SNW – Any IT Folks Going???

I'm having a surprisingly difficult time finding folks who are attending the spring show – even the usual suspects are blowing it off. I'm going anyway – if I don't see the Sun soon I'm going to start evolving into a subterranean creature.

If you are an IT person, and you are attending, send me an email (steve.duplessie@enterprisestrategygroup.com) and let me know. I'm looking for a casual impromptu cocktail-based get together to run a few ideas by and ask a few questions of some real people – ideally Monday afternoon or evening. I'm buying. Vendors, VARs, or other vagabonds need not apply.

Thanks!

Random Thoughts

Tony Asaro is back in the blogosphere. I particularly like his comment that Citrix (Xen) doesn't have a fully functional product. Say what you will about Mr. A, he ain't shy about tossing a bomb or two.

Bear Stearns is gone (and what a deal that was, the government insured the debt and the building alone is worth 4X what the company sold for). What's interesting is that Wall St. IT has always been considered the king of all that is IT – they have the most dough, the best people, etc. Guess what? It ain't true anymore. They still have the most dough, but the crown of IT gods lies now firmly in those who have mastered the wacky world of Web 2.0. Google and Amazon do way more interesting stuff with way less money and "talent" to drive value out of their IT operations. Why? Because instead of retrofitting legacy architectures and processes to work in the world of unknown value, totally unpredictable growth, and "make it work right now, not in 4 months" demands, they did they opposite. They started with those requirements (adding on "I want it free") and retrofitted those principals onto their business and distributed systems. People think Google runs its billing operations on loose components they pick up at Radio Shack, but they don't. They run the same transaction systems as you do. Their marketing and engineering folk don't use systems with wires sticking out of them; they use the same stuff you do. They just do it from a different perspective.

Speaking of Amazon, S3 is getting way more traction and attention than I would have thought possible. Since it's so non-core to their real business, I figured it was just a way for them to try to monetize their IT development efforts, but trends are pointing positively for them. They should split that business out, however, if they want to compete long term.

It's spring in New England. You can tell by the frozen flower buds, and that Manny Ramirez already spent 35 minutes watching his Japanese homerun that didn't exactly make it out of the park instead of running around the bases.

Recession Time

2007 was an interesting year for most of us. Overall the economic environment for data center-related companies was pretty vibrant—most companies grew. The tail end of 2007 had some feeling skeptical about macro-economic conditions going into 2008, and they were right. Our industry is acting, well, sort of like grown-ups for a change. Instead of pushing full steam ahead after what was a great year overall, most are adding some caution to their optimism for 2008. So far, the markets are tumultuous, the IPO opening has closed at least temporarily and overall IT spending looks like it will be flat or even down. The Sub-prime mortgage debacle has long reaching U.S. ramifications and the bottom isn't known yet. Bear-Stearns is toast. I must admit, I didn't see that one coming.

So do we plan on more gloom and doom? No. While never an advocate of outrageous spending ahead of any market, the fact is that demand for capacity—in every way, shape, and form—is absolutely going to jump to the highest levels ever this year. As a matter of fact, over the next three years, we'll double the amount of data managed in the corporate world—and in five or six years we'll be up by an order of magnitude. The growth rates over the next 12 months will be higher than in 2001, as a comparison. In that recession, IT spending got flat or decreased. Likewise, IT headcount was flat or decreased, but despite that, data growth continued unabated. IT pros simply had to get better at dealing with their operations—and they did. They squeezed more utilization out of what they had and "managed" versus "just buying more"—maybe for the first time in decades. Even while many vendors took hits, data growth didn't.

This year we'll see higher than average data growth rates because of the new era of "Internet Computing and Data in the Cloud"—Web 2.0 meets the commercial enterprise. That, combined with economic caution, should lead to another round of IT professionals "poking their heads up" and looking around at new and better ways to address these new (and existing) issues—which is exactly what happened between 2001-2005. The result, then, was that more up-and-coming companies were able to grab a market foothold than at any other time prior. We saw some big IPOs and big acquisitions—but mostly we saw "old school" customers rebuke the incumbent and take a shot on an emerging player with a better solution to a current problem. Will that happen again this time? I think so.

In the last recession, the incumbents were too fat, dumb and happy to react quickly or properly, as a general rule. This time, they won't be so slow. If we had "do-overs," one could believe that Riverbed, Data Domain, 3Par, Equallogic, etc., would have been bought or crushed early on. Either way, it would have been a heck of a lot cheaper than dealing with them now. This year we're going to be talking about the requirements of Infrastructure 2.0—caused by the attributes associated with data created in the Web 2.0 world. That means scale-out capabilities are going to become the thing. Self-managing, self-tuning, dynamic expansion and a cost structure based on entirely new criteria will rule the next 5 years—starting in 2008.

The difference in this new era/economic downturn is that the incumbents aren't going to sit on the sidelines and do nothing about it. It remains to be seen just when they actively get into the game (you could argue that Dell and IBM already have with their recent acquisitions), and whether they lead or simply follow. It's hard to tell a customer to stop giving you $100 because you have a better option for them for $25.

No matter what, the world is changing, and this change is happening much faster than past changes—this one is going to be violent and potentially unforgiving. The good news is this new era, like the previous two (the transactional era and distributed era), will ultimately be accretive and not combative. Just as the mainframe/transactional era didn't die when the distributed era came around (it has grown at a 26 CAGR from a capacity perspective since 1960), neither will it die in the Internet computing era. And like the previous eras, the new era will dwarf the previous, as the vast majority of new data created and managed in the commercial world will quickly become born of this era.

So what does it mean for you and me? I'm hoping (and planning) that history will repeat itself. When the incumbent analyst firms dealt with the recession by firing talent to cut costs, little ESG hired. When others offered less value, we invested in bringing more to the table. Those investments may seem contrarian, but our growth over the last 8 years has almost been perfectly linear. Why? Because being small, and private, we don't gauge our prognosis by our cost structure, and fortunately don't have to deal with shortsighted 90 day windows. We continue to invest in people and processes because that model has proven effective in good times—and even more effective in tight times. If you suck and a recession hits, you tend to get squeezed. If you add inarguable value, you tend to get a bigger piece of the pie – whether you're an IT guy or a vendor. When times get tight, the smart get called on. Of course this isn't always the way, as sometimes when times get tight, morons prevail. If you fire all the smart, expensive people, imagine how much money you'll save!!

In 2001 IT tightened their wallets and we saw more emerging vendors snag some share than ever before. This time the incumbents' see it coming, and probably won't let it happen quiet so easily. IT may stop spending, but industry won't be able too. It will be interesting to see who takes advantage.

Information Privacy and the Generation Gap

 

Each generation has its "thing" that it grew up believing that causes consternation when the next generation doesn't believe. My dad had short hair, still maintains a self-assigned brutal work ethic, and has an unnerving self-created need to make sure he is the one taking care of all those around him. Those qualities, which I have inherited, are good. His distrust of "machines" and unwillingness to challenge authority are generational traits I, nor most of my generation, have inherited. My kids, however, take it to a whole new level.

Our parents didn't worry about giving their social security number out to anyone who asked because their generation wasn't readily caught up in identify theft, that was my generations gift to mankind. Technology usage in our generation created entire new industries, and entire new social, economic, and criminal opportunities and challenges. Privacy is one that pretty clearly shows the generation gaps, and may end up being the poster child of our generation and all that we stand for. It very well may be the biggest generational issue since the Vietnam war – only this time we have three generations involved instead of two. (I mean that in terms of highlighting an issue with significant generational viewpoint differences only.)

Our parents adopted technology begrudgingly, as a generation as a whole, one could argue that overall adoption in their ranks remains low. Our generation adopted and continues to adopt new technologies as fast as we can absorb – us being those mid-lifers with jobs and "real" issues to contend with. After all, we aren't just kids who can spend all day futzing around with the latest gizmo, web site, or internet language that pops up. We are serious people.

Which gets me to the point; we created the privacy issues at hand. We decided it was better to keep everything about everyone than to not keep it, which left the door open for bad things to happen. The governments of the world tend to be made up of the previous generation, no more hip to being in front of current generation issues than the generation before them was. As we get older, we get more comfortable with the way we've always done things – true in IT, true in life. So the lawmakers lag the issues – until we reach some sort of social crossroad, which is where we are.

I don't want people stealing my stuff. It is inconvenient at best; it is a serious problem at worst. Our previous generation businesses aren't equipped to deal with it any better than our lawmakers for the most part. Worse, when they act they tend to violently overreact or address the wrong issues, as they don't understand or want to understand current generational issues. By the time they have 400 hearings on a subject, the issue will have changed.

My dad doesn't want anyone knowing anything about him, whereas it would make my life easier if those I wanted to know things about me did – but those folks haven't proven they can be trusted yet. My kids couldn't care who knows what, because kids are stupid. They don't care how much Google knows about them, they just want the shiny new gizmo. We'll end up legislating something that no one wants.

It would be easier if the people I do business with, from the phone company to the cable company to the ticket broker to the grocery store were able to help me make choices based on what I really want. I get 4000 channels, and spend most of my time surfing to find things. It would be better if the cable guys said "we know you only ever watch these 5 channels on these 6 subjects, so we're only going to list the things that you may deem relevant first. That would be useful. The problem is that I don't want them telling anyone else anything about me. I would opt in – the key term here – to such a system if I knew that while they may share my data, it (legally) had to remain completely anonymous. I don't mind if advertisers know that I am 44, watch the History channel, have 87 kids, an X-wife, a dog and a cat. That way, I should reduce the number of irrelevant commercials sent to me. I don't want them to ever store, keep, or pass along my name, my address, or even my street name, clearly none of my credit card or like information. I'll happily settle for the issue of inputting my credit card and address every time I buy something knowing that information couldn't be saved. Unfortunately what would really happen today is the cable company would give or sell my information to anyone who wanted it, and I end up getting spammed, junk mailed, and telemarketed to death. That isn't cool. That sucks. I got yet another call from the Republican National Committee telemarketing machine this morning (letting me know that the Chairman personally requested this person reach out to me, which is better than the invitation to the White House for dinner one they used to do) even though I am on the "do not call list", have specifically told them to remove me numerous times, and refuse to give them a dime because of it. It's not only annoying, it costs them money. I'm going to trust our government to do the right thing on privacy regulations when they can't even do the right thing in this regard?

Information is useful, but privacy (and common sense) are on a collision course when it comes to a typical businesses use of that information. Because companies still tend to operate under the past generations business logic, combined with the next generation's ability to create "new" marketing, my generation is getting squeezed from being able to reap the rewards of all the advancements we've created. Business will eventually figure out that I will give them more insight into me and my world than they could ever get if they just ask, and act transparently and ethically when it comes to how they treat the trust I've bestowed upon them. It is in my best interest to give them information that they can use to make my life easier and more efficient. They screw themselves when they take the quick buck because unlike my Dad's generation – I still have a memory. The silliest thing is that it is simply bad business – who wouldn't (at least in my generation) buy from someone who pounded the message out that "WE WILL NEVER KEEP OR GIVE ANY DATA ABOUT YOU WITHOUT YOUR EXPRESS CONSENT - AND EVEN THEN WE WILL ONLY DO SO UNDER COMPLETE ANONYMITY"? The new world is about connections to each other, and about trust. You dinosaurs clinging to arcane business models based on the notion that you will own and control the information without ramification (even without laws) are perfect stock shorts. Thinking you can hide from the truth is a fools' concept today, and will (hopefully) kill you tomorrow.

Our kids may end up causing the final uproar on the subject. They will adopt the new technology as fast as it comes, and don't you think for a minute that they will even think twice when Google (or whoever) offers them a free phone with free texting (they don't actually know how to speak on the phone, but they have thumbs of glory). Even better, all they have to do is tell that company a little bit about themselves, maybe answer a few questions every now and then, and in exchange that company will keep track of everywhere they go and everything they do – in the real world as well as the virtual world. In five years they will know more about an entire generation – by individual – than anyone has ever known. J. Edgar Hoover would be proud. The issue isn't so much the bare naked exposure, but what will Google (or whomever) do with that information? I'd love to think their motives will be pure, but without tight legal control, the worst will happen. By the time our kids are old enough to care about such things, it will be too late. Today it's a pain in the ass mostly, but make no mistake, we have enabled big brother and we might want to consider the consequences before our kids welcome him in.

My dad may never be comfortable enough to divulge his secrets (although he will continue to deny the IRS knows more about him than anyone) to the cable company, but I am. My kids will sell themselves (and me) out without blinking. It is our generation's responsibility to tame the beast we've created – and to make the issue one about allowing no one to ever do anything with our information that isn't entirely anonymous, and without our specific opt-in consent. Assumed opt-in is crap. You don't read the license agreement, so you think our kids will? Business needs to learn now that you have a direct path to the consumer – no matter where in the world they are – and they have a direct path back to you. It's Web 2.0 baby – but that doesn't mean your crappy marketing concepts and quick hit money moves are going to be tolerated. You also need to recognize that it's just stupid – that if you don't build an absolute layer of trust with me that I will not only dump you in a second, I'll tell everyone about it. As soon as someone is able to filter the blogosphere and search to the individual, you might as well plan your funeral. Your ability to control the consumer's sphere of influence is dying. This is one of those times where doing the right thing is just plain good business, and doing the wrong thing is going to eventually accelerate your demise.

I just spent hours going thru some online service trying to opt out of the 987 catalogs I receive every day. I never buy from a catalog – I buy online, which apparently gives real or tacit approval to send me catalogs. Outside of Victoria's Secret, I don't want any – even from the companies I like and will continue to buy from – though I will stop buying from anyone who ignores my request. I love companies who market their "green" message and yet send me 83 catalogs a month (or those who use that fake popcorn packing materials, I really hate that stuff as it makes a freakin' mess, and also believe it will never actually decompose).

So I'm not sure of the correct process but I am sure of the answer. If anyone is smart enough to know how to get this message to our legislators by all means chime in. Maybe getting simple privacy legislation passed before we die can be our generations' legacy.

Let the Sun Shine

I'm starting to feel like Alice in Wonderland more and more. I can't be the only one to find stuff like this weird. The whole "dogs sleeping with cats" thing has to be right around the corner. Here are the contents of a recent email received from Sun's Analyst Relations department.

"Last September we announced that Sun was becoming a Windows Server OEM, after years of Sun-Microsoft collaboration on interoperability in key areas. Today we're announcing two key milestones in this ongoing alliance:

The official opening of the Sun/Microsoft Interoperability Center on Microsoft's Redmond campus, and

The availability of the Sun Infrastructure Solution for Microsoft Exchange Server 2007, which is designed to help enterprise customers better manage explosive email growth and fully realize the benefits of Exchange Server 2007.

The Sun/Microsoft Interoperability Center serves as a working lab for tuning, benchmarking and interoperability solutions creation. It will be designed to include:

A demonstration and testing area for Windows on Sun x64 systems and storage;

A lab space for customer proofs-of-concept focused on Windows Server 2008 on Sun x64 systems and storage;

The ability to certify Java Platform Enterprise Edition (Java EE) and Java Platform Standard Edition (Java SE), including Sun's Java Runtime Environment (JRE(TM)) software for and with Microsoft operating environments and applications;

Joint work to help enable cross-platform server virtualization, including Windows Hyper-V and Sun(TM) xVM software;

Cross-company collaboration to allow Sun Ray(TM) thin client software to provide a first-rate virtual desktop for the Windows environment and support Windows technologies.

We've included the complete press release below for your reading convenience. We've also posted a blog entry exploring the benefits of these new developments on the Sun AR blog at www.sun.com/ar."

 

Maybe I'm just getting old, but I witnessed Scott McNealy "doing my PowerPoint presentation" – which meant he used a grease pen on a transparency display. The mockery was DNA deep. This would have him turning over in his grave, if he were dead. I'm waiting for the Sun announcement declaring their intent to tell all customers to buy AIX systems from now on……

Trip Report: Back in Amsterdam

Not only reaffirm my previous commentary regarding the height of the Dutch population, I can comfortably now report that I seem to have understated it. While 5'7" is widely accepted as the statistical average height of males universally (according to me), I now believe that the Dutch have completely skewed the results with their outrageous length. Therefore, by tossing out the Dutch from the research process, the new average height of the global male population is 5'5" – thus making me tall.

I went across the pond, with a cold and a less than positive attitude towards my 50 hour trip, to speak at a conference put on by Dutch IT VAR ISIT – which is cleverly pronounced "eye sight". ISIT is interesting in that they are an example of a European trend – they were acquired by a Telco (Telindus who is owned by Belgacom) 9 months ago. Regional/Country specific telecom companies have been merging with each other and adding higher touch IT services and gear resellers in order to maintain relevance inside customers and to fend off the larger multi-nationals. The European market acceptance for such products and services is dramatically different that the U.S. market – customers not only are willing to buy core IT gear, professional services, and managed services from their Telco, they are starting to insist on it.

In the U.S. major Telco behemoths have dabbled in and out of core data center offerings, but have been relegated back to providing bandwidth and phone services – mostly because they really haven't had any legitimate capabilities. No major enterprise would even consider outsourcing any significant IT function to their Telco – since the Telco's don't have anyone that speaks the language of IT, it's sort of hard to garner that trust factor. U.S. Telco's have started to make hay in the small commercial market, offering services such as backup or simple capacity, but (smartly) tend to do so by front-ending someone else's service offering. Verizon offers small biz and consumers services and capacity from Digi-Data, for example. I wonder how long it will take before U.S. Telco's start to become active buyers in this space – it sure seems like they would have the upper hand if they only invested in really getting into the space, and really building competencies (or buying them). In this the "cloud" based data storage era it sure seems like the guy who owns all of the routes to the sky would have a pretty sizeable advantage.

The ISIT conference had 350 IT professionals in attendance. That's a lot. This is about the 8^th time I've participated in a Dutch IT event, and they always have a ton of real IT folks. Better yet, they all tend to be formally dressed – so my new contrarian thing of wearing suits and ties didn't play. I looked like a conformist.

The U.S. democratic primary was a major topic of discussion. The Dutch are fascinated with the whole thing. They follow U.S. politics more than most U.S. citizens. They seem to have some difficulty not bursting out in laughter when explaining the primary process. By the time you've been through the non-primary primaries, such as Florida, the generic "it doesn't really matter if you win the popular vote" delegate system, and the "it really doesn't matter what you think" super-delegate discussion; you can almost hear the "these people are insane" comments locked in their heads. They are too polite to say it, of course, but you just know it's there. Inevitably the discussion turns to Texas, and that's where any semblance of logic (or empathy) disappears. No one can explain the Texas primarycaucus circus. I tried a few times but recognized I was kidding myself, I have no idea how it really works. Eventually I told people that if it comes down to a tie, each candidate picks a gun and they draw at 50 paces. At least 8 people believed that one. Silly Americans. Feeling the need to defend my country's goofiness, the only retort I could come up with was "hey, it's no dumber than Cricket", but the Dutch don't seem to play much Cricket.

Europeans open the bar at these events around 3pm, which is 9AM Boston time for those of you paying attention. Talking about IT and politics is definitely more interesting once the beer starts flowing.

Schiphol, Amsterdam's airport, is hyper-modernized. There is a retail Rolex dealer next to a café. The Europeans seem to be enjoying the fact that the exchange rate is roughly one Euro = $11,000. Thank god the Chinese are keeping the RMB artificially undervalued or there would be no place left on earth where $100 is worth anything. The cab ride to my hotel was slightly larger than my mortgage payment.

One modern, yet dumb, thing they have at Schiphol are "stairless" escalators. They are moving walkways that go up a floor or down a floor. They are easier to get on and off – certainly for kids. (Lily will stop 4,000 people rushing to catch their plane and stare at the escalator for 8 minutes before timing her leap – on and off – causing major pile ups occasionally). The design flaw is that some people actually carry-on baggage, so when heading down a floor the fact that my baggage weighs about 400lbs caused me to accelerate to about 40 miles per hour. Had anyone been in front of me they would have been crushed.

97% of the Dutch still smoke, and yes, you can still smoke inside a restaurant. Even the French don't allow that any more.

The evening prior to the event I was hosted at a fine dinner by Telilndus MD Kris Verheye (not tall, but Belgian), NetApp country manager Theo van Teylingen (ridiculously tall) and ISIT VP of Sales Tony Archidona. Tony is one of those lucky gene guys. A Spaniard raised in Holland, he looks like a cross between Enrique Iglesias and a young Mel Gibson. I was glad my wife wasn't with me. After dinner Kris did the responsible thing, and went home. Tony, a young man of about 30 or so, felt compelled to attempt to drag me (and Theo) to one of Amsterdam's many interesting evening attractions. Being 80, and jet lagged, I convinced him that a nightcap at a pub near my hotel was all I could handle. We entered a classic old (looking – apparently everything in Amsterdam is new, unlike the rest of Europe) pub. The enormous linebacker bartender drew up some beer. Within four minutes, Tony was behind the bar blasting Elvis. Within seconds, both Tony and Theo were singing nearly flawless renditions of the king. Two guys with Dutch accents that would make Austin Powers proud suddenly sounded more American than me. Theo, it turns out, was also really good. It was a bit surreal. It's not every day you see a giant Dutchman flawlessly belting out Suspicious Minds.

It will be interesting to hear the reaction to my presentation. I've been on this "3 Era's of Commercial Computing" kick, effectively proving (at least to me) that A: new generational data in this, the Internet Computing era, will be accretive to the previous era's, as data (and the market itself) was in the Distributed Computing era was to the Transactional Computing era. B: that while not as stark a contrast as block is to file, new era data has different characteristics (bigger files, and way more of them), different creation attributes (they come from everywhere, not just your employees anymore), and have even more nebulous value, and C: if you are struggling keeping up today, you are going to get buried in the near future – and the only way out is to stop trying to retrofit data conditions of today into IT processes and architectures developed in 1970. I'm right, of course, but wonder how that message was received by my tall friends. I'll let you know.

I attended the post event dinner and accepted a ride from a nice young sales guy to my hotel at the airport that the company had nicely arranged for me. Unfortunately James, who has lived in Amsterdam for 14 years (a Welsh lad, it was funny to converse with him in what sounded to me like a typical English accent ((no offense, I'm American)) and then to watch him seamlessly break into fluent Dutch. I have no such skills.) James couldn't find the hotel. It was late, I was on a very early flight, and James had had enough of driving aimlessly around, so he dropped me in the middle of Schiphol with an "it's got to be right around here somewhere" and took off. It was snowing. I asked a cab driver where it was. He had no idea. When a professional cab driver has no idea where your hotel is, a seasoned traveler such as me knows better than to tempt fate. Instead, I saw a big Sheraton sign and headed that way. I got to the counter (it was approximately midnight), said hello in a very raspy voice to the giant man at the front desk, told him I was a Platinum SPG guy and begged for a room. He typed a lot, told me they were oversold, and then typed a lot more. "I can get you only one room" he said. "Great, I only need one room" I replied (although with my cold, raspy sore throat, alcohol level, second hand smoke and general exhaustion he probably heard something that sounded like the noise the creature from Alien made). "It is a suite" he said. "Great" I tried to say audibly, but gave up and tossed a credit card at him. I only ever get suites when I'm alone, and all I want to do is pass out. I never get one when the wife and I are staying somewhere for a few days and can enjoy the fact that we don't have to share a bathroom.

Room 854. Upon exiting the elevator and looking for which direction to go, I started trekking down a hallway that was entirely reminiscent of a scene from The Shining (or maybe Alice in Wonderland). There were at least three thousand rooms on this floor. I walked for miles it seemed, and as I looked up it was like the Monty Python and the Holy Grail scene where Lancelot is charging the castle but never gets any closer. Finally it hit me – I was in the room at the very end of the hall – the only room on the floor facing the length of the hallway and the only one with a double door.

Apparently the King of Saudi Arabia and other such royalty must stay in this room. It had a foyer. Had I the time, I would have spent an hour or so finding all the rooms. Between the front door and the first bedroom I found there were 3 bathrooms. I estimate that the room was at least 2000 square feet. There may have been other people staying there as well, but it was so big I never ran into them. I'm fairly sure it had a staff waiting for me to demand something. Six hours later I woke, showered, dressed, and almost killed myself on the stairless escalator.