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Does Windows 7 matter?
Oct 22nd
Today Microsoft will ring the bell on Nasdaq, as just one other way of celebrating the effective launch of its newest flagship product, Windows 7. The new operating system comes to the market just 3 years after the launch of the much announced Windows Vista, which never fulfilled the expectations of the market, nor that of Microsoft. To put it in words of Times Online, Microsoft is hence trying to “reboot itself”.
But, paraphrasing the title of the often-cited article by Nicholas Carr on “Does IT matter”, one should probably ask oneself if Windows 7 actually matters. It certainly matters to Microsoft, since its success or failure will shape the future of the -still- biggest software company of the world. But does this also apply to the software market as a whole, and especially to corporate and home users?
Currently, we are in the midst of experiencing a computing paradigm shift from desktop computing to cloud computing (see “The Economists” cover story in its October 15th edition). Even though in the opinion of some it will still take years to actually mature cloud computing, it is hard to deny that change will happen. The main stakeholders of the industry are finally all aligned, and even the emperor of the old desktop computing world, Microsoft, considers this to be a “fundamental shift in the computing paradigm”, as Steve Ballmer said in an interview to Michael Arrington from Techcrunch almost a month ago.
If hence the paradigm shift is a given, any decision to upgrade to Windows 7 has to be evaluated from a cloud computing perspective. And here the road starts becoming rough for Microsoft. How is Windows 7 positioned? As the successor of Windows XP, the operating to which any user should finally upgrade (since most of us skipped the Windows Vista upgrade). Will this bring us into the cloud computing world?
Probably yes, but in the Microsoft way. Windows 7 is about evolution, not revolution. What are the key messages with which they come to the market? If you browse the “Windows 7 features” page of Microsoft, the headline message is “Engineered by us. Inspired by you – A few years ago we started asking PC owners what they wanted from Windows 7. The result?” Will a product inspired by current users be a game changer, heading us towards cloud computing? It may slowly lead us toward cloud computing, but it’s clearly engineered to cater the mainstream PC and server world. Evidence is clear: Windows 7 is designed for a world of applications run on a desktop or server. In an interview by The New York Times on March 20, 2009, Ballmer showed himself convinced of the fact that browser based access to applications is not the way to go. In his own words: “Everyone says ‘You have to run in a browser.’ That’s nonsense”. Consistent with this vision Windows 7 guarantees backward compatibility for programs written for previous platforms, back to Windows …95! Hence, Windows 7 will allow for a slow transition towards cloud computing. It does not hinder cloud computing, but it is designed to spur traditional desktop and server computing, fastening it up, boosting efficiency. But it is not a product that will drive the cloud computing market forward.
Is this a problem? It may be, depending on the speed at which the market evolves. According to a report of a recent study published yesterday by Avanade (a business technology services provider), cloud computing is showing “a 320 percent increase over the past nine months in respondents reporting that they are testing or planning to implement could computing”. Particularly interesting is that the company was founded by Accenture and Microsoft, and hence the intention of the study probably was to show that cloud computing adoption is slow (both players have dominant roles in the “old computing world”). In general, there is still little support for cloud-only models, but its a fact that companies no longer ignore the possibilities of the new paradigm.
The announcement of Google that it is working hard on the development of the first genuine cloud computing operating system, Google Chrome was one of the big news highlights of the summer. It won’t be able until next Fall, but still, news are out that something different is coming. Also in summer, Forrester Research reported that according to one their studiesone out of four large companies plan to use cloud models soon. And yesterday cloud computing topped the list of the top 10 strategic directions for 2010 presented by Gartner analysts David Cearley and Carl Claunch at the Gartner Symposium in Orlando. Hence, things may go much faster than Microsoft -and the ecosystem around it- desires, or at least want to make us believe.
So, what should all of this imply to a company deciding whether or not to adopt Windows 7? On one hand, according to NetApplications the worldwide market share in operating systems of Windows XP is around 70%, and XP was launched in 2001. One might think that it’s now definitely time for to upgrade. On the other hand, if we’ve been able to live 8 years with Windows XP, couldn’t we continue one more year? Wait until Google’s Chrome OS has been launched, see what’s really going on with cloud computing adoption? Especially in tough economic times, in which companies tend to delay investment decisions, the decision to upgrade to Windows 7 could be a perfect candidate to be delayed.
Microsoft knows this better than anybody, and has been working hard on preparing its partners to drive adoption. Windows 7 comes to the market with 8500 certified applications. In an article on the BBC news website Tim Weber cites Alex Gruzen, in charge of consumer products at the computer giant Dell, who things that “in the past, Microsoft looked at its operating system in isolation, (…) Now, they collaborate, help to figure out which third party vendors are slowing down the system, help them improve their codes.”
Hence, Microsoft may well succeed with Windows 7, convincing corporate and home users to adopt its newest product. But tragically, this success will put Microsoft back on its own track. It may have created a perfect operating system for a world in which applications are executed in an operating systems. But what if this track goes nowhere? What if the time is right for a a shift to a different world, in which we execute our applications through a simple browser?
Regulatory obstacles for the Microsoft-Yahoo search deal
Sep 13th
After all the excitement and press releases about the search deal between Microsoft and Yahoo, the serious market analysis is now beginning. US regulators have decided to scrutinize the deal, to understand if the reduction of the number of major search providers, from three to two, will hurt competition in the search market.
Regulators will likely first look at if this reduction will hurt advertisers, since there will be fewer search advertising options. Google's advertising prices have soared as search advertising has become a basic part of general advertising campaigns, and fewer competitors could leave advertisers with few options and an extreme price increase in the market. Further, Google may not feel the need to innovate if Microsoft's search technology does not turn out to be effective and successful.
Some analysts feel that the US regulators will require the companies to sell Yahoo's search technology and infrastructure, so that a new competitor come into play and preserve competition. As the search market has matured, it has developed high barriers to entry, and the likelihood of new significant competitors is becoming more unlikely. Serious technological innovation and infrastructure investment are now required to be a player in the market. However, with Yahoo's assets, a new provider might have a better chance at getting a hold in the market.
During the review process, Microsoft will likely argue that the merger is necessary for them to stay competitive with Google. Google's market share has been steadily increasing, and it would still be much larger than Microsoft/Yahoo after the deal. However, because of Microsoft's significant resources, this may be a hard argument to sell, particularly since they were able to create Bing on their own, and since they have been fairly successful in gaining search market share since Bing's introduction.
If the regulators do force the sale of Yahoo's search assets, the big question will be whether Microsoft will accept the entry of a new major player that uses Yahoo's technology. This could lower the value of Yahoo and cause Microsoft to reevaluate the deal.
Finally, Microsoft + Yahoo…
Jul 30th
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After months and months of merger and acquisition talks with Microsoft and Google, Yahoo has finally reached a deal to merge their search and search advertising functions with someone – Microsoft! The deal will last 10 years, and “Microsoft will now power Yahoo search while Yahoo will become the exclusive worldwide relationship sales force for both companies’ premium search advertisers,” according to the companies. Further, Yahoo will get 88% of the search revenue for the first five years, which is higher than the 60% or so that is typically given in these types of deals.
To some Yahoo supporters, the deal may be disappointing, because it is much less lucrative than the $44 Billion buyout of Yahoo that Microsoft attempted last year. The companies announced that the new deal will likely lower Yahoo’s costs and increase their profitability, but it may not have a huge impact on their revenue. The cost reductions
are due to the fact that Microsoft will absorb all of the search technology development and infrastructure costs. However, Yahoo will lose the chance of having a distinctive competence in search, the most lucrative area in internet advertising.
Yahoo will now be able to focus on the portal content and display ads areas, which they are a leader in now. However, this has not been a recent growth area for the industry. AOL has focused on these areas in recent times, and the results have not been pretty.
For Microsoft, this deal will allow Bing to gain market share, and it will possibly cause Bing to become more prominent in the eyes of users. Further, the deal eliminates one of their main search rivals. As Bing receives more traffic, it will also allow Microsoft’s engineers to improve its engine at a faster rate.
The deal will need to pass regulators, who did not look favorably on the recent potential Google/Yahoo deal. However, even combined, Microsoft and Yahoo will have a share in the search market that is less than half of what Google has. The companies hope that the deal will be quickly approved and that the merger will start in early 2010.
The next exciting step will be to see the reaction of the industry leader, Google. They may try to step up their search offering, and they may try to influence the decision of the regulators. More on this to come…
Software as a service goes mainstream: A tribute to those that made Microsoft’s decision to open its Office happen!
Jul 14th
If last summer was that of financial turmoil, this summer may very well become that of the long-seeked change of the software industry. What a month!
Microsoft launches Bing, Google responds with Google Wave. Google announces the Chrome OS, Microsoft responds launching a free Office version. OK, it will still take some time until we see most of these things in the market (with the exception of Bing, but even Redmond’s new search engine in my humble opinion still requires some serious rework), but I have never before seen so many breaking news (and IT industry players making it to the front-papers of all sort of news outlets) in less than a month.
Nevertheless, we should not lose perspective. News these days tend to highlight that this is a battle of “titans”. I think that even though we have two enormous players, we should not forget that this battle would not be taking places if it wasn’t for the entire IT ecosystem claiming for a change. The “integrated software” model, initiated decades ago has proven to become more and more a burden to those clients that made caused its rise: corporate clients.
It were the corporate clients who have triggered most of the evolution in the IT industry to its current constellation. Large corporations were asking “platforms” that would allow them to integrate all sort of solutions. Microsoft was smart enough to become the first of those platforms, other payers (like SAP) have achieved similar success following the same strategy. But the model had some drawbacks. The first and foremost probably has been –and still is today- that firms suffered a high dependence on a single provider with noticeable pricing power and gate-keeping functions. In times of relative cost unconsciousness this model could work, especially in a context of relatively low IT-knowledge in the higher ranks of the corporations, and consequently with high de-attachment of executive boards and CEOs from IT-related decision . Even more, product innovation seemed fast enough in an environment in which most organizations were busy “automating” business processes. But those times are over. Cost consciousness has skyrocketed, and so have the needs for increased innovation, especially in the world of increased emergent, virtual and collaborative work.
Collaboration, virtuality, and emergent connections initially were not dominant in the corporate world, but developed in the consumer world, in the world of the young people, in the world of those who had to use technology and who could not afford to spend the big sums that organizations were willing to spend. In sum: in the world of Internet. This is where the “freemium” model was born, dismissed by the dominant players. “Get the basic version free, pay for the premium” has become a business model that is feasible for many of the newcomers (including Google, of course), but not for the established league of software giants. Their rules were different. But now their rules seem not to apply anymore.
In a day like today, in which Microsoft announces that it will move towards its own “freemium” model, we should not forget to thank those that have been instrumental to make this change happen. The news that we are seeing these days are a joint effort of the many small (and some big) companies that have believed for many years that a different software would is possible. With a free operating system – think Linux. With free software pieces – thanks to Sun and Java! With a more open architecture – think Oracle. Try it for free, and then, either you pay per use (and here we go straight to software as a service!), or somebody will pay for you (advertisers, show me something that I value while I use the thing!) And of course, we should not forget all that have build up business models that have made that the final users have gotten used to this new way of functioning: In music (check out SlicethePie, or Spotify), in the telecommunications world (Apple’s application ecosystem for the iPhone or the Finnish operator DNA introducing ad-funded mobile phone subscription), on the Internet (more companies than I can possible enumerate here, look them up at Crunchbase).
Last summer, we did not want to hear the news about the evolutions in the financial industry. But I must say: I am looking forward to IT news this summer!
Increased Information Freedom in China
Jul 9th
Greetings from China. I am writing this post from China where I am traveling with a group of global executives in the context of a corporate training program. I had not been in China for a year and a half and I must say that I can feel the effect of social media in the internet on the country’s information policies.
One of the classic discussions on the web has been the censorship of Google by the Chinese government http://www.wired.com/science/discoveries/news/2006/01/70081 The censorship basically was a reflection of the policy of restricted information by the government to its citizens; not letting Google index some sources of news was a good way to prevent users from finding them. Things have changed dramatically in a very short time, and I believe it is due to the ability of the Chinese citizens to connect to a myriad of social networks and interact outside the formal control of the government. If the citizens can send information to the world via social nets and get informed through them as well, it does not make much sense to drastically block information, if you do not block it, you may as well report it, as this gives you an opportunity to provide your own version of the story. The included picture is the front page of the China Daily newspaper reporting on the current situation in Xinjiang that forced the country’s president to
return to China. Publishing this news was an almost unthinkable event just a few years ago.
Another obvious indication that the situation is changing is that I am writing this post from China (maybe they will detain me in the airport, guess that this happened if I do not block any more!) . All these changes are nothing but excellent news. There is still a way to go for this country as the freedom of the press is concerned, as evidenced by comparing the actual content of the different news sources from the outside that can be read here and those reported by Chinese media. In any case, the progress evidenced by not blocking news items from outside sources is crucial and it is the best step in the right direction.
