Month: April 2011

Microsoft reported its numbers, and the results are interesting for what they say about the computer market overall.  The entertainment side was very strong, thanks to Kinect, but Windows licenses were lower and this trend worried investors.  In the middle, the server and Office franchises both delivered strong results.  So what does this mean?  Let’s discount Kinect; it’s early in the roll-out and competition is still sparse.  We’ll instead focus on the rest.

PCs are not seeing the growth they once did, and that of course reduces the new-system licenses for Windows.  Some of the slowing is due to tablet encroachment, but most is likely due to people just not upgrading as often.  Windows 7 drove a spate of refreshes, and that’s over.  I don’t think there’s much of significance in this particular data point.

What’s more interesting is that the server and Office portfolios did very well.  The media has Linux running rampant in the data center and cloud productivity tools kicking Office’s butt.  The truth is apparently not quite that dramatic.  In fact, both Microsoft’s server sales and its Office sales were well ahead of IT spending trends overall.  I’ve noted for quite some time that Google Docs isn’t equivalent to Office, and that’s for now enough to keep the Faithful in line, Office-wise.  I do have to admit surprise at the server numbers; 11% growth is twice the industry rate.  I think a decent chunk of this is SMB spending; SMBs adopt Linux at half the rate of enterprises.

Another earnings statement that speaks volumes is that of RIM.  It’s not a surprise that RIM disappointed; they’ve been forced to accept much lower margins and they’ve lost market share to every smartphone option out there.  This is a classic story of how not being innovative will hurt you, perhaps fatally.  The iPhone caught everyone by surprise, to be sure, but it should have generated a fast and insightful feature-differentiated response.  There was at least a year when RIM could have cemented its franchise with the enterprise and then built into the consumer space.  They worried instead about first trying to enter the consumer market, and in that period Apple made the iPhone more competitive in the enterprise.  Then we had the iPad, which even in its first release was light-years ahead of the PlayBook.  Moral:  Differentiate or die.

 

We’ve got more signs of change from the earnings announcements, and as always change is good for some and bad for others.  There does seem a bit of a bias toward bad-ness, though.

Nokia is going to shift Symbian support to Accenture and cut 4000 jobs.  The move illustrates that there are significant challenges for Nokia in sustaining Symbian but it’s also virtually impossible for the company to drop it because of its broad commitment to the OS in its handset line.  That Nokia got itself into this mess is an illustration of the problems that EU players have faced in coping with the pace of the US-driven wireless market.  Consumerism is way too demand-side for a company that’s built itself on understanding only the evolution of infrastructure from the supply end.

That doesn’t mean everyone in Europe is in trouble, though.  Ericsson’s profit nearly tripled, and this is a pretty clear indicator that wireless presence is the driver of vendor success in the telecom space.  This gain, I’d note, came after a disappointing Sony Ericsson earnings call.  The Ericsson news may bode well (even better) for Alcatel-Lucent, who also has very strong wireless credentials.  That may in turn mean challenges for Cisco, Juniper, and other telco equipment players who lack any position in the RAN and lack strong credentials in wireless overall (Cisco’s buy of Starent notwithstanding).

Speaking of Alcatel-Lucent, they announced the availability of their OpenPlug tools to all developers free of charge.  The move is an interesting one because it demonstrates that there are two visions of the service layer out there.  The app programs of the phone/tablet players prove that an active developer community enhances a product’s sales, and that would presumably carry over into services.  But a viable app community is normally generated by the expectation of a big payday for developers, which implies a large installed base and active marketing support.  The Alcatel-Lucent OpenPlug strategy is almost certainly designed to pull through the Open API program and carrier-hosted (or Alcatel-Lucent-hosted) services.  Right now, developers have little expectation of winning the lottery on that bet.  Certainly they’re less concerned about the size of the opportunity if the cost of entry (in tool terms at least) is zero, but whether this move will be enough to bring a large number of developers to the Alcatel-Lucent table is yet to be seen.

Another piece of news with significant potential implications was the disappointing results from Akamai, more for guidance than for current performance.  The Street recognizes that Akamai is probably the highest-priced and most vulnerable player in the CDN space, but it’s also starting to see that CDNs overall are going to be impacted (perhaps crushed) by the combination of direct telco/cableco entry and the availability of wholesale CDN services (from telcos like Verizon, for example) to content providers/producers.  We’re starting to see that “content” is really two sectors; what you can monetize and what you can’t.  Most of the former is focused on movie and TV media, and that’s something more in control of the players who own the material or the players who already syndicate it in broadcast form.  In any event, the CDN needs of TV-Everywhere-like content are very different from those of traditional CDN-friendly content.

Moving past earnings, the flap on Apple and Google “tracking” users continues.  I understand why people don’t want somebody taking their cyberpresence into a real physical meeting uninvited, so I understand why people are concerned about tracking.  The problem is that many of these same people are checking in on a social network and advertising their location openly, or are running apps that might be doing all manner of LBS-based tracking down below the level of user awareness.  All this points out that things like who you are, where you are, and what you may have rights to are truly personal and that you need to be aware of who know the things and how they’re using them.  I think Apple and Google need to mandate that their developers fully disclose the use of this sort of data—what they do with it and where it goes.  I also think that both companies and other smartphone/tablet OS players need to provide users a way of determining if a given application is accessing that data—it’s obtained through an API so it could be monitored.

In the M&A space, CenturyLink has decided to buy ISP-turned-cloud-provider Savvis, who promptly came out against cloud standards.  There is no question now that the carriers see cloud computing as being critical to them, but there are multiple reasons for that belief and it’s hard to know which is more motivating at this point in time.  The obvious reason is to sell cloud computing as a retail offering, binding it tightly to the network to create more value-add and higher ARPU.  Obvious isn’t only, though.

In the economy, the Fed indicated that it wasn’t changing interest rate policies but did suggest that a “QE3” program of quantitative easing would be unlikely.  Nobody believes that the US could sustain a stimulus strategy indefinitely, and the markets so far are taking the news that some end may be in sight in stride.  Earnings continue to drive stocks, and earnings overall are still decent.

 

We have today a kind of interesting counterpoint between online value and online risk, and also a demonstration that Orwell was right in his famous trio of seeming contradictions.  Sony’s PlayStation network has been hacked and considerable information stolen, and Microsoft and Google are battling over just who has the best online document tools.

Personal productivity tools are among the easiest things to cloudsource because their data integration with other apps is generally explicit.  You produce documents or spreadsheets and you then send them to somebody.  If the production process works well, then the whole process works.  Which is where the Microsoft/Google battle comes in.  Microsoft put up a comparison between its Office 365 cloud implementation and Google’s Docs, focusing on a Word file and how it’s rendered by the two.  Not surprisingly, given that Microsoft picked the document, it shows significant formatting differences.  All docs, apparently, are not equal.

But that’s not the issue, of course.  Word and the other Office tools contain myriads of features that virtually nobody uses, and furthermore even differences in how commonly used features worked might easily be overcome if you simply adapted your work as you developed the document.  It might not translate perfectly to a real version of Word, but if the goal is to support online editing at low/zero cost, that’s not a problem either.

Here’s the dope as I see it.  I’ve personally tested Google’s offerings and other Office alternatives (OpenOffice, AbiWord, etc.) and what I’ve found is that none of the Word alternatives worked consistently even with my own documents.  Worse, the PowerPoint alternatives had even more significant flaws such that virtually every presentation had serious formatting errors.  Spreadsheets were very inconsistent too, with some alternative packages working most of the time and some working none of the time.

But does this mean that cloud productivity tools are doomed?  Hardly.  The collateral truth in my tests is that unless you have a library of stuff that you’re expecting to suddenly move to the cloud productivity world, or unless you have to exchange files with Office users across a broad spectrum of companies, you can develop all sorts of documents that won’t give you a whit of trouble.  Office-to-cloud has issues; cloud-to-Office has few issues.  That means that it would be easy for someone just starting with productivity tools to never go to Office to begin with, and likewise easy for somebody with very basic Office use to migrate to Google’s approach.  I think that’s really Google’s goal to begin with; you’ll have a hard time justifying a shift away from Office for a power user, so focus instead on the legion of casual users whose Office software costs just as much and who’s return on that investment is minimal.

But now Sony enters the picture.  Anything you put online, even when you play a game, can be stolen (Amazon already proved that it could break).  Are the confidential plans, the sales contact lists, the customer data spreadsheets, that you transfer into the cloud safe from hacking?   You could argue that even your own facilities can be hacked (or simply stolen along with a laptop), but a cloud or a big gaming network is a lot more tempting a target.  If somebody hacks a cloud productivity service and gains access to all the data, do we end up with the corporate equivalent of WikiLeaks?

If online productivity tools are good enough, multi-vendor networks never can be—at least according to an event Cisco is pushing today.  The company is taking a tack that any market-share leader pretty much has to take, which is that buying any gear from another player contaminates your infrastructure.  My surveys have shown that any time there’s a clear market leader in a tech product space, buyers get antsy about being held captive to that vendor and try to introduce other vendors to “keep them honest”.  That essentially erodes the value of incumbency, and that’s why a “multi-vendor-is-bad-news” story is logical if you’re the erode-ee.

A more interesting rumor relative to Cisco is that the company is pushing another SMB initiative, this one aimed at creating a retail presence in the SMB product space.  HP, once-partner-and-now-arch-enemy, has shelf-space dominance over Cisco.  While Cisco has been shifting its home/retail products from its Linksys brand to its own brand, it’s still not pushing a full line of SMB equipment through the storefronts.  HP has done more there, simply because of its computing gear.  Worse, HP is said to be readying its own push for retail networking products to leverage its brand.

That brings back yet another angle to Cisco’s “multi-vendor-is-bad” story.  If you are forced to sell edge switches of ten or twenty or fifty ports on retail shelves, you’re admitting to loss of differentiation on everything but price—at least in that space.  What do you then do to prevent erosion to your brand, to keep the “cancer” of multi-vendor from spreading out from the edge and into your bigger enterprise networks?  Cisco cannot surrender the retail network market because it’s going to end up being most of the SMB network market, all of the consumer market, and an increasing chunk of the enterprise market.

Ok, so this is logical.  The question is whether it will work, and there is absolutely no survey evidence that it will.  I’ve never found an enterprise buyer who thought that a “don’t buy multi-vendor” was anything but a cynical ploy, even some who had single-vendor networks.  Weak strategy, poor prospects of success…it all adds up to an action taken under pressure, and that’s bad for Cisco.

 

Barnes & Noble has finally brought out a true (if dated) Android version for their color Nook, which likely makes it the cheapest tablet around.  It’s clear from both the performance and features of the new release and the pronouncements of the company that this isn’t intended to be a general-purpose tablet, but it’s also pretty clear that it presages a price war in the tablet space. That will have profound impacts on everything in the online world.

The Nook could, and likely will, launch a kind of e-reader/tablet price war that inevitably spills over into the broader Android tablet space.  Sony also announced its own pair of tablets, one roughly iPad sized and the other a five-by-five inch fold-screen model, which shows that more and more device players are jumping in, and jumping on Android.  The result of this is likely to mirror the smartphone trends; Android has already taken the lead and isn’t likely to lose it.  That would be bad for Apple because it confronts them with the same problem they had in PCs; a choice to sustain margins and control ARPU by creating a more closed ecosystem costs you market share forever.  That makes you a second-tier player in a market you created.

The other dimension of the tablet market that’s critical is the impact of the tablet on 3G/4G planning, policy, and deployment.  Nobody believes that we’re moving to unlimited-use broadband wireless even now; it’s clear that everyone will do a combination of usage pricing and a usage tier that imposes rate-limiting to constrain video at a certain point.  Even with those accommodations, wireless capacity needs will be much higher as tablets deploy.  That means more backhaul and metro, less wireline access and core.  Most financial analysts are matching our December forecast that wireless will be where growth is, and that operators will constrain wireline spending.  Wireless impacts metro, and primarily Ethernet, as well as (obviously) the radio network.  This could have a very favorable impact on vendors with strong RAN capability matched by support for Ethernet transport/backhaul and mobile/LTE voice elements.

We’re going to reach an equilibrium with content.  A lot of people will use tablets and OTT video to supplement their TV viewing, but that’s where it will stop except for a few users.  And the growing pressure to impose usage pricing in wireline won’t help one bit.  This is why TV Everywhere and multi-screen strategies are so critical.  Ultimately, that suggests that players who have TV broadcast capability and who can create content are the only ones who are truly safe.  Even Netflix faces headwinds.

The cloud is another area where recent news points out the universal tendency to over-hype every development beyond the reach of any possible fulfillment.  Research is now showing that even SMBs aren’t jumping to the cloud as fast as many believed.  Part of the reason is that the hype wave hasn’t really built any level of buyer literacy, and part is that the costs are higher than most SMBs expected and the benefits lower.  My own research shows that SMBs’ own estimates of cloud adoption have been based on the presumption that they’d get Internet-based applications for nothing.  That’s an easy benefit case to make, but not a very plausible one to present as a seller.

A final issue is growing evidence that “entitlements” are more of a problem than we thought.  No, I don’t mean that Social Security or Medicare is less financial stable (how could they be without collapsing?), I mean that we’re also seeing unrealistic assumptions about other pension and retirement health care plans coming under pressure.  Pew estimates that state pension fund deficits have increased by over 25%, and there has already been a political battle to curb the traditionally generous retirement benefits of government workers.  It will be much harder to talk about changes to “public” programs like Social Security while you continue to fund more generous programs for government workers.

All of modern economics is a Ponzi scheme of sorts.  Bubbles in financial instruments clearly are, and so is the politics of benefits.  We’d all like to believe our future is secured at no cost to our present, and in a period of strong growth that may appear to be true.  More players in the classic pyramid scams delays the inevitable.  We could fix the current problems in both economics and deficits/shortfalls by creating financial regulations that forced capital to work in partnership with labor and raw materials to create wealth.  Instead we’ve worked to figure out how to make capital an end unto itself.  That’s inherently the biggest Ponzi scheme of all.

 

Amazon has finally restored the “great majority” of its EC2 customers after a failure on its Elastic Block Storage (EBS) cloud DBMS left websites in limbo.  The outage has already generated more than its share of commentary, and as usual there are more extreme views than useful ones.  Some say that the problem demonstrates that the cloud isn’t reliable, some that it demonstrates that the cloud is perfect.  It demonstrates both, neither, in my view.

What the Amazon problem shows is first that our view of the cloud is simplistic to the point of being dangerous, but that’s true about the popular view of just about everything these days, it seems.  Second, it shows that people aren’t looking deeply enough into cloud computing when they commit to it.  There’s no substitute for knowing what you’re doing.  But third, providing any form of high reliability is always harder when you’ve ceded control to a third party.  Nobody at the enterprise level has any good feel for how EBS might impact reliability; they don’t have it.  Given that, all you can do is to rely on an SLA, and anyone who’s ever looked at a cloud SLA knows that in the end it’s not particularly valuable.

Technology isn’t the only place where we’ve got unresolved problems.  The flap over S&P’s threat to downgrade US debt has pushed the political debate into high gear, which radically lowers the chances of any responsible action.  The US economy slipped in Q1; we’ll know how far later this week, but it’s not likely to have grown much more than 1.5%.  Part of that is high oil prices, part the highly politicized debate over the US deficit and the conviction of voters that nobody will do anything useful.  Wake up, Washington.

 

Two “tech embarrassments” lead the news today, and there’s at least one lesson to be learned from each of them.  Amazon had a cloud outage that disrupted some websites, and both Apple and Google are accused of tracking users with their smartphone technology.

The Amazon outage was apparently related to its distributed RDBMS, though precise causal information may or may not be available eventually.  This has caused a public flap, understandably, because cloud computing is supposed to be a way of improving reliability.  Amazon, in addition, has segmentation strategies that are supposed to add to the availability of the cloud, and the failure is certainly no endorsement for the service in general or the availability enhancements in particular.  Could it be that clouds are over-hyped?  Gee, why would that be a surprise?

The WSJ has reported that both Apple and Google are “tracking” users, meaning that they either are or could report location back to the companies and to developers and others.  There’s the usual threat of an inquiry from Congress here, but there’s also an interesting question; why?  Truth be told, neither Apple nor Google are trying to follow you, they’re just trying to monetize you.  That effort, pursued with perhaps more gusto and less foresight than we’d hope, is really not focused on “you” at all, but the demographic superclass to which you belong.  They want to serve personalized ads to the “merchandisable you” and so they need to know where the “real you” is because that’s a member of the demographic superclass they need to serve ads to.  They’re not thinking “Tom is entering Staples”, but rather “Gray Panther” is entering, and they serve an ad accordingly.

Verizon reported their numbers and demonstrated why voice and legacy is out and FiOS and mobile is in.  They beat AT&T on subscriber ads, something the media links to the iPhone availability.  I’m not so sure, given that AT&T didn’t report any noticeable loss of customers because of their loss of exclusivity.  But at any rate, the numbers also showed that FiOS is picking up strongly and that DSL (limited in speed by the local loop characteristics) is losing ground in its basic form.  That’s significant because it suggests that copper loop may be getting a lot less valuable.

The latter suggests a fundamental issue for the telcos; leveraging their key asset is on the ragged edge of financial whimsy and yet doing FTTH is over the edge for most areas.  That’s another reason to jump into mobile, but it also casts doubt on whether wireline is even a rational long-term business.  Since wireless can’t easily support HDTV broadband to the home, that begs the question of whether telco TV is feasible in some areas of the world, and whether OTT video can really be expected to overcome multichannel broadcast cable and satellite.

Economically, the big news is that consumers are feeling poorly again.  The dip in confidence is attributable to a combination of higher gas prices and political dialogs that are making the future look like a choice between a bunch of lousy options.  Since the gas price issues are, in my view, a result of commodity speculation that could have been stamped out by an honest regulatory policy a decade ago, this puts the whole problem at the feet of the two parties.  And, of course, the voters.

 

There were a lot of happy smiles on the Street yesterday as stocks skyrocketed, and things aren’t looking too shabby today either.  Apple and GE posted better-than-expected numbers and at least for the moment the hope of an earnings-season blowout is overcoming concerns about Eurozone debt, US deficits, and even some uneasy unemployment numbers.

Apple had another great quarter, and with their arresting success comes a possible new threat from a possibly-new business direction.  No, I’m not talking about Apple dominating the smartphone or tablet space—they will almost surely suffer the same longer-term fate in these spaces that they suffered in the PC space.  Apple is a trend-setter, a cream-skimmer in the device market.  As it commoditizes (as all valuable spaces do), Apple loses share to price leaders.  No, the problem isn’t in the appliances, it’s in services.

Apple has been looking at a revamp of its “cloud” or service position.  The basic model that Apple has long applied has been to sell Apple users device-related services (MobileMe, iWork, iTunes, etc)  and to use this add-on model to further raise revenue and (especially) profit.  It’s not at all distant from the old call-forwarding feature model of the RBOCs; you make your money on the add-ons.  To protect this space, Apple recently changed its policy to ban applications that accepted recurring subscription payments; they have to go through Apple’s store.

Apple is also raising a related and possibly even more difficult question, which is whether consumerism is now so dominating technology development and deployment that the business IT processes are also-rans in terms of focus, revenue, and planning.  If most of IT is the consumer, then IT is a series of classical boom-bust cycles.  For any Big Idea there’s a quick surge of revenue and profit followed immediately by a combination of commoditization and competition that kills the opportunity in a short period (about 20% of the total period of a market of this sort presents “opportunity”).

Alcatel-Lucent is, I think, trying to leverage its unequaled asset base to offer operators a way to counter this and other disintermediation threats.  They announced a project with China Mobile to cooperate on a lightRadio-centric mobile ecosystem.  The only concern I have about the deal is that it’s not highlighting any service-layer cooperation, but rather more stuff down in the network itself.  It’s not that I think the network isn’t valuable, but that the real differentiation has to come in features that are hosted in a higher layer and that exploit value uncovered below.  Until we have the hosting and exploiting part under control, developing other stuff isn’t going to pay the bills.

Tech earnings are demonstrating again that the global economy is recovering, and also demonstrating some of the dynamics within the tech market.  Yesterday, IBM, Intel, and Juniper reported, and there’s something to learn from them all.

IBM revenues overall were up 8% and earnings up 10%, and the IT giant raised its forecast for the year.  What was strongest were the platforms (mainframe revenues were up 41%!) and middleware (up 16%).  Services were up only 6%, which was also the software segment’s gain rate.  What’s interesting about this is that it shows a shift of spending away from projects and back to basic budgets.  Project spending periods typically show stronger gains in services and in software, because services are key to sustaining projects and software is typically what makes project business cases.  In short, IBM is showing us a consolidating IT picture.  EMC’s numbers were also up, and in the past stronger storage sales combined with stronger server sales tended to indicate a budget-driven or consolidative environment.  Part of the picture was a banner period for VMware, which beat estimates.  An uptick in virtualization would also suggest a cost-driven IT sector.

Intel’s numbers were truly impressive; revenues up 12% and net income up 3% sequentially.  Intel attributed the gains to a server buildout for “the cloud” but it’s pretty obvious that “online” would be a better characterization, or even “server” by itself.  The point is that Intel is showing that the upspin in server sales is still carrying forward into the supply chain, suggesting that the change has some legs.  That would be good news in the short term; even if we’re seeing a longer-term consolidation it might not impact IT hardware in 2011.

Juniper reported roughly inline numbers, but a weakness in the enterprise side.  Here again we see the handwriting of budget-versus-project on the financial wall, so to speak.  Data center modernization is a project class that has historically straddled that boundary; in some cases the funding for this sort of change is allocated to the network or IT budget and at other times it’s managed as an off-budget project.  I think there’s an indication that the project side of this is what’s weaker.  Networks are also lagging indicators of data center modernization, so this segment might pick up in the second half.

Economically, the news remains positive but the risk factors (North Africa, the EU sovereign debt issues, and US deficit uncertainties and politics) remain.  There seems a new pessimism among some in the US about the future jobs market even though the numbers continue to improve, and this translates into more pressure on the President’s approval rating.  That, of course, means Republicans are in no hurry to make things look better before 2012.  However, there are signs that the Republican balance-the-budget thrust (which they proposed to do with steep social program cuts) has kicked off a tax-the-rich-instead backlash.  The number who favor taxing the rich is double that who favor cutting social spending, according to recent polls.  Tax increases are always problematic, but the foes of the increases may have sanitized the whole notion by offering an even-more-problematic alternative.  We’ll probably not have a resolution to this one any time soon, though.

I’m still cautiously optimistic about the economy, here and globally.  I’m slightly pessimistic about tech spending overall; I think we’re losing touch with the essential truth that enterprise spending depends on projects that enhance productivity in the long run, and that network operator spending depends on profits and not traffic.  AT&T and IBM are signaling us that we need to pay attention to these two dynamics, and right away.

 

Yesterday wasn’t pretty in the stock markets of the world, though many exchanges did manage to close off their lows.  Here in the US the problem was that S&P issued an opinion on US debt that threatened to cut its triple-A rating if something weren’t done by 2013 to rein in deficits.  How much of this is political or posturing is hard to say (these same bond rating agencies were asleep before the 2008 crisis), but the move sent stocks down.  We’ll likely see today how much of the dive was simply short selling.

The challenge of the S&P comments is that they tend to create pressure on Washington to do something difficult, and in politics hard things involve so many dodges, lobbying cave-ins, and scams that almost anything could happen.  Logically you need to raise taxes in the higher brackets; the US has arguably the lowest marginal rates of the industrial nations.  It’s defensible to have that situation if it’s creating broad-based prosperity, but no possible interpretation of the last 15 years of economic numbers would support that claim at this point.  Anyway, those who make a lot can contribute a lot to politicians.  Logically you also need to cut costs, but everyone in Congress wants their own power bases well padded with cash.

In tech, Microsoft made its Office 365 available as a public beta.  The “cloud-based” version of Office is targeted at reducing Microsoft’s risks in its critical Office franchise by limiting the damage that things like Google Docs could cause.  What they seem to be circling around is a plan that would offer SMBs a license for the “collective” parts of Office that are normally hosted on a server, and enterprises a per-seat license for the full Office suite.  That’s likely a smart move because SMBs can probably spend the dough for per-worker versions of Office but can’t sustain central server tools.  Enterprises are looking at moving some of their less tech-literate workers to cloud packages, and this could stem the tide.

Microsoft’s big problem isn’t Google and the cloud, though, it’s Apple.  We’re living in a world where wireless and appliances are redefining how people do just about everything, and Microsoft has let itself get trapped outside the candy store window.  Phone 7 just isn’t going to catch up in the mobile handset space, Nokia deals notwithstanding.  Microsoft has no effective tablet strategy because they’re afraid of undermining their Windows 7 space.  The more iPads Apple sells, the more they turn the consumer away from Microsoft; away, in fact, from anywhere that Microsoft appears even able to move.  Yes, Microsoft has to protect its current incumbencies, but without creating new ones that matter that’s only delaying the inevitable.  Microsoft won in PC operating systems over Digital Research because DRI missed the IBM PC opportunity.  One slip and you’re done.  Microsoft has missed MP3 players, smartphones, and now tablets.  They need to get their act together–and fast.

 

 

Nobody doubts that we’re seeing a revolution in video, but there are revolutions and revolutions, and it’s not yet clear just how sweeping the video change will be.  Some recent data from Nielson seems to show that while online video viewing is increasing, it’s increasing primarily within a largely static group.  Not only that, the four-hours-plus of online viewing per month is insignificant compared to the average of over 150 hours for TV.

Google is one of many who aren’t happy to see that outcome, and in Google’s case they’re trying to recast YouTube to become more of an attractant for the online video fan.  Professional or at least semi-professional production is being encouraged, and there are some signs that Google may be close to addressing one of the biggest problems with YouTube, which is less the “production quality” issue than the “needle-in-a-haystack” issue.  There are thousands of interesting and valuable YouTube videos, but it’s not likely that most will be viewed widely simply because they can’t be found.  Google seems to be working to offer the semi-pro regular producer better visibility, which would then insure more viewing.  In turn, it would mean that viewers were likely offered stuff that at least included a strong dose of content that could credibly carry ads.  Will this work?  We’ll have to wait and see.

Cisco continues to suffer on Wall Street; UBS added the company to its “Tech 10 Least Preferred” list, which is a long way for Cisco to fall.  Cisco has all of the technology assets it would need to create a killer positioning for both enterprise and service provider.  What they also apparently have is a set of blinders that’s preventing them from seeing the need, or the solution.  Is that an easy or hard problem to fix?  In an execution-mechanics sense, it’s easy because you have nothing creating a real barrier.  You can turn a positioning on a dime.  In a historical-precedent sense it’s hard, though.  Cisco has had what they needed for that whole five years, enough to put its competitors away definitively.  They’ve not done it, and that speaks volumes in an empirical sense for the difficulty that management blinders pose.

New studies are showing that mobile devices and ubiquitous broadband impact shopping behavior very significantly, and that doesn’t surprise me.  If you track the “trajectory” between “suspect” and “customer” you see that in the later stages, when the buyer is truly in “buy” mode, online ads and tools are far more valuable than traditional media.  However, online trails significantly in its ability to build brand or need.  Mobile is an even-more-tactical picture; people typically use mobile search or other product-finding tools when they are actually shopping, not just considering it.

In economic news, we’re seeing more problems in the Eurozone.  Greece is looking twitchy again, the Finns may be moving to reject the Euro, and of course there’s still Portugal, Spain, and Ireland.  The big problem with an economic union of equals is that the parties aren’t really equal, and under any conditions that exacerbate the inequality the union comes under stress.  China’s inflation worries and fiscal tightening are also a worry, as is Japan’s perceived dip in economic power.  In all, only stellar earnings are likely to counter the fundamentals trends this week, so we may see a listless-at-best market.