Computer Industry Goes Zoom Zoom

You would think that last week’s announcement that Dell was acquiring 3Par for US$1.15B was news enough. Ha! Intel then raised eyebrows by announcing the acquisition of McAfee for US$7.6B. Now, comes Monday morning and HP raises the stakes against Dell by sending in their own and bigger bid for 3Par. It’s nice to be loved. Somewhere in all this, Hitachi Data Systems announced that they had acquired the Intellectual Property and core engineering team of Parascale, a cloud software company. Too bad for them. What should have been a sweet announcement was lost in all the noise.

So, what the heck is going on here? On the one hand, this is actually not that surprising. Computer tech companies tend to throw off lots of cash so they have a lot sitting around for acquisitions. Most of these big companies can thus afford to buy expertise or market share. This is especially true when you are coming out from the bottom of the market. Best to build up the arsenal before the economy really picks up.

This is an industry with a tradition of letting smaller companies trail blaze new technology and markets then get their payoff from a big company. In the long run this is cheaper and less risky for big companies but profitable for small ones. More unusual are the Googles and Microsofts who start in a garage and end up a behemoth. That’s the myth of computer tech but not the reality. What is not a myth is that deal making gives folks like me something to talk about. So here’s the talking about part.

Intel-McAfee Makes for Secure Communications

The Intel-McAfee deal has a lot of pundits scratching their heads. It’s a lot of money for a company with a big consumer business. McAfee’s revenue would barely be a rounding error for Intel. In 2009 Intel’s revenue was 18.5 times McAfee’s (~US$35B vs. US$1.9B). $1.9B is nothing to sneeze at but it will be a long time before a McAfee revenue stream makes up for the money Intel paid for it. What McAfee has going for it is lots of core security technology. More importantly, it’s spread across all aspects of the digital world – web, mobile, desktop, and server. Combined with Intel hardware and chips and you have a much higher revenue generating business than McAfee alone. It’s like having your cereal with fruit and milk. It’s part of a complete breakfast. It also well positions Intel for the long term. This is an example of the Gestalt principle – the whole is way better than the sum of the parts.  Besides, people said similar things about EMC’s RSA acquisition and that has worked out well for them, right?

3Par Bid Up by HP

I wasn’t that thrilled about Dell’s acquisition of 3Par, except insofar as it worked well for the 3Par folks (nice folks). I’m both more and less thrilled about the HP bid along the same lines. It’s better for 3Par financially, so I’m more thrilled. It’s makes less sense for HP though. Unlike Dell they have a coherent storage story, reputation and brand going back decades, as well as an extensive product line. Do they need 3Par? At least with Dell, 3Par would be a prominent part of the line up. They might have even kept their name, like Equalogic did. With HP, they will be absorbed. It’s hard to see what this deal adds to the HP product mix that they can’t get or build more cheaply. I doubt they need 3Par’s customer base really. Perhaps it’s just a way to keep Dell from becoming a serious competitor in storage. Perhaps. Generally, I don’t like this for HP but do for 3Par investors. It will be interesting to see how high this one gets bid up. There could be crazy amounts of money tossed around here.

HDS Goes Parascaling Up In The Clouds

The cloud is about software. It sells hardware but doesn’t exist without software.  Parascale provides software that makes storage and servers into clouds. I don’t know enough about Parascale to say if it worked or was particularly good software. Assuming it worked just fine, then this is the kind of technology play that I like. It adds immediate value, helps move hardware, has broad, future potential in an emerging market, and is a deal that is easy to do. It’s kind of conservative but conservative often pays the bills.

Bye Bye to OpenSolaris

There were also a bunch of other, smaller announcements too. One that is significant was that Oracle will be dropping support for the OpenSolaris project. This is sad since there was a vibrant community around OpenSolaris. It was not, however, unexpected. Oracle has nothing to gain by supporting an open Unix product. In the end, this will be good for the Open Source community. There are already too many Linux and Unix projects and variants diluting the talent pool. Do we really need OpenSolaris and FreeBSD and OpenBSD and NetBSD and Darwin and so on and so on. Not really. So, while I understand how this bothers some people and generates a lot of “what else will Oracle kill?” questions (Don’t worry it won’t be Java or MySql. They generate revenue) it’s really for the better. Time to move on.

I must admit, all this activity is exciting. It’s rare that this industry gets a week like this. Deals are usually more evenly spaced out. It’s like NASCAR for computer geeks.

Piling on the Dell/3Par News

Whenever some news comes out about an acquisition, everyone chimes in. It’s like kids playing little league football. Someone tackles the kid with the ball and all the other kids pile on.  I promised myself I wouldn’t do that. I lied. Hey, if you can’t lie to yourself, who can you lie to?

But really, I follow the storage segment but don’t claim in-depth technical knowledge anymore. I’m too interested in technology and business strategy to dive into the deep technical details. I can make a thin provisioning joke but that doesn’t mean I have the kind of encyclopedic knowledge of the segment that folks like Marc Farley (of 3Par – ready to buy that boat?) or Chuck Hollis of EMC have. Sticking to what I know here are some thoughts.

Why it’s a good thing (in list form):

1. 3Par would have eventually hit the wall. The hardware industry is a game of numbers. Big volume plus low cost equals great margins. You need market share and manufacturing prowess for that. A company the size of 3Par would have eventually gotten eaten alive by the big boys.Or faded into irrelevance. That would have been the slow death.
2. The deal provides a nice Return on Investment for 3Par investors. I like it when people make money in startups. It provides fuel for more startups and gives hope to the rest of us entrepreneurs. Now, if you all want to swing some of that cash my way…
3. I bet Dell really wants 3Par. 3Par could have gotten bought up by someone who just wanted them out of the way.  That would have been sad for the industry. There is a better chance that some of what makes 3Par unique will continue to live on at Dell. It’s nice to be loved.
4. 3Par employees can get great deals on Alienware computers. I’m just speculating but wouldn’t that be cool. Those babies are hot! If that’s not in the term sheet then amend that puppy now.

Why it’s not a good thing (also in list form):

1. US$1.15B is a lot of money. Dell is going to have to sell a lot of storage to make that back. That’s especially hard to do when the 3Par message has often been how you could buy less storage at a cheaper price to get the same functionality. I get the “less is more” messaging for a startup but you all have to make back a big pile of money now.
2. Dell’s bought a lot of storage companies but still doesn’t have a cohesive storage message. This is actually a good-not good thing. On the one hand, you don’t think of Dell as being in storage the way you do, say, HP or EMC. They’ve bought up a boatload of storage companies but it’s like Yatzee - all tossed in an incomprehensible pile. On the other hand the scrappy 3Par people are really good at new marketing. If they stick around (and Dell should make it worth their while to stick around) they could have a positive effect on Dell’s overall storage marketing. If they’re allowed to which brings us to…
3. They can’t use what makes 3Par special. People think that companies like 3Par are about technology. Not really. They are about ideas. The simple audacity of 3Par is part of what makes it successful. That rarely translates well in a big company. Just because Dell wants 3Par doesn’t mean they know what to do with them.  The impact of the creative folks that have been driving the company will be diluted once they are just a cog in the Dell machinery. 
4. On some level, this has to annoy EMC, Dell’s big storage partner. The more meat Dell adds to the storage stew, the less tasty it is for EMC. I keep wondering how long EMC will put up with this. Dell clearly wants to create a business that competes with EMC. An ugly breakup would be bad for Dell since EMC could probably crush them in the enterprise storage segment. My guess is that the only reason this has yet to happen is that Dell has not gotten it’s act together enough to really get in EMC’s way. Maybe this is what EMC needs to go buy a server company and finally become the full service provider that they should. Some of those Taiwanese computer companies have good SOHO servers that would fit in well with Iomega and Mozy. Just sayin’…

Ultimately, this is very good for 3Par, it’s investors, and many of it’s employees. Making honest money always is. Whether Dell gets it’s $1.15B out of the deal remains to be seen.  They need to develop a simplified but cohesive product line. Better storage marketing would also help. 3Par people can help but will they be allowed to? Wish i knew.

Nice. Not Thrilling But Nice.

I'm a bit puzzled by the recent Cisco-NetApp-VMWare announcement. Besides wondering how VMWare was even allowed to sleep with EMC's enemy, its focus on multi-tenancy security has me a a bit confused. Not confused in the “what the heck are they talking about” way. More of the “So what do they have to do with it anyway” manner.

Multi-tenancy is the sharing of an application amongst different users who, if they had their way, would much rather not share the same air . I saw this in the IP management software and call center outsourcing businesses. In both cases, customers needed to be assured that their incredibly valuable and secret data could never be viewed by someone else. For the outsourced software services provider, such as Salesforce.com, this is a a pain in the neck. An understandable one but a pain none-the-less. To get the economies of scale outsourcers need to be profitable, it is best if you don't have to repeat yourself too much. Multiple instances of the same applications require more hardware, more software licenses, and more maintenance. In other words, more costs.

In most cases, if an application is designed correctly you can use a (logically) single application and database for everyone. That's the crux of the matter – if it's designed right. Bugs happen and there is the potential for data to be exposed to the wrong people. This is a rare occurrence but people worry about it anyway. Customers should worry about backup processes more since there is much more risk there. It's like worrying about getting hit by a meteor. It can happen but almost never does. Meanwhile, you don't worry about getting in your car and driving on the highway. Guess which one is more likely to get you killed.

This intense customer worry drives many outsourced service providers to either give almost no guarantees about security of data or physically segregate data on different servers running separate instances of the application. Virtualization helps a lot in that you can run reasonably secure instances of applications on the same hardware with little chance of bleed over. Everyone gets their own application space but not their own physical box which cuts down on hardware costs. It still doesn't solve the major problem - the need to reduce the number of instances of databases and applications. Repeating software is expensive and still a problem.

This brings me back to the “Huh?” look on my face. While it's nice to see Cisco, NetApp and VMWare working together to support a secure virtual environment, it doesn't solve the main problem of multi-tenancy. You can already virtualize the heck out of your environment to save on hardware costs. Great, but that's not what the people in multi-tenancy environments really need. They need to run one instance of their database and one instance of their application and be sure that any one customer can't see another's data. One application that can act like a dozen applications. They need virtualized applications.

These applications exist. I've designed and marketed a couple myself. The problem is that customers don't believe it. They feel that if data is in one place or accessed from the same application, then it is a hazardous environment. That's not true of course. Your bank is able to keep your records secure from other users even when accessed online. These applications can be built now. Virtualized hardware resources don't really impact that.

What the new triumvirate (or Axis of Evil depending on who you talk to) is developing is great stuff for hardware service providers wanting to sell virtual resources. It's good for IT departments looking to save on hardware costs through high utilization. It really doesn't solve the multi-tenancy problem any more than VMWare, NetApp, or Cisco products do alone. It's fundamentally an application software problem that needs to be solved by application software vendors. Multi-tenancy problems need to be solved by Oracle, IBM, and Microsoft.

Now that would be a mind blowing announcement.

Blessed Be The Makers

Tweet this

Tweet this

The current recession is a tough one for sure. Not only is it the deepest economic downturn since the Great Depression but the supposed recovery is looking to be a jobless one. In past recessions, lots of talented people were let loose on the marketplace with a few bucks of severance or buy out money in their pockets. Many of these creative people ran out and started companies. Others went and joined these new companies, which they would not have done in better times. Some of today's bellwether technology companies grew up in the midst of recession.

This is unlikely to happen this time around. With money so tight, funding a new business is a bigger challenge than it has been in the past. From banks to Venture Capitalists, the money is just not there and the requirements for funding are more stringent than ever before. The upshot of the lack of investment funding is that companies will need to fend for themselves much longer than they did in the past and not everyone has the stomach for that. Going without meaningful income while working like mad is hard to do. When you think you will do it for years, it can be downright disheartening.

There is a bright spot however. Bubbling up from the underground is a grassroots movement of people who like to build homegrown technology. Called Makers (and the related movement, Crafters), this is a DIY movement that celebrates homemade tech. Makers create electronic doo-dads from open source hardware like Arduino boards. They build funky mechanical devices. They blow stuff up and put it back together.

In my youth the computer industry was like this. Back in the day we were called Hackers until the term was co-opted by the bad guys. Many of these same hackers created software and hardware companies that still endure.

Like the Hackers before them, Makers do what they do for the sheer joy of it. They create devices to do interesting and sometimes silly things. Whereas launching a Christmas tree with rockets is kind of silly (and dangerous), other projects have real usefulness. For example, a cheap strobe algae bioreactor is serious stuff for biotech and alternative energy.

Makers know how to build product on a shoestring and have no wish for the pretensions of glitzy high tech companies. Instead, technology is reason enough itself. The simple fun of making something is what drives Makers.

Makers are also forming collectives to share resources and lab space. It is not hard to imagine these collectives turning into companies some day. Take a group of smart techie folks used to working with little money and stick them in one place. Before long you are bound to have a “Hey! I got an idea how we can make a few bucks” moment. There is some spill over into the software world too. Call it a resurgence of the old values. Groups of people with skills who are under or unemployed, writing code for giggles until one day – BAM! - the great idea emerges.

And these folks will have little use for the bankers who spurned them and cause so much economic misery. They will remember that they had to work at Best Buy because a bunch of greedy money people screwed things up. About the only people they will listen to will be the Angel investors because they've built something themselves. The Makers will drive hard bargains when they do take money since this is a labor of love not simply business. They will once again be an engine of growth in the technology market. Watch for it. It's already starting.

Blessed be the Makers for they will raise us out of the depths.

Of Paperweights and Doorstops

I have quite the collection of paperweights and doorstops. They didn't start out that way of course. They all began life as usable electronics like cell phones and networking gear. All were the victims of upgrades to newer gear such as Wireless-B to Wireless-G. My cell phone upgrades every two years per the plan, leaving a graveyard of old phones. Some devices were on their way to the trash and I couldn't help but save them from becoming toxic waste. Don't kid yourself. Even the most innocuous electronic devices have heavy metals, plastics, and other materials that will continue to pollute for centuries to come.

What annoys me is not the proliferation of electronic gear but the fact that they can't easily be reused or upgraded. Why? Because they are designed to be tossed away, use closed architectures or, and this really galls me, are purposefully locked.

For example, I decided to upgrade my cell phone this year. My old one worked fine but was lousy for texting. So I took the old one to a Verizon store and asked if they could convert it to a Tracfone. Tracfone is a pay-as-you-go cellular service provider which is great for the kids. The no-contract, phone card type system keeps teenagers from running up massive phone bills. I was told, quite emphatically, “No!” What's so ironic about this is that Verizon owns Tracfone. I was offering to spend more money with them but they didn't want it. So the phone sits in my desk draw waiting for its day of liberation.

I could attempt to jailbreak it. Jailbreaking consists of hacking the hardware and firmware to remove whatever is tying the device to the service provider. Why should I have to do that though? Besides the fact that I might brick the device, it's also likely that Tracfone/Verizon still won't let me use it.

There are alternatives. I could donate the phones to various groups that re-purpose them for soldiers in Iraq or victims of domestic violence. Worthy use but I wanted to get more out these myself. And I'm pretty sure they don't want an old DSL Modem.

The sheer waste is incredible. Millions of these devices get tossed in landfills or, hopefully, sent to a recycler. All could be given a new lease on life if only they could be opened up, added to, and tinkered with. I'm not suggesting that vendors open up the phones when the are active. That would be nice but unnecessary. It's great that Cisco opened up their Linksys Routers. Lots of hackers enjoy extending their WRT54 devices, adding new features and sometime using them for entirely different purposes. I'm not that ambitious. I only want my devices to have a longer lifespan.

One of the great things about computers is that they can be used nearly forever. I know a lot of folks that still use DOS era computers for useful purposes. Some are hobbyists and others use them for a single purpose like voice mail. I still use a nine year old 40GB disk. I stuck it in a USB drive case and use it for email backup. Why can't we do that with all of these devices? Okay, it's big company greed but it's stupid greed. They could sell me a cheap retrofit kit and make a couple of bucks that they wouldn't have.

Reuse is the ultimate recycle. Let my devices go!

Cloudy Skies This Week

Recent blog posts and comments I made on Twitter might give some people the impression that I'm against cloud computing. I bet I've given some people the impression that I hate cloud computing. Despise it! Want to see it die! Nothing could be further from the truth. I love the idea of cloud computing. It's the cloud computing marketing that I take issue with.

Overall, what's not to like about the cloud idea? The promise of cloud computing (notice I say promise, not reality) is the ability to only buy what you need with the option to buy more later if you want to. In that respect, it deals with one of the key problems in computing: coarse granularity in systems. If I need 10 percent of a server, I might have to buy a whole server. Someday I might need that whole server but not right at the moment. Then again, maybe never. We have wonderful terms for buying more than you need such as underutilization. The best term is “a waste of money”. So, buying only what I need when I need it is a great way to manage my budget. Same goes for software. I no longer have to buy a software package designed for fifty people for just three people to use. It's efficient and cost effective. It also makes it easier to quantify the cost of running an application.

Cloud computing is also evolution not revolution. We have been doing limited purpose cloud computing for years. It's called web hosting. And email hosting. Oh. And application hosting. Do I notice when my hosting provider adds new resources in order to add more customers. Not really. I pay ten bucks and get a chunk of resources adequate to running my simple web site and that's how I like it.

So what's not to like? Well a couple of things really. Security of a cloud is no better than security in a non-cloud data center. You still have the problems of internal espionage, external break-ins, and other Dick Tracy stuff.

There is also a migration problem. When the day comes that your application needs to move to a dedicated system (don't kid yourself – it will happen), you might have a heck of a time moving it. Unlike moving up to a bigger piece of iron, applications may have to be rebuilt to live in a different type of environment. In that way, I suppose, it is different. It's worse... and nobody wants that.

This is especially true of clouds built around service frameworks like Amazon's. At some point the application might get big enough that it makes sense to bring it in house. Worse yet, you could find yourself dissatisfied with the service provider (like that never happens!) and forced into an acrimonious divorce. This is an especially nasty problem because they have you by the data stores if you get my meaning.

These are not reasons to forgo the cloud. They are reasons to be careful. Figure these issues out ahead of time and make good choices up front. And ignore the hype. If someone slaps “cloud” on something that seems not so cloudy, be suspicious.

Remember, cloud computing is a strategy and maybe an architecture. It's not a product no matter how many times the corporate talking head says so.

How Microsoft Learned to Stop Worrying and Love the Netbook

There has been a number of news stories lately about Microsoft and netbooks. The upshot of the articles has been how amazed people have been that Microsoft is not overtly hostile to netbooks. The second round of news was that folks at Microsoft consider many netbooks to just be little notebooks.

Why does this surprise anyone? Many computers sold as netbooks are basically notebooks with small screens and cramped keyboards. They have nearly the horsepower of a desktop computer with hard drives nearing 200GB and one or two Gigabytes of RAM. This is a far cry from the original netbooks which had tiny four or eight Gigabyte solid-state hard drives and and 512MBs of memory.

Most importantly, these new netbooks/notebooks run Windows. If nothing else this should make Microsoft sing with glee and do cartwheels. When the first netbooks were introduced with Linux as the OS, many immediately predicated the demise of Microsoft. Clearly, the rumors of its death was greatly exaggerated.

While the original netbooks were okay (and only okay) for Internet access at Starbucks, they were close to useless for nearly everything else. Why? Because most people use Windows applications not Linux applications. If you want to take any of your important applications with you, you can't. Like that presentation that you are flying in for. You don't need a big honking laptop for just that. But you do need PowerPoint. And, while I love OpenOffice.org (I'm writing this using the Writer application) it just isn't want what most people use. Neither are online applications.

For Microsoft, it gets even better. Most netbooks use Windows XP. They get to drag a little more revenue out of their dying old product and get set up for Windows 7. What's not to love? More money!

All of this money also comes with the gratification that they kicked Linux, as a desktop OS, right in the teeth again. They also proved that that the desktop OS still matters and that not everything is online yet and might never be.

Finally, for those who really want a netbook to be what it was supposed to be, our buddies in Redmond will soon roll out an online (and viable) version of Office. You will be able to access it from your Windows 7 notebook and show the customer your PowerPoint presentation. Microsoft everywhere, no matter where your office is.

It is no surprise that Gates and Ballmer are not intimidated by netbooks. They own the netbook market. I can see them doing their happy dance right now. And it's not pretty...

Fatal Attraction from Cisco

Finally, Cisco announced what had been about the worst kept secret in the tech industry – that they would be making servers. They put a wrapper around it that they called the Unified Computing System which packages together everything you want in your data center and uses virtualization to make it “simple” (their word not mine). The name is not very imaginative (how many Unified somethings do we have any way) but at least it describes their ambition.

Thirty seconds after the announcement, both the Cisco haters and Cisco apologists launched their offensives into the skies of the blogsphere and the beaches of the social networks. Cisco's own press release sounded down right militaristic claiming “Cisco Unleashes the Power of Virtualization with Industry's First Unified Computing System”. You can still smell the burning wiring from the initial volleys.

The issue at stake is whether this is just a thinly veiled blade server launch (big snore everyone) or a radical new way to approach computing. As is always the case, the truth is somewhere in between. Still, I'm leaning to the YABS (yet another blade server) side of the argument. There is little that Cisco is offering that others have not offered before. By others I mean every major IT equipment company. We used to call it end-to-end solutions but I guess everyone will say Unified something or other from now on. I'm waiting for the Unified Unity of the Universe of Computing before I build my next data center. I want it to do everything I have yet to dream of including wash my car.

I'm not against Cisco by the way. I like their network equipment, a lot of nice people work there, and they help fund my son's Cisco networking class in high school. Okay the last one is probably a bit self serving on their part. I have no doubt they are helping to create the next generation of Cisco apologist zombies but the kid likes it so who am to complain.

What I am willing to rail against is monoculture. Buying everything from one company opens you up to a world of pain. Monoculture is like a jealous lover. It demand undying loyalty and only gives to you what it wants you to have when it thinks you deserve it. Given enough time, monoculture turns into Fatal Attraction.

It starts innocently enough. “ Baby, don't you want only one place to go to for support? I know you do.” And “I can give you everything you want and it will all work together. You don't need those other systems.” And of course “ Honey, I can make it so easy for you, so easy.” Then, it turns ugly. Want that new feature that the other companies already have? Sorry. You'll get it when your lover wants you to have it. Found a rather disturbing flaw? It's might be everywhere. Thinking of leaving? Well don't. With it's claws in you this deep, the pain won't be worth it. Instead, you will continue to take the abuse until, one day, your monoculture system company decides it will leave you. They don't call it End of Life for nothing.

I won't beat on Cisco for making this move. It's kind of gutsy in a recession. I won't embrace it either. Buying a unified anything has enormous risks. Buying a unified data center is asking for trouble.

If Cisco wants to slug it out in the server wars against its own partners, that's their business. Don't know if it's smart but I don't care. They have money to throw at initiatives like this and the storage switch play worked. Just don't expect me to invite it to my house where it can kill my pets.