Too Much Doom and Gloom?

Cisco, Nortel, Riverbed, Isilon, Symantec, and LSI all beat their Wall St. numbers last quarter. LSI's CEO Abhi Talwalkar stated, "Stronger than expected sales of our SAS and SAN silicon partially offset the effects of normal seasonality while the longer-term benefits of our strategic steps and sharp focus on storage and networking continued to grow." LSI supplies those who supply IT.

Sun's numbers, of course, were exactly opposite, but they tend to be contrarian in general. Their numbers were "stunningly bad" according to the young ESGer who tracks them.

It is clear to me that the buying spree is over, but that companies continue to invest into technologies required to keep them competitive and even accelerate their leads. Smart companies spend in downturns – they just spend smarter.

I'm ok with people being smarter as a general rule. If budgets continue to get tight it forces better use of those budgets or exposes that we were in processes of solving problems that perhaps didn't need to be solved. It's like spending $14 million on a conduit system for the Big Dig so cell phone companies could put their gear into it – only to find out those companies would rather just run lines the old fashioned way – or perhaps like giving Matt Ryan a $32 Million dollar guaranteed salary (the highest ever) before he ever takes a professional snap as a football player simply because his agent (salesman) made the ownership somehow panic that without giving Matt the dough they would somehow end up repeating their Michael Vick fiasco. The point is, people who have way too much money to spend on way too insignificant issues may be a salespersons' best pal, but it doesn't tend to drive sustainable business behavior.

What's the number one reason IT buyers pick one vendor/solution over another when scrutiny is high? It's marketing and psychology. Pressure mounts when you're under the microscope, so buyers make what appears to be the most practical choice to have the most possible impact on the most visible elements of a problem. If the answer is "I have no money" like in 2001, then cheap wins. If the answer is "I'm not going to be an idiot" as it appears to be in 2008, then the winners are proving to be those with the clearest articulation of value. They market clearly and concisely into a known problem area. Folks getting squeezed don't buy based on brand recognition or high-level abstract campaigns if they have tactical problems to solve.

The moral for you all is simple – say what you mean and mean what you say – all the rest is noise and buyers can't afford the time or effort to decipher whether or not you might have a solution to their problem based on the fact that you are a staunch proponent of free love and are firmly against dumping toxic nuclear waste behind school houses.

Social Nutjobbing

First, Jay Kidd is a good blogger, but he's a marketing guy so I'd expect nothing less. Second, the point he is making – while seemingly somewhat self-serving, is realistic. We spend way too much time trying to come up with catchy phrases to make our dumbed down efforts seem hipper.

Comcast, clearly reacting to ill-understood pressure, bought "social networking pioneer" Plaxo. Plaxo is a social networking pioneer just like Jehovah Witnesses are welcomed ice-breakers. Plaxo is a good idea – keep your contact list online and have it be automatically (almost) updated. The problem is they didn't stop there – they decided that once they had enough members they were a social network. They aren't.

A social network is one in which I decide to whom I wish to reveal myself (so to speak) and under what conditions. The social networks of the business world today are the modern manifestation of everything we've hated about consumer marketing of old, except now it's spam instead of telemarketers. I have received 11 billion Linked-In requests, to which I'm flattered. I ignored 99% of them, until one day I decided to see what it was all about. That was a mistake. There is little to no value to me in most social networks today – I suppose if I had nothing to do or knew I was in a perpetual state of requiring another job that might be different, but as it sits, being pestered online is no more fun than being pestered anywhere else.

Eventually there will be legitimate business networks that provide real value. People like and leverage Amazon because of user ratings. Amazon blows that goodwill (with me anyhow) by sending me 198 emails every day. I don't want the emails. If they gave me user ratings and left me alone, it would have value. When we grow up enough to apply true social phenomena to technological capabilities we have the chance to make really big changes in the way business is done – and that's going to be interesting. Along the way this step back to "boiler room" tactics thinly guised as "social" is annoying.

The real value of all of this to date is in the Web 2.0 delivery of Web 1.0 capabilities – it's letting me buy stuff online and more importantly, it's letting me store stuff online. The business implications thus far have been around monetizing eyeballs (Google) or finding a new usage/consumption model for infrastructure (cloud computing/storage) by enabling the consumer to create and store where and when they want. Today our kids take videos on their phones and immediately email them to their pals or post them on MySpace. Why hasn't Verizon offered an adjunct service to allow them to put their video's or pictures on the Verizon site instead of simply routing them to someone else? Verizon best learn to give those types of things away, less they get Googled up.

Thus far the economics of all of this are based on giving away the ability to create piles and piles of data – all of it file – and even giving away the ability to store and access it – in exchange for new, different monetization schemes. I'm more than fine with that.

What will happen is that traditional business not currently under attack by others attempting to pull the go-to-market rug out from under them will continue to feel like all this social networking/web 2.0 stuff is what it has mostly been – noise from the kids. The really big money and really big impact is going to happen when business 1.0 figures out that world 2.0 isn't going to operate old school anymore – and then they will panic. E-Trade was no threat at all to traditional Wall St. brokerage houses. No one would ever do that! Think again my friends. Just because we might have to wait for Web 3.5 before real business making real money becomes a real thing doesn't mean you should blindly dismiss what's going on as a fad. Life is in the clouds.

Spam Spam Spam Spam….

It's funny when it's Monty Python, but a massive pain in the butt in real life. I received 266 Spam emails yesterday. One day – 266. The problem isn't getting better, it's getting worse. I won't debate the "why does anyone take the time to create Spam?" issues – there are total A*holes in the world as we know. Tip: Don't respond to the ridiculous offers you get in your Spam and maybe they will stop sending them!

Anyway, I was ok with an odd little homegrown package build specifically for Notes (yes, I'm still running notes, and no, I don't know why) that worked pretty well. I thought it was a pretty easy to use white list/blacklist tool – if you sent me an email and weren't in my contacts folder (or often even if you were), you received a notice that told you to copy a long string and stick it in the subject line of your reply. Amazingly, I figure half of the people screwed up that simple instruction. Therefore, while the filter worked for machine generated noise, it also couldn't adapt to human moronity, which meant I always had a bunch of legitimate emails lost in the piles of Male Enhancement and downright filthy other offers. Sorry if I have blown your email off – I swear it was the system.

Our other guys finally started getting hammered with Spam as well so we moved to Postini as a quick fix. It works pretty well comparatively, so many complaints stopped. As a user I get a Postini email (which seems to get trapped, ironically enough, somewhere because I only see the email on my Blackberry – but not in my inbox) that gives me a link I can click to go to their site, log in, and peruse the spam of the day (which I don't do, because it doesn't show up in my Inbox). Like most users that turns out to be a hassle, so I don't do it. I've occasionally logged in to Postini when I have the time or inclination and can remember my password, but now the volume is so big it's pointless.

Then, as pure luck would have it, I found a nice Irish lad in my office last week from Spam Titan. The pitch was simple – we trap all your spam but make it easy for an individual user to administer their own lives. The system sends an email with the Spam embedded in it – so there isn't a need to go anywhere else. You can blacklist, white list, or deliver the email to your inbox in a microsecond. It has a bunch of other cool corporate features as well, but I don't even really care – it lets me control my own requirements without bugging our IT guys and its idiot proof (or "Me" proof, if you will). Best of all, it is grossly underpriced - $550 bucks for 100 users, and $4400 for 5000. That's ridiculous. I'll be showing them how to A: provide this offering to smaller groups and B: price to value and jack the prices higher for corporate accounts – so go get it while you can. http://www.spamtitan.com

Quick takes....

HP buying EDS is brilliant.  HP needs to up the game and get into high-end corporate board rooms, and at the same time extend its global high-end service capabilities.  Problem solved.  IBM has run around all alone as a systems player with those relationships.  Interesting to watch as they are very different cultures. 

IBM has been squishing HP and most every other IT vendor in the "green" play.  They figured out that chasing the IT guy isn't the right way - since IT appears well disconnected from the Sr. Management of those companies.  By aligning IT moves with actual corporate objectives, IBM has been taking advantage globally.  EDS gives HP the ability to have those conversations.

Yahoo telling Microsoft to pound sand was dumb.  They won't recover, and the only winner is Google.  I suspect you'll see the management and board tossed while the vultures wait for the inevitable collapse.  There is a chance the next regime will go back to Mr. Ballmer with their hats in their hands, in which case the deal will go down at least 20% below Microsoft's offer, further irritating stock holders, but no way does Ballmer not make them squirm - even though Microsoft needs Yahoo more than Yahoo needs Microsoft long term.  Google is taking all the money from the next generation.  Microsoft is taking money from me.

VMware buys Yahoo in 8 months, EMC goes private.  Stuff enterprise search capabilities into VMware and they have the legitimate chance to become the data center operating system. 

Having said that, VDI is the next virtualization war - and it will make the server virtualization market look tiny.  There are 100 times more desktop machines than servers in the corporate world - at 100 times the power, cooling, problems, etc.  Those are going away, and the corporate benefits are staggering when they do.  Think of the money some will make when we collapse 200,000,000 desktop drives down to 2,000,000 or less.  Short term boost for Seagate, long term problem.  Same for Intel. 

Bad scenes in Burma and China.  Pray for them.

Service as a Service – My new SaaS play….

Why not? We have Software as a Service, Platforms as a Service, and a host of others. How about Service as a Software? That's what all the backup guys are really offering – not Software as a Service.

This "asS" acronym might be my final undoing. Lemmings, you all are. Why can't we simply say what we do? Why do we feel compelled to jump on any passing bandwagon in some pathetic attempt to reap rewards that invariably end up causing customers confusion to the point of giving up and taking a job mowing lawns?

Mozy is a backup service. No one in their right mind considers it "Software" – it's backup. Connected (Iron Mountain) sells me services – they back my stuff up, and give it back when I need it. It ain't software. If I wanted software, I'd buy it. The whole point is I don't want software - I don't even necessarily want a service – I want backup.

Do we call online banking BaaS? Retail shopping online RaaS? Is a train really Transportation as a Service?

5 years ago if you used the word service you were ridiculed. You couldn't fund a service company to save your life. GlassHouse might be the biggest "in your face" to the establishment in twenty years. They were told they were nuts to even think about a service play, that they could never raise a dime, and they could never have a legitimate company. The establishment was full of crap (as a service, which would be CaaS).

Now services are way back in vogue. So what do we do, we ruin them by grabbing the latest moniker du jour and shoving it on top of our ill advised product. Can a tow truck company use Jack as a Service – or Jack aaS?

I am totally fine with the "aaS" descriptor and even the concept used properly. "aaS" is a way to enable different consumption models for technology and products for customers, and therefore expand the reachable markets for these technologies and products. I think that's great.

Coming up with new out of the box thinking around go to market models that enable us to put our value into more markets is great. Creating new unique ways for customers to do business with us is fantastic. "aaS" in the pure sense – the Salesforce.com model – is exactly the right play. They knew people failed in their CRM endeavors most of the time. They knew it failed because the promise of CRM was littered with a minefield of noisy, competitive offerings that ended up requiring a huge time and expertise investment on the part of the customer – who had better things to do. Salesforce took away the biggest obstacles to consumer consumption – they offered the stuff as a service. By doing so they took away that whole "IT problem", took away the capital cost/budget problem, and also took away the complexity by only giving people what they actually needed versus all the marvelous bells and whistles they might have normally jammed into their product in order to differentiate it.

It ain't about the moniker people; it's about the business model. Do business the way your customer wants to and good things happen. That's $aa$.