Microsoft began opening its own retail stores in 2009 and recently began a push into more US cities. A recent post by George Anderson on Forbes.com about Microsoft's new store format prompted me into some late-night analysis. It appears Microsoft's store format strategy is to ride in the draft of Apple by building larger-format stores very near, if not adjacent to, Apple's own stores. As a retail analyst and both an Apple and Microsoft customer for over 25 years, I feel compelled to weigh Microsoft's retail strategy against Apple's (and since I cover retail strategy from a CIO perspective, it feels appropriate to publish here).
Comparing eight success factors
Location: I'll start here, as it was the subject of the original post. Across from Apple may be the only sensible choice for MS, but the challenge MS has is that Apple is a destination store, i.e. people plan to go there for the experience. This makes it less likely they will decide to browse the MS store because it is close. On the other hand, assuming MS does some promotions to attract traffic to its stores, they are likely to also drive additional traffic to Apple. Predicted winner = Apple.
I'm in the business of identifying when there's a change in the wind coming that will push us in a new direction. On balance, I've been successful. So much so, that when something I staked my career on becomes commonplace, people are so used to it that they look back and think I was only pointing out the obvious. Like when the most senior faculty member in the advertising department at Syracuse University rejected the "Interactive Advertising" course I proposed to teach in 1996 because online advertising was "just a fad." I took a stand and got to teach the class, over his objections. Fast forward to today and online advertising is so obvious that predicting it is a thankless task.
I say this because I am about to take a stand I want you to remember. Ready? Starting November 4th, Kinect for Xbox 360 will usher us into a new era Forrester has entitled the Era of Experience. This is an era in which we will revolutionize the digital home and everything that goes along with it: TV, internet, interactivity, apps, communication. It will affect just about everything you do in your home. Yes, that, too.
I've just completed a very in-depth report for Forrester that explains in detail why Kinect represents the shape of things to come. I show that Kinect is to multitouch user interfaces what the mouse was to DOS. It is a transformative change in the user experience, the interposition of a new and dramatically natural way to interact -- not just with TV, not just with computers -- but with every machine that we will conceive of in the future. This permits us entry to the Era of Experience, the next phase of human economic development.
I’ve been getting a number of inquiries recently regarding benchmarking potential savings from consolidating multiple physical servers onto a smaller number of servers using VMs, usually VMware. The variations in the complexity of the existing versus new infrastructures, operating environments, and applications under consideration make it impossible to come up with consistent rules of thumb, and in most cases, also make it very difficult to predict with any accuracy what the final outcome will be absent a very tedious modeling exercise.
However, the major variables that influence the puzzle remain relatively constant, giving us the ability to at least set out a framework to help analyze potential consolidation projects. This list usually includes:
To paraphrase Charles Dickens, Q2 2010 seemed like the best of times or the worst of times for the big software vendors. For Microsoft, it was the best of times; for IBM, it was (comparatively) the worst of times; and for SAP it was in between. IBM on June 19, 2010, reported total revenue growth of just 2% in the fiscal quarter ending June 30, 2010, with its software unit also reporting 2% growth (6%, excluding the revenues of its divested product lifecycle management group from Q2 2009). Those growth rates were down from 5% growth for IBM overall in Q1 2010, and 11% for the software group. In comparison, Microsoft on June 22, 2010, reported 22% growth in its revenues, with Windows revenues up 44%, Server and Tools revenues up 14%, and Microsoft Business Division (Office and Dynamics) up 15%. And SAP on June 27, 2010, posted 12% growth in its revenues in euros, 5% growth on a constant currency basis, and 5% growth when its revenues were converted into dollars.
What do these divergent results for revenue growth say about the state of the enterprise software market?
So what does this mean for CIOs and IT, the custodians of enterprise technology architecture?
It is clear Jive wants to play with the big boys in the enterprise software space. To date, many Jive deployments have not involved IT. This ability to deploy its technology without IT’s involvement has no doubt helped Jive to this point. Of course, having market-leading functionality hasn't hurt. (Jive has featured highly in recent Forrester Wave reports).
At the recent Enterprise 2.0 conference in Boston, I sat down with Jive’s new CEO, Tony Zingale, to explore the company strategy. From our discussion, it was apparent that Jive intends to compete for a big slice of the enterprise collaboration marketplace. Fundamentally, this is the right direction for Jive, but I foresee some big challenges for the company along the way.
This week, I was at the Microsoft Worldwide Partner Conference in Washington, D.C., and it was all about THE CLOUD. Now, many colleagues argue that Microsoft will be the second-to-last major vendor to show a 100% cloud commitment, saying that “it’s too embedded in its traditional software business,” “it doesn’t understand the new world,” and “it’d be scared of cannibalizing existing and predictable maintenance revenues.” But I remember Stephen Elop, president of Microsoft Business Systems, tell me with a mischievous grin that he’ll probably earn more money from Exchange Online than the on-premise version — “firstly, it’s mainly new business from other platforms like Lotus Notes, and second, I even generate revenues by charging for things like the data center buildings, the infrastructure, even the electricity I use.” That was in Berlin last November. I suspected then that Microsoft did get it but was just getting its platform ready. This week, I am convinced — Microsoft is “all in,” as they say.
And at the Microsoft Worldwide Partner Conference, it was driving its partners to the cloud as aggressively as any vendor has ever talked to its partners at such an event. All of the Microsoft executives preached a consistent mantra: “MOVE to the cloud, or you may not be around in five years.”
Microsoft’s cloud-based Business Productivity Online Suite (BPOS) is already being promoted by 16,000 partners that either get referral incentives for Microsoft-billed BPOS fees or bundle it into their own offerings (mainly telcos). There are nearly 5,000 certified Azure-ready partners. This week, Microsoft turned up the heat with these announcements:
Many product strategists are, like me, old enough to remember software stores like Egghead. Those days are gone. Today, consumer packaged software represents a very limited market – the software aisle has shrunk, like the half-empty one at the Best Buy in Cambridge, MA (pictured).
Only a few packaged software categories still exist: Games. Utilities and security software. And Microsoft Office – which constitutes a category unto itself. Some 67% of US online consumers regularly use Office at home, according to Forrester’s Consumer TechnographicsPC And Gaming Online Survey, Q4 2009 (US). Office is the most ubiquitous – and therefore successful – consumer client program aside from Windows OS.
Office 2010, Microsoft’s latest release, will continue to succeed with consumers. On the shoulders of Office 2010 rests nothing less than the defense of packaged software in general. It’s also the most tangible example of Microsoft’s Software Plus Services approach to the cloud – a term that Microsoft seems to be de-emphasizing lately, but which captures the essence of the Office 2010 business goal:
To sell packaged client software and offer Web-based services to augment the experience.
Today, Google announced Google App Engine for Business, and integration with VMware’s SpringSource offerings. On Monday, we got a preview of the news from David Glazer, Engineering Director at Google, and Jerry Chen, Senior Director Cloud Services at VMware.
For tech industry strategists, this is another step in the development of cloud platform-as-a-service (PaaS). Java Spring developers now have a full platform-as-a-service host offering in Google App Engine for Business, the previously announced VMforce offering from salesforce.com, plus the options of running their own platform and OS stacks on premise or in virtual machines at service providers supporting vCloud Express, such as Terremark.
What’s next? IBM and Oracle have yet to put up full Java PaaS offerings, so I expect that to show up sometime soon – feels late already for them to put up some kind of early developer version. And SAP is also likely to create their own PaaS offering. But it’s not clear if any of them will put the same emphasis on portability and flexible, rich Web-facing apps that Google and VMware are.
So Google aims to expand into enterprise support – but will need more than the planned SQL support, SSL, and SLAs they are adding this year. They'll also need to figure out how to fully integrate into corporate networks, the way that CloudSwitch aims to do.
Okay, so I'm a sucker for nostalgia. But being on the same stage as Gilda Radner and John Belushi and John Candy and Tina Fey was a thrill. And being in the same studio where Elvis Costello and the Attractions stopped "Less Than Zero" after a few bars and jumped into "Radio Radio" in defiance of NBC's wishes brought a rebellious, empowered smile to my face.
NBC's Studio 8H, home of Saturday Night Live, is where Microsoft launched SharePoint 2010 and Office 2010 yesterday. It was a short, punchy, customer-filled event. These products are the latest in the "Wave 14" product set, a ginormous (as my 9-year old says) overhaul of the Office product line. And they're beauts. Here's my (admittedly enthusiastic) analysis of what Microsoft has accomplished with this product.
The lion awakens and roars.
Microsoft's Office business has taken a battering in the press as journalists chase stories about the important innovations from nimble startup competitors, open source alternatives, and Web-based productivity tools. But let's face it. Microsoft doesn't have 500,000,000 people using its tools for no reason. And while three years is a long time to wait for a product release (especially in this era of instant innovation via the Internet), Microsoft has re-confirmed its position as the most important driver of business productivity on the planet. This launch will crush the dreams of a 100 entrepreneurs and force another 1,000 to rethink their companies. That's okay. It's what happens when Microsoft turns a niche product for a geeky few into a global feature that anybody can use. As an economy, we need it.
I've just had the chance in the past few hours to really play with the device. I find myself smiling each time a new SMS bubble pops up. I love it. I also like seeing my friends' faces on my phone. I love being able to navigate my content and messages via my friends. Loved how easy it was to set up my email, Facebook, and Twitter. Packaging rocks ... and is recyclable. What is subtle in this device, in my opinion, is how intuitive the UI is. The UI looks and feels similar to others I have seen, but I was able to pick up this phone and use it without reading the instructions.
My colleague Charles Golvin will provide a more in-depth analysis of the device itself.
From a social networking/media perspective, the KIN is a good start, but I hope to see more with upcoming releases, especially around helping people build their social graph. I don't put this burden on Microsoft alone, but on the industry and all handset manufacturers. The content we create needs more meta data or labels. We need logic to mesh this content together and navigate through it. It's great that I can navigate to my friends' status and messages through my contacts (and KIN's UI is a lot of fun). I also want to navigate through my photos and location. Location should be table stakes for photo/status/review (restaurant/bar) content and the logic shouldn't flow in just one direction. Based on my location (simple location or map), I want to see who is nearby or what restaurants my friends liked. Navigating through my friends, I want to see what restaurants they liked. I want to group photos by location. I want to group photos by friends. These are just a few examples. With every product and service developed, one can't have everything. There are cost, time and design trade-offs. I completely understand that the KIN and DROID and others couldn't get everything done in v1.0. I look forward to the next version.