Dear everyone,

I am extremely happy to start off this new year by introducing a fresh face on Tech IT Easy, Anand Kishore Raju, who will be blogging with us in 2010. His main areas of focus as a blogger will be greening the internet, carbon footprints, energy and power figures of the internet and web2.0.

Anand is currently working as a Research Engineer at Telecom ParisTech (ENST). His area of research focuses on the Energy aspects of the Internet, what the scientific community calls “Green Networking”. His efforts are directed towards making Computer Network Science aware that processing, moving and storing bits has a cost in terms of energy and in terms of the Carbon Emission Footprint.

In the past, Anand had also worked at Collaborative Systems Group (ColSys) at Bilkent University, Turkey, where he developed a taxonomy for user properties, influence factors for feedback quality in web 2.0, existing and novel models for deviation types and their detection. He also holds a degree in Computer Science and Engineering and aspires to join HEC in near future.

Anand joins a smart team of collaborators, some of which also work in green computing and many of which share an interest in this important topic for sure. As such, please join us in welcoming Anand to the team and I hope you enjoy reading his words on Tech IT Easy!

Happy New Year,

The Tech IT Easy team

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Last February, I was in Silicon Valley for a week thanks to a course I was taking. Here’s a summary of what happened there.

UC Berkeley: Center for new Music and Audio Technologies.

Prof. David Wessel showed us a new instrument that was basically 32 touchpads. Each was connected to a sample loop and the x- and y-axis and pressure modified that loop. It was an interesting idea, because it didn’t look like just pushing buttons to make sound.

Fail whale at LHS

UCB: Raymond Yee, “Mixing and Re-mixing Information”

A lecture from a course on web mashups. Yee has written the book, Pro Web 2.0 Mashups. The students need to plan and work on a mashup project. There were lots of interesting ideas, but I was worried that most of them were remixing for remixing’s sake and didn’t add value along the way.

Lawrence Hall of Science

Our contact at UC Berkeley had warned this place was mostly for children, and sure enough, this is a place to avoid unless you’re 7 years or less. Almost as complete waste of time as our Google visit.

We had also pizza available for but no-one from UC Berkeley came (we were too scary). Except one guy, whose name I forget. But he took some of us for drinks downtown, so that was great.

Digital Chocolate / Trip Hawkins

Hawkins really loved "Bowling alone"

Trip Hawkins talked a lot about how leverage is the key to successful business and what are the differences between the supply chain in when he was at EA and in operator-controlled world of mobile gaming. He told how he built EA so that it was NFL who wanted them to use their brand, not the other way around. This is why he sees that his competitors who just put out license games based on movies will ultimately be driven off the market, because they do not control the IP.

He thinks that the iPhone is the coolest thing in all time and how the rest don’t get it: “If you’ve played around with Storm or Android you know, wow, these suck”. In his view, the others had focused in Features (“What it is”) and not on Advantages (“What it does”) and not at all at Benefits (“Who cares?”).

Digital Chocolate’s game development doesn’t depend on the device, because they change all the time and they can publish all their games in every device. This is the only way to make the business work in the mobile space. Hawkins doesn’t see that there will be any standardization, because that would move the leverage away from mobile operators to handset manufacturers.

He also believes that the social starving that began around 1950’s because of TV is the reason people are so keen on the social gaming and internet services and is the driver for “omnimedia”. His suggested reading are The Innvator’s Solution and Bowling Alone. Even in the old days, he didn’t see gaming as waste of time. When playing, he said that “I was thinking, learning and motivated”.

He recommended that we try Tower Bloxx, their Facebook game. I was a bit disappointed, the game itself isn’t that bad if you want to kill time, but it is really spammy. Not only is more screen real estate spent on questionable ads than on the game, not only does it notify your timeline every time you play the game, not only the “social aspect” is just a high score table of your friends, but it also spams your friends every time you play to add the game. Not exactly what I’d expect from the guy who’s partly responsible for the great games EA pushed out in the early days. I asked why is it that as a former hardcore gamer, the only interesting game I played last year was World of Goo. In his opinion this down to how big corporations work and can’t innovate. If Tower Bloxx is Digital Chocolate’s answer to this, I don’t think it’s just big corporations.

Sun Microsystems / Mårten Mickos

FAQ: "If heating is a problem, why is it black?"

We were given the tour at Sun’s Executive Briefing Center. They showed the SunRays and other stuff and it was pretty nice to see up close the Black Box.

Afterwards, Mickos gave us a presentation about open source development and MySQL. He said that MySQL is like “New Orleans” of web apps in that if you want to control an important river, you need to control the important cities and this was the reason Sun acquired them. He also anticipated the question about superiority of Postgres, which is probably asked from him all the time. “When I joined MySQL, Postgres was better. Some say it still is. But who cares?”

He also started a discussion about “Why are web companies so closed?” – a poke directed among others Google, who benefit a lot from GPL software, but due to a loophole in the agreement can get away without publishing their improvements because the software isn’t redistributed. This is what he calls the hypocrisy of open source: “People just want to get stuff for free”.

Like Hawkins, he said that the most important thing for startup business is category-leadership. One advice he gave for Finnish start-ups was “not to be Finnish”: MySQL didn’t have sales offices in Nordics, only in the US. Other thing was that if something sounds good in Finland, it takes 10-15 years for until it’s widely accepted as a good thing, so don’t go to market too early. “There’s still time to make a Google-killer”, he said.

This was one of the best sessions we had, not only because Mickos isn’t there anymore and looks like Sun won’t be either but also because we got vodka and swag. You could see there was an economic crisis, because elsewhere we didn’t get anything.

Nexit Ventures / Michel Wendell

Wendell, from Nexit Ventures, a VC firm interested in Nordic IT startups, told how the VC market works and what kind of mistakes Finnish companies usually make. He told how he ended up in the business of helping Nordic companies make it in the US. Being a VC has lot to do with knowing people.

Lots of interesting discussion, but it was late in the evening and it’s pretty hard to upstage either Hawkins or Mickos.

IDEO

We got a standard theme park tour at IDEO. If you have seen the documentaries on TV or at YouTube, there’s not much to see. I was surprised that they actually avoid any systematic or analytical approach to design and focus more on a holistic, iterative and therefore probably pretty expensive (to the client) approach. As a case study they presented Nokia N-Gage platform they did concept work for. A surprising choice, because not only being old was also a spectacular flop. I guess they thought that being from Finland and the course given by ex-CTO of Nokia, we’d be interested in Nokia or something. If we were, we probably didn’t need to come all the way to Palo Alto for that.

Stanford University / VHIL

At Stanford, we got a nice presentation from Jeremy Bailenson from Virtual Human Interaction Lab. He was talking about the Proteus Effect, or how avatars change humans and their behaviour. For example, even though Blizzard has nothing in World of Warcraft code that gives advantage to taller avatars, they nevertheless level up faster than shorter ones. Also, taller avatars get better results in the Ultimatum Game, the real world height of the human is irrelevant. As I’m interested in behavioral decision making, it was nice to see that it might be possible to do empirical studies in virtual worlds, where we can control many variables that social sciences haven’t been in the real world.

Nokia Research Center at Palo Alto

First NDA of the tour. They showed us some research projects they were working on and had the worst slides of the tour. Most of us came out there frightened how out of touch Nokia can be.

Stanford University / Entrepreneurship Week / “Next Big Thing” Panel

Tim Draper, Tony Perkins and Michael Moe talked mostly about Twitter and iPhone and how making revenue is irrelevant. Draper really loves the free trade. Apparently ad-supported business model is the next big thing.

These guys were either drunk or lived in a bubble of their own. Probably both.

IBM Almaden Research Center / Ray Strong

There's pr0n in it, I'm sure.

Strong talked about how IBM tries to predict the future. First of all, the Almaden Research Center looks like a super-villain’s secret lair from Bond movies (it didn’t help that the guy we met had a Bond-esque name). Forget Google, this is the place to visit. There was the world’s first hard drive in the lobby, which was a nice monument to how long IBM has been in the game.

The main thing Strong told was that it isn’t possible to predict technology in to deep future, only in to the business horizon of up to 5 years. This is what they told to an unnamed government agency that wanted them to do so. As government usually gets what it wants, IBM decided to find a way to do it. They brought in people from academy, futurologists and social scientists. Their approach is half scenarios and half technology landscapes, but their ideation emphasizes backcasting from deep future (>50 years) using trends that can be with high probability assumed to continue.

One problem with scenarios has been that it’s really hard to transform them into strategic actions a company should take. IBM tries to close this gap between scenario planning and strategy by using what they call signposts. These signposts are future events that are both recognizable (when they happen) and actionable.

Strong also talked about how predicting future, it’s important to stay in the qualitative side of things, not only because quantitative side of things usually doesn’t work and might be harmful because of the tendency to use numbers to calculate expected values or other figures, even though they are full of uncertainty and can be harmful.

This was by far the best visit during the tour.

Google

NDA. It was a standard theme park tour. It was pretty clear that Google is exactly as “open” as SEC demands it to be, not an inch more. I guess many for many of us the myth of Google was totally burst.

To be fair, this was the only place where our contact wasn’t executive level so we might have gotten a better experience with a more suitable contact. Even though our host was great and all that, he probably wasn’t the right one for our group.

HP Labs

Runner-up in best architecture for a research lab.

NDA, but they mostly showed published academic research about nanophotovoltaics or something to that end. Our guess is that they didn’t want to tell us anything but out of courtesy showed something. When they talked about things I could understand, they talked about MagCloud and how HP is transforming from a printer and computer company into printing and computing company.

Next day, couple of us went to see the garage (more like a shack) Hewlett and Packard started from and what is considered as the “Birthplace of Silicon Valley”. Not much to see, but at least it had some historical value.

All pictures by me. All rights reserved. Originally published in my private blog, but I decided to get rid of it so I republished this thing here for people interested.

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In many ways, I consider this the best strategy book, I’ve ever read. “Valuation,” by George Norton, is, as the name suggests, a book that uses financial models as a basis to build (sound) strategies. It is also a textbook—my version is hardcover and 190 pages long—but written in a format that reads easily and is structured to be implemented—ca. 30% of the book are (group-)exercises meant to implement what the book suggests.

If I had to criticise it, it’s that I don’t consider it very practical in an entrepreneurial setting. One thing that such methodologies require, is time, which is often a luxury that smaller/younger companies and projects do not have. Building up a set of co-ordinated, organisation-wide strategies can be a matter of years, and, I expect that if you were to follow the book’s advice, you’d engage in a 6 month trajectory, at least.

That said, it is a well-written book and achieves the objective of a book, which is to make understood its topic. In this case, valuation means understanding the value of companies, their products, and business activities. The financial part only really plays a part in the first third and last third of the book, while the middle is more about the actual coming up of the company’s mission, its broader goals, its objectives, and its strategies—the latter being the nitty-gritty activities of how to fulfil the grander vision.

And, where valuation comes in, everything will affect the cash position of the business: some activities may be research-intensive (= costly), but lead to greater rewards in the long-term; others will be quick-sale actions, which generate revenue, but may not always improve the long-term position of the business, unless that revenue is re-invested in more sustainable growth.

I find that these principles easily translate into small business- and individual activities, but only if taken on a holistic level, in which case reading this book may be overkill. But if you’re a finance-geek that wants to learn how to better translate the numbers into practical company-activities, or, vice versa, if you’re a creative business-person, who wants a relatively easy intro into the financial fundamentals behind strategies, then this book may be for you.

Vincent

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Dear readers,

These last few weeks, months, you will have noticed that content on Tech IT Easy has mainly been provided by me, Vincent, with sporadic, but much appreciated interjections by other bloggers. Why this is the case differs for every person on this blog and I will not go into those reasons.

When this blog was started by Jeremy Fain, it came out of his vision, one which he expanded into building a group-blog, which, for a long time now, has managed to stay alive. Now that I’m the main blogger here, however, I find myself somewhat conflicted with following that vision, which I’ve always seen being focussed on the tech and business space (with some other content interjected).

My background is a-similar to Jeremy, because I don’t have the tech-education and other experiences that he has enjoyed. Rather I am an international citizen, with a passion for innovation and business, as well as plenty of other stuff, and I am able put a few words together about these topics. That said, my work and interests also take me out of the tech-space much of the time, which makes writing about tech more of a hypothetical exercise than anything else.

So I ask those of you that read this blog what you would prefer from my part. Would you prefer that I continue as I have, writing about anything that comes to mind, with the occasional tech-component? Or would you prefer less updates from me on Tech IT Easy (in which case, I will re-open my personal blog) and the occasional blogpost about tech and/or business?

Please answer the following poll to give me an insight, thanks!

[polldaddy poll=1120707]

Vincent

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I have to say that I (Vincent) am a little baffled by the amount of effort that goes into IT or ICT. I thought we had these discussions some years ago and the general consensus was: IT is not the source of sustainable competitive advantage.

Yet, when I opened my Economist from two weeks ago (I’m always a few weeks behind), an article mentioned that with this credit crunch, mergers and acquisitions are going down, and with that a major cash-cow for consultants: IT systems consolidation.

I guess I’m wondering why companies, particularly those young babies being acquired, are still working with proprietary systems? Is there some kind of competitive advantage to doing it “your own way?” Or is that simply a myth that people believe in?

For myself, I’ve whined a-plenty about how Excel sucks and Powerpoint sucks, and how I’d like to have software work in my “right-brained way.” But I still believe that Excel and Powerpoint works fine for 95% of the population and for 95% of the time, and that there is no need for a custom-built solution on that—the administrative—end.

There is of course multiple sides to IT, particularly if you are an IT-company or one where IT plays a leading role. Let’s take Amazon, which won’t be acquired anytime soon, which relies heavily on its proprietary technologies, being so specialised that it decided to become an IT-service-provider. Or Lucas Arts, which develops effects for films, also 3rd party, and will certainly use custom-built software.

But when I think IT-consolidation, I think databases, and I’m wondering if one database is better than the other. And I’m wondering, why there isn’t a standard for this yet, as the Amazon’s of this world are clearly pushing for it.

What am I missing here? Why do we need consultants again? Why aren’t we doing everything in the cloud?

Vincent
(give me smart answers, and I may write a smarter post about it )

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Behavioural Economics made the Gartner Emerging Technology Hype Cycle again this year. Unfortunately I don’t have access to that report, so I’ve really little clue about why a theory is on the same curve with wikis, SOA and other, well, technologies. So, my knowledge of the report is based on snippets I found by searching the web. Anyway, for those who do not know Behavioral Economics, here’s a short primer on the subject.

In short, Behavioural Economics tries to explain why people make decisions that are against traditional rationality axioms. This traditional concept of perfect rationality is something that decision criteria like expected utility, on which many of classical economic models are built on, assume. Expected utility does recognize that people are risk averse and prefer smaller certain amounts of money to chance of winning more (see for example, Deal or No Deal -tv show.) 

Value function as described by the Prospect Theory. All you need to know is that this graph tells that people really hate losing.

Now, people systematically act differently than these traditional models predict. Turns out, people really hate losing. This phenomenon is called Loss Aversion and it means that even a small chance of (perceived) loss makes us nervous. Interestingly enough, when at loss, people are willing to bet the farm to get back to break-even. There are many interesting stories in the world of finance of people catching this “get-evenitis” like for example LTCM, Nick Leeson and, recently, Societe Generale. These two are just few of many different heuristics and biases people tend to have in their decision making. These “anomalies” are not covered by traditional models of decision making.

The history of Behavioural Economics goes back to the 1970s and many see Kahneman and Tversky’s 1979 paper Prospect Theory: An Analysis of Decision Under Risk (Econometrica, 1979) as a culmination point for the theory. This paper tries to offer a framework to explain the many anomalies (compared to rational decision making) they explored in an earlier paper, Judgement Under Uncertainty: Heuristics and Biases (Science, 1974). For their efforts, Kahneman won 2002 Nobel prize for psychology. Anyway, recently there has been more interest in Behavioural Finance, which basically just builds on the Economics side and is so practically the same thing.

So, Beahavioural Economics aren’t anything new, but so far it has had few applications. One of the main reasons for this is that it is basically a descriptive theory. In a really good book on the topic, Beyond Greed and Fear, author Hersh Shefrin explicitly warns the reader not to try to use any of the anomalies in the book for his/her advantage.

So, why should an IT manager be interested in this emerging technology that will, by Gartner’s estimates, hit the mainstream in 5-10 years? True, the topic is somewhat sexy filled with sexy terms like Gambler’s Fallacy, Money Illusion, Winner’s Curse and so on and cool jargon is something that is required of every hot new tech (like microblogging, cloud computing and wikis!). It is easy to get excited about the topic and that’s probably why Gartner has set Behavioural Economics as a “technology trigger” just rising to the “peak of inflated expectations”, because many might bitterly find out that in addition to awareness to one’s decision biases, one might not get that much more out of it.

Another Ph.D. student in my field told me that he was interested in behavioural decision making because he expected it to improve his poker skills. He had a successful sports betting background (which paid his M.Sc.) but he was moving to Texas Hold’Em. The thing was, he was interested in how to win a given game and not just more games in the long-run. In last December’s the Economist, there was a good article on poker and howw many academics are getting interested about researching it. In the end, this student came to conclusion that while the issues are interesting, the theory, as it is, is quite worthless to him in improving success in a given game. I guess this just highlights the problem that so far there’s very little you can apply the knowledge to.

So, what’s in it for an IT manager? There is, of course, the dark side to behavioural economics, which is closely related to marketing. Because, as a popular psychology book tells us, we’re Predictably Irrational, wouldn’t it make sense to exploit this predictability, say, for example in marketing and sales? By framing options differently in a web page you can make people behave differently and – Okay, seriously, a reality check. We’ve got a Nobel-worthy theory and Gartner thinks we should be using it for mere web design and perhaps for internal decision making?

As stated before, behavioural decision making is mostly a descriptive theory. It only gives us explanations why people act the way they do. What it can’t give is a prescriptive framework for making people act in a specific way and even if it did, there are huge ethical aspects to be considered about. So, a fail to see what Behavioral Economics can give to an IT manager – expect what it gives to everyone else. One thing to keep in mind is that Gartner’s curve is literally named “hype” cycle, so it no doubt deserves its place there.

Richard Thaler, a famous behavioural finance economist, recently wrote a book, Nudge (here’s a Q&A at Freakonomics blog), and in my opinion the title gives a good summary of what behavioural economics can or should give us. Just a “nudge” for better decision making and expanding our freedom of choice – not exploiting our biases for an extra buck.

The thing is, we all make these systematic errors in decision making – it’s built-in. The best you can do is educate yourself against them, because in 5-10 years, “choice engineering” (what Gartner really means) might just be mainstream. And knowing your biases might just improve your everyday decision making abilities, anyway.

If you’re interested, a good place to get an “executive summary” is Harvard Business Review’s article “The Hidden Traps in Decision Making” by Hammond, Keeney and Raiffa. I haven’t read Predictably Irrational, but I guess it’s in the Freakonomics-territory in terms of how approachable it is for general public and, given the author’s background, more suitable for the marketing folk. I haven’t yet started Nudge, but I imagine it is in the same territory. Then there’s also “Sway”, but I’m not so sure about that. Beyond Greed and Fear is best suited for the finance folks and is the only one of the bunch that requires basic knowledge of stock markets and finance/economics.

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Context: I’m currently in discussion with a number of companies that are involved with SOA-vending & -consulting. As a result, I’ve been studying up a little on this market and hope to learn more by writing about it. Note: Since I know, judging by the response to other articles on enterprise-software, this isn’t exactly the most sexy of topics, I expect the number of comments to be minimal.

Jeremy has already written about this topic (primarily in terms of Software-as-a-Service (Saas) and Software + Service (S+S)) before (here, here, and especially here), so I won’t go very deeply into it, but SOA is roughly defined as:

“guidelines that allow software developers to design systems in stand-alone chunks of computer code, each specifying the critical outcomes, performance metrics, and interfaces between a discrete activity and other services.” (Src: HBR, June 2008)

If that’s a little abstract, I see it as a selling you a ticket to Lego-land, where you can play with legos all you like, those lego-blocks representing individual applications that can be used by businesses through a web (SaaS) or hybrid (Software+Service) interface, and Lego-land being the SOA-system that integrates all of them for you. This is opposed to the historical approach of buying a lego-box, which you eventually replace by another and another (side-prediction: we will eventually see Lego-world online).

SOA’s value-proposition

While traditionally it has been so that in order to compete in a technological world, you have to be technological, the idea of SOA is to remove that element, instead allowing individuals and businesses to focus on what they do best. I, personally, like that very much.

Other, more measurable advantages are that it is dramatically more cost-efficient. If you imagine that 5+ years ago, every company had to either invest into a powerful wide-area network (WAN) to be able to centralise IT-services, or replicate islands of IT-systems for each business-location, SOA removes that idea entirely, using a freely available infrastructure, the internet, and removing the need to build IT anywhere, instead paying-as-you-go for singular services that an external provider hosts and distributes. Added to this is the idea that performance now becomes accountable, in the sense that it is covered by contracts (e.g. QoS or SLA), something that was much harder to do with a permanently employed IT-staff.

With all these advantages and several more, it is no surprise that, in 2007, over 50% of mission-critical IT-projects were estimated to be SOA-based, a figure which is believed to increase to 80% in 2010 (these figures are from Gartner and may be US-only).

SOA’s hurdles

While this sounds pretty great, anytime you’re talking about system-wide change, you have to consider that this will meet resistance and involve a great many stakeholders, i.e. take a lot of time. And the question is here, who will you talk to as an SOA-vendor? Will it be the business-side of your client, as you are selling easy-to-understand lego-blocks, or will it be the technology-side, as you are selling technology? This is a serious question, so please answer it in the comments!

Added to this, a SOA-deployment is a strategic issue for your customer, meaning that your selling-proposition will also need to include the option of strategic support, aka consulting-services. This means that technology-only SOA-providers (vendors) will likely have to work with third-party consultants that pick-and-choose the best SOA-package for their client.

Related to this, the lego-like quality of SOA, which promises values like agility, flexibility, price, and reuse, and several more, all very important in this recession-prone time, also mean that someone can quite easily replace your service with someone else’s legos. Arguably this is much less the case if you provide an architectural framework and focus on building ecosystems (create lock-ins). But that is easier said than done, and as such this is a field dominated by few big players that buy up smaller ones.

Some more things, which I haven’t researched, are the degree that open source is a factor/issue here, and different revenue-models.

Grasping the paradigm-change

On the customer-side, there’s two ways of seeing this trend. On the one hand, extreme efficiencies, which also follows Nick Carr’s view that IT is no longer a competitive advantage. On the other hand, you’re giving away a lot of responsibility, which can be bad in two ways.

One, you’re giving away a lot of power to an industry, which will continue to consolidate. It’s something that may not be a problem now, but may become one.

Two, delegating a problem does not necessarily solve it. Taking the retail-industry, the biggest problem here is logistical inefficiencies, caused by delays, unnecessary replication of processes, or otherwise. Here, SOA, as long as it spans across the value-chain of manufacturers-transport-retailers-customer, is clearly a good thing. But it still requires a solid understanding of how IT does and can help your supply chain reap better results, something an independent SOA-vendor may not do as well. My opinion here is purely hypothetical, but it may be worth investigating how the masters of retail (Wal-Mart, Tesco, Carrefour, etc.) solve it. And if this is a problem, I imagine it is elsewhere too.

The SOA playing field

This post is getting a little long, so I’ll briefly go into this. Following Forrester-graphs show the players in the integrating corner of things (consultants) and, on the right, the vendors (also note the time-difference (the second one is Q4 2007) and region). You can find the originals here and here.

Clearly this industry is very layered, with some offering the complete package, including strategic assistance, and others providing either the SOA or a part of it (SaaS or similar). There is a lot of movement in this field with players buying each other out or moving into related industries, either on the hardware or software-side.

Final thoughts

Because I’m not a soft-/web-ware guy, I’m still very much undecided whether to head in the software-only direction myself, though I see much merit for an integrated business-consulting + software-deployment approach, and I also prefer selling Lego-blocks to rubber-trees. Feel free to convince me of your points of view.

All of this was initial thinking of course, and as such I’m happy to hear if you have anything to add or if I made some obvious mistakes. Again, considering the relative unsexiness of this area, I don’t expect too much

Vincent

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Okay, I was wrong at least on one count. iPhone 3G will hit Finland and pretty much everywhere on 11th of July and I wasn’t expecting it before September. Other than that, I still agree with my previous posts about iPhone (before European launch and after it) and smartphones in general.

One thing to keep in mind is that iPhone 3G is still mostly hype. It’s not available yet so we are seeing just Apple’s marketing material and also I’ve no idea for example what my operator’s (TeliaSonera) plans will looke like. As I’ve written in my previous posts, I still expect carriers to earn premiums from internet access fees. In the US, we already saw that the 200 USD price reduction was more than balanced out by a 10 USD increase in AT&T’s data plans.

The fact that iPhone 3G will be priced at maximum 199 USD is meaningless. I can get a Nokia N95 for (the law-mandated minimum of) 1 euro and the USD/EUR exchange rate isn’t that bad yet. Comparing iPhone’s max 199 USD subsidised price to other, unlocked, smartphones is worse than comparing apples to oranges (or, as someone might say, lemons). I can only assume that for some reason, in the backwaters of mobile world (aka the US), iPhone is the only subsidised smartphone available. Otherwise, for example, this post announcing the death of smartphone market doesn’t make any sense. As I’ve pointed out time and time again, the mobile markets are totally different around the world. The main reason for this is the mobile operators who have quite total control of the whole value chain. I think Apple would really love to learn couple of their tricks.

I’ve found it strange that many U.S. websites somehow say that iPhone “killers” and its competitors are some never-heard-before handsets – and the only apparent similarity is that they happen to have “touchscreen”. I’m pretty sure Apple isn’t worried about these also-rans because I’m guessing they’re not in the same markets Apple is aiming the iPhone 3G at. The first market is the normal enthusiasts market Apple sold the 1st generation iPhone to. This is the market where “cool”, features and such are important. Compare to how Apple markets iPod. This is why iPhone 3G has 3G, GPS and 3rd party apps.

The second market is “enterprise”. Steve Jobs spent a long time talking about how iPhone 3G and Fortune 500 companies are best friends forever and for a reason, the first major critical backslash to 1st generation iPhone was that it wasn’t “business-friendly”. This market is now dominated in some countries by BlackBerries and in some other by Nokia’s E-series. This is why iPhone 3G got Exchange and Office document support.

Unfortunately, the latest (and in my opinion, misguided) trend in corporate IT is “mobile device management”. See, for example, Nokia’s Intellisync. Fortunately, most companies’ IT systems are so vendor-locked-in that it’ll be years before they can even dream to get anything beyond Exchange to mobiles, so this doesn’t really matter. But, the control-freak nature of corporate IT means that iPhones aren’t still “enterprise-ready” unless they can (if they wanted to) lock the user out of using iTunes-functionality of an iPhone.

Anyway, let me reiterate the numbers: “Smartphones” make about 10% of the global mobile handset market. About 50% of this belongs to Nokia and Apple is third with appx. 7%. 18,5 million Symbian phones were shipped to consumers in Q1 2008 alone. Also, Nokia makes most of its profits from its low-margin phones.

Don’t get me wrong, I have nothing against the product itself. My main point is that it is easy to fall for all the hype and marketing fluff going around. It is way too early to call Nokia, RIM, Motorola or Samsung irrelevant and my guess is that Nokia will still lead the market – their current volume is just so huge. Apple is no doubt one of the big boys, but one of the reasons is that the market isn’t that big to begin with. But there’s nothing wrong with that, as this is exactly how Apple operates with its laptops. Its niche there is the high-end, high-margin, over $1000 USD laptops – a niche it has a nice 66% market-share in.

So, iPhone is one of the phones I’m considering now that my current plan runs out. The problem isn’t iPhone as a product. The main barrier is my mobile operator, which in addition to sucking also charges pretty nicely for data – and without internet access, why would I want an iPhone? I already got a mobile phone and an iPod and in their normal use, I couldn’t care less about things like UI or touchscreen (which would mostly touch my pant pocket). It’s the other functions that make iPhone great. For me, it’s the mobile operator who makes or breaks iPhone and also the reason why I don’t see Apple ending its exclusive deals anytime soon.

All the smartphones, and especially iPhone 3G, are designed for a world where the cost of internet access is not relevant. The only people living currently in that world are business users. Do not forget that the true clients of phone manufacturers are the operators themselves and it could be argued that the true function of their phones’ features is to make “value-added” profit to the operators. Want to guess why iPhone’s Bluetooth is still crippled?

PS. And seriously, many of the “innovative” applications of iPhone have already been done for the Symbian like ages ago. For an example, see how many people have suddenly reinvented Jaiku Mobile et al. True, it doesn’t really matter who does it first, but who does it best.

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Here’s a quick question to all people used to either interact with or being part of software development teams.

Consider a software vendor, a good one, and its technical headcount. It is no secret that R&D teams aren’t made of software developers only. In order to be deployed successfully, architectures and code need to be tested by a QA department (QA = quality assurance) where professional testers run through thousands of automatized-or-not scenarii; documentation; technical support staff help the install base with potential regressions occuring during updates and coping with changing information system environments; localization project managers monitor translations of the software: and last but not least, application engineers actually parameterize the software at clients.

Now my question, how many technical staff should you account for every software development engineer? I figured out an average ratio of 1 to 4, that is to say, for every technical team of 100 there should be around 25 software developers actually hacking code.

I know there exists extremes but by and large, from what I’ve seen, I don’t think I’m too far from the reality with a 1:4 developer / all-categories-technical-staff ratio.

What do you think? Feel free to describe what the company does when sharing your experience, because, since there are very large discrepancies between, say, an SAP that manufactures ‘heavy’ enterprise software and any web application designer that may not necessarily run industrialized testing and that has no professional service department, we might not get nuances at first sight.

PS: the ratio will also depend on the maturity stage of the company: at Microsoft, [# of develops]/[develops + Microsoft Consulting Services staff + developer evangelists + localization engineers + testers (1 for each develop) + architects] approximately equals 1/4 (1 to probably 5 ot 6 adding documentation specialists; & 1 to much more if you consider the system integrator ecosystem that actually does the application engineering). But the company is rather mature and therefore can afford to focus on quality of execution rather than productivity in execution. Which probably wouldn’t be the case for an enterprise software startup for obvious resource reasons. Anything to share? Best and worse practices, per specific industry (Web 2 / UGC, Video Games, enterprise, affordable consumer traditional applications, etc.) most welcome. I need to test my own budgeting assumptions

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I’ve seen a steady stream of visitors finding their way to my last year’s post about ITIL service catalogues. At one point I had to finally close the comments, because some people felt it was a correct place to advertise their solutions. Even after leaving the company I did the project for, I’ve been approached by a certain vendor on how that project is coming along and if their software could be of any use – to my personal e-mail address.

So, vendor’s are really interested in selling their wares – and for a good reason. The steadily increasing page views show that more and more people are interested in creating their service catalogs. The other reason is that a big number of available solutions either totally suck and/or are extremily expensive. Of course, developing one’s own solution is also insanely expensive. The software vendors can ask for any amount of money and it can be too easy to think the software will solve their ITIL problems. Unfortunately, things are not that easy.

My advice for making a good service catalogue is rather simple. Read the chapter about in ITIL and understand it. The mistake I made in my project was focusing on the solution. A static HTML-page might be just what you need. Seriously, it’s enough for Google. In my opinion, their page fulfills the needs of their customers.

Understand that your IT department is not Amazon selling all the world’s books to people around the world. Your scope is much more narrowly defined.

Your customers want to do their work and not shop around for stuff they only need to do their work. Yes, they will spend weeks to choose the optimal mobile phone or printer for their home use, but, at work, they will be satisfied with whatever. This is why ITIL makes so big thing about talking in “customer’s language”. For example, you’re not selling them a Lenovo Thinkpad X50 with 2 GB RAM and 80 GB HDD with Core 2 Duo with AC adapter and all the necessary Software installed. As the IT department, you’re providing them with a Laptop. The guy at Accounts Payable is not looking for Nokia E61i with 1GB SD-card, FM tuner, 3G connectivity and PC Suite to sync all their stuff with their computer. He needs a Mobile phone with E-mail (and with great probability, delivered today).

You might be tempted to give all the SLAs, shopping baskets, delivery tracking, and all these maginficient features to your customers and many vendors remember to tell that their software makes this easy. Well, yeah, if you have that information to begin with. As a modern IT departement, yours too most likely has outsourced most operations to many providers. You really shouldn’t try to fantasize giving your customers more information than you yourself have.

Anyway, I think the authors of that section in ITIL should add “Keep it simple” somewhere there.

Another challenge in implementing ITIL service catalogue is that many managers might feel that it’s not important like the other stuff there. If I remember correctly, ITIL promises user satisfaction gains, but not much more. For budget-constrained IT departements, that’s not enough motivation to do it – unless their performance bonuses are tied to user satisfaction index. Even if that is the case, they are interested in it in so far as their bonuses are concerned.

ITIL service catalog is only about making things easier for the user. And there lies the problem, because it is still wide-spread sentiment in many IT units that user is the problem and in many IT projects the user perspective is summarily forgotten about. Interenstingly enough, many of these projects are doomed to fail exactly for this reason. So, above anything, keep your users in mind when developing your service catalog. Take a look at the Google one again.

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Last week, the unsexy world of lower software layers witnessed some significant consolidation moves: Sun Microsystems acquired MySQL AB, and Oracle Corporation acquired BEA Systems.

I know you guys browsing the blogosphere want to hear about Paris Hilton (this one keyword to boost visits from search engines), and most of all Twitter, Google, Apple, MS-bashing (which I won’t do unless deserved & today I believe it’s not the case), Facebook, and all that jazz. So I’ll make it quick, although I think this topic is more strategic anyone else, especially when it comes to applicative platform decisions – amongst them web apps.

• MySQL’s acquisition by Sun Microsystems

One thing that’s pretty sure is that 1bn$ (800m$ cash, 200m$ in Sun stock options) for a flagship asset like MySQL is dirt cheap. MySQL enjoys a very large developer community, a well-deserved strong brand awareness amongst web and SaaS application developers & DBAs – as well as geeks of all sorts, and most of all references like Linden Labs (the publisher of Second Life), Flickr & Facebook that have proven wrong those, like me (although I still think the TCO of MySQL is a lot larger than with MS SQL Server or Oracle 10g technologies), who doubted MySQL could handle massive loads (see this interesting slideshow by John Allspaw from Yahoo! on Flickr’s architecture) despite it’s very nice and simple administrative console. To me, MySQL will be to Sun what Flickr, MyBlogLog and del.icio.us are to Yahoo!: the jewels of the crown. 

So, from a price standpoint, I’m buoyant. However, it’s hard for me to say whether Sweden-born MySQL is a good or a bad acquisition for Sun, strategically speaking. The move looks a lot like a vertical integration effort by Sun to push its application server SunONE against Apache to run with MySQL, and its server-side OS Solaris against Linux server distros when it comes to running a MySQL database. This is where since may get mixed up, as Sun has been engaged in a very fruitful partnership with Oracle to almost bundle Solaris & Oracle 9i/10g. The same goes for Postgre SQL by the way. Therefore, my take is that a lot in the success of the acquisition will depend on how Sun’s management positions MySQL databases against Oracle.

A quick last remark: in Europe, it’s become very trendy to pretend you’ll IPO to actually get acquired by an American corporation. Anyways, I’m glad there’s one more financial success story in open source: MySQL AB wasn’t in business to be open source, but had chosen to be open source to actually do business. Open source ayatollahs pretending to developer communities hacking code in their spare time for the greatness of mankind are fools treating others like likes – that is to say fools: open source is one more software business model. Period.

• BEA’s acquisition by Oracle

This very aggressive move is one more confirmation of Oracle’s market share-acquisition strategy. Oracle is now at loggerheads with IBM Software Group, the world’s leading middleware vendor. Websphere 6.0 and Weblogic Server 9.0 + Aqualogic BPM, alongside with Software AG’s Webmethods, have been competing for a while in the business infrastructure middleware market – & I suspect Oracle anticipates Microsoft’s upcoming marketing effort to generate adoption of BizTalk Server amongst large accounts. Hence the fact that I believe that this time, Oracle’s acquiring a little more than juste market share: with Weblogic, Aqualogic, Oracle Databases and BI Suite Enterprise Edition, Oracle has a broad enough catalogue of good products to compete with Websphere, DB2, Cognos on the IBM side, and BizTalk Server, SQL Server and PerformancePoint Server & ProClarity Analytics on the Microsoft side. 8.5bn$ was therefore the price to pay to win back Weblogic Server + DB2 or + SQL Server accounts as well as afford not to loose the everyday larger account base willing to go through one software vendor, and one only, to get equipped in infrastructure software. Moreover, Oracle kills two other birds with the same stone by 1) isolating SAP whose catalogue, although enriched with BO’s acquisition a few months ago, lacks heavy weight munitions in lower layers; 2) harming Red Hat whose JBoss Application Server has long been embedded into Weblogic. It may look like gambling, but I doubt Oracle will let Red Hat support Weblogic too long.

It’s not the end of the middleware war yet, but we’re getting closer to it since the entry barrier for a potential new incremental-innovation entrant has become very high in the recent years. 

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No it is not. And when you think about it’s kind of a good thing. Because it means that the path from technology to revenue is that much shorter. Of course, the other side of that coin is that there are many people competing for that same revenue.

After writing my last post on this, and Marc’s comments, I started to ask myself some questions, such as:

• What is technology? Is it mechanical, digital, a hybrid?
• What is software? Is it the nail, the hammer, the glue, something else?
• Should software be an end-product? Is is worth anything without the hardware, is hardware worth anything without software?
• What would it take to make something innovative, aka. high-tech?

Certainly not an exhaustive list, but a good start.

My favourite of these is the fourth question, what it takes to be innovative. Back, when I was trying to convince myself to go into software, my main objective was to create something that would change my / the world in some ways. But it was strange, every-time I was thinking about a product, or rather a service (I see software as a service), I was always thinking that it would be so much better if there were hardware designed for / with it.

It’s the age-old debate of Apple vs. Microsoft, Quicktime vs. Flash or Java, a console vs. a computer, Firefox vs. IE/Safari etc. The difference between these “technologies” is that the one is designed to be—somewhat—platform-agnostic, and the other is designed for a platform.

We’ve rehashed Apple vs. Microsoft many times, so I won’t go into that too much. But if you look at cross-platform apps like Flash (as well as AIR) or Firefox, they are clearly feature-rich, but in many cases laggy as hell. I would consider both an inferior product, simply because it does not work as well as other competing products on the same hardware. The same with Windows, which has huge legacy-support, but is in some cases (a loud minority, I’m sure) not as “plug & play” with the systems it runs on, as e.g. Apple’s OS X, or the Xbox-OS.

Both of which are designed for the specific hardware, and it is actually the whole package—hardware + software—that is considered the innovation.

For something to be considered innovative, it should be seen as the whole end-product for the consumer. A minor example. When I installed OS X Leopard on my ancient (but perfect) G4-laptop, it gave me the two-fingered right-click. By all accounts a hardware-innovation, a tiny one, but which made the whole interface better. I’m not sure if software on its own could ever achieve a similar effect on the user.

So what would it take for real innovation to occur? It would have to be a paradigm-shift. We’re seeing a lot of interesting software coming out, a good example probably being Second Life. Yet Second Life—which was inspired by a world called “The Metaverse” that an author, Neal Stephenson, came up with in a book, called “Snow Crash,” is nowhere close to that ideal.

The reason is that, from a user-perspective, the Metaverse started with the interface—gloves and a helmet hooked up to a box—which allowed the user to literally hook into a system. How does Second Life ever compare to that? Instead, it forces users to be immobile behind their PCs, staring into a 2-d interface, imagining themselves to be in a world, in which they clearly are not.

And, in my eyes, the same applies to lots of software designed for an interface that simply does not innovate.

Facebook, Windows, OS X, Open Social, AIR, etc. All platforms actively marketing for developers. Yet how much of that marketing is happening in hardware, an area which has largely been commoditised over the last 20 odd years to the degree that R&D in that area must have been stagnating much.

You do see some changes. Microsoft, when it started on the Xbox, made a paradigm-shift. Apple has been doing the same for years, but now at an exploding rate. Microsoft’s Surface will be very interesting, as will the next version of Windows, though still restricted to a 2-d interface. And there’s probably 100s of other examples, which I can’t think of now.

The thing is that innovation in software has exploded in the last decades, as has, to a lesser degree, hardware. But we have reached a mature-level where the novelty has worn off. For software to become interesting again, we need new hardware—a new way to interface with technology, that takes us away from the boring old mouse and keyboard, and allows us to the live the mobile life for which our physical bodies were actually designed.

The Wii is a good example of what happens when you don’t just focus on hardware, you don’t just focus on software, but you focus on how your product can actually become useful in the lives of people that are not geeks, early adopters, or the loud minority.

Vincent out. This is my last post this year, I think.

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That is the question…

[youtube=http://youtube.com/watch?v=pr7lDlUfw9w]

Video not available anymore, find it here.

What do you guys think?

via LittleGirl

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I’m exhausted and it’s only half of the study trip, but I enjoy SO MUCH going with a great bunch of cool guys to amazing companies like OQO, Netvibes, City Council of SF, l’Atelier US, eBay, Box.net, SRI, Stanford, Meetro and tomorrow Twitter, Neocase, Microsoft, Google, Plug & Play, the Churchill Club, XOBNI – & the day after Orb Networks, Orange, SAP, PodTech, Bizanga + great VCs like Jean-Louis Gassée, Vincent Worms from Partech, Matt Lecar from Partech, Sven Strohband from MDV & Jeff Clavier from SoftTech VC + Marylène Delbourg-Delphis, who actually recruited Guy Kawasaki out of Apple & François Laugier, a prominent lawyer in Silicon Valley….that I haven’t had the energy to blog recently. At night, after 7 visits during the day, all I think about is collapsing.

We’re only half way and here’s our program (below). I’ll make sure I blog extensively as soon as I find some time – although I’ll have to blog on TechEd in Barcelona first. I’m late, I know.

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 In chess, a gambetto – say it with an Italian accent, consists in sacrificing a piece at the beginning of a game to gain a competitive position on the exchequer – for example through the control of the center of the chessboard or one of the long diagonals.

Getting back to business (we’ll get back to the gambetto later), it is very common to say that the state of an economy is reflected by the strength of its currency when the Euro currency is weak – and hence that the economy of the EU are in poor shape. However, when the Euro gets stronger, companies and officials claim that corporations are constrained in their efforts to export goods and services and that the situation should be reversed or the EU will soon enter an economic turmoil.

I think this is all too easy and bullshit.

God Dollar used to be the only viable currency in international trade, until the Euro came out of nowhere in January 2000 (2001 for actual pocket coins and bills). The European Union is the world’s largest consumer market, and a gateway to the Middle East and Africa for American companies. Although the Dollar still dominates international transactions of goods (slightly) and financial transactions (easily), the Euro has emerged as a tangible alternative considering the political stability of the region.

Consequently, the Euro vs. US Dollar exchange rate has kept growing insanely from 1 EUR = USD 0.85 in mid 2000 (1 EUR = 1.19 USD on January 1st 2000) to 1 EURO = USD 1.47 USD today. Althoug I acknowledge the trickiness of the situation for export businesses, high tech or not, I see very few corporations have implemented hedging strategies or make proper use of forward contracts – which is a shame. Still, instead of lamenting, I believe economic decision makers of both the US and the EU should roll up their sleeves and act in such a way (hell yeah I’m even givin’ lessons now, love blogging…):

For US High Tech companies: go for internationalization. Acquiring hardware, software, telco devices, consumer electronics and services labeled in USD has never been cheaper. So why wait? I’m pretty sure any potential buyer would understand this reasoning. A weak USD is a fantastic opportunity for American exporters to thrive abroad, and win strategic, long-term projects. It doesn’t matter whether the profitability of these projects is low: what matters is to build reputation on new markets, or to highlight your competitive advantage against local players. Remember, the gambetto? Be ready to sacrifice a few cents today (anyways, the dollar rates so low that it’s no big loss whatsoever) to be in the real race when that moment comes.

For European high tech ventures: shop for intellectual property and talents in the US since the Euro has never been so strong against the US Dollar – which will make acquiring quality companies cheap, and build production capability in China and India (or go and get cheap but excellent developers in Eastern Europe, before the Euro comes there, or Israel) to reduce the cost of goods sold, enhance their competitiveness and therefore be ready for a shift during harsher economic times or win back market share on their competitors’ behalf. EU corporations, especially the big ones, find it hard to tear the P&L from the balance sheet and should learn to make better investments. Remember when the VCs said that few large European high tech corporations had a real, sound external growth strategy? Even though making the quarter may seem tough because of a strong Euro, acquiring today technologies that will generate tomorrow’s revenues boils down to ’sacrificing’ a small slice of the pie to weaken the competition, and build a better product offer for tomorrow. Gambetto again.

Now waiting for the Chinese Yuan to offer a third way…

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