Alcatel-Lucent became the first network vendor to suffer in the latest quarter, with a profit warning that sent its shares down sharply. The company, like most in the space, faces a deadly combination of competition from price leader Huawei and pressure on operators created by their own ROI and profit woes. What’s sad for me is that this problem could have been avoided three years ago and significantly mitigated even a year ago.
I have to admit frustration here, not just with Alcatel-Lucent but with the network vendors overall. How long do you have to read the same tea leaves before you understand that the business of pushing bits is just not going to make enough to sustain you? Operators have been unhappy with their vendors’ support for monetization strategies for four years now, and it’s been clear since then that without positioning to help operators field higher-layer services to compete with OTTs, vendors would not only lose engagement they’d lose differentiation for their equipment. Well, gang, we’re here.
The operators are not without blame. The same day that Alcatel-Lucent announced its profit warning, the Wholesale Application Community disbanded. WAC was an operator initiative intended to promote the operators’ entry into the higher-layer services space, but my readers will recall that from the first I was concerned that their APIs weren’t moving the ball. The problem with the operators is that they see things through OSS/BSS-colored glasses (vendors see them through router-colored glasses). When your big achievement is to expose a billing interface that does little that a free credit-card reader for a mobile phone couldn’t do, you’ve got problems.
Interestingly, this may wrap around to demonstrate the biggest opportunity that Yahoo’s new CEO (Marissa Mayer, an engineer type formerly at Google) has to turn the former giant around. About the same time as operators were saying they didn’t like vendor support for their strategies, they approached Yahoo (and Google, and others) to propose a kind of alliance. They didn’t get one from Yahoo then, but might they now? It’s up to Mayer.
Can Mayer turn Yahoo around? I think all this “product company” stuff is high-flying crap. You can’t slap a different label on something and call it something different, you have to change the underlying reality. What product? Yahoo could be a giant in OTT simply by creating a strong alliance with the operators. Do it now, Marissa. Do it before either another player does, or before the operators suddenly figure out that OSS/BSS isn’t where services live. Do it now, before you toss Yahoo’s last chance out the window, because this is surely exactly that.
Speaking of Microsoft, they’ve unveiled Office 2013, surely a product nearly as critical to the company’s success as Windows 8. The new Office is more of a partnership with the cloud than a traditional software application; Microsoft wants the experience to work on anything from a thin-client Surface to a full desktop, and with or without an Internet connection. The truth is that the average software user will still install the stuff pretty much as always, even on the RT version of Surface. It’s accessible from a browser if you happen not to have your own system.
The bigger news is the licensing, which seems to be breaking the single-system model that Microsoft has stuck to (and lost market share to Google Apps over). Licensing would normally cover up to five devices, allowing users to run their software on all their Windows gadgets for one fee (which we don’t know yet). The devices sync via the cloud, a mechanism that can be created ad hoc now via SkyDrive.
A stronger new collaboration link is created by the first integration of Lync, Sharepoint, and Skype, as well as with Microsoft’s social-media platform Yammer. It appears that Microsoft is going to develop the cloud/collaboration dimension of Office significantly, no surprise given that’s a direction for Google in Apps. Because even the RT platform will run a full-feature Office with or without connectivity, Microsoft has an advantage for users who aren’t always able to be online while working. That may be a reason for the keyboard-centricity of Surface too; there’s no point in offering a full-feature Office package on a system without a good keyboard because few could take advantage of it.
Office 2013 will move the ball in the battle over cloud productivity, ironically by making productivity cloud-facilitated but not cloud-dependent. It’s becoming clear that Microsoft isn’t launching a bunch of stuff, it’s launching a coordinated attack on rivals Google and Apple for the worker/user, a subset of the “consumer” that Apple targets or the somewhat diffuse opportunistic space Google targets with Apps. By shooting for a specialty space, Microsoft hopes to get a firm foothold from which it can then advance as conditions dictate. Smart strategy, but it will be all in the execution.