What’s wrong with an insider?

Posted on February 17, 2014 by halberenson

I am often shocked at how many people believe an insider taking over as a CEO will be more change-averse than an outsider would be.  It just isn’t necessarily the case, though it may be harder for an insider to throw the baby out with the bath water.   And shareholders, particularly those with a long-term focus, will find that a good thing.

Why would anyone think that Satya Nadella agrees with every decision, every process, every cultural quirk, or every anything else that he’s been exposed to at Microsoft over the last 22 years?  Yes he has a deeper more intimate understanding of those things than any outsider could.  But living with them year in and year out also means he’s formulated his own opinions of what is or has worked and what isn’t or hasn’t.

For every three decisions that Bill or Steve made that Satya agreed with I will guarantee there is at least one he didn’t.  For every three ways of doing business that Satya agreed with I will guarantee there is at least one he doesn’t.  For every three proposals he made that were approved there is at least one that wasn’t, and he’ll be looking to revisit some of those.

For the next year or two, any proposal that comes to him that might have gotten rejected pretty quickly by Steve will get a much greater amount of consideration just because the way things work now are not (primarily) Satya’s creation.  He will have a lot of context of why they are the way they are, but not the kind of emotional attachment that Steve might have had.  Nor will he have attachment to processes that were designed specifically to match the way Steve thought about things.  Nor, by the way, will he reject processes that Steve put in place just because they were Steve’s.  In many cases those processes are things that Satya probably finds just as useful as Steve.

I think Satya will make a lot of changes, though probably in a more gradual way than an outsider would have.  In the questions on another of my posts I was asked about a lot of the processes used with Microsoft’s sales force (or more generally, “the field”).  Because Satya is not a sales guy I don’t think shaking up sales governance practices is really on the top of his list.  But he’s going to start questioning some of the practices pretty quickly, especially with FY15 planning getting under way.  And keep in mind he came out of the product groups, and particularly a product group that has long been frustrated over field practices that make it difficult to win large complex Enterprise deals.  So I expect Satya to put a lot of pressure on the field model over time.

There are many other areas where I think Satya will cause change behind the scenes.  Take acquisitions.  He has a lot of experience in this space, though not necessarily lots of big successes.  How he thinks about this area will probably have an immediate impact, and perhaps already has.  What kind of deals should the company do?  What are the metrics that make for a good deal?  When does a deal have to be accretive to earnings and when should he accept a margin hit to set up long-term success?  What changes should be made in integration processes?  Satya took over on a Tuesday and I would bet that by Wednesday he was getting questions about acquisition efforts in process or others being contemplated.  Some acquisitions that Steve might have shot down will now be pursued, and some that Steve would have been a backer of will not.

There are dozens of these things, including product efforts and priorities, that Satya will begin to change almost immediately.  Will he make the big strategic shifts like “kill Xbox” or “kill Bing” that some quarters want to see happen?  Not likely in the short run.  Will he propose splitting up the business?  Again, not likely in the short run.  Will he significantly change the priorities of underperforming businesses and force them to present him with a plan that he believes can lead to success?  Yes.  Will he accelerate the company on the Devices and Services axis?  Yes.  Probably even at the risk of its traditional license revenue businesses.

Lastly let me point something out that many people miss, especially those who haven’t worked in the senior ranks of a large company.  The CEO sets a tone and direction, but his most important role is to bring out the best in organization’s employees as a whole.  Most ideas do not originate with the CEO.  Setting up a culture that encourages people to bring great ideas forward, gives them serious consideration, and then act on those ideas is what the CEO really does.  And this is an area that I think Satya has already started to change.  Much to the delight of a number of employees I’ve talked to.

 

 

 

 

 

Posted in Microsoft | Tagged , | 15 Comments

More fuel on the Android apps on Windows fire

Posted on February 13, 2014 by halberenson

In 1996 Microsoft licensed Java from Sun.  Think about that for a moment before continuing on with this blog post.  At what seemed the height of its PC market dominance, when it “owned” the developers, when Visual Basic and Visual C++ dominated the application development landscape, and it was embarking on its own effort to create what would become .NET, Microsoft licensed and brought to market its own Java Virtual Machine (MSJVM).  If in those days of “monopoly” strength Microsoft was willing to bring a way to run non-Windows apps to Windows, and in the process risk furthering a development platform explicitly designed to take away the Windows’ app advantage, why is it such a shock that they would consider a similar strategy today?  With a struggling library of modern mobile-centric apps, why is looking for a way to bring Android apps to Windows and Windows Phone any different from what Microsoft attempted to do with Java?

Of course Microsoft, having gained rights to offer its own JVM, then proceeded to enhance that JVM with access to its own APIs and services rather than newer ones that Sun was adding.  Microsoft thought their contract allowed this, Sun thought otherwise and sued Microsoft in 1997.  Five years later Sun had prevailed and Microsoft removed MSJVM from Windows XP SP1 by issuing a SP1a.  The nice thing about Android, at least AOSP, is that Microsoft doesn’t need a specific contract with Google to offer an AOSP compatibility layer.  They just need to abide by the Open Source licenses that cover various parts of it.

One of the big questions everyone has is, if Microsoft offers Android app compatibility why will anyone ever write a “native” Windows/Windows Phone app.  I’ve thought about this and I believe there are multiple answers.  Here are two:

The first answer is, maybe they won’t!  Maybe instead Microsoft will start to treat the Android “compatibility layer” the way they’ve nativized HTML5/JS in the Windows app model and the way they attempted to nativize Java.  They’ll add APIs to access both local Windows/Windows Phone capabilities and Microsoft cloud services to AOSP.  Oh, under GPL they’ll have to make that source code available to others.  And if others pick it up and make those APIs available in Google’s own Android code base, or on Samsung’s market dominant Android devices, how will that do anything other than help Microsoft?

The second answer is that maybe they won’t have to, customers will pressure developers to do it for them.  Once Windows 8+/Windows Phone volumes reach a certain point developers will have interest in, and justification for, targeting Microsoft’s platform.  Customers will demand apps that fully make use of the platform.  Customers will demand a reasonable amount of user experience consistency.  And while the ability to run Android apps will delay a developer’s need to create a “native” app, it won’t eliminate the pressure.

In fact, with three strong platforms to support the path of least resistance for a developer is going to be to move to a tool like Xamarin for future versions of their app.  In that sense, no one has a fully native app, but they all share a common code base with tweaks to have native experiences on each device.  That puts Microsoft in as good a position as any for running most apps.  It is then up to Microsoft to make available unique capabilities that are interesting enough for developers to want to put in the extra effort to exploit.

My take on what Microsoft should do, which I have no information to support other than it’s the option with the most potential return for the least potential risk, is to use Android as a development tool for Windows/Windows Phone apps.  If they do that then I can envision a number of paths in which they turn it to an advantage for their devices, their services, and the Windows OS.  Yes it is a tricky game, but what is the alternative?

Microsoft faces a critical mass problem in mobile apps.  If they don’t get to critical mass then they are irrelevant in this space and the rest of the discussion is moot.  If they do get to critical mass and achieve very significant market share (e.g., 25%) but the apps are mostly pure Android apps then they have a potential problem, but it will be a good problem to have.  And if they get to critical mass with a bunch of Android apps that have been tweaked to use their platform and cloud services?  Then who cares that the apps started out as Android apps!

Microsoft can make a huge move here, completely change the app market dynamics for their platform, and eliminate this huge hurdle in their efforts to rival Google and Apple in the mobile space.  They could execute a strategy with near perfection and turn the current market on its ear.  Or they could make both strategic and execution mistakes and increase the odds that they never achieve true relevance in mobile.  But it’s not the concept I propose, it’s the details that are the issue.  And we don’t know what concept or details Microsoft has in mind.

Posted in Cloud, Computer and Internet, Google, Linux and Android, Microsoft, Mobile, Windows, Windows Phone | Tagged , , , , , , | 19 Comments

The Scott Guthrie Manuever

Posted on February 11, 2014 by halberenson

A few weeks ago, as rumors that Satya Nadella would be named Microsoft CEO gained prominence, a friend and I were discussing who would replace him as head of Cloud and Enterprise.  Our conclusion?  Scott Guthrie.  So I wasn’t particularly surprised when Scott was named interim EVP of Cloud and Enterprise, though I found the interim designation a little odd.  I’m going to explore Scott’s appointment and this “interim” thing.

Scott is very popular with customers, and developers in particular, both because of his long association with Developer Division but more specifically because of his interaction style.  He’s a heavy blogger, and a technical blogger at that.  He had his own conference, Mix.  He’d owned very popular technologies, like .NET.  And once he started working on the Azure App Platform he made Azure something developers could really look at, instead of some confusing and seemingly useless Microsoft initiative.  This has often led to customers calling for him to take on roles well beyond what most insiders would have considered him ready for.

So how can I on one hand consider the Cloud and Enterprise position a huge stretch for Scott, and on the other think he’s the best candidate for the position?  Simple, he is the one with the vision and leadership to make Azure a success.  There are other great, some more senior, some perhaps better, engineering CVPs amongst his peer group.  But none of them are as likely to pull off the Cloud transition as Scott is.  And that, as we say, is the high-order bit.

So let me dig a little more deeply into the problem here.  Scott’s historical scope is rather narrow.  He didn’t run DevDiv, he ran the .NET Runtime part of it.  The Azure App Platform effort was also relatively constrained, and a very similar area.  Most recently he’s been running Azure Program Management, spectacularly from everything I can tell, which covers far more ground.  But it isn’t that large from a people management perspective.  I don’t know the largest organization Scott has led, but it is probably under 1000 people.  He’s also never owned a diverse portfolio of products.  And I don’t think he has significant experience managing other CVPs, some of whom are actually SVPs by level.  Put simply, running Cloud and Enterprise isn’t just a move up for Scott it is really a double move up.  Both in product/service scope and organizational complexity.

Now if I’m Satya and I know Scott is my guy for moving the Cloud efforts forward then I’m going to want to set him up for success.  And putting him in charge of Cloud and Enterprise as it exists today is probably setting Scott up for failure.  So I know I need to make more changes, but I’m not ready to do it yet.  Thus the interim EVP designation.

There are four things Satya may be considering in terms of the Cloud and Enterprise organization and how he could set Scott up for success:

The first possibility for Satya, and the one that most managers turn to in this situation, is to look for things you can take off of Scott’s plate without really changing the mission.  For example, the Global Development Centers (GDC) report into Cloud and Enterprise through DevDiv head Soma Somasegar.  There is no strategic reason for the GDCs to be in Cloud and Enterprise, though I think Soma really takes on all the overhead so it wouldn’t take much off Scott’s plate.  Of course, you could move DevDiv out of Cloud and Enterprise too.  And if developers weren’t deeply in Scott’s blood that would make a lot of sense. A more dramatic change would be to take Windows Server and move it into the Windows organization, though you then risk overloading Terry Myerson.  Anyway I’m not making recommendations, just throwing out illustrative examples.

The second possibility for Satya would be to split Cloud and Enterprise in a far more dramatic way, leaving Scott running part of it and a new EVP reporting to Satya for the remainder.  This would require a lot of effort as you tried to tease apart the current organization in a way that both strategically made sense and avoided creating non-functioning organizations.  The Windows Server and System Management organization separates from the Azure organization relatively easily, but the Data Platform Division has feet in both camps.

The third possibility would be to have Scott run Cloud and Enterprise but move away from him having multiple triads reporting to him.  That is, re-insert a management level below Scott with a (S/)CVP running Windows Server and System Management, one running Azure, and one running Data Platform.  That reduces the number of directs Scott has to manage as well as letting him offload more responsibilities to area owners.

The fourth possibility is to maintain a Cloud and Enterprise organization with a different internal structure, perhaps along Cloud and Enterprise lines, with Scott owning the Cloud organization and someone else owning Enterprise.  Both would report to an EVP who reported to Satya.

By giving Scott the interim designation Satya has set things up so that further near-term changes won’t seem like they were done because Scott failed.  He was just a caretaker until they decided on a permanent structure.  Of course it could take months to sort all this out, in which case Scott could prove himself ready for the Cloud and Enterprise EVP role and they’ll just drop the “interim” designation.

Most likely there are further changes afoot, but I have no idea if they are modest ones designed to help Scott succeed or more substantial ones based on not wanting to push him too far too fast.  Or, they could be changes based on Satya having a different organizational viewpoint from Steve.  Or ones that Scott himself initiates (e.g., who says Scott wants to pay attention to everything that he inherited with Cloud and Enterprise).

Scott is a good guy and he was ready for a bigger role.  I want him to succeed, and hope Satya and Scott are working on making sure his role is defined in a way that he has a good shot at it!

 

Posted in Microsoft | Tagged , , , | 1 Comment

The one about the new Microsoft CEO

Posted on February 11, 2014 by halberenson

Now that some of the dust has settled on Microsoft’s changes last week I’m going to cover three topics.  Satya Nadella the new CEO,  Bill Gates increasing his Microsoft involvement, and Scott Guthrie replacing Satya as Executive VP of Cloud and Enterprise.  I’ll take three different blog entries for this.

Satya is on one hand old-Microsoft through and through and on another he’s more of the startup guy.  If you think about what he’s worked on over the last 20 years it hasn’t been classic things like Windows and Office.

When I first met Satya in the 1990s he was working on those early days of Internet-based commerce.  The BizTalk Framework if memory serves.  A couple of years later we served on the same staff when he cobbled together some acquisitions and re-targeting of existing properties (like Hotmail) to create the bCentral small business Software as a Service offering.  This was 2000/2001.  Yes, Satya was laying the foundation for, and delivering early implementations of, the Cloud long before the term existed.

Shortly after Microsoft formed Microsoft Business Solutions, by acquiring Great Plains and Navision, Satya became head of its engineering organization.  Later he lead all of MBS before being tapped to build the engineering organization for Search and Advertising.  And when Steve Ballmer needed someone to accelerate the Server and Tools Business (STB) move into the Cloud he tapped Satya to be President (and then EVP under the One Microsoft reorg) of that organization.

Leading STB was a good test for Satya because he had to deal with two strongly competing goals.  He had to engineer a cultural and priority shift away from on-premise computing to the Cloud while at the same time maintaining the health of one of Microsoft’s largest and healthiest businesses.  That’s quite a balancing act, but he’s done it successfully.   STB has continued to grow its business at a healthy clip, Azure is well on its way to serious success, and STB (now Cloud and Enterprise) is well along in its cultural shift.

Some people may not understand just how much of a challenge Satya faced.  A few months into Satya’s term as President of STB I asked him if Steve (Ballmer) had given him any relief on Contribution Margin during the refocus on the Cloud.  The answer was NO.  We’d struggled with this problem when I was in STB as it forces you to reduce or eliminate efforts that support an existing revenue stream so you can fund efforts that won’t produce a healthy revenue stream for years into the future.

If you mess up the transition then revenue growth, or even revenue itself, will fall off from older streams (because you neglected them) before the new streams are capable of replacing them.  Alternatively you might not shift enough resources to succeed in the new efforts, miss the paradigm shift, and your entire business collapses when customers redirect their attention (and budget) to the new paradigm.  It was a lack of faith that Bob Muglia could lead STB through this transition that led Steve to replace him with Satya.

Take a look at SQL Server 2014 for a hint of how Satya and Microsoft have managed this balancing act.  On the one hand SQL Server 2014 contains the biggest advance in OLTP support (primarily the in-memory tables for OLTP and related features) since 1998’s SQL Server 7.0, while on the other hand much of the rest of the on-premise product has received minor or no change.  Meanwhile this week marked release of PowerBI, a cloud-based offering from the same Data Platform (nee, SQL Server) team.  For the last few releases on-premise BI has been an area of focus, but for this release cycle those resources were focused on the Cloud.  SQL Server 2014 is going to be a big hit, and so too is PowerBI.  Revenue stream protected, cloud focus producing results, mission accomplished.

Satya’s ability to lead this key part of Microsoft through a transition cycle while preserving the health of the business no doubt played a big part in him getting the CEO position.  Because that characterizes the nature of the entire task in front of the new CEO, taking Microsoft through a number of transitions to renewed industry leadership while preserving the health of the business.

Satya is wicked smart, inquisitive, probing,  and a real pleasure to work with.  He holds very strong opinions, but is always open to input.  I think all constituencies, from customers to investors to employees are going to feel that he is listening to and taking their input into consideration as he moves Microsoft forward.  Is the CEO job a stretch for Satya?  Yes, but it would be a stretch for anyone!

Some stakeholders wanted a new CEO who would jettison the consumer businesses and focus on the enterprise.  Other stakeholders wanted someone with consumer electronics experience precisely so they could do the opposite, find a successful path in mobile devices, Search, and other consumer offerings.  Some wanted a CEO who would rock the boat until it looked like a spacecraft.  Others wanted to make sure the baby wouldn’t be thrown out with the bath water.  Some wanted a CEO who had already led a large F50 company, others wanted someone with more entrepreneurial credentials.

In truth no one person could have met all the expectations for a new Microsoft CEO, particularly since so many are in conflict.  What everyone wanted in a CEO is someone who would find the handful of things where Microsoft can establish or reestablish leadership, focus the company on those, and lift Microsoft out of the malaise that has haunted it every day since the antitrust actions began a decade and a half ago.  That’s something Satya can do, now he has to actually do it!

Of all the things I’ve seen published about Satya my favorite comment came from David Sobeski, a former co-worker of ours.  After Microsoft, David held executive positions at Yahoo and The Walt Disney Company.  In one of his comments on Satya’s appointment as Microsoft CEO David compared Satya to Disney CEO Bob Iger, someone he greatly respects.  Having a “Bob Iger” as Microsoft CEO sounds like a good thing to me.

I’m happy Satya was chosen to be Microsoft’s new CEO.  It gives me a lot of hope that the next decade is going to be a lot happier than the previous one for customers, shareholders, and employees.

Posted in Microsoft | Tagged , , | 9 Comments

Microsoft and an Android play

Posted on February 10, 2014 by halberenson

We are floating in rumors and suggestions this week around Microsoft and Android, from a call for Microsoft to drop Windows Phone in favor of a forked Android to Peter Bright’s explanation of why that doesn’t make technical sense, to the long-standing rumors about Nokia switching its Asha line of feature/almost-smart phones from Symbian to an Android (AOSP) base.  Starting with the imminent announcement of the Nokia Normandy aka Nokia X aka who knows.  And then on top of that we have occasional rumors that Microsoft is working on a way to run Android applications on Windows Phone and/or Windows.  What is reality here?

I’m going to stay away from the “Microsoft should just fork Android” (as a Windows Phone replacement) debate by saying “That’s the stupidest thing I’ve ever heard!”.  Got it?  Now, let’s move on to things that make a lot more sense.  At least sort of.

First let’s jump into the debate about Nokia shipping an Android-based device as part of its Asha line.  There are two questions that come to mind, the first being why not replace the Asha line with something based on Windows Phone?  The second being, how can you ship an Android-based device when you are about to be acquired by Microsoft?  Answering the second one first, read my blog about the legal situation during an acquisition.  The sad thing here is that the Microsoft/Nokia Devices acquisition was supposed to have closed in January.  If Nokia targeted the Normandy for announcement at MWC, that would have given Microsoft the opportunity to kill or bless it without creating an antitrust issue.  But because China and a couple of other Asian countries have not yet approved the acquisition Nokia is going to proceed with the announcement without Microsoft being able to kill or bless it.

Now to the first question.  It is clear that Microsoft could have worked with Nokia to use a stripped down Windows-based answer for next generation Asha devices.  This could have been a derivative of Windows Phone 7, it could have been a derivative of Windows Phone 8 Embedded, or it could have been some pieces parts thing based on either Windows CE or NT.   For whatever reason, including concerns about lack of focus (at Microsoft), that appears not to have happened.  Instead, if rumors are to be believed, Nokia took the open source part of Android and created a Windows Phone look and feel on top of it as their new OS for Asha.  Is this a big deal for Microsoft?

Maybe not.  Remember that Asha is basically a feature phone bridging into the smartphone world.  It need not allow installation of arbitrary Android applications.  Nokia could in fact mandate that third-party applications only are installed from its own app store, that they are developed with cross-platform tools such as Xamarin, and that they must have an identical or super-set app in the Windows Phone Store.  In fact, if done right, an Android-based Asha line could become a better feed for both customers and apps into the Windows Phone world than the S40 Series ever could be. Symbian-based line is.

Is this an ideal strategy for Microsoft?  No.  Is it a strategy they would have pursued themselves?  No.  Is it a strategy they could live with post-acquisition?  Yes.  Could they make lemonade from this strategic lemon?  Yes!  Will they?  Well, that is yet to be seen.

They could also close the acquisition and immediately kill off the Nokia Normandy/X and any future Android devices, even though doing so post-announcement would be an embarrassment.  Bottom line:  Nokia introducing an Android-based line of Asha phones is not the end of the world for Microsoft.

So on to the other interesting topic and the one that I think is going to become the real debate in the Windows Phone (and maybe Windows) world sometime soon.  Microsoft appears to be getting ready to support Android applications running on its platform.  Now, of course, if you have a full x86 Windows 8 PC you can do that today using the Bluestacks software.  But I keep hearing rumors, some of them believable, that Microsoft is working with someone (and I don’t know if it’s Bluestacks) to bring a way to run Android apps to Windows Phone (and/or Windows 8.x).

I don’t think Microsoft is planning on opening up its devices to just obtain apps from Google Play or other arbitrary Android app stores.  I think this is more of another way to do cross-platform development.  That is, you can go to an app developer and say “you can use this software to get your app running on Windows Phone and submit it to the Windows Phone Store for almost no development cost, you’ll just need to do some testing, manifest work, etc.”.  The app developer gets a low-overhead entry into the Windows Phone world, Microsoft can grow its app library much more rapidly, the end-user not only gets more apps but Microsoft can still offer them guarantees about app safety in the store.  As Windows Phone volumes grow the app developer would then be encouraged to either write a native app for WP or switch to a cross-platform environment that lets them use native platform features.

Now of course running Android apps on Windows Phone would make the user experience less consistent.  If Windows Phone were taking over the world that would be a reason not to pursue this direction.  But right now finding ways to eliminate the app gap is far more critical to the success of Windows Phone than taking an absolute position on user experience consistency.  Instead of Microsoft pressuring app developers to stick with the Metro style, let end-users put the pressure on app developers.

Will Microsoft announce something about support for Android apps at Build?  I hope so.  If Windows Phone is to essentially eliminate the app gap by the end of 2014 (as Joe Belfiore has claimed) then some dramatic things have to happen, and soon.

Now let me throw out two disruptive ideas.

One came to me as I was reading Peter Bright’s article on why no one should fork Android.  Right now most Android apps only use services present in the open source part of Android called AOSP.  Google is trying to push them to use services from its proprietary GMS layer instead.  Since Microsoft can’t bring GMS to Windows Phone without a license from Google, and would likely limit apps to the use of APIs that are part of AOSP, could they also hope to (temporarily) derail Google’s push for app use of GMS?  This would play not only into Microsoft’s hand, but into Amazon’s as well.

Second, what if Nokia’s move to use Android on Asha devices has been coordinated with Microsoft’s rumored plan to allow Android apps on Windows Phone?   That is, the specs and rules for bringing an Android app to the Nokia Store for Asha Android phones is a subset of the specs and rules for bringing an Android app to the Windows Phone Store?  Suddenly things make a lot more sense!

Ok, this is all fantasy built on speculation built on rumors built on wishful thinking built on more rumors.  Some of it may be true, much of it will not be.  No one should bet the ranch on any of it.  At least not until Build hopefully separates reality from fantasy.

Posted in Computer and Internet, Google, Microsoft, Mobile, Windows, Windows Phone | Tagged , , , , , , , | 17 Comments

Where is Windows going?

Posted on February 10, 2014 by halberenson

Paul Thurrott’s piece (some might say rant) this weekend over where Microsoft seems to be taking Windows with Windows 8.1 Update 1 adds more fuel to the fire about the future of Windows.  Put simply, Microsoft began a re-invention of Windows with Windows 8 and that releases market failure and follow-on updates have done more to confuse the situation than add clarity.  Now I have a different take on the future than Paul seems to have, but let me be clear that I don’t totally disagree with him.

One of the things that everyone has to realize is that much of what we got in Windows 8.1 was in the Windows 8 plan, then dropped to make the 2012 holiday schedule.  I don’t know about Update 1, but I suspect that is still the case.  For example you don’t have to wait for Update 1 to experience desktop-style context menus in the “Metro” interface.  If you have a mouse, in 8.1 just bring up the recently used app list on the left side of the screen and right-click on one of the apps.  You’ll get a context menu that looks something like:

context

So we can see the path Microsoft was on and that they made more progress in Windows 8.1 Update 1.  The problem is, and this is what I think Paul points out well, is that its a confusing work in progress.  Microsoft could have had two separate user experiences, one mobile and one desktop, on a single operating system.  Instead they telegraphed they were moving to a single, touch-centric, more mobile than desktop, experience for both.  With 8.1 and, even more so, 8.1 Update 1 they seem to be on the way back to separating the user experiences.  But they still haven’t made that clear.

Of course everything about Update 1 is based on speculation since all we have is leaked builds.  For example one of the great improvements for mouse users reportedly in Update 1 are more cases where a right-click brings up a context menu instead of the app bar.  One of the big negatives is that this isn’t what happens inside a Metro app.  BUT, what if doing this inside apps requires developer effort and that is not something Microsoft will introduce until the Build conference?

I think I know where Microsoft is going with all these changes.  We really are going to end up with two Windows experiences, and probably SKUs to match.  One experience is a unified Phone-Tablet mobile experience that is touch-first, touch-centric, and perhaps even devoid of support for desktop apps.  The second is a Desktop experience that retains touch as a primary means of manipulation but is much more centered around the mouse and keyboard.  It will have a more traditional Windows look and feel, but modernized (pun intended) of course.  Most importantly, both of these variants will be capable of running the same set of Metro/Modern apps.

The Mobile experience will run Metro apps in an immersive way much as we already experience in Windows 8/8.1 while the Desktop experience will run them as windows (of course).  And just as many desktop apps today have a full-screen mode, Metro apps will support a full-screen immersive mode when running in the Desktop experience.  This is the state that Microsoft is aiming at with Windows 9.

When taken in this context the moves in Windows 8.1 Update 1 make a lot of sense.  What’s missing though is the context.  If Microsoft elaborates at (or before) Build on the vision and how Update 1 fits into it then the user community is going to embrace these changes.  If they fail to lay out the vision then Update 1 will just be seen as the latest monster to escape Dr. Frankenstein’s lab.

 

Posted in Computer and Internet, Microsoft, Mobile, Windows, Windows Phone | Tagged , , , | 15 Comments

1984 wasn’t 1984, but 2024 might be

Posted on February 6, 2014 by halberenson

A number of organizations are uniting to sponsor a day of Internet protests on February 11 against mass surveillance by the NSA.  You can find out more here.

With apologies to all my non-American readers, I have no problem with the NSA spying on foreign entities or persons.  Hey, that’s why they exist!  I do believe they should have well defined governance even in terms of spying outside our borders.  Sure I’m willing to grant them a lot of leeway to prevent another Pearl Harbor, or 9/11.  But you want to spy on an allied leader?  I think that should require a Presidential Directive.  On the other hand, you want to track the entire network of communications as it emanates out from a communications pattern detected in an Al Qaeda stronghold somewhere?  Fine.  Even though it sweeps in a lot of innocent people?  Yup.  Even though it crosses the U.S. Border?  With proper governance.

If the U.S. government is going to spy on people in the U.S. it needs to allow for all the constitutional protections we are supposed to enjoy.  It’s pretty obvious from the Snowden leaks that current procedures do not.  Administrative fiat and FISA Court rubber stamps have replaced our constitutionally mandated checks and balances.  And that is what has to change.  We’ve seen a few small improvements in public communications in the wake of the Snowden leaks, but no governance changes that move us closer to our accepted system of legal protections.

What I really worry about with domestic surveillance is the potential for abuse.  A prominent D.C. lobbyist once told me “you can write the legislation as long as I get to write the definitions”.  Even if you have legislation that restricts the use of domestic surveillance to “terrorism”, almost anything could be redefined as terrorism.  Recall what happened with RICO, the Racketeer Influenced and Corrupt Organizations Act.  RICO was established to fight organized crime, a.k.a. “The Mob”.  But the ink hadn’t dried on the bill before it was being used for other things.  It has even been used to suppress Pro-Life groups.  How long before any collection of mass surveillance data is exploited to go after suspected tax evaders, drug dealers, drug users, or political protesters?

Two states have now legalized recreational marijuana usage and many more have legalized it for medical use, yet it is still illegal on the federal level.  This administration is not going after users or legal producers in states where they are following state law.  But that policy could easily be reversed by the next administration.  We always hear claims about how terrorists exploit the drug trade to raise funs for their activities, so how hard would it be to justify mining surveillance databases to identify and prosecute state-legal but federally-illegal drug users based on this alleged terrorism connection?  It is not that far-fetched.

It is also not far-fetched to consider the use of mass surveillance data to go after political organizations.  You don’t have to go back to the Nixon administration to find abuses, we are still in the midst of an IRS abuse-of-power scandal when it comes to approving 501(c)(4) status for conservative organizations.  Whatever your political leanings this should be a concern.  If a Democratic administration can abuse power against conservative organizations, a Republican administration can do the same against liberal organizations.  Given that terrorist organizations are political movements that have embraced violence, how hard would it be to justify using domestic surveillance against non-violent political movements?  I can hear the argument now: “today they are non-violent, but if we don’t spy on them how will we know if they are going to stay that way?”  To say that is the slippery slope towards totalitarianism is a vast understatement.  1984 wasn’t 1984, but 2024 might be.

It’s time we brought back some balance between our need to defend ourselves and the risks in allowing government to exceed more than a very limited amount of interference in our lives.  That’s not to punish, or neuter, the NSA or other agencies.  It’s to make it clear what they can do, when they can do it, whose approval they need, and that sufficient checks and balances exist for the American public to be confidant that the protections they believe are afforded to them by the Fourth Amendment to the U.S. Constitution are indeed in effect.  Benjamin Franklin (may or) may not have meant his famous words “Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety.” in the way we interpret them today.  But he should have.

Note that I’m not discounting the spying, I mean tracking, that goes on amongst commercial entities and the risks that those bring.  The difference is that governments send men with guns to do their bidding.  And, historically, they aren’t afraid to use them.

Posted in Cloud, Privacy, Security | Tagged , , , | 11 Comments

Another one bites the dust

Posted on February 6, 2014 by halberenson

Today we learned that Sony has sold off their PC business, although from the sounds of it (and certainly for anyone outside Japan) Vaio PCs are just history.  In my view this is a healthy development.  Too many airlines with too many seats meant that under anything other than ideal conditions an airline couldn’t sell a seat for enough money to make a profit.  So it was a race to the bottom in prices,  but also in service and customer-friendly policies.  And lots of trips to bankruptcy court.  It took industry consolidation, and discipline from the remaining players, to start that industry on a path back to health.  And it definitely is still a work in progress.  The PC industry has some of the same business dynamics, and I wish the comparisons ended there.

It’s too easy to get into the PC business and too hard to differentiate products within it.  The good news has been a race to the bottom in prices, but that has brought with it mediocrity in design, spotty quality, crapware, crapware, and more crapware, and incredible customer confusion as they try to figure out what the difference is between two PCs priced 2x-3x differently.  And no PC maker is healthy on a per-unit profitability basis, except for Apple of course.  Apple, via its monopoly on OS X, has very different market dynamics than anyone running a broadly available operating system can achieve.

Assume a company developed a supersonic transport and created their own airline around it, refusing to sell to other airlines.  They would have a unique service for which they could charge a premium, and assuming they found the price point for maximizing revenue and profitability and maintained margin over market share discipline, they could become the most profitable airline in the world (by a wide margin).  That’s because all other airlines would be flying the same Boeing and Airbus planes with the same characteristics, economics and competition for the same passengers to fill their seats.

In the computing world we have that supersonic transport airline equivalent, Apple with IOS and OS X.  Then we have the numerous minimally undifferentiated companies flying “Boeing”  (Microsoft Windows and Windows Phone) and “Airbus” (Google Android and Chrome OS).  So we have the race to the bottom with all its negatives and a problem with sustainable profitability and health for all PC makers.

Part of the solution in the PC industry is the same one that is happening in the airline industry.  You need fewer players and you need the remaining ones to exercise increased discipline (that it, margins over market share).  And once you’ve achieved that, and have a few healthy participants, they can focus on greater innovation, better service, higher quality, etc. as differentiators.

The problem with Sony is that while they imagined themselves as the airline with a supersonic transport all they really had was the same old 737s and A330s with better paint jobs and prettier interiors.  They tried to use that to justify supersonic transport like premium prices over their competitors, but potential customers generally found the premium greater than the perceived value.  This indirectly added to the mindset that, just as with airline tickets, customers go for the lowest price and ignore the other differentiators.

On top of the general problem that Sony hasn’t even been delivering what they promised; I think over the last few years they just failed to introduce breakthrough products.  Why is it that Dell and Lenovo are leading the charge on 8″ Windows tablets?  Even in the 10″ space Sony was essentially a non-player.  And their 2-in-1s featured some of the oddest, and least usable, design choices any player brought to the table.  Pay more, get less.  Does that really work?

I’m not an Apple fanboy, but I do believe you get value for the extra money Apple demands.  The question with Apple is “do you value those things enough to justify the extra cost, plus the negatives that come from leaving the Windows ecosystem”?  For 5-10% of the world’s population the answer is yes.  And Apple has per-unit profitability to make it interesting to focus on that 10% rather than get into a price war trying to go for the other 90%.  Sony was not Apple.

Sony leaving the playing field creates opportunity for others.  Everyone needs excellent cost control, but not everyone needs to be an ultra-low cost carrier.  With Sony out of the picture other PC makers can look at trying to push a little more into the premium PC space.  Samsung already seems on its way out of the Windows world, or at least on its way to niche player status.  Perhaps we can lose one more global PC maker, such as Acer, which would really open the door to a healthier PC industry.  A Dell or HP will continue their focus shift more towards enterprises, or perhaps re-find their MoJo in the consumer space (as Dell seems to have done with the Venue 8 Pro) and take advantage of a smaller set of competitors to become both more aggressive and profitable.  Lenovo will continue their march to being the top global player.  And Microsoft can take the niche that Sony always wanted, providing premium products, but at competitive yet profitable prices.  ASUS could regain its footing, perhaps becoming the global “Low Cost Carrier”.   Specialized ultra low-price local market players could thrive with less pressure on the “majors” to compete with them primarily on price.

Of course Sony is leaving the PC world but is remaining in the Android Mobile Device world.  Acer, if it left the PC world, would remain in the Android and ChromeOS worlds.  There is an overabundance of players in the Android (and increasingly ChromeOS) world,  Yet only Samsung is making serious money.  They’ll have their shakeout eventually, but right now we need to see the Windows PC world rationalized.  Sony’s departure indicates that is really starting to happen.

Posted in Computer and Internet, Microsoft | Tagged , , , , , | 21 Comments

No real comments on today’s Microsoft announcements, yet

Posted on February 4, 2014 by halberenson

I can see from the stats that people are coming to my blog to see what I have to say about today’s announcement of Satya Nadella as Microsoft’s new CEO and Bill Gates putting in more time at Microsoft as Technical Advisor.  I’m not going to say much yet as I prefer to wait a few days and see what unique value I can add after all the news is out.  There will, of course, be more news over the next few days.  For example, in about an hour Satya and Bill are holding a company-wide meeting and I’m sure some more information will leak from that (e.g., a better description of what Bill’s involvement is going to be).

In case anyone is wondering, I’m thrilled by the choice of Satya as CEO.

So hang on a few days and I’ll add any unique insights I have.  But for now, enjoy the show!

 

Posted in Cloud, Computer and Internet, Microsoft | Tagged , , | 1 Comment

Tablets, Phablets, and Phones: Is there change in the wind?

Posted on January 30, 2014 by halberenson

With the exception of Microsoft, most tech companies are posting somewhat disappointing results.  Particularly when it comes to sales of tablets and smartphones.  Now to some extent I think this is the result of overly aggressive projections by analysts.  Or it could be some temporary fatigue amongst technology buyers.  But it also feels like there are other factors at play and there is change in the wind.

The first factor at play is that the market for high-end smartphones is pretty saturated and it has largely turned into a replacement market.  This impacts Apple more than anyone else, but on the positive side the “iPhone 6″ is going to launch to a very large base of customers who have come off contract.  One financial analyst I heard the other day gave numbers that suggested at least 50% more off-contract iPhone users will be out there when the 6 launches than there were when the 5S launched.  So good times for Apple in the $ sense, but no market share growth as a result.

Even the mid-range smartphone market is beginning to feel pretty saturated.  The unit growth is in the low-end, but this doesn’t help Apple and probably hurts Samsung.  Another dynamic in the U.S. is the move away from the subsidy model.  For a few people this will let them update devices more rapidly, but for the majority it may lead to them holding on to their devices for longer periods of time.  So assume replacement cycles will stretch out.  That argues for even more attention to markets such as China and India where vast numbers of low-end smartphones will be sold.

Anyway the basic point is that Smartphones are yesterday’s story.  They will continue to take over from basic and feature phones, and that will be good mostly for smaller players.  Including perhaps Microsoft.  And there are a bunch of interesting strategies one could imagine going forward.  For example, how do you turn today’s low-end buyer into tomorrow’s mid-range buyer, and mid-range into high-end?

Tablet growth also slowed surprisingly last quarter.  Are tablets like netbooks, a device category that actually had a built-in market share limit?  Recall that at one point it was thought that netbooks would take over the world, but eventually they topped out (before tablets then came along and decimated them).  Basically is there a natural limit on devices above phones but below full powered and sized PCs?  Perhaps.  And if there is then the big winner is Microsoft, because attention will turn from tablets to notebook and desktop replacement cycles.

But I think there may be a more interesting change afoot.  As we settle into smartphone screen sizes in the 4.5-5″ range, and see an explosion of Phablets in the 5.5-6+” range, are many consumers deciding that they can buy one device that covers their Phone and Tablet needs?  If so that cuts total mobile device sales potential way down!  And again it plays into Microsoft’s hand because while a 6″ Phablet may eliminate the need to carry an 8″ Tablet (for watching video or moderate email, for example), it is far less suitable as a notebook replacement than 8-10″ tablets can be.  This again leads to a notebook refresh cycle, or a heavier emphasis on 2-in-1 type devices over pure tablets.

My change of heart on Phablets is the result of observations over this last year.  For one thing, mainstream smartphone screen sizes are already bumping up to 5″, making the leap to Phablet realm more of a hop.  Another factor is the rise, and potentially impending explosion, in the smartwatch category.  If I can leave the Phablet in my pocket, bag, or briefcase much of the time then its size becomes somewhat less of a factor for phone use yet it is handy for more tablet-like use.  Samsung is already leading the charge here.  Lastly come the stories I’ve gotten from people who actually are using Phablets.

The most recent story I heard was from a Microsoft employee who was carrying a Lumia 1520.  He’d borrowed one to play with and fell in love with it to the point he found himself no longer taking his tablet with him.  Yes it doesn’t fit his pocket that well, but eliminating the need to carry a tablet was something he found worth the tradeoff.  Is he unique?  I don’t think so.  Is this a small niche, large niche, or significant trend?  While it is too early to make that call I suspect it is at least a large niche and, when 5″ smartphones are included, a significant trend.

Does this mean that Tablets are “over”?  No.  It just means that they are going to settle into a space where the form factor makes the most sense rather than become the defacto computing device.  It also means that the greatest potential market over the next few years will become the Enterprise, rather than Consumer.  (Something I’m not going to explore here, but might address in a future post.)  Again something that plays into Microsoft’s hand.

Of course I think Apple, Samsung, and virtually every large consumer electronics firm understands this.  And understands that the next wave of consumer excitement is around wearables.  I also think this is where we find out if Apple still has the magic.  When I look at the Smartwatch space, for example, I see plenty of options all of which don’t quite cut it as mainstream products.  It looks a lot like the pre-iPod MP3 world.  Apple came in with a solution that just nailed the experience, completely dominated the market, and leveraged that position into high-end consumer smartphone domination as well.  Can they do it again?

Wearables is also the place where Microsoft could either boost or sink its ability to succeed in the smartphone/Phablet market.  Wearables are largely a peripheral for the smartphone or Phablet, and as consumer focus shifts to them it will also alter phone/Phablet buying behavior.  Today’s startup solutions large ignore Windows and Windows Phone while supporting IOS and Android.  Strike One for Microsoft.  If we assume Apple does a great job on a watch and its linkage to IOS and their overall ecosystem that’s Strike Two.  Microsoft has to hit a home run with their own smartwatch and its ties to Windows, Windows Phone, and the overall ecosystem or else the strikeout won’t just be on wearables.  It will be on their smartphone/Phablet ambitions as well.

Over the next year the changes in the market should go from speculation to obvious direction.  I could be right, completely wrong, or things could go in a totally different direction.  But we shouldn’t have too long to wait to figure out which it is.

Posted in Computer and Internet, Microsoft, Mobile, Windows, Windows Phone | Tagged , , , , , , , | 29 Comments