Wednesday, July 29, 2009

Microsoft, Yahoo Deal: Why You Stand to Lose

After a year and a half of negotiating, Microsoft and Yahoo announced a search deal partnership this morning that will make Redmond's new search engine, Bing, Yahoo's search platform and put Yahoo's sales force in charge of handling both companies' search advertisers.

Microsoft and Yahoo posted a joint press release outlining details of the partnership, including video statements from Microsoft CEO Steve Ballmer and Yahoo CEO Carol Bartz.

As noted last week, this puts the weight of the world on search baby Bing. It will now be the branded search engine for both Microsoft and Yahoo, try to build on close to 30 percent market share and compete with dominant household verb Google. A little over two months ago, Bing didn't even exist.

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And despite statements from Yahoo about the partnership being a "significant opportunity for us" and calling Microsoft "an industry innovator in search," Yahoo is handing over a core part of its business to a competitor with less than half the market share.

Sure, Yahoo benefits financially. Yahoo simply doesn't have the money to operate and market its search engine effectively, and Microsoft has the deep pockets to handle that load. Microsoft will pay Yahoo through a revenue-sharing agreement based on traffic generated on Yahoo's network of both Yahoo sites, as well as its affiliate sites. Microsoft will be able to integrate Yahoo's search technology and gain more users and market share.

Yahoo says it expects the deal will boost its annual operating income by about $500 million, while reducing capital expenditure by $200 million and increasing operating cash flow by about $275 million per year.

So this is likely to be a win-win for both on the business side. Microsoft CEO Steve Ballmer said in a statement: "Both companies benefit from scale and better economics. Consumers really will get better products."

He may be right about the first part; but the second part is debatable.

What consumers will get now is a two-horse race and limited choice. Bing's search engine has been getting solid reviews; it does offer a more organized user interface than Google and was able to slightly increase Microsoft's search share in its debut month. But how much will it really improve with the addition of Yahoo's search? What's worse, integrating the two could be a time-consuming and complicated mess, creating a "more is less" scenario.

The bottom line here: most people are comfortable Googling. Google is deeply entrenched in the hearts and minds of users. It may take awhile for the Microsoft/Yahoo partnership to be put into practice. The deal still has to get the green light from regulators, which could take months. Expect Google to raise a stink as well. Both Microsoft and Yahoo said they hope to close the deal in early 2010 .

Is there any good news for users in the deal? Google will be facing a more formidable foe that will slowly steal market share (keyword: slowly). The search king will likely be challenged and will innovate, creating better search to stay on top.

It could take two years, but the Microsoft/Yahoo partnership could awaken a renewed sense of urgency in Google, famous for its unrushed "beta" apps and features.

But right now this looks like a money grab for two wounded tech giants, not better search for you and me.

by Shane O'Neill © 2008 CXO Media Inc.

Thursday, July 23, 2009

Microsoft’s sales tumble on PC weakness

Hopes that a rebound in the technology sector would help to fuel a broader recovery from the downturn suffered a setback on Thursday as Microsoft reported an unexpected slump in sales for its latest quarter.

The world’s biggest software company said revenues had declined 17 per cent amid falling global demand for new PCs and servers. The news follows a spate of more positive earnings news from Apple, Intel and IBM.

“It’s going to be difficult for the rest of the year,” said Chris Liddell, chief financial officer. “We’re really still not sure we’re out of the woods.”

While the software company had been expected to suffer more than other leading tech companies, given its heavier exposure to cyclically volatile PC and server sales, the extent of the decline was unexpected and its shares fell by nearly 8 per cent in after-market trading.

The setback in the fourth quarter of Microsoft’s fiscal year caps the worst year in its 23-year history as a public company, and the first in which it has seen a revenue decline.

Broader trends in the technology markets have also hurt the company. Netbooks, the small, low-cost laptops that have been the one bright spot this year, now account for 11 per cent of all PC sales, according to Microsoft.

However, it receives much less for the version of the Windows operating system shipped with these machines.

In spite of the latest signs of weakness, Microsoft’s shares are still up nearly 60 per cent since their low point in April on hopes that new product launches, including the Windows 7 operating system, will revive its fortunes next year.

Mr Liddell said that Microsoft was not anticipating any further big declines from current levels of spending by its customers, and sees “the potential for improvement” in 2010.

A 29 per cent plunge in revenues from Microsoft’s core Windows PC division, to $3.11bn, aggravated the decline in the latest quarter. Microsoft was also affected by an upgrade guarantee that allows PC buyers to switch to Windows 7 when it goes on sale in October.

Heavy cost-cutting made up for some of the shortfall, with Microsoft slicing 10 per cent from its operating expenses compared with a year before. But net income fell 29 per cent to $3.045bn, or 34 cents a share.

By Richard Waters in San Francisco
Copyright The Financial Times Limited 2009

Friday, July 17, 2009

SaaS vs. On-Premise Apps: Can't We All Just Get Along?

The misleading debate between SaaS and on-premise software undermines the strength of corporate IT shops.

We live in a society that relishes competition and taking sides: Republican or Democrat? Anti-abortion or pro-choice? Red Sox or Yankees?

Philosophical allegiances are equally pervasive in high-tech, where debates over Mac vs. Windows, Oracle vs. SAP, and proprietary vs. open source rage on and on.

Now, the "us versus them" mentality is engulfing on-premise software and SaaS/on-demand applications, and the bitter and misleading debate between the two licensing models threatens to both undermine the strength of SaaS applications (and in some cases, of on-premise software, too) and to cheat CIOs of the benefits of both models.

Fanning the SaaS vs. on-premise flames are tech journalists, IT analysts and the software vendors themselves. CEO Marc Benioff, the maker of SaaS CRM apps, has said that his company can't be compared to "mature, dying models like Oracle and SAP, which are maybe already dead."

But let's stop the incessant chest-thumping and unnecessary hyperbole for a minute.

Instead, let's look at a recent trend piece from Gartner that essentially condemns the future of SaaS, and dig a little deeper for some much-needed perspective.

A recent Gartner survey of SaaS users and prospective customers in 333 U.S. and U.K. enterprises "found that the apparent acceptance of SaaS as a viable model has not entirely translated into satisfied users of SaaS." These users were said to be "lukewarm" and "underwhelmed" by SaaS, the Gartner analysts pointed out.


In that very same report, Gartner noted that "58 percent of organizations will maintain current levels of SaaS in the next two years, 32 percent will expand, 5 percent will discontinue and 5 percent will decrease levels."

So just 10 percent were going to decrease or discontinue investment in SaaS, and the other 90 percent were going to maintain or expand their SaaS use, yet SaaS is suddenly "underwhelming" companies? The report goes on: "Survey findings showed that overall, organizations are somewhat satisfied with SaaS, with an average score 4.74 on a 7-point scale." To me, 4.74 on a 7 point scale isn't so bad.

Nevertheless, Gartner offered the following divisive conclusion: SaaS is flawed and overhyped, so on-premise software—what else is there?—is the key!

For too many years, big-vendor FUD has driven home the perception that SaaS enterprise apps simply can't scale to meet the mission-critical needs of the Fortune 500. Interestingly, SAP CTO Vishal Sikka told me in an interview that many of SAP's applications aren't currently able to scale to meet the needs of many of its massive customers' computing needs, and that's fine with many of SAP's customers.

Sikka is right, of course. Some companies don't want anything to do with a multitenant product offering right now. And that's perfectly OK.

But those industry watchers who make blanket statements about what SaaS or on-premise software can and cannot do and which industry segment can and cannot use either software product are foolhardy, at best, and dangerous, at worst.

Just ask GE CIO Gary Reiner: GE's supply chain has 500,000 suppliers in more than 100 countries. Each year, the company spends some $55 billion among its vast supplier base.

Big company? Yes. Mission-critical? Absolutely. And Reiner uses a SaaS supply chain partner application to manage it all. (And there are plenty more examples just like GE's.)

Rest assured that Reiner has plenty of on-premise enterprise apps running his global company. In this instance, however, SaaS just made more sense.

In fact, the big-versus-little debate was recently debunked by CIO's May 2009 "Economic Impact Survey" (pdf) of 171 IT leaders: Large company CIOs (59 percent) are more likely than their small (31 percent) and midmarket counterparts (38 percent) to consider alternative IT models, such as SaaS or on-demand applications, as a result of current economic conditions.

Let's not make enterprise software any more confusing than it already is. In these financially turbulent times, I'm advocating for a reasoned viewpoint that encourages hybrid and well-strategized enterprise software plans that take into account all the gray areas that exist in a world that's no longer black and white.

We all have choice now. It's not the time to blindly and stubbornly take one side and ignore the other.

By Thomas Wailgum, 07/13/09

Wednesday, July 8, 2009

Perspectives on Distance Education : Open Schooling for the 21 century

Edited by Dominique A.M.X Abrioux and Frances Ferreira

"Open Schools for the 21st Century" shows how open schooling can be adpoted for a range of purposes and in different ways, using a variety of technologies and approaches. With contributions from educators with extensive first-hand experience in open schooling, the book confirms that opens schools can provide good quality secondary education as long as senior policy-makers, bureaucrats, and administrators are well informed about the key factors affecting success in open schooling, and that they use this knowledge to plan implement, and monitor their own open shool initiatives

Tuesday, July 7, 2009

5 Free Apps That Make Project Management Easier is a great way to start teaching yourself the basics of project planning. This Webware application provides a simplified take on project management, so be aware that you shouldn't lean on it to manage more complex projects. But this is essentially a personal tech project of its creator, Volodymyr Mazepa -- so that if he decided not to continue it for any reason, it could quickly go away.

GanttProject may be a good choice if you need flexibility in how you want to display your task bars in your charts. Still, it's best to keep in mind that you shouldn't go overboard with the colors, lest you create confusion over your project's plan.

jxProject is focused on precision and the minute details of your plan, although the charts it generates can look cluttered, and that ad banner does get distracting. But if you're already comfortable with project management and need to create a plan that shows as much detail as possible, jxProject is worth considering.

OpenProj impressed me with its ability to load most project plan files saved in Microsoft Office Project format. So it's a great alternative if you need to work with someone who's using Office Project, and you don't want to pay for Microsoft's program. OpenProj also stands out for generating the most kinds of charts to represent your project plan.

Open Workbench's split-screen window, which tries to show you as much of your project plan's relevant information at once, lessens the back-and-forth clicking that you have to endure when using other project management software. But jxProject and OpenProj each offer much more in terms of features, like OpenProj's multitude of charts and jxProject's resource optimizer.

So if you're a beginner to project management, break yourself in over at Then graduate to OpenProj, particularly if you have to work with Microsoft Office Project files. And if you find you need more advanced features (such as extreme precision in allotting tasks to part-time resources, or resources located in different time zones), take on jxProject and consider paying the $20 to kill the banner ads

By Howard Wen