterprise Strategy Group in April, they immediately gave me the opportunity to start a new blog, Marketing Information Technology. It’s been great. I can write about technology and marketing all in one place. I still will update Tom’s Technology Take from time to time, especially when I find some really cool technology. The more business-like musing will be found in my new home at ESG.  While there check out the other awesome ESG blogs. Our analysts have great observations and insights.

The Tech Toy That Will Probably Cause My Divorce

I’m late to the smartphone party. That’s okay. It’s only recently that I could justify buying one of these expensive gadgets, both professionally and personally. They also were a wee bit more expensive than I would have preferred. Also, let’s be honest, I’ve been burned by enough version 1.0 products to know not to do that with my phone. But the time was ripe.

My new baby is a Samsung Continuum Galaxy S. Sounds like a starship on Star Trek doesn’t it? I have yet to see a more melodramatic and pompous products name. It is the complete opposite of the simplicity of the iPhone name. That’s not surprising since it’s philosophy is pretty different too.

This is a good time to introduce Tom’s Law of Usability, Stability, and Flexibility. It states that usability and stability are inversely proportional to flexibility for IT and Electronics products. The Geek Corollary to that Law states “Geeks prize flexibility over usability and stability because, heck, we can figure it out, right?” You see this played out dramatically in the operating system market. On the far right is Mac OS X. It’s pretty, it’s easy, and you have one way of doing anything. That’s why you only have one button on your mouse – because that’s all you need and if you want more you are doing something wrong (dammit!). Mac’s are for people who say “I just want you to tell me how to do <fill in the blanks>!” This is true of all of Apple’s products. They excel at simplicity as long as you do things the way you are told.

Linux is on the other end of the spectrum. If you don’t have to drop to the command line a couple of times a day, then go get a Mac! Seriously, Linux users like the fact that their are ten ways to do something, each with varying degrees of difficulty. They like the fact that they have to edit a 57 page XML-based configuration file. Registries are for babies and the mentally incompetent. With Linux, you can remake you computer into your own image down to rewriting the kernel if you please – and who wouldn’t want to do that? Microsoft Windows lives in a space between the Linux and Mac worlds, trying to balance usability with flexibility and taking hard knocks for not achieving either. It’s not fair but neither is life.

This Law applies to my phone. It is based on Android, a Google Linux derivative. Compared to any other phone I have ever had, it has infinitely more settings, configurations, and options. In other words, it’s way cool! It’s not really even a phone. It’s a tiny computer that happens to make calls. I can customize it at least as good as my Windows and Linux computers. I can add software from anywhere (not just the Verizon app store) and even connect it to my home network. Heck, I have used it to get a remote desktop to a server on my LAN. It is just the neatest toy which is why my wife is starting to hate it. It’s only a matter of time before I will hear “Put that damn thing down when I’m trying to talk to you” or something like that.

But, just like a typical Linux computer it has it’s foibles. Ever so often it just locks up. No reason. It just seems to go home for the evening and hangs out a “We’re Closed” sign. There’s no reset button so I have to pull the battery, an action that requires opening up the case. I cringe every time I have to do that. It feels like something I shouldn’t be doing.

But this is truly a device for geeks. There are lots of ways to really screw this puppy up, not the least of which is misbehaving software. That’s its charm. You can customize this phone/tiny laptop to your heart’s content without getting permission from mother Apple.

Now, if only I can stop playing Angry Birds. That’s like game crack.

And I Yawn Again at NTAP

There have been so many blogs written in just one day about the Network Appliance deal to buy the chunk of LSI called Engenio. Between Steve Duplessie at ESG, Greg Schultz of StorageIO, and Andrew Reichman of Forrester, I figured the deal was pretty much covered. This morning on Twitter I saw another half dozen links to blogs about it. With all this coverage you would think this was a game changer in the industry. It’s as if Google bought Microsoft.

I find myself bored by it.

While I like be a contrarian sometimes, that is not the case here. I don’t think it’s a bad deal. All the points have been made as to why it’s a good deal and I can’t dispute any of them. Controlling one’s technology is a good thing. Increasing gross margins on products is also a good thing. And you can’t complain about adding incremental revenue. All very good.

But not very great. Not very bold, not very exciting, not game changing, and certainly not transformative. It’s a boring move not a bold one.

Look, there are are only a few types of sustainable models for companies. They are:

• Emerging – what every startup is. They don’t know what they will be when they grow up but that’s okay. This is where our most exciting technology comes from. Eventually, however, they will have to grow up and become something else or getting eaten but someone else.
• Parts Supplier – you make parts for other people. Like headlights or NICs. Great work, especially if you spread it out amongst a lot of companies. The goal of a Xyratex. Qlogic, or an Atto for that matter is to be a supplier to as many people as possible and build something of an aftermarket for your components. Think Cummings (they make engines).
• R&D Shop – companies that produce only intellectual property. You see this in Pharma and semiconductors but most computer tech companies want to control their R&D. If a big company sees something it likes in another company, they just buy it.
• Outsourced Services – who doesn’t outsource call centers and manufacturing these days? Most of the services industry falls into this category. It’s the business process equivalent of a parts supplier.
• Specialty Supplier – the big companies can’t make everything. High performance or special purpose products can’t be produced in enough volume for the big companies to be interested. We used to have more of these in the hardware industry. SGI was one and sort of still is. Alienware certainly was but was bought. Software is rife with specialty companies. Software can get away with it because they have almost no recurring costs. It’s all R&D and no inventory. What is important is that these companies have something that is very important to a small number of people but enough people to sustain the company. They are unique but have demand.
• Conglomerate – a set of loosely related companies. Some are completely unrelated like GE (aircraft engines and broadcast media?). EMC looks more like a conglomerate than anything else. You can try and put a “Data Management” wrapper around them but RSA, EMC storage, Documentum, and VmWare are only loosely connected in the marketplace. Conglomerates manage companies or divisions like a portfolio. They diversify to guard against downturns. Storage is down? That’s okay because security is up and so on. Google is looking more like a conglomerate every day. And when the need growth they buy some other company in a different space than where they are now.
• Solution Supplier – soup to nuts in a particular market. HP can provide you everything from mobile devices to laptops to storage to servers. Oracle and IBM can also provide you with almost a whole solution. For these companies, it’s a matter of defining your boundaries. Is is business hardware to business software like Oracle? Maybe it’s all software from infrastructure to desktops to game systems like Microsoft. It’s about delivering a complete end-user solution. When you need more growth, you push out the boundaries.

Then there are the odd ducks. The folks who sell directly but in a narrow non-unique space. They are too big and too old to be Emerging but sell direct rather than to other companies in their market. Not diverse enough to be a conglomerate, they don’t supply enough of the whole system solution to be considered a real solution supplier. And they don’t do anything special enough to be a specialty supplier. This is where I see NTAP now. Basically a one trick pony in a whole herd of mustangs.

NTAP was the specialty supplier when NAS was new. Now, all the solution suppliers and some conglomerates have NAS in their bag of tricks. It’s just not that special anymore. They might have superior technology (don’t know really) but they clearly are at a disadvantage when someone wants to buy a whole system. If I’m putting in a new application, I can buy most of my parts from Oracle, IBM, or HP. No one has everything (well, maybe IBM does) but their services divisions can help me to get whatever I need. Heck, even Dell is better positioned for the IT business.                             

For me to buy from NTAP, I have to only want storage. Just storage. Not servers, not infrastructure software, not desktops, and not mobile devices. If all I need is storage then they have to compete against the conglomerates and all the storage products that the conglomerates and systems suppliers have too. That’s not to say that NTAP is doomed. I believe all those other smart people that say they are a good company and this deal will help them. They can compete effectively in their niche. But their niche is not special enough anymore to drive people to them and them alone. It’s always a bake off for NTAP. They are no longer a specialty supplier but it’s not clear what they are anymore. What I don’t see with this deal is a growth plan. Incremental revenue is not about moving forward. It’s running in place. There is nothing in this deal that will really drive meaningful revenue growth or make them an HP or even an EMC.

LSI was smart here. They know where they are in the food chain. They supply parts. What they do is the computer tech equivalent of making headlights. A good solid business but not one where Engenio fit. They got money for it and can focus on making more of the type of parts they make best. Good move LSI.

What is unclear is what NTAP wants to become. If they stay where they are things will only get harder. If they keep patching the cracks with spackle the house won’t get any bigger or better. Maybe they should buy Brocade or merge with/get bought by Cisco. Doubling down in storage isn’t going to do the trick. To get meaningful growth they will need to do something a bit more risky and bold.

Shaking the Smartphone OS Cocktail

The difference between a mélange and a mess is balance. A mélange mixes together disparate elements into a cohesive combination by carefully balancing each part in relation to the other parts. A mess, by contrast, has no balance. It’s a jumble of confusing elements that fight against each other. It’s why one bartender can make the perfect cocktail and another a horrible brew with the same ingredients.

The smartphone OS market right now is a mess not a mélange. Rather than a handful of operating systems that compliment each other we have too many that do the same thing and fight with each other. While this will eventually shake out, at the moment it is a confusing mess for the consumer.

I’m about to step up to a smartphone. It’s been a long time coming. Truthfully, I wasn’t sure what value these devices had. They had neither the software or power that I crave in a computer nor, in most cases, the sound quality I want in a phone. Both of those situations have changed. The devices and apps have become more powerful and hence, more useful. The sound quality has also increased dramatically. This is a great time to buy these devices too. Prices are dropping and data coverage expanding.

It’s the operating systems that are holding me back. There are too many of them to choose from. Smartphones are not like old school cell phones. In my old mobile phones the operating system really didn’t matter. The carrier and phone did but not the OS. Whether you bought a phone from Nokia, LG, Samsung, or Motorola, the features of the phone and phone company (flip or stick? service in the desert?) decide your experience.

No longer. Now, like a computer, you have to decide on an OS and boy are there a lot of them. Ticking off the major ones in my head I came up with Apple iOS, Android, WebOS, Windows 7 Mobile, and RIM’s BlackBerry 6 OS. That’s five major smartphone operating systems I can come up with using no research. All with incompatible apps, offered on different devices that have different features, on different carriers, and available in different countries. If I was starting from scratch, I would need a matrix of carriers (probably only the major ones like AT&T, Sprint, Verizon, and Nextel), device manufacturers (the ones I’ve mentioned plus HTC and RIM) and five operating systems. All before I got to the features of the phone. At a minimum that’s a 4X6X5. For you math geeks that means as many as 120 combinations. Even if I eliminate some combinations as non-existent, such as Blackberry OS with anything but a RIM device, it’s still a big number before heading out to look at the phones that support my X by Y by Z combination.

Complicating matters is that smartphones are only one slice of the mobile pie. I have to take into account that I might want a pad device someday. That makes the OS choice even more important since I wouldn’t want more than one mobile OS with incompatible apps. It’s bad enough that my laptop and phone will have different applications and operating systems. No need to make it three different operating systems.

It wouldn’t be so bad if there were clear distinctions between any of these operating systems and their apps. Perhaps from the point of view of the folks who design them and the analysts who cover the mobile market there is. To consumers, however, it’s all the same. You have gestures, even if they are different. You have apps, even if they are different. You have buttons and some type of virtual keyboard, even if they are different. At best, ones choice is determined by whimsical personal preferences.

The thing is, the OS matters. Just like any other computer, the smartphone OS determines what applications are available for your platform. Which operating systems a software developer writes for depends less on technical details and much more on market share. My choices will be limited by which OS app developers think will provide them the most exposure in the market. Most software companies don’t want to develop for an operating system that won’t have much market share or be around very long.

I’ve been in this industry long enough to know this won’t continue. Sooner or later there will be a shakeout and half of these operating systems will disappear. Some won’t that should but will be marginalized like Windows CE. Others will become nothing more than user interfaces in much the same way Apple’s OS turned into UNIX under the covers but has kept its Apple GUI. Still others will disappear altogether.

The problem is guessing which ones will live and which will die. No one wants to buy a device that will have an obsolete and discontinued operating system. It’s like buying a Palm device anywhere between 2000 and 2005. If you knew then what we know now you wouldn’t have. I have a desk draw full of obsolete devices like my old Palm devices.  They are, for all practical purposes, museum pieces.

I generally don’t like to make predictions (since they are frequently wrong) but here’s what I think will happen:

• Apple iOS – keeps going. Apple simply doesn’t care about the wider market. That and the cognoscenti love their Apple crack.
• Android – generous licensing will insure that it continues to evolve. It lives!
• Windows 7 Mobile – another failed attempt. Sorry Microsoft. I actually like Vista and Windows 7 on the desktop. The mobile OS is too little too late. It dies. Microsoft money insures it dies slowly and painfully. Please Mt. Ballmer, do a deal with Google and move to Android while you still can.
• WebOS – really? I get that HP paid good money for Palm but with all the other choices, why would I want this. The tablet market? And this from a company who’s last homegrown OS was HP/UX. It dies and HP switches to Android merging whatever is good about WebOS into it.
• Blackberry OS – this is a tough one. RIM has an enormous and fanatical installed base but it’s slipping. They had the first viable smartphone-like device which helped get them established. At the time you had to rely on their closed system for email. Now, that’s a liability. I’ll bet that they quietly move to something else but with Blackberry extensions so the old guard can feel happy. My guess is that it will be Android too.

Given where the market is going, the basic mobile phone probably has only a few more generations before they are all smartphones. There will be basic versions for the cheap, the Luddite, and the burner phone market. Those will still be smartphones, just lobotomized ones.

In the meantime, there are too many choices and that will hurt the market. Consumers like simplicity. Until recently, mobile phones were fairly simple devices with a small number of functions. As long as the major bases were covered (make and receive calls, SMS, a couple of toys like tip calculators) you were fine. Now they are computing endpoints with all the same problems as a laptop. Too many operating systems makes it overly complicated. It can’t continue like this.

For the smartphone OS folks who I’ve just insulted remember this: This was the same situation in the personal computer/workstation market in 1990. You had DOS, Apple, dozens of UNIX flavors, CP/M in all of it’s variants, as well as proprietary workstation operating systems. Remember IRIS? Ask your kids (huh? what’s that?) and you will feel old. I loved developing for Apollo’s Domain OS but where is it now? Next to the VAX in the Smithsonian. The market demanded simplicity, leaving Microsoft with the lion’s share. It didn’t matter that DOS was inferior to UNIX or Domain OS. Microsoft still ate their lunch. That UNIX, Apple, and a few others still exist is no solace. They are niche players now, not majors.  Windows and Linux make up the majority of the market by fulfilling different needs. They compliment each other.

Since I have to bet, I’m betting on Android. I’m locked into Verizon with no burning need to change which makes the decision easier. Choosing Android eliminates Apple and RIM devices too, further simplifying things. I almost don’t care what the phone is now. I’ll probably decide on price.

Public Clouds : An Unregulated Utility

What is a utility? It’s a little like art or pornography – we know it when we see it.

Public cloud services such as backup services, photograph storage like Flickr, and email like Gmail are quickly becoming completely ingrained in the fabric of modern life. The Internet offers a host of free or low-cost services that we come to rely on for managing, storing, and sharing our data. In fact we have become as dependent on these services almost as much as phone, electricity, and energy services. To me that makes them data utilities but unregulated ones.  And that’s dangerous.

In the past one of the defining elements of a utility was a sanctioned monopoly. There was only one gas company, only one phone company, and only one water company. If you didn’t like their service or their prices then tough! Back in the day, when our US Presidents were manly men who acted manly and had manly mustaches (such as Teddy Roosevelt), it was decided that this was a bad thing. These monopolies had the people by the… throat and that would not do. However, these were not just manly politicians. They were reasonably intelligent ones (and a few may have been receiving perfectly legal contributions from the utilities) who understood the importance of monopolies to early business development. So they struck a bargain. You get to keep your monopoly Mr. Phone Company President and we will regulate you and tell you what you can charge, what your service (i.e. product) will be like, and everyone will be happy. The people won’t get a royal screwing (we being Americans and not liking royal anything one bit) and the monopoly/utility will get unreasonable amounts of money. Bully for us!

Then, in an era of still manly Presidents (Yes sir Mr. Reagan sir!) but less manly politicians in general, things changed. Competition was the byword and deregulation become the way to do business like an American. Let the market, not big government, decide. However, deregulation does not mean no regulation. You see Mr. Cable Company CEO, you still need to pull wire through OUR towns. So we can tell you what to do. You still have a market share that is monopolistic? That means we can still regulate you so that we have no royal anything going on here in America. And this is why the cable company can’t raise rates when it wants to. What could be more un-American than making 500 channels of television unaffordable! Wars have been fought for less.

So what does this have to do with Public Cloud services. Even if you are enjoying the spirited economic history lesson (bully for you!) it is a reasonable question. You see, as we become more and more dependent on cloud services for functions that are important to our lives, they have us by the throats again. Do you want to see your photos disappear suddenly? Could you really live without Facebook? Not if you’re a 17 year old girl. Take away Facebook and their phones and you have a mental health crisis on your hands. Worse, if you are a small business that is using an online backup service or email from Google, Yahoo, etc. you rely on it to make your living. Don’t want that living to dry up so that you have to live in a cardboard box? Pay up! Mr. Roosevelt would not be amused.

This is only getting worse as smaller companies embrace cloud services for IT. Salesforce, Amazon, Google, and a host of other companies provide services that are critical to business. Worse, moving from one service to another is not trivial. Go ahead, try and change your email account, the one that all of your customers already have in their address books. It would become a symphony of missed opportunities.

Let’s take Mozy as an example. When they recently announced changes to their service plans, they did so as if it was just any old product – they just did it. Sure they risk losing customers especially amongst the geeky crowd. Clearly that isn’t bothering them too much. Why? Because changing is a pain and quite difficult for people who don’t know much about technology. For geeks like me, switching to another service isn’t all that hard. [Note: It was real easy for me personally because I didn’t use Mozy. Tried it years ago and didn’t much like it.] For the average American who got Mozy bundled with their new laptop, has no home infrastructure, and is scared stupid of losing their latest podcast about hipster living in New York City, switching is beyond them.

So Mozy, like lots of other cloud services, has nearly unlimited pricing power. They have their customers by the throat. For them, pouring costs into gaining new customers makes perfect sense. Worrying about losing them doesn’t. These people can’t really leave even if they want to. This is the modern definition of a utility. This is not to pick on Mozy (okay maybe a little) because there are lots of similar cloud services that have the same model. Herd in the cattle, pen them up, and do what you want to them.

Here’s what I think will happen. Nothing.

We do not live in an era of government officials with marvelous mustaches. They lack the moxie to stand up to a banking industry capable of bringing the entire world economy to its knees. Why would we expect them to even care about unregulated data utilities? That is, until they are forced to choose between losing their pictures of themselves with celebrities or paying through the nose to people who don’t contribute to their campaigns.

As consumers, what can we do. Be careful. Know the technology that you rely on enough to switch to a competitor. Build you own infrastructure and make the cloud secondary. All good ideas that enhance good ole American competition. It still won’t help when Facebook decides to start charging. Then you will have to man up and do without. Bully for you!

If I was a cloud service, I would starting looking at lobbyists and handing out contributions. You never know when a a member of the House Committee on  Committee on Science, Space, and Technology will suddenly be faced with paying to share pictures of their grandkids. Then you will see just how manly our government can be.

Fun U.S. History fact: The last U.S. President to sport a fantastic mustache in office was President Taft. Mr. Obama, it’s time!

ARMed for a Takeover

If I was Intel I would be worried. The hegemony of the Wintel empire is facing a threat like none before. And that threat is from ARM. ARM is not a multinational criminal organization (cue the James Bond music). It’s a processor. Actually it’s a processor core architecture used in a host of processors with a pedigree that goes back to 1983.
ARM processors are subversive. They have been used in small, low power devices forever. They lie under the radar of general purpose computing. ARM is found in the stuff that you don’t think of as computers such as mobile phones, network switches, game consoles, and GPS systems. These little devils are the processor of choice for smartphones everywhere. Android was designed for it. It lives in the Apple iPad. There might even be one in your Blu Ray video player. ARM is everywhere.
It’s only a matter of time before ARM sneaks into the Empire of Intel, snatching away bits of key real estate. We saw that with the first Netbooks. Why? How could this happen? Power! It’s all about power. ARM cores provide that almost mystical combination of processing power and low energy use. Just look at the iPad. Inside is an Apple A4 based on four ARM cores. It gives the device all the power it needs while allowing it to claim a battery life of 10 hours while using WI-FI. Sure, that longevity is not only because of the ARM processor but it certainly is a key factor.
None of this would matter if it weren’t for the fact that mobile devices are taking over. I don’t expect servers or desktops or even laptops to go away anytime soon. There are times you need more raw computing power. But much of the time you don’t. For most home uses, a low-end, Internet enabled device that moves around with you is just fine. Truth be told, a lot of business users would gladly ditch the expensive and heavy laptop in favor of something small and light but long on battery life. The movement to cloud computing makes this even more appealing.
So where does this leave Intel? In mortal danger. Intel finds themselves, for the first time in  ages, with an entrenched enemy on it’s doorstep. They are in the position of having to displace a competitor instead of having someone trying to eat their scraps. In the past, they could rely on revenue in all high growth segments, be they servers, desktop, or laptops. Not now. ARM has infiltrated core Intel markets as mobile computing devices supplant laptops and low-end computers.
For those of us used to the seismic shifts in the computer industry, the ARM ascendance is a bit surprising.  We notice the Googles and Microsofts, the Oracles and Apples more. Companies that burst on the scene with all the subtlety of a Mongol invasion. The fifth column tactics of the ARM processor was not as noticeable. That’s why it’s so dangerous to Intel. ARM may have taken their market from within, quietly. It’s much harder to fight a threat that sneaks up on you.
Intel will certainly fight back. They have the technology, size, and money to fight a protracted war. The strategy has to be different from what they are used to. They are the underdog now. Given that, Intel needs to be more aggressive and less complacent. My advice to Intel is “shock and awe”. Buy and build whatever is necessary to crush ARM before it is too late. Or, one morning, all the residents of the Empire of Intel will awake to find ARM processors everywhere and themselves friendless and forlorn.
The enemy is at the gates! To arms! Oh wait. Wrong rallying cry.

An Apple a Day

All the insane attention that Apple gets turns me off. This is especially true of Steve Jobs. No other technology executive gets the type of hype as Jobs, not even Larry Ellison of Oracle. Don’t get me wrong - I don’t hate Apple. I just feel that they are a company not a religion.

That said, the frenzy of angst that emanates from the business and technology press over Steve Jobs’ illness feels a bit hysterical to me. Mr. Jobs is a visionary and a masterful marketeer. He is also just one person in a very large company. All the Cassandras that are predicting the end of life as we know it, simply because Steve is in poor health, don’t understand Apple. Apple is not Jobs. It is a company which, by definition, is a collection of people. A company that just announced outstanding results. A company with depth in their bench.

Apple is successful for a lot of reasons, not just because of it’s present CEO. It did fine without him for awhile when he was sick a couple of times before. Instead, Apple excels at designing, packaging, and branding technology that mostly exists already. Touch screens, music players, smartphones, and graphics workstations all existed before Apple came out with their version. The difference was that their version has so much panache that it could be positioned as a luxury item and not simply gear. None of that will change if Steve Jobs leaves, even if it’s permanent.

The Cult of Jobs does help the company of course. It adds to an already fanatical brand loyalty that is the envy of every company on the planet. But it’s only the cherry on top of the sundae, not the ice cream. The Culture of Apple is much stronger.

I admit that I hate technology driven by little more than decent design and awesome marketing. It seems shallow to me. But then again, I’m a computer geek. I view technology differently, in an almost minimalist and functional way. For most people, Apple products are much more exciting, much more fun, much more memorable than the average geek gadget. This is the success of Apple.

No matter what happens, the Culture of Apple not the Cult of Jobs will be the driving force in the company’s success. Personally, if I were Steve Jobs, I would retire. I would harness my considerable talent and hoard of money to get well again. I’d spend time with my family and enjoy life. Steve, you’ve earned it. You have already passed on your business DNA to others at Apple. It will do fine.

So consider this a get well card to Steve Jobs. It doesn’t matter if he ever comes back to Apple. Getting well is what matters.