Google becomes Microsoft as Microsoft becomes IBM

There was a good article in the NY Times business section today about Google.  Mostly about how Google is growing up.  It reminded me of talk around Microsoft at the peak of its ride.  At that time, the last thing Microsoft wanted to do was to become IBM.  But they have.  IBM has done an amazing job of reinventing itself as a consulting company, and Microsoft has taken over as the legacy systems company.

Google meanwhile, is under increasing pressure from governments about its monopoly power, and use of customer information.  All of the sudden, Google is spending just as much time and energy dealing with the government as Microsoft did with the Justice Department in its day.  Actually, IBM had that same problem too.  

So the pattern is:

1. Old monopolist gets pounded by the government
2. New entrant uses the opening to build a new monopoly
3. New company is the darling of everyone (and stock goes to $600)
4. New company becomes old monopolist
5. Go to step 1

Also, today I started a new page where I am tracking the new tech bubble.  Check it out here.

The Cloud is Out of Our Control

Anyone familiar with network diagrams knows that the cloud symbol is used to refer to the things outside of the control of the network owner. In the old days it meant our network connects to the Internet here, or connects to the telephone network here.

Wait, that is still what it means!  By this definition we have had cloud computing since the 50s. What is the big deal about all of this “Cloud Computing” then?

True to the definition, we are shifting more computing from inside our networks to the part of the diagram depicted by the cloud – the part out of our control.

Web email (gMail, Hotmail…) was the first mainstream application of this, but network administrators know that the migration to the cloud started well before that with security services, enhanced phone services, distributed computing grids.  And everyone else is watching as we are now getting cool cloud apps like Dropbox, Evernote, Google Docs, and Office 365.

So are we just back to timesharing the VAX? Well, no.

Yes MS Azure, AWS, Google App Engine, OpenStack, and the dozens of other offerings do look a lot like mainframe timesharing with one big exception – the new cloud services talk to things inside your network, and talk to each other.

All of this talking is done with Application Programming Interfaces (“APIs”).  These are instruction sets that enable people or computers to interact with systems, without being in the system. 

We will all be hearing a lot about APIs in the weeks ahead because how they are used and who owns them is the center of the currently front page lawsuit between Google and Oracle. 

Did You Know that Netflix Runs on AWS?

CloudFair 2012 ended yesterday and I was lucky enough to see about a dozen of the presentations.  It was a good show with many well thought out pitches. Some were more educational, some more evangelical, some fell flat. 

I find it interesting to find the theme in any convention.  Here is what emerged for me during CloudFair 2012:

1. The Cloud is Real:  It scales, it is cheaper, it slices, it dices.
2. IT Departments are Dinosaurs:  Some presenters tried to defend IT departments by explaining why they are in a tough spot. But everyone agreed that IT departments are in the way.
3. Some Cool App Runs on our Stuff:  Google had the royal wedding, AWS has Netflix, Everybody has a validating customer.  If you doubt it, here is a juicy chart about traffic or here is a customer quote about how we saved the day.

Who attends these conferences?  The premise is that the audience is the potential customer.   Which could be either the IT Department or the end user inside a business.  If not that maybe channel partners that already work with the potential customer.   The potential customer is the IT department.  How it got to be cool to blast the customer is beyond me.  Last I checked, the IT department still had the budget.

Walks Like a Bubble, Talks Like a Bubble

Just weeks ago there was a steady stream of posts and articles saying we are not in another bubble. Since the Facebook/Instagram deal those voices are much harder to hear. Sure there have been those defending the deal as rational, but really. Instagram worth more than the NY Times? News momentum needs a trigger event, and the Instagram moment may be just the thing to reverse the news momentum and change the story.  Now we are in another tech bubble. So, when will the bubble burst? My guess is 2014 and here are my reasons:

1. Too much money looking for a home: The fundamental problem that caused the mortgage bubble still exists. The world is awash with cash because central banks have been trying to stimulate growth and there is no inflation in sight. The excess cash problem did not get solved with the mortgage crash. In fact it got worse because all of the money that came out of the mortgage market is still looking for a home, and it has been flowing into tech. At the same time, the cost to start up a tech company has dropped. So when Facebook goes public, the market will willingly value it at over $100 billion -- even though the CEO can operate without any board oversight.
2. Not much "whole new world" talk yet: The end of each bubble cycle is marked by some desperate arguments that we are in a new world (this time because of the rise of mobile) and that the people that say gravity still exists just don't "get it". I bet these arguments will become central to the news coverage of the bubble this year. 
3. It always takes longer than we think: The smart people that knew the mortgage market was a bubble, knew it in 2004. The end did not come for four more years. This one will probably seem like it is inflating forever.

It is true that smartphones are a revolution in tech. It is also true that it will accelerate the pace that new users can be brought into the market. But hey, it was also cool when the Americas were discovered or electricity was invented. Those bubbles burst and this one will too.

Selling to Enterprise; or the Shadow Enterprise

Everyone agrees that IT at the enterprise level is messed up.  Here at CloudFair it is just an excepted fact.  The are those that think the Cloud will save us and we just don't have to think about the Enterprise anymore.  That would be nice, but most people realize that Enterprise IT will be here next year, and some of them realize that it will probably not be much different than it was last year.  

This thought tracks along with a post from famed VC Ben Horowitz:  Meet the New Enterprise, Same as the Old Enterprise. So what should channel partners do today to span the widening gap between new technologies and Enterprise IT.

1. Skip the hyperbole: talking about the end of the world as we know it is tiresome
2. Realize your value: wide gap = big opportunity, where do you fit?
3. Find your voice: the new entrants have done a great job at this, so can channel partners
4. Find like minded clients:  there are so many potential clients that qualifying becomes the key.  

As an industry, we need to think differently about channel partner attributes.  The badges of yesterday (gold status; certifications) will fade and new  badges (success cases and competencies) will rise.  Newer still will be complete end runs around old thinking. When the environment gets confused and uncertain, decisions slow down (or stop).  

The enterprise sales landscape is littered with stalled sales cycles that can be tracked back to the uncertainty associate with the changing IT environment.  Salesforce.com has benefited from the stalled CRM environment.  Salesforece.com may soon become a casualty of this very phenomenon.  Most companies buy Salesforece.com because they just cannot bring themselves to buy a big CRM ($ millions, years...) projects, but must do something, so they buy salesforce.com by the seat by the month.  Then Twitter comes along and enterprise IT really does not like it, so it they buy Chatter.

By some measures, half of all big IT initiatives (and that is big in terms of dollars and time) never even make it to launch. 

Add to all of this the growing trend of shadow IT in big enterprises and it is clear that we live in interesting times.  

Tale of Two Conferences

I was fortunate enough to attend two Cloud Computing conferences today.  They were right next door to each other in Seattle, one at the Sheraton (CloudFair2012) and the other at the Convention Center (Cloud Intelligence Conference).  It was an interesting study in the current state of tech marketing because the CloudFair was dominated by Google and the Could Intelligence Conference by Microsoft.  While it is not really fair to make a full comparison because I could only attend part of each (the CloudFair is in the workshop day of a three day conference and the Cloud Intelligence Conference was only a one day thing), it was a great way to see the contrast between how Google and Microsoft reach out to their markets differently.

The experience reminded me of the great exchange between Bill Gates and Steve Jobs at the All Things D conference in 2007 where Walt Mossberg asked them what they appreciated most about each other and Steve said that he admired Bills ability to partner, and Bill said he wished he had Steve’s sense of style.  Two great companies, two completely different approaches.  The same can be said for Google and Microsoft.  Microsoft still knows partners and Google’s “style” is to turn as many of its engineers into marketers as possible.

Microsoft Knows Partners

At the Cloud Intelligence Conference, the speakers were mostly talking about Microsoft Azure and Office 365, and most of the speakers were not from Microsoft, but partners of Microsoft that help Microsoft customers run their Microsoft products.  These partners are formidable companies in themselves, and some have products that integrate closely with Microsoft’s offerings.  The speakers were talented, had a great deal to contribute and were not just pitching their own services.  Since just about every company has Microsoft in its IT infrastructure somewhere, it is a given that the audience were already Microsoft customers.  The presenters took advantage of this fact and were helping Microsoft customers see what was on the way to them from the mothership.  The negative of this approach was that the audience did not feel that they were getting the inside view into Microsoft, and there was a bit of a theme of ‘yes we are keeping up with the cool kids’.  Neither of these is going to push customers off of a platform already through their organizations.

Google Is Not Evil and Engineers are Not Marketers

Google as a company defines itself by declaring what it is not (evil) and continues that method with Google engineers declaring they are engineers and not marketers.  These guys were great speakers, very knowledgeable, easy to listen to, and clearly passionate about Google products.  In addition, and in contrast to Microsoft, they did a good job of letting the audience get a sense for the inside Google perspective.  Developers do like that kind of thing a lot.  The talks were clearly aimed right at the users with no reference to partners or how a partner could use this technology to take better care of its clients.  It is very possible that there were partners in the audience that were going to do just that.  It was interesting that the Google guys were both published authors and took the opportunity to plug their books.  I suppose this could be a result of Google’s culture of academia (where college professors are always writing and plugging their books).  It was a bit ironic however, because they did say they were not going to try to sell the audience anything, well except their books.

Great change only happens when innovation makes things 10 times better.  Clearly the tools available to businesses through the cloud are at least 10 times better, so this is going to be a time of great change and it is hard not to be excited about it.  It will be interesting to continue to observe these two great companies build their tools and their markets.  Along the way Microsoft will surprise everyone and innovate, and Google may even surprise themselves and do some marketing.

Making Victims As Opportunity Slips Away

Imagine a father and son talking about a poor report card.  The son says the teacher doesn't like him.  The father says that is just not fair.  So the son doesn't learn and improve from the report card experience and the next report card is worse.  The teacher or the system is blamed again and soon the son drops out.  

This scenario is repeated many times in our education system.  In our state about 1 in 4 students that start high school never finish.  I propose that a meaningful number don't finish because of this negative reinforcement loop.  Clearly, even if the father is right and the teacher has treated the student unfairly, the victim is the student.  We cannot blame this failure on the student.  By the time we get done with that he has already dropped out and is well on his way to a low income future.

Michael Lewis wrote a book a few years back about how this can happen at the other end of the economic spectrum.  He went back to his privileged New Orleans high school to interview the baseball coach, because, like many coaches, this one was tough on the kids.  In the 70's, when Michael Lewis was there, that was how it worked, these days, the parents were trying to have the coach removed.

If they could not get the coach removed, these lawyers and doctors wanted to intimidate the coach into telling their sons that they were better athletes than they were.  They wanted the coach to give more playing time, not run the guys so hard, you know the drill.

Those student athletes are the victims just like the high school drop outs.  Sure those rich kids are probably going to be just fine, but think of the missed opportunity for life shaping lessons.

Lawyers are particularly good at making victims like this.  In the now famous McDonald's vs Liebeck case, where Liebeck was awarded over $3 million to compensate for burns she suffered when she spilled her coffee in her lap.  I think it is a shame that she was burned by her coffee spill.  However, the real damage came later when she was persuaded to sue McDonalds.  The case went on for two and a half years, and then was negotiated down after the award to something less than $600,000.  Sure that is a lot of money, but Leibeck was 79 years old at the time of the incident.  She came to believe that she was a victim and she turned two or three years of her life over to that way of thinking.  

Imagine all of the people that choose to enter into the aggravation of such a fight and lose years of their lives and in the end, many don't even win any money!

Next lawyers will be telling their sons not to worry about their schoolwork because they can just sue the school instead.  

Here is the book Coach by Michael Lewis should you be interested in reading it.

Under the Cover of Darkness

People will do the darndest things when they think no one is watching.  Just think Tom Cruise in that scene from Risky Business.  Michael Lewis wrote a whole book about the crazy antics of people when ushered unsupervised into a dark room full of money (Boomerang).  

Operating in the light of day however is a whole different thing as we found out with all of those cables exposed by Bradley Manning and Wikileaks.  What a surprise it must have been for all of those people that thought they could do whatever they wanted and no one would find out.  I think it is safe to say that no matter your politics, those cables cut deeply into the public opinion of the people sending them.

Under the cover of darkness, people convince themselves that they are right even while pursuing the most evil schemes.  I think this contributes to the negative opinion of lawyers -- who are always trying to make things even darker with confidential deals.  This is getting harder and harder to do in the age of the web and the resulting free flow of information.  Just look at the hole AT&T is digging for itself on the whole unlimited bandwidth business.

I admit that evil is a strong word for anything having to do with AT&T's billing practices.  Unnecessary too because there are so many examples of people behaving in truly evil ways.  The governments of North Korea, China, Syria, Egypt, Pakistan, and just about all of the rest of the middle east, most of Africa, and Russia depend heavily on the cover of darkness when they do what they do to the people they oppress.

Whether or not you agree with the intentions of the Kony 2012 campaign, anyone shining a light on bad behavior is doing good work.  (here is a post about Bono's reaction to Kony 2012).

When I was in middle school, my family hosted two young men that had escaped from Uganda.  They lived with us for a while as they were getting back on their feet after having run for their lives from Idi Amin's police.  Ironically, they escaped under the cover of darkness.

Choosing Happiness

One of the most difficult things about being a generally happy person is deciding what to do when encountering unhappy people.  This is not to be confused with encountering unfortunate people, because I have met many unfortunate people that are happy.  I do not believe that happiness is the result of good fortune.

It does not help that happy people often say they are lucky.  Which makes everyone else think that those people became happy because they had good fortune.  I submit that those people are happy because they choose to be happy.  I bet they made that choice long before encountered their good fortune.

Once someone has chosen to be unhappy, everything else flows from that decision, and all of their energy is invested in making others unhappy too.  The only way to help an unhappy person is to convince them that their happiness is their own responsibility.  Frankly, I have really never succeeded in doing so.  So I do what I can to be around unhappy people as little as possilbe.

I spend a significant amount of my time and whatever money I can afford helping unfortunate people.  It is very rewarding.  I have to conciously work to make sure I don't mix up the unfortunate and the unhappy, because it is only natural to want to help the unhappy people too.  It just cannot be done and it takes energy away from what good I can do for the unfortunate.

One HP is a lofty goal for the new CEO

From one end of the financial spectrum to another... HP had its annual meeting last week where Meg Whitman introduced her plan to combine the PC and Imaging divisions.  HP has been through a great deal in the past 10 years and getting back to stable ground is not going to be quick or easy.  And it does not seem like the press is going to give the new CEO much latitude.  Here are a few of the headlines:

MarketWatch:  H-P’s latest move draws skepticism

WSJ:  CEO Whitman Tells H-P’s Workers ‘Everything Is on Table’ in Overhaul

Reuters:  HP creates PC-printing power, Wall St waits and sees

This is in the context of their ongoing "One HP" initiative, which strives to unify a company that has been operating as fragments for decades.  In recent years growth by acquisition is one of the few things that the many HP CEOs have agreed on.  The HP acquisitions page on Wikipedia tells the whole story.  The revenue and head count growth is dramatic.

Whitman is right to identify the disparate nature of the company as a big problem.  Employees that joined the company over a decade and three CEOs ago still refer to themselves as Compaq people.  Same with employees from 3 Com, 3 Par, Mercury Interactive, EDS, and most recently the employees from the $11 billion acquisition of Autonomy last year.

The list has so many multi billion dollar deals on it that it seems unlikely that one company could be made of the resulting tangled mess. The aim behind combining the PC and Imaging divisions is more likely to convince the employees in the PC division that the persisting story about a spin off is not going to happen and that they should get back to work.

We all remember how big the Compaq deal was when it was announced.  I had forgotten that there were 53 other deals in that decade!  The company grew from 100,000 employees to over 300,000.  Nothing is impossible, but making One HP out of this will be quite a challenge.