Outside Innovation

Sun Will Shine in Blue Cloud

What a fun week for a technology watcher/analyst/would-be geek like me! The IT world had gotten so boring over the past few years, that I have been happy to turn my attention to customer-led business innovation and customer experience (with IT enablement). This week’s news has taken me back to my heyday as primarily an IT analyst and pundit (as opposed to my current self-image as a customer-centric business/IT strategist).

First, Cisco threw down its gauntlet to IBM, Dell, HP, and Sun and declared that it too is entering the market for blade servers to be sold for IT data centers and virtualization. (Translation: there’s not enough growth in telecommunications and Internet infrastructure, we’re adding data centers and cloud computing to our remit).

Next, and in parallel, 1) Sun announces its eagerly anticipated “Sun Cloud.” This is Sun’s cloud computing offering, which will compete with Amazon’s cloud, Microsoft’s coming cloud, IBM’s Blue Cloud, and the existing Google cloud (which oddly, no one talks about)—and 2) the rumor leaks that IBM will acquire Sun for $7.5 to $8 billion in cash. Sun’s stock soars; IBM’s stock falls. And the pundits start punditing. What fun!

[UPDATE: First IBM Lowered the Price, then Sun Refused the Deal, but my take is that this will still happen.]

What made this little flurry of news and analysis more exciting was the process I have used to come up with “my” analysis. Over the last 12 hours, I used a combination of social media (twitter search filters to watch the pundits’ tweet their commentary and tweeples’ comments on their punditry) and outreach to my own community of technology architects: Patty’s Pioneers. As their comments rolled in from Hong Kong, Sydney, California, Boston and Chicago, it has been fun to debate and ruminate together (and the discussion continues!).

Steve Siu, the chief technologist at Orient Overseas Container Lines (OOCL) in Hong Kong, summed it up best: “This deal potentially marks a milestone of a new generation of computing economic model—a new chapter. Commoditize all computing activities, back to business model innovation to create value.”

Peter Horne from Blues Point Partners in Sydney, Australia, commented: “Sun is a hardware company with a software community (Java) attached. The hardware company has been dying for a while, and as a hardware company they have proven that it's hard for a hardware Co to understand and leverage a software community. IBM transformed themselves in to a services company and has probably made more money out of Java than Sun (Ditto Oracle). While a single brilliant Sun engineer created Java, they were pedestrian at managing it. I'm not worried about who owns Java now as it's owned by the community of Java developers and can't be directed by any single commercial interest anymore. Linux also becomes the final word in x86 OS alternatives as well. IBM is a Linux shop and I can't see x86 Solaris continuing. IBM also gets MySql which gets them some head space in open source databases. They also get Open Office which may make things a bit more interesting for MS given IBM’s incredible corporate sales ability. Summing up—inevitable outcome for Sun, great outcome for IBM.”

The IBM/Sun deal makes so much sense to me that my first reaction on seeing the news (on Twitter) was “of course.” I realize that Cisco or Oracle may compete with IBM, turning the sale into an auction. But frankly, I doubt it. I believe that Sun’s board and CEO, Jonathan Schwartz, have already shopped the company around. IBM is ready to make the best offer. Cash. Now. At a price that is not embarrassing. (2x Tuesday’s market valuation). I also realize that the deal will probably be slowed down by antitrust deliberations that are stimulated by HP, Cisco, Dell, Microsoft and Oracle—all of whom have the most to lose.

Most of the other pundits are busy comparing the two companies’ hardware, software and services’ portfolios. There’s lots of speculation about what the combined road map will look like.

Hardware: The two firms will need to rationalize their hardware offerings—Sun moved away from its own RISC chips to AMD some time ago. IBM remains a leader in computing chip technology, but derives less of its revenues and profits from hardware these days. Sun’s hardware engineers will probably find a happy home in IBM’s labs.

Software: Both firms have big investments in Java, Linux, and open source. They will need to rationalize their Unix/Linux offerings. Both use Linux; both have their own proprietary versions of Unix (AIX/Solaris). Both support the open source Eclipse development environment. Sun’s software engineers are already in bed with their IBM counterparts.

Steve Siu’s comments about the Linux/Unix variants: “In five years, the Unix server will become legacy; the same way the mainframe did, if we step back 5 years. In the future Linux / open source world, the application execution platform will further commoditize through virtualization. So, this potential deal will trigger corporate users to think about their choices. In the current market environment, all IT projects would require a more solid return. We will minimize special technologies to be employed. We did shut down our mainframe before Y2K, maybe we’ll do the same for our Unix server in 5 years.”

Services: IBM derives the majority of its revenues and profits from its professional services, SaaS, and outsourcing (including cloud computing) offerings. Sun has been terrible at monetizing software and services.

Google Chrome: Browser Plus a New Platform for Web Apps

Whenever Google announces a new major application, it's big news. This week, Google announced a new browser. I have to admit that despite my discomfiture at having yet another browser environment to learn, and to support for our end-customers, I am intrigued.

Comic Book Used as Launch Collateral

Google appears to be targeting technorati first—not just the usual technical early adopters, but the developer/architect community. I found the most interesting and useful part of the Chrome launch collateral to be the 38-page Chrome comic book. (Comics are a great way to convey a lot of information quickly. Product marketers of many other categories of products should take note!)

User-Generated Comic Book Parodies!

I wonder whether Google expected users to immediately begin creating spoofs using its own marketing collateral. But that's what has happened. If you want a quick way to see all the negative reactions to Google Chrome, check out these comic parodies:

* From Conde Nast's Portfolio.com
* From The Register

For those of you who want a shortcut to the technical pros and cons of Chrome, check out Charles Nutter's A Few Thoughts on Chrome.

Why You Should Pay Attention to Chrome

Anything Google does is important, since Google is the most powerful and most widely used platform on the Internet today. From a business/marketing standpoint, you'll want to be sure that your Web sites and portals are Chrome-friendly. From a technology strategy standpoint, you now have yet another browser and Web application platform to support and to consider when designing information and tools for your prospects, customers, employees, and stakeholders. Think of Chrome as a next-generation Web OS for rich Internet apps.

Google Strategy #1: Track Everything We Do

The biggest "aha" in Google Chrome is that the browser bar and the search bar are now one and the same. This makes a lot of sense to those of us who have become used to just typing a word or phrase to get to the right site(s).

National Instruments Takes the Next Step in Capturing Hearts and Minds of Budding Scientists and Engineers

Those of you who have read Outside Innovation will recall the story about the partnership between LEGO and National Instruments (brokered by Dr. Chris Rogers who promotes engineering in elementary/primary school curricula, catalyzed by a kids’ robotics competition in Austin, Texas, and cemented during a rain-soaked soccer game). As a result, Dr. Truchard, (“Dr. T”), National Instruments’ founder and chairman, authorized an innovative partnership to embed NI’s $2,000 LabVIEW software platform into the software that would be sold as part of a $200 Mindstorms NXT kit to kids and teachers.

Photo by: usfirst.org

On April 17th, National Instruments took a further leap in extending its market to the younger set. They announced a partnership with FIRST to provide the robotics controllers (hardware and firmware) to be used in the robotics kits for the FIRST Robotics Challenge (FRC)—the robotics league for High School kids. This is a multimillion dollar in-kind donation.

So now National Instruments is providing hardware as well as software, and it is extending its reach from 8-year-old engineers through to high school age kids.

The benefit to the kids is that this new platform will be less expensive, reducing the cost of the kits from approximately $15,000 down to closer to $2,000. (Each team has to raise the money to purchase the robotics’ kit they’ll need each year.)

Adopt a Mac over a Weekend

This past weekend, I decided that I could afford a few leisurely hours to migrate my work life—no, actually my entire online life—from my Dell Latitude 610 running Windows XP to my new MacPro Notebook running OS X (Leopard). I was really looking forward to it.
       
       
I had already enjoyed the “Mac out of the box experience”—unpacking my new laptop, plugging it in and marveling at Steve Jobs’ signature power supply (with “ears” to loop the cord around, as well as the sliding hook on the cord that makes it easy to create a quick and tidy loop to get excess cord out of the way, and the magnetic connector that lets the plug click satisfyingly into the MacBook). I even marveled at Steve Jobs’ packaging. Who knew that styrofoam could be so elegant! I’m convinced that Steve J personally approved the styrofoam design. My husband and I joked about making a wall hanging out of it.

What Are PC Users Doing? Stampeding to Mac!

OK I admit it. I’m really late to the party. Everyone who IS anyone uses a Mac. When Lawrence Lessig gave one of his mind-blowing presentations at the Harvard Law School last week (CC now stands for both “Creative Commons AND “Change Congress”), he used a Mac. In fact, just about everyone I admire uses a Mac. I’m beginning to feel like the odd woman out at any geek gathering or any customer experience confab. What am I still doing with a PC in 2008? It’s past time to get out of the PC/Windows stranglehold and into the sexier and more satisfying world of Mac and Linux. My catalyst: a Dell notebook that’s on its last legs, an expired support contract, and absolutely no desire to move to Vista. Of course, I’m not alone. Everyone who has a reason to trade in their current computer is going thru a similar thought process. The majority of people whose computers need to be replaced or upgraded in 2008 are stampeding to Apple. Walt Mossberg’s recent PC Buyers’ Guide was the final imprimatur that people like my stingy neighbor needed. “It’s not really more expensive,” he opined, after reading Walt’s column, last week, “and I already have an iPod.” Watch out Microsoft, Dell and HP—the trickle is about to turn into a flood!

How to Design Your Products (and Business) to Be Customer-Adaptive

        Here’s an update on one of the companies featured in Outside Innovation. CohesiveFT is a software company. Their products are digital. But I believe that some of the patterns we’re seeing as customers create their own digital products hold up well for physical products or for hybrid physical/service products.
       
         In fact, I’m writing this post from St. Louis, the center of the Bio-Belt, where the products that are sold—seed for growing corn, soybeans, fruits, and vegetables—are designed and packaged in ways that are surprisingly similar to today’s hardware and software. As Monsanto's CIO, Mark Showers, explained to me, what’s going on in bio-agriculture is that there’s an increasing split between the hardware (the seed or germ plasm) and the software (the traits) of a plant. Advanced bio-technology has made it possible to optimize the traits at each layer of the seed stack (below ground/roots; ground-level/weeds and pests; above ground/leaves, flowers, fruit). In fact, today’s hybrids come in triple-stacks—soon there will be 4 to 6 stacks—of optimized traits. Farmers select the traits they need in their seeds based on the soil conditions, pest patterns, weather patterns, and their expectations of what the growing season will hold. (Then they hedge their bets through commodities trading where they make their real money!) While farmers don’t CONFIGURE the optimal seed traits at each layer today (that’s done in the lab and on the manufacturing farms), they do SELECT seeds with optimal traits at each layer for different sections of their farmland. It’s a very sophisticated and complex set of choices. Much of the value of the seed resides in the intellectual property involved in optimizing each layer of the stack for the precise conditions required and in the ability to mix and match these traits to meet the particular requirements of a particular strip of farmland in a given micro-climate. Companies license the intellectual property—the traits—to one another.

APPLE & EMI: OPENING ITUNES WILL BOOST SALES

The good news on the innovation/transformation front—a.k.a. “let’s run around in front of the lead customers’ parade”—this week was EMI’s announcement that it will sell music on iTunes without digital rights management. European consumer advocates have made it clear to Apple that using DRM to prevent paying customers from playing the music they’ve bought on iTunes on non-Apple devices is not OK. Apple is facing lawsuits in France and Norway as well as pressure world-wide. “It’s my music, I bought it; Let me play it when and where I want” is clearly a moment of truth for customers.

“I won’t buy DRM-protected music...Why would I pay money for something that limits how I can use my computer? I view such products as broken.” Asheesh Laroia, graduate student, Johns Hopkins University

Steve Jobs responded to the mounting clamor in February 2007 with an open letter to the big music labels, asking them to allow Apple to drop DRM protection from their digital music sold via iTunes. Steve found an early ally in Eric Nicoli, the head of EMI. On April 2nd, EMI became the first of the big record labels to announce that all EMI music will be available via iTunes in a non-DRM protected format, starting in May 2007. Owners of EMI music tracks purchased via iTunes before that date will be able to upgrade their EMI catalog to the higher quality, non-DRM-protected versions easily (for a fee).

MIGRATING FROM LEAD USERS TO MAINSTREAM CUSTOMERS

I recently met with Rod Johnson, the CEO of Interface21 and the original creator of what has come to be the highly popular Spring Framework for enterprise Java application development.

Rod was on his way to his now-annual Users’ Conference, The Spring Experience 2006, which is being held in Hollywood, Florida starting today, December 7th. This year, more than 400 developers and architects from more than 20 countries convened for three days of 60 technical sessions. These customers (developers and IT architects who use the Spring framework as applications infrastructure for their applications) are, for the most part, developers of large-scale enterprise and commercial applications in many of the world’s biggest firms.