Wednesday, November 19, 2008

SAP Gouging Developers a Little Less

Let me get this straight.

SAP is slashing the price of developer subscriptions to its NetWeaver platform by 50%, from around $2300 per year to a little over $1100.

What ever happened to free?

Sure, developers would make money from creating new applications, and they wouldn't have to pay SAP a toll--the equivalent to ensuring all SAP offices have a year's supply of toilet paper.

But the bigger picture is that SAP's flagship products would be more attractive to customers. Why doesn't SAP get that?

This is taken from SAP's own filings: note that nowhere does SAP talk about the strategic importance of gouging software developers:

As part of our ESA strategy, we are currently working to transform the SAP NetWeaver platform as a business process platform. The business process platform will include enterprise services built into our own applications and the creation of a repository of enterprise services for use by customers and partners. The business process platform is intended to allow customers and partners to develop new composite business applications more easily using enterprise services, as well as allowing our software products and technology to provide greater flexibility and added value to customers. We expect this to create increased demand for our application software products and related technology and services. In addition, the business process platform will allow us to improve our efficiency and reduce time-to-market by allowing the reuse of software components in development, and by permitting the creation of composite applications more rapidly than traditional modes of application software development. Composite applications created by software partners will complement and extend our products, allowing us to reach a larger market.

CA Pushing Simplification

CA is responding to changes it sees in the market by offering customers easier-to-manage software bundles--and easier-to-manage pricing packages as well.

On the software front, CA is rolling out enhancements to its service desk application that focus on centralizing processes rather than piling on additional task-based tools.

CA Service Desk Manager 12 unifies service desk, change management, configuration management database, application dependency mapping, knowledge management, remote support automation and reporting capabilities. The product should help customers looking to adopt best-practices and move away from ad hoc tasks to more streamlined processes.

On the pricing front, CA is moving more applications to a service-based (SaaS) model in response to customer demand, according to InfoWorld.

InformationWeek notes that CA is also focusing on simplification when it comes to mainframes.

Ironically, the virtualization hype-cycle has helped reignite interest in mainframes, as customers realize that they already own some of the best virtualization technology the world has to offer.

Unfortunately, the generation of IT administrators who introduced and then managed mainframes in the enterprise is nearing retirement age en masse. CA sees this as an opportunity:
First, CA will introduce a consistent installation stack to make it easy to get software up and running. The company will also move to a more predictable release cycle, starting with a new round of releases in May, that will also help CA do better integration testing. New products will be more automated, with more set pre-configurations. It will also enlist partners to help with installation and care and feeding of mainframes.
Is this just part one of "the new adventures of old technology?"

Tuesday, November 18, 2008

Yang Yahoo Departure Leaves Unanswerable Questions

Jerry Yang and the Yahoo board of directors announced that Yang will resign his post as CEO once a successor is found, but will retain his seat on the board and reclaim the honorary title of "chief yahoo."

Kara Swisher, who broke the news, published the full text of Yang's email to Yahoo employees, in which Yang said, "since taking on the ceo role, i have had an ongoing dialogue with the board about succession timing."

So all this time, he was plotting his own departure? Oh, and Yang and the board talked about timing, but not about who would replace him?

In his most recent turn as CEO, Yang presided over the continued decline of the Yahoo brand while engaging in the kind of destructive behavior that, were Yahoo a person, would have friends recommending some form of therapy.

In the past year alone, Yahoo rejected the advances of Microsoft, spurned the hand of would-be savior Carl Icahn, and then engaged in a failed dalliance with Google.

Yahoo will now have to answer two questions: who next and, most importantly, what next?

Om Malik thinks Yahoo should get back to basics:

Hopefully they will bring on a no-nonsense, [HP CEO] Mark Hurd-style executive who can stabilize and revive the company by making it leaner, simpler and have it focus on its core competencies.

Rob Hof at BusinessWeek says that president Sue Decker shouldn't hold her breath, even if she wasn't too involved in the Microsoft fiasco:

But she also has been Yang’s chief lieutenant throughout a period in which Yahoo has been unable to inspire confidence among investors or many employees, who remain divided about her leadership. If she were chosen, investors no doubt would assume there will be little change in Yahoo’s direction—especially with Yang still on the board.
Erik Sherman at BNET notes that anyone taking the CEO role is walking into a no-win situation, given that the board isn't admitting it's done anything wrong, and that Yang remains on the board as well.

How will anything change? If the board is sure that it has been right, that the Microsoft and Google deals falling apart were just unfortunate circumstances, then who would it let a new CEO go in another direction? And what person, capable of running the company, would want to walk into a situation where his or her hands might be tied? Unless the egos on the board are willing to admit that they have badly erred and need to change course, there is no reason to think that anything will change for the better over the next few months.
Fred Vogelstein at Wired makes the point that Yahoo failed to make smart business decisions because it was more concerned with religious questions. "According to those who know him, Yang still won't use any device remotely associated with Microsoft technology. And so it is no surprise to anyone that he figured out a way to scuttle that deal."

There is also rampant speculation that Yang's departure will bring Microsoft back a'courtin', but Henry Boldget at Silicon Alley Insider opines that if this happens at all, it will only occur once a successor is in place.

This may seem like vapid speculation, but given that Yang will continue to hold sway over the Yahoo board, a Microsoft acquisition may be the only thing that could change the culture at Yahoo.

What any new CEO--or acquirer, for that matter--will have to address first and foremost is, what does Yahoo do better than anyone else? What purpose does it serve?

As someone who in 2001 used Yahoo for everything from email to gaming to news, and who now uses it exclusively as a junk mail folder, I couldn't say.

Monday, November 17, 2008


If this is news to you, you're in the wrong business.
instead of having to toggle to a separate window, downloaded to a desktop, users can strike up a real-time conversation with someone else right from an application they're already using—say, Hotmail.
It turns out customers want all that interweb stuff to be integrated together with itself. Or something.

Adobe Getting AIR Time

Very useful piece by Stephen Shankland at CNET on Adobe AIR and competing rich Internet applications.

Adobe is trying to remain a force both on the desktop (thanks to the ubiquity of the PDF standard) and in the browser (thanks to Flash), and is hoping AIR can be the tie that binds.

But it's difficult being all things to all people. As Shankland notes,

there's a risk to choosing a hybrid strategy: gains in flexibility often come at the expense of specialization, and specialized applications often work better. Sun Microsystems tried for years to get Java to catch on as a cross-platform runtime, but 13 years after its launch, it has yet to catch on with mainstream computing applications.

Of course, Adobe isn't the only company offering ways to pair the cloud and the desktop; Google Gears and Microsoft Silverlight are two notable competitors.

Of the two, though, Google is probably the biggest threat to Adobe. Microsoft's recent SaaSy announcements notwithstanding, Google has offered customers a lot of cloud-based apps to choose from, and Gears allows developers to tie them to the desktop to some extent.

Microsoft impressed everyone with its Olympic performance, but that hasn't translated to recurring business.

In the battle for RIA supremacy, what counts is being ubiquitous enough for developers to become so familiar with your app dev environment that it becomes the default choice. When the battle was for the desktop only, Microsoft was Adobe's biggest foe.

But as the battle switches to a hybrid browser/desktop model, Google will emerge as Adobe's biggest threat.

Sunday, November 16, 2008

Software Companies Offer 0% Financing

Microsoft is the latest software company to offer enterprise customers 0% financing for Dynamics ERP (enterprise resource planning) applications.

This follows SAP's announcement a couple of weeks ago that it would offer interest-free credit for purchases of some of its applications.

That seems like a smart move given the current economy, particularly with unsettled financial markets making it harder to get credit on any terms.

But this won't help customers who can't get credit because their business simply can't afford it. Most companies extend 90-day (or longer) credit to their customers, meaning they're in a world of hurt if their customers go out of business or default. That's why they're having trouble getting credit from banks and other corporate lenders.

This also won't help convince customers who are considering SAAS as a way of reducing their capital expenditures. They've already crossed the philosophical or operational bridges necessary to take that step, and nothing short of the on-demand model is likely to get them back into the on-premise fold.

Moreover, by lowering the TCO on their applications, Microsoft and SAP risk alienating existing customers who are paying interest, and resent seeing their competition get a much better deal.

I wonder what Microsoft and SAP think they really have to gain.

Microsoft Socializes Why?

Microsoft is attempting yet another gimmick in the hopes of invigorating The idea is to try to get users to hang around its portal longer, and to get in the habit of using Microsoft search.

Good luck with that.

Kara Swisher notes that the new features include, "a heavy emphasis on socializing its online offerings and giving users better tools to share all sorts of information from across the Web within them."

She also notes that Microsoft specifically doesn't want people to think of it as a social network, quoting Microsoft's Brian Hall as saying, "the last thing people want to do is sign up for another social network."

Michael Arrington, however, ignores this point and proclaims it to be "a social network!"

That's fine, of course--no reason to regurgitate Microsoft spin if that's what you think it is.

But Arrington isn't trying to refute Microsoft's assertion, or even think critically at all.

In fact, he is so impressed with Microsoft's potpourri of Facebook-like information feeds and software services that he declares, "The result is an impressive personal productivity suite that makes me almost wish I wasn’t solely a Mac user."

That good, huh?

Here's the question no one seems able to answer--or even ask: why?

Just because Live has 40 million names of people who signed up for the service at one time or another, and just because it's providing all of these goodies in a Microsoft wrapper, doesn't mean people will want to use it for social purposes.

Microsoft is way too late to the social game. It's already staked out its claim as the anti-social company, and its past (lame) attempts at creating community around have driven away even the agnostic few who were willing to give it a shot.

Microsoft can't turn into a destination just because it wants to. It needs to give users a compelling and unique reason to visit its world, and it's never been able to do that without bullying or destroying its competition with the cudgel of market share.

Well, Microsoft doesn't have market share in social networks. It should be happy with its stake in Facebook and leave it at that.

Friday, November 14, 2008

Future of Humanity

Oxford's Future of Humanity Institute has published a detailed roadmap of what it would take to create a computer that behaves like a human brain--free will and all. The authors of the study take "free will" into account by substituting "sufficient noise in the simulation."

While admitting that the experiment is "fascinating," Nicholas Carr has some issues with this, and says the "Future of Humanity Institute seems to be misnamed."

I also have issues with the idea, but I think Carr misses the central flaw here, which is that free will isn't about "noise." Humans behave unpredictably because they have varying levels of morality and completely unpredictable motivations that drive them.

Let's put it this way, from a purely probabalistic point of view, a certain percentage of human being drown kittens; if you build that into a model, it will work out that a certain number of times that a robot brain is confronted with a kitten, it will drown it in the correct proportion of times.

But the fact is that some people will never drown a kitten, some people will drown a kitten only because there is no other alternative (i.e., can't afford to keep it), while others will drown kittens every chance they get.

No amount of "noise" will reflect that in a truly realistic manner.

Nokia, Sun Highlight IT Woes

It looks like tech isn't immune to the downturn after all. After Intel issued a somber warning earlier in the week, other bellwethers piled on with somber announcements of their own.

Nokia, whose 40% handset market share represents more shipments than the next three handset suppliers combined, took a hard look at recent demand, gulped, and predicted that fourth-quarter industry volumes will decline by about 20 million phones and that next year's shipments are likely to decline as well.

The contagion from this will spread to other sectors, as Nokia said it will cut spending on outside contractors and other professional services, according to InformationWeek.

Meanwhile Sun announced that it will cut up to 18% of its workforce, meaning more than 5,000 employees will lose their jobs. CEO Jonathan Schwartz said that the company is also making significant organizational changes, including the departure of Rich Green, Sun's top software executive.

Schwartz is putting a good public face on the changes by blaming the economy for the company's troubles, but most analysts believe the company was adrift in any case and that this shake-up was coming either way.

Sun may come out of this healthier, but like many of its peers, a lot smaller. ZDNet's Larry Dignan notes:

Sun said that its “new organizational alignment is a recognition of the comprehensive role software plays in the company’s growth strategy.” That’s where you get the Sun paradox–Sun makes most of its money from hardware. The transition is likely to be painful: Sun will have to get smaller as it transforms.
Om Malik outlines the specific changes Sun is making, but has a somewhat rosier view: "leaky oil tankers take a long time to sink, so there is enough time to patch stuff up."

The effects of the downturn aren't limited to hardware vendors. Even Google's seemingly relentless rise may be slowing; reviewing a handful of new analyst notes, Silicon Alley Insider's Henry Blodget says that while no one has turned bearish on the stock, "the tone has changed."

A short-term view is that customers will end up paying lower prices, but there's a cost. As customers cut spending and vendors react by cutting resources, R&D is the first line-item to suffer. And in the long run, that means less innovation and longer road to recovery.

And as John Maynard Keynes famously said, "in the long run we're all dead."

SAP Hires Guy Who Couldn't Get it Done at Oracle

SAP has sent a strong signal to its customers by hiring John Wookey to run its enterprise on-demand business, saying that, in effect, it will really, really integrate SAAS into its overall business plan.

Joshua Greenbaum is probably right in surmising that Wookey will start slowly, though, selectively adding applications to the cloud that complement SAP's existing on-premise software, rather than trying to create a SAAS alternative to every perpetual license product.

SAP’s large enterprise, on-demand efforts will likely start with running specific processes and services in the cloud that are both highly discrete and have a distinct value-add above and beyond the cost benefits of merely flipping on-premise functionality into the cloud a la That latter model eventually ends up in a price war, and flies in the face of SAP’s higher value market position.
But Wookey also brings Oracle's acquisition-happy culture in his baggage, and will probably try to buy--rather than build--other complementary pieces for the on-demand business.

That may not sit well with SAP's engineering-focused culture, but the fact that SAP hired Wookey may be an indication that CEO-elect Leo Apotheker is ready to break with some tradition.

On the flip side, Wookey is available because Oracle CEO Larry Ellison got tired of waiting for him to deliver the Fusion product that is to be the glue for the disparate systems Oracle has bought and dumped in its customers' laps over the past few years.

SAP is hoping that Wookey will have more success blending products this time around, but SAP customers should be wary of any product-service integration promises. Just ask Oracle customers what they think.

Thursday, November 13, 2008

Falling PC Shipments Reflect Gloom and Opportunity

IDC is about to release new estimates for Q4 2008, predicting that PC shipments will fall by 1%--it had previously expected shipments to rise by 6% during the usually robust holiday period, reports the Wall Street Journal.

If those projections prove accurate, computer-makers like Dell, HP, and Lenovo are going to have to slash prices on PCs and other hardware.

Computer-makers themselves expect a lot of orders to get pushed back, and in many cases, those will turn into cancellations pure-and-simple. Because this isn't going away anytime soon.

Economist Nouriel Roubini is already talking about a recession "longer and deeper" than any we've experienced since WWII.

Even if the economy were to exit a recession by the end of 2009 the recovery could be so weak because of the impairment of the financial system and of the credit mechanism (i.e. a growth rate of 1-1.5% for a while well below the potential of 2.5-2.75%) that it may feel like a recession even if the economy is technically out of the recession.
One hedge fund manager I spoke with thinks it will go on even longer than that. "The Great Depression went on for more than 10 years, and what's going on now in the financial system is pretty similar," he told me.

But it's not all bad news for customers--anyone left standing in early 2009 should be able to command some pretty good deals on hardware.