Outside Innovation

What Are the Chances for Nokia + Microsoft’s “3rd Ecosystem” Bet?

How’s that “burning platform dive” working out for you, Stephen Elop?

After Nokia’s CEO made his controversial burning platform speech and dove into the arms of Microsoft on February 11, 2011, Nokia’s stock price dropped precipitously and is still falling, its developer and customer community rebelled, and 1,000 Nokia employees staged a walkout.

Nokia does not seem to be doing a very good job of creating a buzz around the benefits of supporting what Elop calls, “the third ecosystem,” by which he means having a Microsoft/Nokia mobile phone/application ecosystem to compete with the Google/Android ecosystem and the Apple/iPhone ecosystem.

Granted, change is hard; cultural change is very hard, and you often have to cannibalize your current offerings in order to evolve to a next generation. But Elop’s handling of this planned transition will go down in management history as one of the worst SNAFUs ever.

Nokia’s oh-so-public trashing of its existing software platforms, and, by extension, all those employees and developers who have invested in it, was badly done. When you need to make a transition to a new platform, you should do so by making it seductive and a “no brainer” for customers, developers, and partners to transition, not by telling them they are stupid!

You (our readers) were quick to pick up on this gaffe…. Among your comments, I found Aussie, Peter Horne, to have the best analysis:

"Nokia is a large and powerful Finnish company, influenced by founder stakes and is a huge employer, which means that"

"1) The company won't leave Finland"

"2) It will make local decisions (see 1)"

"3) This guy [Elop] will have to live amongst the people he is dangerously close to insulting."

"It is not unusual for x-pat U.S. execs to talk to their new companies as if they are U.S. employees, only to regret the fact that they didn't take some time to work out the Real Politik. This guy looks like an idiot to me..."

~ Peter Horne, Patty’s Pioneer

Microsoft’s Unpopular Coup

What smells the most to me is the fact that Microsoft is clearly the master puppeteer. Microsoft didn’t acquire Nokia, but they might as well have. Microsoft is buying Nokia with billions of dollars of investments in R&D because Microsoft needs to establish a beachhead against Google’s and Apple’s ecosystems. I don’t believe that this approach will work. You can’t “buy” an ecosystem. You have to grow it, organically. If you build it, they (customers and developers) won’t necessarily come, even with bribes.

Nokia's Burning Platform: Which Ecosystem will be Best for Nokia's Customers?

On February 8, Endgadget published a memo that was sent from Nokia’s CEO, Stephen Elop to all of Nokia’s employees. In this “Burning Platform” memo, Elop sets the stage for the announcement he’ll be making on February 11th, 2011, about Nokia’s shift in strategy. I believe that Nokia will jump into the arms of Microsoft (Elop’s most recent former employer) and that this was probably in the wind when he was recruited from Microsoft’s Office division to become Nokia’s president and CEO in September 2010.

Microsoft badly needs a strong mobile device partner to make Windows Phone 7 viable. Since October 2010, Windows Phone 7 has been available on phones from Dell, HTC, LG, and Samsung from 60 carriers in 30 countries. But all of these phone providers also support Google’s Android OS. It may be that Nokia will espouse the Microsoft OS and eschew Google’s Android. Nokia may well walk away from its own software technology to become a Microsoft-only phone supplier. In order to do something this radical, Elop has to convince his Nokia employees to throw away their own intellectual property and to follow his lead into Microsoft’s arms. Hence his already famous “Burning Platform” memo.

What interests me about this move by Nokia is not just the likely Microsoft/Nokia alliance, but the assumption that Elop makes that, in order to be successful in mobile phones, you have to be part of a winning ecosystem.

The Consumerization of Enterprise Computing

Last week's Consumer Electronics Show (CES '11) in Las Vegas was a tipping point in IT history.

• Although consumer electronics’ giant Apple never exhibits at CES, Apple's presence was felt as over 100 tablets all vied for the coveted position of "also ran" to the iPad.
  
  
• Corporate IT execs roamed the aisles in search of secure wireless tablets for their executives.
  
  
• Microsoft’s Steve Ballmer did not impress anybody with his keynote speech; Microsoft is rapidly losing ground in consumer mindshare and developer appeal (apart from the Xbox).
  
  
• Mobile, wireless devices have taken over the boardroom and the automobile as well as the living room.
  
  
• Online App Stores linked to devices have become the preferred way to consume and distribute applications and content.
  
  
• The mobile Web is the world we all live in. Corporate IT execs and security execs are scrambling to accommodate to this new reality.

As one CIO put it, "The world has changed. Microsoft is toast in the enterprise." The consumerization of the enterprise comes as no real surprise to most of you. Many of you have been predicting this for at least a decade. What may be surprising to many is how quickly corporate users—and, in particular, high level executives—are demanding to consume their corporate information and applications the same way they interact with their consumer information and applications—always available, in the cloud, easy to consume on their mobile devices, highly personalized, and intermingled with their consumer life, applications, and communications. It's all well and good to distribute iPhones, iPads, Blackberries, and Androids to your mobile executives with the appropriate levels of encryption and security (or at least the ability to remotely wipe the data off a lost phone). But you can't prohibit those executives from texting with their kids, listening to Pandora, or watching a ball game on the same device.

Mobile consumer devices, behaviors, and expectations are taking over enterprise computing.

IT Musical Chairs

High tech musical chairs seem more and more irrelevant to me. So Intel is buying McAfee in order to provide firmware security between our mobile devices and the data that sits in the data centers within the clouds we access using our mobile devices. Intel is aligning with both Nokia and Google Android to gain a foothold in the smartphone market. HP and Dell are squabbling over who will pay more for 3Par (a data storage company), while both firms teeter on the brink of irrelevancy. (Google doesn't buy servers from Dell or HP, they build their own.) Nobody really cares what Microsoft does anymore. But every time Google or Apple sneezes, we all notice. In the information technology field, Google and Apple are now the center of the universe. Everything they do matters. Every other company is either aligned with one or both of them or competing with one or both of them. Those who are aligned (Intel+Google) will benefit, at least temporarily. They may get cannibalized over time. Those who are competing (Microsoft vs. Google, Microsoft vs. Apple, Oracle vs. Google, Adobe vs. Apple, etc.) are doomed. We've seen this cycle before. Once upon a time (maybe before you were born), IBM was the center of the IT universe. Later, it was Microsoft. Then Google. Now Apple. Who’s next?

Our Search Maven’s Reaction to Microsoft’s Bing

By Susan Aldrich, SVP, Sr. Consultant/Analyst, Patricia Seybold Group

Historically, search has been Microsoft’s Invasion of Russia: huge expense, army turned back in defeat, humiliation, and mass death ensues. Okay, no death involved, but search has not been a happy story in Redmond. Now Microsoft has Bing, the new branding for its Internet search. We are utterly convinced that Bing will boost Microsoft’s market share. Rebranding is essential to getting people to take another look at Microsoft’s search efforts. Microsoft has chosen an interesting name and, furthermore, created a lovely homepage for Bing. Choices are emotional, and Bing is pretty attractive. That alone is enough to get us to use it: we like seeing the Bing home page gracing our browser window, like lovely wallpaper.

Microsoft has a huge campaign planned to call attention to Bing – estimated at $100 million—to get people to give it a try. Microsoft is also offering incentives to people who shop using Bing: Every so often, it offers a cashback bonus. For a time, use of Bing will surge. And some percentage of people who give Bing a try will stay, out of inertia or pleasure. More market share for Bing, less for Google and Yahoo!.

Sure, Bing isn’t as clever as Google, but, for many or even most of our searches, the answers aren’t hard to find. Offering search refinement is a nice touch, when it is offered. It's not always offered. Maybe Bing will prove to be “good enough” for enough people enough of the time, that Microsoft can declare victory. But we’re not counting on it. In the search wars, Microsoft still looks like Napoleon to us.

Cloud Computing: Once Renegade, Now Sanctioned

My reaction to Microsoft’s announcement of its Azure cloud computing platform is: “Good, now it’s safe for corporate IT to embrace cloud computing.” You may be too young to remember when IBM announced its PC (1981). By doing so, IBM validated a customer-driven movement that was already well underway: PCs (of the Apple and TRS 80 and other varieties) were already being used as renegade computers by lead users. Business people were already bringing personal computers into the office or buying them with departmental budgets. They were doing spreadsheets, performing simple calculations, even typing their own memos.

In 1981, IBM ran around in front of this renegade customer parade, pulled together a “platform,” and declared it an industry standard. The PC revolution was legitimized. Cocktail party conversations among IT professionals and corporate execs shifted immediately from “we don’t take PCs seriously” to “we have a PC strategy.”

Microsoft’s Azure announcement will have the same effect. Corporate IT gate-keepers will now acknowledge that they need a “cloud computing strategy” for their applications and their data centers. Again, they’ll be running around in front of a parade that is already well in progress. Small business users, under-the-radar-renegades in enterprise departments, and IT project leads for fast track, low budget projects have been using cloud computing for two years. Microsoft’s validation will enable them to raise their heads, be smug, and show others how it’s done.

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!

Microsoft Opens XBox Gaming, O/S and Office APIs

The "new" Microsoft  (Ballmer/Ray Ozzie combo) is opening up in a variety of ways! This week, Microsoft made two significant announcements that will foster outside innovation. The first one that really grabbed my attention was this one: Xbox 360 Becomes First Video Game Console Ever to Invite the World to Create Original Games and Share Online With Millions.

Awesome! I can't wait to see what happens as the geeks who have already flocked to XBox contribute their coding skills to creating games for the Xbox platform. It's not yet clear to me how truly "open" this platform is, e.g. whether game developers will be able to extend each others' games. The image at the right is from "Culture" -- one of the seven user-created games developed bt Hidden Path Entertainment using the XNA platform that Microsoft featured at the Game Developers Conference.

Here's the description included in the official press release:

"An Xbox 360 community game created using Microsoft's XNA Game Studio software and XNA Creators Club membership will be able to be submitted for distribution on Xbox LIVE. Each community-created game must then undergo a thorough peer-review process and be evaluated for accuracy in representation and appropriateness. Community game developers will be able to beta test the process this spring and will be able to distribute their games on Xbox LIVE by the end of this year."

I look forward to learning more about how "open" this environment is.. Of course, Microsoft hopes to attract millions of budding game developers. The official release goes on to say:

"Xbox 360 once again broke new ground by introducing a new, open distribution service for games created by the community and soon playable by its 10 million Xbox LIVE members. Community-created games on Xbox LIVE will quickly double the size of the Xbox 360 game library. By the end of 2008, Xbox 360 owners will have access to more than 1,000 games, making it the largest, most creatively diverse library across all next-generation platforms."

At the Games Developer Conference this week,

"Chris Satchell, general manager and chief XNA architect at Microsoft, announced that seven games created using XNA Game Studio 2.0 would be available immediately for Xbox 360 owners to download from Xbox LIVE Marketplace."

In reading through some of the heated discussions among participants at this week's Game Developers' Conference, the "consensus" seems to be that Microsoft is releasing a true "Game Developers' Platform" and creating a marketplace in which game developers can strut their stuff, whereas Spore (coming in October 2008) and LittleBigPlanet (LBP) are "content-creation systems inside of a game."

The second "opening up" of Microsoft this week is of course the announcement that Microsoft will finally publish open APIs both to its OS and to its office applications.

My Take on Yahoo! / Microsoft

My first reaction to the news that Microsoft wants to absorb Yahoo! was “of course.” After all, Microsoft has not managed to stop Google from becoming the only technology player that matters. Microsoft has not stopped Google from becoming the only player whose strategy is the center of the universe. Microsoft held the coveted position as the company around which everyone planned his strategy for two decades. Now it’s Google. Venture capitalists, investors, content providers, advertisers, businesses, and technology firms plot their courses around Google’s trajectory. This must really annoy Microsoft! More pragmatically, Microsoft needs a competitive search marketing/advertising offering. There’s a lot of money at stake. There’s brand at stake. There’s mindshare at stake. Search has become the starting point for all network interactions. Microsoft can’t afford to cede that first point of user-contact to Google. It’s worse than losing the browser wars. People search from their mobile phones, from their PDAs, from their cars, from their phones, from their TVs. 

My second reaction to the Microsoft/Yahoo! take-over bid was, “oh no!” This is not good for customers. Having fewer choices never is. Having Microsoft—an already untrusted behemoth as our alternative to Google—(can we trust Google not to spy on our every move?) gives us two “big brothers” from which to choose and fewer alternatives. I immediately began thinking about white knights. Barry Diller, Rupert Murdock, John Malone all came to mind—so did eBay, Amazon, and Apple. I was intrigued that Google stepped up to the plate and offered a helping hand to stave off Microsoft. “Come partner with us, the way that AOL has done, and we’ll help you keep the green giant at bay.”