Verizon reported its numbers and demonstrated why voice and legacy is out and FiOS and mobile is in. The company beat AT&T on subscriber ads, something the media links to the iPhone availability. I’m not so sure, given that AT&T didn’t report any noticeable loss of customers because of its loss of exclusivity. But at any rate, the numbers also showed that FiOS is picking up strongly and that DSL (limited in speed by local loop characteristics) is losing ground in its basic form. That’s significant because it suggests that copper loop may be getting a lot less valuable.
The value of copper suggests a fundamental issue for the telcos. Leveraging their key asset is on the ragged edge of financial whimsy, and yet deploying FTTH is over the top for most areas. That’s another reason to jump into mobile, but it also casts doubt on whether wireline is even a rational long-term business. Since wireless can’t easily support HDTV broadband to the home, that begs the question of whether telco TV is feasible in some areas of the world, and whether OTT video can really be expected to overcome multichannel broadcast cable and satellite.
Barnes & Noble has finally brought out a true (if dated) Android version of its color Nook, which likely makes it the cheapest tablet around. It’s clear from both the performance and features of the new release and the pronouncements of the company that this isn’t intended to be a general-purpose tablet. But it’s also pretty clear that it presages a price war in the tablet space, which will have a profound impact on everything in the online world.
The Nook will likely launch a kind of e-reader/tablet price war that inevitably spills over into the broader Android tablet space. Sony also announced its own pair of tablets, one roughly iPad sized and the other a five-by-five inch fold-screen model, which shows that more and more device players are jumping in and jumping on Android. Continued »
Amazon finally restored the “great majority” of its EC2 customers after a failure on its Elastic Block Storage (EBS) cloud DBMS left websites in limbo last Thursday and Friday. The outage has already generated more than its share of commentary, and as usual there are more extreme views than useful ones. Some say the problem demonstrates that the cloud isn’t reliable, some that it demonstrates that the cloud is perfect. It demonstrates both and neither, in my view.
What Amazon’s problem shows is first that our view of the cloud is simplistic to the point of being dangerous, but that’s true about the popular view of just about everything these days, it seems. Second, it shows that people aren’t looking deeply enough into cloud computing when they commit to it. There’s no substitute for knowing what you’re doing.
But third, providing any form of high reliability is always harder when you’ve ceded control to a third party. Nobody at the enterprise level has any good feel for how EBS might impact reliability. Given that, all you can do is to rely on an SLA, and anyone who’s ever looked at a cloud SLA knows that in the end it’s not particularly valuable.
Apple had another great quarter, and with its arresting success comes a possible new threat from a possibly new business direction. No, I’m not talking about Apple dominating the smartphone or tablet space—it will almost surely suffer the same longer-term fate in these spaces that it suffered in the PC space. Apple is a trend-setter, a cream-skimmer in the device market. As the market commoditizes, as all valuable spaces do, Apple loses share to price leaders. No, the problem isn’t in the appliances, it’s in services.
Apple has been looking at a revamp of its “cloud” or service position. The basic model that Apple has long applied has been to sell Apple users device-related services (MobileMe, iWork, iTunes, etc) and to use this add-on model to further raise revenue and (especially) profit. It’s not at all distant from the old call-forwarding feature model of the RBOCs where you make your money on the add-ons. To protect this space, Apple recently changed its policy to ban applications that accepted recurring subscription payments, which now have to go through Apple’s store.
Apple is also raising a related and possibly even more difficult question, which is whether consumerism is now so dominating technology development and deployment that the business IT processes are also-rans in terms of focus, revenue and planning. If most of IT is the consumer, then IT is a series of classical boom-bust cycles. For any Big Idea, there’s a quick surge of revenue and profit followed immediately by a combination of commoditization and competition that kills the opportunity in a short period (about 20% of the total period of a market of this sort presents “opportunity”).
While we don’t typically cover management changes and executive hires, I do think it’s significant that Juniper has announced a new VP (from Cisco) in a new position. Nawaf Bitar has been brought in as senior vice president and general manager of Emerging Technologies, which Juniper describes as focusing on the intersection of software and systems. The reason this is interesting to me is that Juniper has demonstrated excellent engineering, and in Junos Space and Junos overall, insight in the creation of a software layer in networking.
Juniper has under-exploited its assets, though, and as a result risked being pre-empted by a player with less reality but more sex appeal. With the service provider market finally demonstrating some service-layer deployments (Verizon’s Digital Media Service most recently) it’s clear that Juniper’s rivals won’t be quiet for long.
Juniper’s number one rival isn’t Cisco, it’s Alcatel-Lucent, and that company is said to be exploring the sell-off of its enterprise communications business. But Cisco’s not out of the story; it might well be essentially doing the same thing in a different way.
There are strong signs that Cisco wants to push its own unified communications and collaboration products through service provider channels rather than directly to the enterprise. The UC space has been troubled essentially from its moment of birth, one of those “it-will-be-next-year” kind of markets. The problem is that what’s driving UC is the commoditization of voice over IP (VoIP), and you don’t get very far asking enterprises to capitalize a declining space. UC-as-a-service has been the inevitable winner, but of course PBX incumbents never wanted to hear that. They hear it now.
Tablets are again in the news as RIM launches its Playbook, a tablet that diverges from the iPad mold in that it’s based on a 7-inch form factor, and from the Android craze because it’s based on RIM’s QNX operating system.
I’m not really too hopeful about Playbook, frankly. The problem isn’t the form factor or the OS as much as the need for RIM to straddle a high fence with its tablet.
You can’t win in the tablet device space, or even play well, without a strong consumer value proposition. RIM can’t hope to get any near-term traction with Playbook without tapping the Blackberry base. How do you do both, particularly at a relatively late date at the dance? Seven-inchers would be cheaper by nature (they’ve generally proven to be), but RIM has waited until the pricing on 10-inch tablets seems to be coming down. Given that the iPad has set the 7-inch form factor as the consumer standard, that means an uphill sell.
To add to the problems, Playbook is getting almost universally bad reviews, with the problems attributed to haste and hurry. Well, gosh, RIM, what were you thinking here? The instant the iPhone hit the market, every handset player had to realize that the whole wireless device market was a new game defined by a new player. Even before the iPad hit, RIM should have realized that Apple was going to continue to be a game-changer, and the instant it first appeared RIM knew it had to respond.
So hurrying to get something out? Not unless it waited a year before starting. The simple truth is that you can’t launch something whose sole goal is to compete with something else. You have to have an affirmative goal to support a doctrine of affirmative buyer choice or else you get fuzzy on both your value proposition and your differentiators — which is exactly what RIM has done.
Microsoft made its Office 365 available as a public beta. The “cloud-based” version of Office is targeted at reducing Microsoft’s risks in its critical Office franchise by limiting the damage that things like Google Docs could cause. What it seems to be circling is a plan that would offer SMBs a license for the “collective” parts of Office that are normally hosted on a server, and enterprises a per-seat license for the full Office suite. That’s likely a smart move because SMBs can probably spend the dough for per-worker versions of Office but can’t sustain central server tools. Enterprises are looking at moving some of their less tech-literate workers to cloud packages, and this could stem the tide.
Microsoft’s big problem isn’t Google and the cloud, though, it’s Apple. We’re living in a world where wireless and appliances are redefining how people do just about everything, and Microsoft has let itself get trapped outside the candy store window. Phone 7 just isn’t going to catch up in the mobile handset space, Nokia deals notwithstanding. Microsoft has no effective tablet strategy because it’s afraid of undermining its Windows 7 space. The more iPads Apple sells, the more it turns the consumer away from Microsoft; away from anywhere that Microsoft appears even able to move.
Yes, Microsoft has to protect its current incumbencies, but without creating new ones that matter, it’s only delaying the inevitable. Microsoft won in PC operating systems over Digital Research because DRI missed the IBM PC opportunity. One slip and you’re done. Microsoft missed MP3 players, smartphones, and now tablets. It needs to get its act together–and fast.
Nobody doubts that we’re seeing a revolution in video, but there are revolutions and then there are revolutions. It’s not yet clear just how sweeping the video change will be. Some recent data from Nielson seems to show that while online video viewing is increasing, it’s increasing primarily within a largely static group. Not only that, the four-hours-plus of online viewing per month is insignificant compared to the average of more than 150 hours for TV.
Google is one of many companies that isn’t happy to see that outcome. In Google’s case, it’s trying to recast YouTube to attract more online video fans. Professional or at least semi-professional production is being encouraged, and there are some signs that Google may be close to addressing one of the biggest problems with YouTube, which is less the “production quality” issue than the “needle-in-a-haystack” issue. There are thousands of interesting and valuable YouTube videos, but it’s not likely that most will be viewed widely simply because they can’t be found.
Google seems to be working to offer the semi-pro regular producer better visibility, which would then insure more viewing. In turn, it would mean that viewers would likely be offered stuff that at least includes a strong dose of content that could credibly carry ads. Will this work? We’ll have to wait and see.
The cloud is in the news, in no small part because it’s earnings season and companies need to balance the need for publicity and the need to comply with SEC rules on “quiet periods.” Cloudiness is always a good way to get some positive ink. At any rate, we’re seeing three specific trends embodied in three announcements, by Red Hat, Lenovo, and Nimbula.
Red Hat, leveraging its acquisition of cloudbuilding-tool provider Makara, is looking to jump on what’s always been a critical truth about cloud computing: Platform as a Service (PaaS) is the most logical offering. A middleware vision (built around JBoss) supported by good cloud tools would empower developers to migrate applications to a form where they’d be cloud-optimized. This reflects a second critical (and largely ignored) truth; applications that aren’t developed at least with the cloud in mind may not be optimal in cloud environments.
The announcement of Lenovo’s support for a cloud-ready client on its laptop systems is reflective of two other trends. First, tablets and smartphones threaten to eclipse laptops as client devices for reason of simplified application management—thin clients are easier. By sticking thin-client capability with full security onto a laptop, Lenovo hopes to exploit the fact that while access to enterprise apps through thin clients is a priority for many enterprises, road warriors still need to have productivity apps running locally. Laptops with the right tools can offer both capabilities. Continued »
Cisco announced today that it would be “restructuring” its consumer business, dropping the Flip video line and focusing its home networking activities to gain better profits. The steps neither fix Cisco’s problems nor demonstrate with certainty that Cisco knows how to fix them. But they do seem to show that (dropping the Flip notwithstanding) Cisco can’t quite let go of the “bits suck” mindset.
Over the years, we’ve observed many vendors that seem to believe that the demand for something necessarily forces someone to meet that demand, regardless of profit levels. I’ve used the phrase “bits suck” in public talks to illustrate the view that somehow demand for capacity sucks dollars involuntarily out of provider pockets. Cisco’s play on the theory has been video: Promote telepresence to replace voice calling, encourage teens to generate a ton of video to upload and view, and the demand will raise your total addressable market by driving up the capacity the network needs.
What’s killed this approach is usage pricing, and if there’s anyone left who doesn’t believe that’s now inevitable I’d like to sell them a bridge. Yes, this kills the original Cisco value proposition for Flip, but it also kills broad-based telepresence. You can’t replace voice with video unless the video bits cost the same (not per bit, but per call) as voice. That can’t happen at current equipment and operations cost price points, and Cisco as a provider of equipment and operations tools should see that.
The service layer is the way out for Cisco. Maybe they see that, and maybe they’re working to address the opportunity there, and to pull through service-layer success into the network. Maybe someone else will do that, in which case we’ll finally see what “the next Cisco” really is.