Who Will Replace Elop?

The news that Stephen Elop is leaving Microsoft is hardly a surprise -- Elop was believed to have been coveting a CEO job for a long time and now he has one.

Elop will take the reins of Nokia Sept. 21, leaving yet another void in the executive ranks at Microsoft. In addition to looking to fill the hole left by the departure of Robbie Bach, who headed Redmond's Entertainment and Devices business, now CEO Steve Ballmer will oversee the Microsoft Business Division until he names a successor.

In an e-mail to employees announcing Elop's departure, Ballmer pointed to MBD's bench, including Chris Capossela, Kurt DelBene, Amy Hood and Kirill Tatarinov, who will report to him until a successor is named.

It's been a few months though since Bach was ousted. Will Ballmer take as long to replace Elop? Or might he use the change to re-organize the different business groups at Microsoft?

What's your prediction? Drop me a line at jschwartz@1105media.com.

Posted by Jeffrey Schwartz on September 10, 2010 at 11:59 AM0 comments


Will MPN Drive Consolidation?

It's hard to believe it's already September. While that means back to school for many, it also means there's less than one month until the official launch of the long-awaited new Microsoft Partner Network.

Some may dispute whether it's long-awaited, I realize. After all, for some smaller partners, the new certification requirements could mean their once-coveted Gold Certified status will be no longer attainable.

But others are eagerly anticipating the change. One such firm is Tallan, a Microsoft National Systems Integrator (NSI) based in Hartford, Conn. As I reported today, Tallan has acquired twentysix New York, a move it said positions it for the pending changes.

"It wasn't really a concern and not a factor but now that they've announced it and gotten the rules out, it makes me feel easier we will be able to satisfy that we will be able to stay in the top tier of the program," says Craig Branning, Tallan's CEO. In fact, he welcomes the fact that it will be harder to achieve Gold status.

"I like it. It gives a company like ours some advantages because we can set ourselves apart," he says. "It was a little bit too easy to qualify for gold status for some of the smaller players."

How will MPN shape your business? Is it giving you the urge to merge? Are you looking at other partnering opportunities? Please share with us the good, the bad and the ugly as some did at the recent WPC 10 conference in Washington, D.C. You can drop me a line at jschwartz@1105media.com.

Posted by Jeffrey Schwartz on September 02, 2010 at 9:03 AM0 comments


Microsoft Targets Mission-Critical Systems

Microsoft yesterday launched what it calls Premier Mission Critical Support Service, which, as the name implies, is intended to help users architect and maintain apps and systems that require constant availability.

These long-term services are for those who want to invest hundreds of thousands of dollars to perform architectural reviews, implementation and monitoring services thereafter, as reported by my colleague Kurt Mackie.

I spoke with Norm Judah, CTO of Microsoft Consulting Services to try to get a better understanding of where partners would fit into this service. When asked if they would be certified to potentially deliver these architectural reviews, he sounded doubtful -- and certainly not in the short term.

"Probably not, at least not initially, because the solutions engineer, the guy we are going to keep on site is generally deeply involved in doing that work to have that context," Judah explained. "There's an opportunity for us, when we have much more knowledge about the system to really investigate what a sell-through would look like, but I don't think we are ready for that. In many cases, the customers are asking for us to do this because they want Microsoft's skin in the game."

That said, Judah does see partners delivering some of the remediation services. "Remediation might be something simple such as tune a database but it could be something very complex, like you need to re-architect the middle tier of your commerce application. Those are all partner opportunities, driven by the customer. That is really the customer's choice who they want to do that with. If they have an existing partner that they work with, maybe it's the guy who wrote the application, no problem in doing that and we would work very closely with them taking the output of their remediation."

What's your take on this new service? Drop me a line at jschwartz@1105media.com.

Posted by Jeffrey Schwartz on August 11, 2010 at 11:59 AM0 comments


Should HP Be Split Up?

There's no shortage of opinions out there as to what should happen now that Hewlett-Packard has ousted CEO Mark Hurd.

Oracle CEO Larry Ellison blasted HP's board for taking what he felt was a minor infraction and cutting him loose as a result. "The HP board just made the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago," Ellison wrote to The New York Times. "That decision nearly destroyed Apple and would have if Steve hadn't come back and saved them."

Meanwhile, Kevin Kelleher revives an idea that was frequently broached at the end of the Carly Fiorina era: break up the company.  Kelleher made his proposal in DailyFinance:

"If the board were really honest with itself about the best strategy, it would use Hurd's departure as an occasion to break the company up into three smaller pieces -- a computer hardware maker, an IT services firm and a printer company. Find a solid CEO for each, and let them focus on what they do best."

While that may be extreme, staying the course could be a tough act to follow. True, while Hurd grew revenues from $87.6 billion in 2005 to $125 billion projected for this year, that was done primarily through mega acquisitions.

The cost of doing so has meant the company has taken on huge debt. Daily Finance's Peter Cohan points out HP's debt has mushroomed from $3.4 billion to $14 billion on Hurd's watch, while its cash position has slipped from $13.9 billion to $13.3 billion.

Hurd's cost cutting, while improving operations has had a price. According to yesterday's Wall Street Journal:

"Caris & Co. analyst Robert Cihra estimates that HP's PC business has effectively driven all revenue growth since Mr. Hurd took over. But operating margins in that business are just 5 percent. And in the last two quarters, HP has been losing share to Asian rivals Lenovo Group, Acer, Toshiba and Asustek Computer at a faster clip.

HP's market-leading printing business generates solid 17 percent margins, but growth is a sluggish 3 percent, estimates Mr. Cihra. The same is true of its services business, which became a big part of HP's business with the acquisition of Electronic Data Systems: 16 percent margins but just 2 percent growth."

Meanwhile, Reuters points out that Hurd reduced research and development spending by 20 percent, noting HP spent only 2.5 percent of sales on R&D. Reuters notes that rivals Apple, Cisco, Dell  and IBM averaged more than 6 percent, meaning HP will need to increase its R&D if it wants to keep pace.

What's next for HP is anyone's guess but the status quo likely won't do. Does the board need to do something as drastic as splitting up the company? What's your recommendation? Feel free to comment below or drop me a line at jschwartz@1105media.com.

Posted by Jeffrey Schwartz on August 11, 2010 at 11:59 AM3 comments


HP's Hurd Had To Go

A top executive charged with sexual harassment or violating company policies is hardly a rarity in today's business world. Yet, the news Friday that the laser-focused Hewlett-Packard CEO Mark Hurd was effectively dismissed for such allegations has rocked Silicon Valley.

As the story played out over the weekend, and no doubt will continue to do in the coming days and weeks, some argue HP's board should have looked the other way, given the fact that the company's market cap has doubled and the company has substantially and consistently grown revenues and profits since Hurd took the reigns five years ago.

It's bizarre that the woman at the center of the scandal, marketing consultant and "actress" Jodie Fisher, charged Hurd with sexual harassment and hired the celebrity attorney Gloria Allred to represent her only to release a statement expressing regret.

"Mark and I never had an affair or intimate sexual relationship," she said in a statement released Sunday. Fisher went on to say that she has reached a private settlement with Hurd, who also denied any intimate relationship. "I was surprised and saddened that Mark Hurd lost his job over this," Fisher said. "That was never my intention."

Are you buying this from either party? Even if all that is true would HP have let go a CEO who turned the company around merely for fudging expense reports or having a few ill-advised dinners? Perhaps it would have given the company's strong focus on requiring employees to uphold ethical standards. HP reportedly has let go numerous employees who had violated HP's rules of conduct and it would have been hypocritical to look the other way when Hurd did so. In the end, Hurd no longer had the confidence of HP's board. While Wall Street loved him, employees and many in Silicon Valley detested him, according to analysts.

Suffice to say, it appears there's much more to this story. But the bigger question is what's next for HP? Even those who argue that Hurd was to HP what Steve Jobs is to Apple, let's not forget that Apple did just fine during his six-month leave of absence last year. Hurd's departure is an opportunity for the company to bring innovation forward and strengthen its partnerships.

Internal candidates to replace Hurd include Todd Bradley, who turned around the company's once-struggling PC business. Ann Livermore, who runs HP's huge services business is another oft-mentioned possibility. Outside candidates include two Softies: Microsoft COO Kevin Turner and Stephen Elop, president of the company's Business Division.

Others include EMC CEO Joe Tucci, IBM executive Michael Daniels, and former Compaq CEO Michael Capellas, The Wall Street Journal reports. Netscape founder and Silicon Valley VC Marc Andreessen is leading the search committee. (Could he be a candidate too?)

HP's board should be looking for a CEO who can execute as well financially as Hurd did -- no easy task -- but also someone who will bring technical and product leadership that companies like Apple, Google and (yes, even) Microsoft are demonstrating these days.

If not, those companies, along with the likes of Acer, Cisco, EMC and IBM, just to name a few, will further erode HP's effort to lead in markets that range from tablets to PCs to communications devices to enterprise infrastructure.

The new CEO will also have to look at its partnerships, including the one Hurd extended with Microsoft back in January to develop and bring to market advanced data center technology. While there has been some progress, that partnership looks a little cold these days.

For example, HP phoned it in when it came to endorsing Microsoft's Windows Azure appliance. At Microsoft's Worldwide Partner Conference last month, Dell and Fujitsu had executives front and center to talk up their plans to deliver an Azure appliance. At WPC, HP was nowhere to be found, though Scott Farrand, vice president for the company's Industry Standard Servers and Software business told me not to read anything into that.

"It was a simple matter of logistics for trade shows and availability of key executives for that kind of time line," said Farrand, who also gave telephone briefings at WPC. "There was no specific message in there that's of significance relative to HP's attitude here. We've had a longstanding partnership with Microsoft."

Also, while HP is now planning to deliver a Windows-based tablet PC, that was not a sure thing following its April announcement that it was acquiring Palm for $1.2 billion. In the months that followed, HP went dark regarding the future of the Windows-based Slate PC that Microsoft CEO Steve Ballmer highlighted earlier this year. It appeared DOA only for the company to recently disclose it will deliver the Windows-based Slate targeted at high-end enterprise users.

HP needs a leader who will not just give lip service to advancing its wares and its partnerships. It's not only important to the future of HP but to the ecosystem that surrounds the company.

What's your take? Drop me a line at jschwartz@1105media.com.

Posted by Jeffrey Schwartz on August 09, 2010 at 11:59 AM1 comments


IBM vs. Microsoft: The Big Iron Battle

It appears either Microsoft has mainframe-envy or IBM is not too happy about Microsoft's data center ambitions of late. Most likely, it's a combination of both.

Consider the following:

  • Microsoft recently said it is going to offer portable data centers based on its cloud-based Windows Azure platform.
  • IBM just launched a new mainframe that is the first to support virtualization of x86-based blades with Linux, not Windows, as the preferred platform. Big Blue appears cold to the idea of the blade extensions supporting Windows.
  • The European Union last week launched an investigation of IBM's mainframe business. IBM's response: Microsoft and its minions are behind the investigation.

So it was a hot July for two companies who really have bigger fish to fry than each other. It is clear IBM is not happy with Microsoft these days, based on Big Blue's response to the EU investigation:

The accusations made against IBM by TurboHercules and T3 are being driven by some of IBM's largest competitors -- led by Microsoft -- who want to further cement the dominance of Wintel servers by attempting to mimic aspects of IBM mainframes without making the substantial investments IBM has made and continues to make. In doing so, they are violating IBM's intellectual property rights.

T3 and TurboHercules offer mainframe software that competes with IBM's own offerings.

As for the newly launched mainframe, the zEnterprise is the most important new piece of big iron launched by IBM in more than a decade because it is the first to provide integration with its Power7 blade infrastructure and x86-based blade racks running Linux.

Where it breaks new ground is its common virtualized platform capable of running 100,000 VMs simultaneously, while providing a turnkey data center that shares network, storage and power components.

Providing the capability for the mainframe to assign workloads to x86-based blades is the system's Universal Resource Manager, made up of software and embedded hardware, said IBM Distinguished Engineer Donna Dillenberger, in an interview at the launch event.

Her colleague, David Gelardi, IBM's vice president of sales, support and education, told me one could opt to run Windows workloads rather than Linux on the x86 BladeCenter Extensions, dubbed zBX.

"There's no reason you can't use it to run Windows, because Tivoli's provisioning capabilities is operating systems agnostic," he said. "Windows would run on an outboard blade and ultimately would run on an xBlade inside zBX."  

But at the same time, Steve Mills, senior vice president of IBM's software and hardware businesses, was in another room with analysts playing down that notion. When asked if the blades would run Windows, Mills reportedly said because they are x86-based, Windows could run on it "but the problem was essentially, to IBM, Windows was too much of a black box to be able to do what they wanted to do with it," recalled RedMonk analyst Michael Cote, in an interview.

"I don't think IBM is especially interested in managing Windows on the zEnterprise," Cote said. "Technologically it wouldn't work out, and they probably are unwilling to do whatever it would take to make Microsoft help them out with it. But I think in the wider context of things, IBM's not really out to help Microsoft out really."

Analyst Joe Clabby of Clabby Analytics, in an interview, explained it would require Microsoft to support IBM's virtualization technology and make tweaks to its own Hyper-V. "Hyper-V is nowhere near IBM from a virtualization and provisioning perspective," Clabby said. "If I were IBM I'd say get that stuff out of the way, use this approach and then you can integrate with our mainframes better, but I don't think that will be received well by Microsoft."

So both Cote and Clabby are in agreement that we shouldn't anticipate the new zEnterprise running Windows workloads -- at least with the help of Microsoft and IBM -- any time soon.

As for the EU investigation: "I don't know if IBM's allegations that Microsoft is behind it are true, but in this day and age, part of the way you compete is to try to help government agencies do antitrust stuff," Cote said. "Whether it's a good way of competing, it seems like one front in a war of competing."

Is Microsoft really a threat to IBM these days? Cote says certainly more so than it was in the past. "Microsoft wants to expand into the enterprise area," he said. "If you look at the numbers on Windows server usage, it's everywhere. That's a chunk of revenue that IBM is missing out on."

It's not just the data center where IBM is taking on Microsoft. IBM is also taking its best shot at breaking into the desktop with its new CloudBurst offerings and its free Microsoft Office alternative, Lotus Symphony.

While the two companies both compete and partner in many areas, it does appear that the rivalry between them is picking up. "I don't think IBM as a culture has ever forgiven itself for creating Microsoft with DOS licensing and everything, but I see a bit more viciousness when it comes to IBMers talking about Microsoft people these days," Cote said.

All that said, he points out that IBM's true nemesis is Oracle. And Microsoft has made it clear that its two biggest enemies are Apple and Google, with VMware and Oracle clearly in its path, as well. The tensions between IBM and Microsoft "are definitely more active but they're not at each other's throats," Cote said.

Clearly it will be interesting to see the two go head to head in the market for so called private clouds "in a box." What's your take? Drop me a line at jschwartz@1105media.com.

Posted by Jeffrey Schwartz on August 03, 2010 at 11:59 AM0 comments


HP Plans Multi-OS Slate Strategy

Shortly after announcing that it was acquiring Palm, it looked like Hewlett Packard was throwing in the towel on shipping a Windows-based slate PC.

That was a major blow to Microsoft CEO Steve Ballmer, who kicked off 2010 in January in his annual opening keynote address at the Consumer Electronics Show. That was where he famously unveiled HP's slate PC, saying it would be one of many to run Windows 7.

Despite the low entry cost of the iPad from Apple ($495), HP kept plugging the Windows slate, pointing out it would have some niceties absent in the iPad, such as USB ports and support for Adobe Flash.

But then after HP announced its $1.2 billion deal to acquire Palm, the company went dark on the Windows slate. HP indicated slates based on Palm's webOS were a key reason for acquiring Palm.

Now HP has a two-slate OS strategy: The webOS slate, reportedly to be called the PalmPad, will be targeted at as an alternative to the Apple iPad -- primarily consumers and those using the device to consume content. Its Windows-based HP Slate will be designed for business users looking to run enterprise applications. That move ups a battle recently waged by Cisco Systems, which last month launched the Cius, a device also targeted at enterprise users.

"HP believes the best way to serve customers is to offer them choice, and HP is very excited about the slate category," the company said in an e-mailed statement. "HP plans to use webOS from its recent Palm acquisition as well as Windows 7 from Microsoft for this category."

It also appears HP is looking at providing shared Internet connectivity in its devices, HP Personal Systems Group executive Phil McKinney said Wednesday to IDG News Service at the AlwaysOn Stanford Summit. That's a feature now built into the Palm Pre Plus.

First hand, I can report that the shared Internet connectivity is a nice feature. Though I had trepidations about purchasing a Palm Pre Plus, the free mobile WiFi hub service was worth the highly discounted cost -- even if I decided webOS was a dud. And that was before HP announced it was acquiring Palm.

To be sure, webOS has some nice features but it is sorely lacking in the apps department. For the PalmPad and webOS to succeed, HP will have to get the Palm ecosystem up and running quickly.

Given the success of the iTunes App Store and Google's Android, it still remains to be seen where Windows Phone platform, webOS and even Research in Motion's BlackBerry platform will land. But given the projections for the slate/tablet market, there's plenty of room for growth. A report released this week by Forrester Research found that tablet sales will grow from 3.5 million units in 2010 to more than 20 million units in 2015.

Yesterday's announcement that Amazon will offer a $139 Kindle suggests this will be a diverse marketplace for digital devices for the foreseeable future.

Ballmer said at WPC last month that Microsoft is committed to the slate PC market. For now it looks like the first Windows 7-based slates will be bigger ticket items targeted at knowledge workers. Microsoft's announcement last week that it has licensed the architecture of ARM Holdings microprocessor suggests that there is more to come from Microsoft in this space. 

For now, I am waiting for the dust to settle, at least somewhat, before deciding what kind of slate to acquire. But it's nice to know there will be lots to choose from. Will we (those other than geeks and power users) own multiple digital devices as price points crater in the future? What's your take? Drop me a line at jschwartz@1105media.com.

Posted by Jeffrey Schwartz on July 29, 2010 at 11:59 AM0 comments


MPN: Going for the Gold

Anyone who was hoping that Microsoft's partner organization would put the breaks on its plans to require unique certifications was disappointed last week.

"It's full speed ahead," said Julie Bennani, general manager for partner programs at Microsoft, in an interview during last week's Worldwide Partner Conference in Washington, D.C. "We are still going on with those requirements and landing those in October."

While she and Microsoft's new partner chief, Jonathan Roskill, signaled they were willing to consider alternatives at a later date, as reported, the plan looks baked to move forward with the Oct. 1 date for transitioning to the new Microsoft Partner Network (MPN). "If we said, 'If you could get Gold in three of the five in Core IO, we could give you a Core IO competency.' That's one thing that's interesting to think about," Roskill said.

Microsoft last week did say it's renaming the competency and advanced competency designations Gold and Silver, but many appeared to welcome a Silver designation like receiving a booby prize.

At WPC last week, I sat in on a session called MPN: The Good, The Bad, and the Ugly. It was moderated by Mo Edjlali, a management consultant, who, until recently, served five years as the president of the International Association of Microsoft Channel Partners Washington D.C. chapter.

Now a management consultant, Edjlali looked at the situation from both points of view. "I think Microsoft wants people to have focus, that makes sense," Edjlali said. Indeed there are many partners who are Gold who most would agree don't deserve that designation today.

"But I think the trouble is some products are so closely related that you can't say your good in BI and not in SQL Server, it confuses customers when they might feel that expertise isn't there when it's always been there," he added. "People say 'my staff hasn't changed but now we are going to come across like we're not as sharp as we used to and these big companies that have the manpower will have the credentials but not have the skills or actually put the billable people on project with those skills.'"

That is the center of the fear. The large integrators can afford to have Gold certified engineers across the board, but the small- and mid-sized firms can't. So they will have to decide which disciplines they want to be Gold certified in and accept Silver for the rest.

Perhaps a better idea would have been to introduce a Platinum tier, Edjlali said. "It's going to be difficult for people to go from Gold to Silver," he told me in an interview after the session.

Janice Crosswell of Microsoft Canada's Corporate Assurance Group, who was sitting in on the session tried to spin the situation. "Silver is better than [the current] Gold," Crosswell said to the group. "When you're talking about some of the math, and I am saying 'I am just Silver,' you are actually rank higher than the [current] gold. There are some more requirements."

That didn't go over too well. "Customers are never going to know that Silver is now better than Gold used to be," a partner in the session replied. "They see Gold and that's what they see."

Posted by Jeffrey Schwartz on July 12, 2010 at 11:59 AM0 comments


Compromise in the Works on MPN Competencies?

There is growing buzz that Microsoft will come up with some compromise over the certification requirements that some partners fear will put them out of business. But it is not clear to what extent.

Details of any changes to the new Microsoft Partner Network (MPN) are expected to be made public next week at the company's annual Worldwide Partner Conference, set to be held in Washington, DC.

"The word on the street is some changes have been made and will probably be announced at WPC," says Howard Cohen, northeast regional chairman of the International Association of Microsoft Channel Partners (IAMCP).

Cohen says it remains unclear what those changes will be but he was optimistic. "The people at Microsoft who were responsible for MPN have told us clearly that they are open to dialog and they appreciate the role IAMCP plays as the voice of their partner channel." A Microsoft spokeswoman said the company does not comment on rumors but said "we will be talking a lot about MPN next week at WPC."

As reported, MPN is set to place new certification requirements that will force many partners to hire additional engineers in order to maintain multiple advanced certification levels. As the Gold Certification Partner designation is set to fade away, MPN will give way to specialty-specific designations called Advanced Competencies.

The requirement that bars double-dipping by engineers could impact those organizations with multiple Competencies now because they will have to add engineers to cover multiple disciplines at the Advanced level in the MPN.

Many Microsoft partners, larger ones in particular, say that's a good thing. "We don’t want to compete with someone who paid $1,500 and passed one test and became a virtualization partner," says Thad Morrow, director of sales at Concord, Calif.-based Entisys Solutions.

"Personally I think they are going to have make revisions because it will put too many partners out of business to be quite honest," argues Jeff Goldstein, president of New York-based Queue Associates, winner of Microsoft's CRM Dynamics SL Partner of the Year Award. "I understand what Microsoft is trying to do. Too many people are Gold Certified Partners."

Cohen doesn't dispute the notion that Microsoft has too many partners out there who have abused the Gold designation over the years. By his estimate, of the 12,000 partners in the New York City metropolitan area, 7,000 don't even have registered domains. Of those that do, perhaps only 3,000 to 4,000 are active Microsoft partners looking to grow their businesses, he reasons.

"Nobody who's making investments in building a good practice likes to see anybody level the playing field," Cohen says. "I think MPN is meant to wipe away all of the things that leveled the playing field. This is a good thing. As long as you don’t hurt the people who are playing by the rules, those are the ones we have to make sure we are taking good care of."

Pruning Microsoft's partner base in a way that doesn't take meat off the bone could be a critical challenge for the company's new channel chief Jonathan Roskill, who took over last week after swapping jobs with Allison Watson, who held the job for over seven years.

Another challenge for Roskill will be to get partners comfortable with Microsoft's "we're-all-in" cloud strategy.  What other challenges does Roskill have? If you'd like to make your opinions known, please take a minute to participate in a brief poll. As always, your responses will be kept anonymous unless you invite us to follow up with you about your answers. Click here to take the survey.

Posted by Jeffrey Schwartz on July 08, 2010 at 11:59 AM1 comments


Fireworks in Redmond

Report suggests Microsoft's woes stem from lack of young developers and customers.

It was, no doubt, a rather unsettling beginning of Microsoft's new fiscal year.

First Microsoft kills the Kin, making it arguably its biggest flop since Bob. Then a report by Microsoft Kitchen's Stephen Chapman detailed some specifics about plans for Windows 8 including a Windows Store, faster boot-up, support for slate-type devices and facial recognition. Not a welcome move as Microsoft is looking to keep the focus on Windows 7.

Then on July 4, The New York Times published a scathing piece that questioned Microsoft's ability to appeal to young consumers and developers alike. Using the Kim demise as the backdrop, the Times piece questioned Microsoft's ability to appeal to the youth crowd.

"We did not get access to kids as they were going through college," Bob Muglia, president of Microsoft’s business software group, told the Times last year. "And then, when people, particularly younger people, wanted to build a start-up, and they were generally under-capitalized, the idea of buying Microsoft software was a really problematic idea for them."

Tim O'Reilly, the influential book publisher and conference organizer, lent credibility to the Times' Ashlee Vance assertion:

"Microsoft is totally off the radar of the cool, hip, cutting-edge software developers. And they are largely out of the consciousness of your average developer," O'Reilly was quoted as saying.

O'Reilly in a blog posting said he doesn't recall saying that. "My memory is that Ashlee opened our conversation with that assertion, which I countered by saying that Microsoft still has big, active developer communities, and that you shouldn't assume that just because you can't see them in San Francisco, that they are dead," O'Reilly writes.

"I feel more than a little misrepresented," O'Reilly concludes. "It's sad when the NYT uses "flamebait" techniques in its stories. Rather than real journalism, this felt like a reporter trying to create controversy rather than report news."

Frank Shaw, Microsoft's corporate VP of communications told Seattle's public radio station KUOW that Microsoft has two strong efforts to recruit young developers -- Dreamspark and its Imagine Cup project taking place now in Poland. "We've got programs designed at young developers," Shaw said. "I look at both those things and think maybe our definition of cool and hip is different."

He points to his recent blog posting where he highlights Microsoft's net income for its 2009 fiscal year of $14.5 billion, compared to Google's $6.5 billion and Apple's $8.2 billion. "We've grown revenue and profits in a phenomenal way," Shaw said. Of course a clearer indication will come later this month when Microsoft reports its fiscal year 2010 earnings for the period ended on June 30.

Do you think Microsoft can pull out of its current morass and appeal to young developers and consumers? Drop me a line at jschwartz@1105media.com.

Posted by Jeffrey Schwartz on July 07, 2010 at 11:59 AM2 comments


Kin May Outshine Bob as Microsoft's Biggest Dud

Microsoft cut its losses quickly with the Kin, even though it never should have been hatched in the first place. Not that it's a big shock that Kin failed or Microsoft had much choice in the decision to kill it. It just seemed that after the lack of logic in rolling it out in the first place, that Microsoft might be reticent to concede defeat so rapidly.

Kin, known internally at Microsoft as Pink, of course was borne of Microsoft's acquisition of Danger, maker of the Sidekick, which was marketed by T-Mobile until it yesterday pulled the plug on it as well, according to CNET's Ina Fried. Even though Kin was destined to be a dud, Andrew Brust blogged some interesting theories on why Microsoft had to launch it and let it fail. Check out his top 10 reasons why Microsoft may have launched Kin anyway. Brust notes:

Kin had to be brought to market, and had to fail, in order to topple [corporate VP Roz] Ho from her position and consolidate power in the WP7 [Windows Phone 7] team.

When I saw the Webcast of the Kin's launch in April, I couldn't help but cringe. It came after Microsoft finally had a credible story with Windows Phone 7, even if it is still has an uphill battle to cut into the comfortable lead maintained by Apple with the iPhone and Google with its Android platform.

But it would be foolish to rule Microsoft out of the mobile enterprise race, yet. But when Microsoft launched Kin, it was evident it had no legs, and moreover it was a clear distraction from its Windows Phone 7 story.

The Kin, if it is remembered at all, may challenge Microsoft's Bob as the company's biggest dud ever. For those who remember Bob, launched 15 years ago to make Windows 95 easier to use, it recently made Time magazine's list of 50 worst inventions ever.

Now that's a tough act to follow.

Posted by Jeffrey Schwartz on July 02, 2010 at 11:59 AM0 comments


Quest Reaches Out To MSPs

Quest Software wants providers of managed services to use its broad portfolio of systems management, migration and connectivity software. The problem is managed services providers, or MSPs, don't want to pay Quest's traditional lump-sum licensing fees. In order to make its software palatable to managed services providers, Quest has introduced a new consumption-based licensing model that it hopes will broaden its market.

The company earlier this month launched its new Service Provider Program, designed to let MSPs license its software the way service providers are accustomed to doing business -- by the month or quarterly and as applicable on a per user or account basis.

"We are traditionally targeted at the on-premise customer to give them all the capabilities they need to do things themselves," Darren Swan, Quest's manager of development told me. "We have worked with service providers to help them do it with the customers, but we haven't targeted specifically the service providers to enable them to move on-premise to host and manage."

Quest had to make a fundamental change in its business model to reach this new customer set. That's because the business model for MSPs doesn't encourage them to incur up-front software license fees.

After seeing its revenues decline for the first time in a decade last year, Quest is trying to extend its reach to MSPs by offering its software via a new licensing and model that is more conducive to them.

The subscription model is appealing for two reasons: the ongoing revenues and convenience for the end customer, explains Scott Gode, VP of marketing at Azaleos, a managed services provider and Quest partner.

"The unique thing with Quest, particularly around their migration tools, is that it's not at all a niche because migrations are huge and will continue to be," Gode says. "But it's not your typical annuity model because a migration is more often or not a one-time event verses consuming cloud storage space, which is an ongoing annuity model."

But Quest also has monitoring and other tools that are used on an ongoing basis. Yet MSPs are only willing to pay for those tools as they are consumed. One MSP that found Quest's array of tools appealing is DirectPoint Inc., based in Lindon, Utah.

Dan Atkinson, DirectPoint's VP of alliances, hooked up with Quest about a year ago, and found many of its monitoring and migration tools suitable for its needs. But Atkinson said DirectPoint couldn't introduce new capital expenditures to pay for the software when the company was accustomed to weighing its costs towards operational expenditures. Atkinson said Quest's move from perpetual license fees to quarterly per-user pricing sealed the deal.

"Paying all of those upfront license fees and maintenance fees does not work well for somebody like ourselves that is a pure-play MSP," Atkinson explains. Software vendors who want to do business with MSPs and cloud providers appear to be grudgingly if not gradually moving in this direction, according to Atkinson.

Case in point is CA Technologies, which recently acquired monitoring vendor Nimsoft and cloud virtualization platform vendor 3Tera. "We're beginning to see more and more of it," Atkinson says.

If you're an MSP, are you finding software vendors showing more willingness to work with you on licensing? Drop me a line at jschwartz@1105media.com.

Posted by Jeffrey Schwartz on June 29, 2010 at 11:59 AM0 comments