Keep Taking the Tablets, Boys

This whole tablet thing isn't happening. It won't take off not in the way it actually has done already. It will be the way we design it to be. The market will stop, retrench and come back to our way of thinking. I have my fingers in my ears and I'm saying 'La la la la'. I can't hear you, Mr Tablet Market.

That's the Microsoft way, according to Andy Lees, MS Windows Phone President, who said as much at this week's WPC event in Los Angeles. In doing so Microsoft has banned its OEM Partners from using the Windows Phone operating system as the operating system for tablets.
OK, let's recap the story so far. By June of this year, Apple had sold approximately 25 million iPads, and that rate of growth in sales is accelerating with 6 million sold in the 3 months between March and June. In total between smartphones and tablets around 394 million have been sold versus a global PC population of 1.3 billion and a global mobile subscriber base of 5.1 billion.

Something has changed. Knock, knock Microsoft. Hello, is there anyone at home?

By 2014 it is estimated that there will be more than 400 million tablets sold globally at a rate of 185 million a year by then. It is thought that not Apple but Google's Android operating system (OS) will be the choice of over 40% of those tablet vendors and will be the biggest market share. It is estimated that Microsoft will have less than 13% of the tablet OS market, Blackberry falling to just 5%.

Why is it important to treat these devices as mobile smartphone type devices and not PCs? Don't we want to use them for business? Won't we want Microsoft Office running native on these devices?

The answer is that yes we will want them as hybrid devices as Microsoft describes them but the paradigm has changed. The web has become the platform so we don't need USB ports or adherence to corporate networks, we just need access to the web by WiFi or 3/4G. We want to use these lightweight devices to port business around like a briefcase, sharing folders in The Cloud but having local copies.

Just this morning I blogged that Microsoft Office 365 is already redundant for the iPad because it's SharePoint back end is the wrong animal for the job and it assumes bulky Office client software to be present in full on the local device. Dropbox is the obvious choice. GoToDocs allows creation, viewing and editing of MS files and PDFs and you can print them via WiFi (OK that's ropey for now but it's not rocket science to get it right). This application was downloaded in seconds from iTunes Store and cost less than a few pounds. And cost is key here - nothing in Apple's App Store costs over £30 at the last look. This is good news.

And this is the point. We don't want another device that takes an age to boot and has zillions of processes clogging up the CPU and memory. We want always-on, reasonably priced innovative applications that allow mobile working to be not just effective but affordable. We don't want over-priced, resource-hogging, out-moded operating systems hammering the performance. We want machines with high performance graphics that we can use as a business-grade engine AND as a recreation device - that lasts full day in battery and doesn't weigh a ton.

The tablet market is one of the most exciting things to emerge in the industry for a decade and products like Evernote lead the way in terms of usable business software. A superb MS OneNote alternative constantly synchronises the notes you make on all devices via the Cloud - and it's free. Why do you want vast local storage with that power at your fingertips?

At last the world of computing has wrestled free of Microsoft's grip. And it's fast moving and it's exciting again. This weekend Google Plus will attain 20 million users in just a short period of time - that pulling power is distorting our way of thinking and users like the way it's going. The web is making the world of computing available to any device and it's capturing our imagination.
Microsoft has to change. It is fast becoming a dinosaur and there is a feel of the IBM of the 80s about the management talk as they adhere to only things they know and want to hear. They talk only in the product set they have and cannot seem to innovate new things to tackle the companies stealing their market.

With the European PC market dropping by over 17% this year, the writing is on the wall as the tablet market grows into the space left behind. The world has changed already and Steve Ballmer, Lees and others at the top are standing Canute-like as the 'Sea of Progress' inevitably washes over them.

The problem is that Microsoft's numbers don't reflect it yet. And that IBM feeling comes back once again. The bolt from the blue - the one no one saw coming - has already struck but it hasn't manifested itself in the numbers as yet. The tablet market is established and the main player is not Microsoft - that has got to hurt.

Where a potential 13% of the tablet market leaves MS OS and Office is anyone's guess but with a potential 40% of it, Google would be rather hopeful that they may have a greater say than anyone else with Apple standing beside them.

You could not have predicted this just two years ago. Bill Gates once wrote a book, 'Business at the Speed of Thought'. Well it seemed someone stopped thinking in his company. And Steve Ballmer is reputed to have once fielded questions from an audience where he started by saying, 'Microsoft is right. Now what was the question?'

That about says it all.

Yeehah or Boohoo?

"Through this agreement with Yahoo, we will create more innovation in search, better value for advertisers, and real consumer choice in a market currently dominated by one company."

You have to pinch yourself that these were the words of Microsoft CEO, Steve Ballmer, as he finally welcomed a deal with struggling search and advertising company, Yahoo! It's a very different deal to the proposed acquisition last year which Yahoo rebuffed only to see their revenue, profits and share price plummet as their dependence on advertising margins got found out in a tougher market. Microsoft too have not found it easy, with sales slipping for the first time ever and redundancies announced earlier in the year as profits stalled.

It doesn't sound like the ideal marriage.

The words were also a little hypocritical as Microsoft still dominate the PC market for operating systems and office software, with similar market shares to Google's on search and advertising. The fact is that Google has innovated and sold superbly, leaving Microsoft and other rivals in its wake.

The new deal, sees Yahoo losing control of its search engine in return for 88% of all sales from search and advertising on its site for the first 5 years of the deal and it has have the right to sell adverts on some Microsoft sites. In the complex world of advert syndicating, impressions, click throughs and footfalls etc, this is seen as a mixed deal. Yahoo staff will almost certainly feel the knife over the next 2 years, having already been at the receiving end after falling profits, although some staff may transfer to Microsoft as part of the deal.

For Yahoo CEO, Carol Bartz, this is seen as landmark deal which could not have been done by someone like the founder, Jerry Yang, as there would have been too much emotional attachment to the search engine. The history of the on-off deals with Microsoft stems back to a rebuffed $47bn offer of cash and shares by the software giant. Later Yahoo struck a technology deal with rival Google which must have incensed Ballmer at Microsoft and sure enough anti-trust law stepped in to scotch the deal soon after. November last year saw Yang step down as boss and Bartz assume control and the ex-software executive, who masterminded Autodesk's extraordinary transition from high-end, cumbersome software behemoth to a fast-moving, almost consumer-orientated company, started to resurrect the deal. A lot of eyes were on Bartz as she is not known as a web-savvy operator but this deal marks something of a major coup for her as it is reckoned to be worth around $500m in incremental revenue and release about $200m in much needed savings.

In the hiatus, Microsoft launched a new search engine, called bing, which has had very little impact on Google and the usual tactics of embedding it as the preferred search engine in each new PC has not been done. Google still rules supreme here. The new deal, gives Microsoft about a 30% market share of the online ad market - the kind of figure not easily understood in a world where Microsoft usually is 70% of the market.

It is interesting psychology, but in the conference call to announce this tie-up, in 45 minutes not once did either CEO mention Google but the unseen enemy was indeed implied. Gagging in Ballmer's throat was the apparently positive thought of becoming a strong number two in the market.

In reality, this is a steamroller by Microsoft. Yahoo has lost control of its most prized asset in an attempt to rescue the company's fortunes. For Bartz, this would have been the equivalent of Autodesk giving Microsoft the rights to the software code of AutoCad - it's that bigger loss. In return, Yahoo gets to hang on to Microsoft's coat tails in an effort to compete with Google by dint of partnership and size rather than in technology. How Jerry Yang and the staff feel about this must be horrible, but then again, they were the ones who turned down $33 a share. Now the price is less than 50% of that.

For Bartz, this was perhaps her only option. But it is the equivalent of giving away the engine of a Ferrari in return for a larger share of the market - the Ferrari would never be the same again.

Rather than Google killing Yahoo, the latter has surrendered. For Microsoft, it will be interesting to see what they can do with a Ferrari engine inside a clapped out old Chevy.

Recession Hits Microsoft?

Microsoft has announced a 32% slide in quarterly profits but the shock is that for the first time since 1986, their quarterly sales slid - and by 6% at that.

We can all point to the recession as surely less PCs are being bought and therefore not requiring as much of the core operating system supplied by Microsoft - this, along with core Office applications, is where Microsoft makes most of its money. It's solid, repeatable business, with a long upgrade path.

However, can we really apportion this rather profound aberration down to the recession alone? After all, Microsoft has gone through recessions before and the overall dip in PC sales is actually not massive. While businesses are indeed making cuts, it has not adversely affected Microsoft's sales before?

The Licencing Business

I don't pretend to be a professor of how Microsoft prices it products and sells them to Corporates but I have had enough of a whiff to know that it isn't actually as clear and helpful as it should be. I also know that there was a revenue time bomb looming and in the last year Microsoft people were not talking so much about new licence sales as a phenomenon called 'Deployment'.

The issue stems from that fact that many corporates purchase 'Enterprise Licences' which cover an entire suite of Microsoft applications for all employees. It is priced in a way to tackle all needs of all people and it also includes within the suites, products which may not currently be used but are delivered as part of the package. Good examples of this may be collaborative products like Groove or another example maybe that within a business that has a call-centre function which by and large runs bespoke systems, the staff may not actually use things like Outlook or other applications but the licence is notionally paid for.

Upgrades are part of this too. Many companies choose to stay at certain levels of the applications and operating system because their IT teams have settled at a level which harmonises applications across the business and is more easy to support. Yet large customers will be paying for the upgrades which helps Microsoft pay for the development in advance.

The real problems come when customers either do not deploy all the licences they pay for generally or do not utilise all the applications included in the licence cost or do not upgrade to the new versions. What it means is that the negotiations for the annual renewals become progressively harder.

They have been made harder still by new waves of rival or ancillary technology which are leading customers down different pathways. New operating systems, browsers, search engines, applications, messaging platforms and even 'The Cloud' have come into play and eroded part of Microsoft's hitherto impregnable position. For the first time in its history, the pressure is on.

Pushing The Accelerator

Microsoft has missed out on some of the more lucrative new waves of technology and one obvious one was Search. In reality, Microsoft had killed off Netscape as a rival and had a clear run of owning the entry to the internet via the browser. From there it should have controlled the rest. Google changed that by coming from exactly the opposite way, believing it was not the entry point that was crucial but the content and how it was accessed. Google's land-grab and technological advantages have made it a serious rival to Microsoft and they own 90% of the search market and with it, a large portion of the online advertising market.

Google is now advancing ambitiously down the pathway of applications with its own approach which makes it operating system agnostic by placing all the resources on the web, within 'The Cloud'. We are perhaps seeing the first major wobble of the mighty Microsoft and to some extent, Google has yet to even get a real grip of the market - the next 2-3 years could be crucial for both companies.

An added problem for Microsoft is that it is a company that has avoided the 'hard-nosed' sales types within its business. They have a mixture of evangelising people who just get so absorbed in the technology that they cannot see beyond their noses, and commercial people who just milk the base they have at corporations. Life has been very easy for them as you only have to show a product, make the client pay for it in the 'Stack' in advance, wait for them to upgrade, then hit them again. And again, ad nauseum.

Life has been so easy that there has never been a commission or heavy bonus culture at Microsoft. Stock options were plenty enough to reward the long servers and today Microsoft still has the highest proportion of millionaire employees than any other company in the world. That could change fairly soon but what that has arguably done is that everyone has been convinced by their own Bull. Like IBM in the 80's, managers are rated by who 'gives good slide' and bad news is not coped with well as no one has had to deal with it before, so generally it is not given. Positive attitudes in the face of issues are the order of the day - say it enough times and the customer will agree and everything will be ok.

The Steve Ballmer mantra is always, 'Microsoft is right - now what was the question?'.

The world is changing for everyone and even Microsoft. The recession is playing its part to exaggerate what may be underlying issues, but there was always a hole in the revenue just one step ahead on their way of working. Some day, someone would wake up and ask, 'Why are we paying for that if we do not use it?' or 'If I do not upgrade, why do I still pay?'

For Microsoft's sycophantic salesforce, reality may well bite. The question is, will the management have the fortitude to change?

Big Brother Is Watching You - Hey, It's Good Thing!

'We get sued every day', said Eric Schmidt, CEO at Google. It was a comment worthy of his more bullish rival, Steve Ballmer at Microsoft, and it shows how companies who purport to change the world for the better develop a thicker skin as they mature.

It's a thin line between use and abuse of data in this modern age. So much information on us as individuals is collected and then we lose control over what is done with it. What starts as essential information for a transaction becomes a commodity to be traded itself. The issue of late surrounds Google's Street View service which was launched in the UK this month and got its first formal complaint put to the Information Commissioner (ICO).

In the complaint drawn up by privacy campaigners it cites over 200 reports from members of the public identifiable by the service.

Cool Google

Google has the reputation of being the soft mega-corporation who offers its employees cycles to get around its Bay Area Campus, who brought us the ability to search the web in seconds and who brought cool new applications and gadgets to make the computing dream come alive. It is also a highly profitable corporation and it is hell bent on replacing Microsoft as the dominant player in the future. Google Street View does not seem to be one of those sinister moves by a big company, it seems more like the kind of 'really neat' or 'cool' stuff from a company whose two founders are pleasant multi-billionaires who are ethical, nerdy and general all round cool dudes. Street View, we would like to think, has to be one of their zany ideas for people to try as they could not possibly be any other agenda or money to be made from it.

Street View allows a viewer of Google Maps to actually go and take a look at 25 cities in the UK, and get 360 degree views. As with most things in the computer world many might initially ask 'Why would you want to do that?' But as with Google's satellite views, I could not stop myself taking a look at my own address and seeing that the picture was taken in high Summer and you can see two sunbeds with yellow towels in my garden and my car parked outside the garage. It was way cool and has now become part of everyday browsing. Google Maps is just an amazing service which I even have on my PDA and, yes, I have used it when looking for addresses in London.

My theory is if I use then it has to be simple and useful, believe me.

So What's The Beef With Google Street View?

After the ICO had given permission in 2008 for Google to go ahead there is now a threat due to the complaint that Street View may have to be turned off. Prissy privacy campaigners would tell us that there had been 'clear embarrassment and damage' caused by people being viewed. This was also in breach of the permission granted by the ICO to Google in the first place.

Google had said that they would blur people's faces and car registrations when it was launched.

It sounds just another pathetic attempt by campaigners to spoil our fun. However, there is definitely risk here as one of the complaints received was from a women who was identifiable and had moved house to get away from a violent partner - she was pictured outside her new home. Another complaint came from two work colleagues found to be in a 'compromising position' - the image was subsequently circulated amongst their workmates.

You can see how this can quickly develop.

The Legal Position

Legal Eagles argue that data protection is all about taking reasonable steps and the argument is that if Street View is breaching privacy then almost anything you can do with data is a breach of privacy.

That is one point of view. However, in this instance, the data is being collected without the express permission of those in the pictures to have their images distributed. If you do not have their permission to distribute the data then actually presenting it to millions of potential viewers on the web is pretty irresponsible to say the least, particularly if the images can result in embarrassment or damage.

The same argument can be applied to You Tube and other picture sites which now flourish on the web. In the business world, giving your business card to another person can mean your data can not only become freely available on the web but also sold many times. Services like Jigsaw actively rewards its users for contributing full business card information on contacts made which are then sold as a highly targeted services to other individuals and companies to find contacts and build lists. LinkedIn is similar is some respects but has curtailed access to some information unless of course you pay. There is a very definite implication when you hand someone your card that no permission is granted for the recipient to distribute it and certainly for any third party they should hand it to. But it happens.

The problem here is that already people have proved that they can 'lift' the images from Street View and distribute them and that means that Google really has not taken enough precautions to stop that. But all you have to do is send the link to everyone to achieve the same results, so it boils down to the collection of the data in the first place, how it is subsequently displayed, who has access to it and what might they do with the data once viewed

Will Google Get Around This?

Inevitably they will. They got through to China by taking on board their rules and I guess if they can make sure their blurring technology is more effective then they can re-launch pretty soon. The concept has great merit but as always there is a tendency to trivialise the risks of potential outcomes. We can all point fingers at 'nanny' campaigners but when we are personally affected by it then we suddenly become very indignant - and rightfully so.

The obvious argument goes the other way. If you put yourself in a compromising position, there is always a risk you pay a price. People like Max Mosley have argued successfully that is not true and may even have claim to have 'lost his dignity' because of it and get a large amount of compensation - he was filmed in an orgy with dominatrix prostitutes dressed in strange pseudo-Nazi outfits.

If he can get away with that then Google Street View doesn't stand a chance. As always there has to be a balance. It looks as if Google's first effort got it wrong - but the cool dudes among us hope they put it right as it looks a great tool.

Microsoft's Head In The Cloud?

Following up on my article about SaaS and Cloud Computing yesterday, it is worth knowing what Microsoft are up to.

A senior source at Microsoft told me last year that Microsoft believe that delivering all their Office Suite of products to Small and Medium Businesses (SMEs) is a priority and could account for up to half their business in the future.

Of course, as usual with Microsoft, no one quite knows when that future is - as we have just seen on typical announcements about new product version availabilities.

Azure Tinted Glasses

Microsoft's firm strategy to tackle both Google and Amazon's significant advances on Cloud Computing Services are in the form of a new online operating system called Azure. In the race to secure this ground, Azure is seen as Microsoft's major play for the future.

But Microsoft loves mixed messages. Steve Clayton, Head of Software and Services at Microsoft International has said that on-premises products are still very much part of the future. Citing Google's much publicised recent outage, he pointed to the fact that reliability is still a key issue.

That comes as pretty laughable from a company that produces an operating system that is subject to virus, phishing and hacking every day due to its lack of security and whose products regularly crash mid session (as I type I have a frozen Internet Explorer open on my machine that has 3Gb of memory and XP). An outage at Google is massively publicised yet Vista users every day encounter annoying problems which impact productivity unnecessarily.

But that's Microsoft for you - follow Steve Ballmer's advice 'Microsoft is the answer, now tell me what was the question?'

Online Applications Soon

What Clayton did concede is that Microsoft Dynamics CRM and SharePoint will be online soon.

I am not sure about everyone else but I have found applications like OneNote and SharePoint to be very exciting and then very disappointing. SharePoint has lots of 'cool' features, particularly very good dashboard facilities but as with so many Microsoft products it solves parts of the problems and then leaves gaping holes with no attempt to plug them. Sold as an Action Tracking style system it pails into insignificance when matched with say ActionBase yet the two work well together to solve the bigger problems.

Dynamics is similar, a poor man's version of Salesforce.com it neither gives you the features you need nor the integration - Salesforce.com is way in advance. Yet all of it comes with the Microsoft tag and that has enormous clout for many Corporates as I dare say Azure will have when it finally arrives.

Until then Google and Amazon are way out in front on Cloud Computer facilities and I recommend that, if you are a small business concerned about the cost of scaling your business up and down, then Cloud Computing is well worth considering.

A Sign of The Times

If we needed a confirmation that the recession has really bitten then the news that Microsoft earnings dipped by 11% on the same quarter last year to $4.17bn for the quarter ending 31 December was certainly it.

'We Are Not Immune'

CEO, Steve Ballmer, was unusually contrite in announcing the figures and declaring that even Microsoft is not immune to the markets but he also felt 'The strength of the portfolio and the soundness of their approach' would see them through.

That soundness of approach would be the tactics that Microsoft uses to often beat customers into their way of thinking. That they make so many versions of product that are not backward compatible and got away with it has always been a mystery but the latest Office 2007 is a classic case of 'Follow - there is no other choice'. That has always been Ballmer's way and it is perhaps interesting that this is the first quarter's results since Bill Gates quit his day job, and they are not very good.

The First Cut Is The Deepest

Even more humiliating was the announcement of 5,000 jobs to be cut, 1,400 immediately. This is the first time that most analysts can remember Microsoft having to do anything like this on this sort of scale in their entire history. I am humbled to see Microsoft following my advice on cutting expense on travel though I dare say Steve and Bill are not regular readers of my blog, perhaps they got it from a friend.

The Focus Ahead

If you talk to anyone at Microsoft on the sales side, they will tell you that the pressure is definitely on, perhaps for the first time. Microsoft are not a big commission company and so they don't attract hard-nosed software salespeople but more those who are easily programmed to slip into Microsoft-speak and use phrases such as 'Selling the Office stack' and getting 'Deployment' which is reference to those customers (well nearly all of them) who have actually paid for a whole series of new versions of Microsoft licences some way in advance but have yet to actually deploy the new versions. A whole generation of Corporates will probably skip Vista, which is arguably Microsoft's biggest flop. Meanwhile, the take-up of MS Office 2007 and all the 'stack' of products inside it is a more worrying phenomenon as some time in the future it will leave a gaping hole in revenues if customers are unwilling to pay for the next set of upgrades if they are still on a version earlier than the current. That alone has Microsoft executives worried.

There are other issues as some large customers have paid for an Enterprise Licence for all products yet many departments don't use anything like the whole suite of MS products. Call Centres are good examples of this this as they use multiple, purpose-made systems which don't use standard MS products. At some point, some eagle-eyed CFO will think about asking for a credit for licences not used but to date I don't think anyone has had the guts to stand up to Microsoft.

The Cracks Appearing?

For those who have seen Microsoft virtually print money off the back of owning such a massive proportion of the computer operating system market at the desktop level, you have to ask questions as to whether the future is as rosy for Microsoft as it has always seemed in the past. Constant chipping away at security within Windows, a clumsy browser prone to failure, an inferior search engine to the market leader, Office programs that still have the same bugs in them as when they first came out, new programs that are a shadow of the performance of market leaders and a very slow drag to get into Software as a Service (SaaS) means that for the first time in a while, Microsoft is not dictating the future so authoritatively - in my humble opinion.

The next year is a big one for Microsoft with pressure at the Corporate end building, the gaming and consumer aside is also creaking. We shall see about that 'Soundness of approach'. Certainly Wall St was not convinced and their stock price dropped nearly 8% on the news.