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.

Since last September, I’ve been taking a Ph.D. level course on the future of internet, IT and related fields called Bit Bang at Helsinki University of Technology’s Multidisciplinary Institute of Digitalisation and Energy. The students are all Ph.D. students from either TKK (HUT), University of Art and Design Helsinki or my own Helsinki School of Economics. The course is given by a former CTO of Nokia, Yrjö Neuvo. So, the course is a kind of a dream team of Finnish education system…

During the fall, we were divided into groups and my group’s task was to write about the implications of carbon nanotechnology until 2025. The other groups wrote similar papers on other technologies such as Processors & Memory, Telecommunications and Printed Electronics. Now, during the spring, we’ll do similar papers but on much broader topics: intelligent machines, globalisation, future of media and future of living. These papers will be combined into a book at the end of spring term (thanks to the Sitra, the Finnish Innovation Fund). To get a feeling of what we are writing, here’s an excerpt of our nanotechnology report’s introduction (PDF).

But, now to the more important part. As a part of this course, we’re going to a week-long study trip to California at the end of February, between 23th–28th. We’ll be visiting Berkeley, Silicon Valley, Palo Alto, and some other places and most of us will spend the week-end at San Francisco. If this sounds familiar, long time readers of this blog might remember Jeremy’s original Tech IT Easy SV trip in 2007.

The program for the trip is starting to form and these are some of the places and people we’re probably going to visit. The official program isn’t out yet, but this is what I quickly jotted down.

• University of California, Berkeley; David Messerschmitt
• Stanford University, and coincidentally, Stanford Entrepreneurship Week (We’ll also be attending the Fair on 24.2.).
• Trip Hawkins at Digital Chocolate (he’s probably more better known as the founder of Electronic Arts)
• Mårten Mickos at Sun Microsystems (was CEO at MySQL)
• The Google
• Ideo
• IBM (most likely one of their research centers somewhere in Palo Alto)
• HP Labs
• Nokia lablet & Nokia Research Center at Palo Alto
• Michel Wendell at Nexit Ventures
• And probably some others that I already forgot about

It’s starting to look like a busy week (perhaps not as busy as Jeremy’s, though.) and the guys we’re meeting with aren’t exactly small players. So, here’s my question to you: What should we/I ask from these guys? We have the amazing opportunity to talk with these guys and it would be nice to know what the Tech IT Easy crowd would be interested to know.

This is my second trip to USA and first to San Francisco, so another question from me is: What should I do and see at SF? Basically we have four days of official program and two “vacation” days.

The above program is just the official program, and there’s a group of us eager Ph.D. students from Finland’s top universities who would probably want to see more of what’s going on in SF. All ideas are welcome, but keep in mind our strict time constraints.

I wanted to write a brief follow-up to my Eulogy from a few weeks ago. To recap: my Sennheiser PX 200 headphones died for a second time, not because anything was wrong with their original purpose—to produce great sound—but because a more marginal feature failed: the wires, that connect my mp3-player to the speakers.

I have decided that headphones, especially the more expensive kind, are a big rip-off, because, while the sound may be better per euro/dollar spent, the wires are pretty much identical with whatever model you buy. And it’s the wires that fail 95% of the time, not the USP with which headphones are usually advertised: better sound.

In my opinion, there are three solutions for this problem:

1. consumers buy cheaper headphones and forget about the sound;
2. manufacturers make unbreakable wires or go wireless;
3. manufactures make wires modular.

I thought of the latter, remembering an interview, I heard years ago, with Giles Slade, author of the book “Made to break,” and believer in a great conspiracy: that, ever since the industrial economy took off, manufacturers have create products that were designed to break, because the alternative—a perfectly replaceable modular system—would diminish their profit-potential. The consequence of this philosophy is that, instead of throwing away failing components, we are forced to throw away the whole thing—whatever it is—resulting in great, big thrash-heaps all over the world. The consequence is a higher cost for the environment and for consumers.

The manufacturers’ perspective kind of makes sense. If you look at two computer-companies, IBM and Apple, the one that opened up its technology to be replaceable, was the one who is no longer a computer-company today: IBM. And those technologies that have decided to go modular—razor-blades, printer-cartridges, the iPod-ecosystem—have done so in a way that it is become monetarily painful to replace any part of that technological system. On the other hand, smart companies like Dell have proven that modularity can also create opportunities, but for assemblers more than manufacturers.

Taking it back to headphones, I (egotistically) maintain that a non-modular stance does not apply for the case of wires—though there may be arguments regarding portability. Rather, wires have long been modular for pretty much any application, ranging from mere electrical plugs to the wires that you hook up to your stereo-system. While the quality of wiring plays a real role in the quality of sound, the ultimate value that is attributed to a speaker-brand, is in the quality of the speakers themselves. Sennheiser would lose little by making wires replaceable; rather it would avoid potential PR-scandals and expensive warranty-problems.

This is of course assuming that Sennheiser isn’t one of those companies, whose products are “made to break.”

Vincent

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

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

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. 

Those of you who know me, also know that I am not a friend of Twitter. Not yet! But this medium for micro-publishing seems to grow and grow. Swiss blogger Nico Luchsinger has counted some 800.000 users. So there is quite a good track record and the only thing missing is the business model.

But a call for advertising is not really funny: In my opinion the short message like style of Twitter would suffer a lot from advertising. Twitter simply is not made for it, besides the fact that in a commercial consisting of one sentence there is not much to tell. So Twitter needs something very different. Why doesn’t a company like IBM buy Twitter? They could continue the service without any changes. In financial terms this idea looks quite stupid. Why to buy a business where there is no revenue stream at all? Well, first of all, Twitter is a brand. And a very well reputated one, too. A company buying Twitter would invest into branding and image.

But that’s not all: My german blogger friend Marcel Weiss reminded me of the fact, that Twitter is an open plattform offering an API for developers. And that’s where things start to get very interesting: Twitter as a market leader in its segment can be seen as an exchange place and not all services made along the API would have to be free.

One example: Imagine the “twittersphere” would be scanned by semantic software in order to obtain or extract clue words, ideas and trends from it. Who is talking on Twitter? It is a global elite that is far ahead concerning technology, social media and general information. So following Twitter is market research 2.0. The data mining could be used for trend reports or aggregated publishing on websites which would not be free of advertising. All this would not hurt or disturb the twittersphere. And my opinion, that services like Twitter never will be a sort of mass media, fits very will in our example. Twitter as a tool of a relativly small but focused user group creates a homogenous market segment worth watching. The value would be exactly the opposite of what it is for Facebook or MySpace.

Finally there is the question of prize and worth of Twitter. If we take the level of Facebook as a sort of benchmark we would end up with a prize of aproximately 300 million $ (calculated on the number of users). Ok, that’s a lot of money but it would not be expensive for one of the market leading companies in IT.

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.

I am still a bit obsessed on how companies manage their innovation processes and how they make it fit with their culture. In this context, I recently read an HBS case about Intel research. The “Intel lablets” particularly attracted my attention and raised general questions about the management of innovation.

In 2004, Intel realized that faster and more powerful processors will not be the most important customers’ need anymore and that it had to shoulder more of the burden of innovation. But Intel’s historical approach to R&D didn’t allow the company to spot the technologies that can impact the core business dramatically, or create new businesses. Indeed, Intel has based his R&D strategy on the idea of connecting closely research with manufacturing, by allocating R&D resources to each business units. This structure, even if really efficient in sustaining Moore’s law, was only focused on incremental innovations in the silicon roadmap, making it inefficient to identify some disruptive technologies.

These technologies could only be developed through “exploratory” research. However, Intel’s aversion for a centralized lab, which is definitely the standard model for this kind of research, pushed the company to look for another model. The search for a “happy medium” led to the creation of the “Lablets”, which are some small labs located close to universities well known for their collaboration with the industry and for their expertise in some sectors of interest for Intel. They selected Berkeley, Pittsburg and Seattle. Some characteristics of these lablets are differentiating them from some firms’ previous attempts to build labs close to universities and are particularly conceived to foster innovation:

• Thanks to an Open Collaborative Agreement, much of the research can be published and shared widely, with Intel hoping to acquire proprietary advantage in the downstream stages of the projects;
• Lablets are staffed with 40 researchers and are co-directed by an Intel research employee and a university faculty member changing every two years;
• Projects in lablets are funded on a milestones basis and were reviewed quarterly.

But this clever approach raises a certain number of issues.

How can the scope of activities of an “exploratory innovation program” be defined?

If the lablets’ role is to sense the environment to understand potentially disruptive technologies, then the scope is really wide. So it has to be reduced to some large sectors likely to have an impact on Intel businesses or ecosystem, as the final objective is to end up by passing projects to business units. The model thus represents a tricky balancing act: giving researchers enough freedom to be creative and to think broadly in terms of sectors in which to spot disruptive technologies, while confining their efforts to predefined aspects. There is a happy medium to find between the systematic search for opportunities congruent with core capabilities and “adhocracy”. Intel’s answer to this problem is to have Intel specify the problems it wants researchers to solve, but not the idea it wants them to work on, which sounds like a really fine distinction.

What type of structure is the most appropriate for this kind of exploratory research?

When I heard about the lablets, I couldn’t help thinking: is it really the right structure to be in charge of the strategic responsibility of understanding what will be disruptive in the market? Having only 40 researchers in each of the 3 lablets is a good way to limit costs and therefore limit the impact of the high level of risk involved, which is what companies try to do most of the time with their innovation team, but it also can appear difficult to reach the critical mass, often mentioned as crucial to create a fertile environment. Moreover, even if being a small group can limit the internal resistance (as this kind of exploratory research is absolutely not part of Intel’s culture) by not attracting too much attention, it doesn’t allow stand on your own in a large organization. Intel lablets would require a heavyweight team (see matrix) to push projects into business units without having to fight to convince the business units of the viability of a project. In addition, the frequent turnover of people due to the university involvement can be a threat in the case of long term projects. Besides, if some lablets’ projects make it downstream into the main R&D fold, then some great researchers will probably leave to ensure the follow-up. But it seems that this is the price to pay to always bring new blood into an innovation program, which is crucial to generate more ideas and more expertise.

How to assess the performance of such structures?

What I find interesting here is that the lablets’ case reflects the basic problem of any innovation process: how can you set up performance metrics in a domain that flourishes only when there is a tolerance to failure? Finding metrics to measure the success of exploratory research is difficult as the process of sensing the environment can lead to many useless results, but is still necessary to have chance of producing breakthrough products or predicting disruptive changes in the market. It is clearly the case of R&D as a Real Options: you pay a certain amount of money to have the right to exercise an option when the market changes. Which is why funding the projects on a milestones basis is so important in this context, as this sequential investment creates the option to abandon the project in midstream if it is too early to market or doesn’t fit the company’s strategy. Each stage can be viewed as an option on the value of subsequent stages, and valued as a compound option.

The point of this post was not to speak about Intel’s initiative in particular but more to discuss about the issues that any innovation process will generate. So just for information, since their creation Intel’s lablets have been working more and more closely with business units to facilitate the downstream transmission of projects, and have generated some cross-industry collaborative projects, like PlanetLab. If you have been part of an innovation program or have any thoughts about these basic issues, do not hesitate to use the comments part!

 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…

Microsoft’s 1st fiscal quarter earnings were blow out.  Its profit soared 23 percent to $4.29 billion, or 45 cents per share, from $3.48 billion, or 35 cents per share, during the same period last year, as brisk sales of the new ‘Halo 3′ video game, Windows and Office helped it breeze past Wall Street’s expectations.  Because of this the stock hit 6 years high.  The result, driven by products including Windows Vista and Office 2007, was viewed as evidence that the 32-year-old company still has growth potential. Underneath all this good news, I think, survival of Microsoft itself is at stake.

Let’s start by looking at Microsoft’s Business Strategy.  Its core asset is its Operating System (initially DOS and then all the UI built on top of it).  Using its core asset Microsoft has built a software empire.  The ‘network affect’ created by its near monopoly market share (90%) of its Operating System (OS) has enabled an ecosystem of software solution providers around it.  These value added software application have created the franchise of its OS more valuable.  Microsoft itself builds and sells several add-on applications on top of its operating system.  Microsoft Office is the most important of all the applications that’s built on top of its OS and has become the ‘cash cow’.

Microsoft’s strong ‘economic moat’ has been constantly attacked over the past 8-10 years.  But it has aggressively managed to defend itself.  Now, several disruptive offensive forces are making Microsoft’s moat vulnerable.  First of all, SaaS or On-Demand software delivery model is going to be a formidable challenge to all the software applications written specifically for Microsoft OS.  For example, Google Doc is a tempting alternative to Microsoft Office for the individuals and small organizations.  There are several other open source on-demand applications that are getting ready for the prime time to challenge Office software.  With Microsoft Office software being challenged with a new delivery model, it will no longer  remain the cash cow.  The advances in distributed computing and software security will keep pushing the boundary on SaaS delivery model.  SaaS, with it pay-as-you-use payment model along with mobility access are some of the positive factors that will make even the large organizations investigate its usefulness in their organization.   This is forcing software solution providers to break away from sole Microsoft OS franchise.  Soon, most applications will also be offering with the On-Demand delivery model.

The other disruptive force is Virtualization.  There is a huge demand to ‘maximize’ server utilization, and this is making Virtualization the highest priority for many company’s CIO.  This trend will entice the application vendors to write their own kernels designed to run in virtual environment and knock off Microsoft OS from the server. With more technological innovation, virtualization will make Microsoft OS less relevant.  

The third disruptive force is Demographics.  The ‘iPod’ generation worldwide is more comfortable with Apple product and considers PC as “Dad’s” computer.  The anecdotal evidence point out that majority of students entering university now own Apple computer.  In few years the ‘iPod’ generation that will be joining the work force will be not ‘savvy’ enough to use PCs.  The large organization’s IT department will be forced to provide infrastructure to support Apple Computer to attract new work force.     

Virtualization, Demographic changes and On Demand Delivery model will work in tandem to make Microsoft’s core asset irrelevant.  Its not that Microsoft does not understand the threats but it’s too big and too slow to change and challenge these above mentioned disruptive forces. Does that mean that Microsoft will vanish into thin air some day soon?  Not really, but change is urgently needed at Redmond.

Currently, Microsoft organization looks a lot like IBM of 1970s.  IBM had almost monopoly on the mainframe business and its ‘cash cow’ was add-on hardware services after installation.  With the rapid emergence of PCs (lead by Microsoft), IBM tried several ways to fend off that disruptive force (first with denial, then by building their own OS).  When every thing failed they went through massive restructuring.  IBM evolved from a Mainframe Hardware Vendor into a Software Solution Provider.  IBM of today is vastly different from IBM of 1970s.  I contend that Microsoft will go through some painful metamorphosis similar to that of IBM.  It will be forced to reinvent itself into a new company.  Steve Ballmer is too much of an insider to effectively bring about successful change management.  They need an outsider with new set of eyes and ears.  I personally believe Ray Ozzie will be elevated to a more powerful role to guide Microsoft through these changes.  They may even hire a few executives from outside to bring in some much needed changes.  Microsoft will still be relevant in 2020 but what will be its core competency then, will be interesting to monitor.  The days are numbered for the Microsoft in its current incarnation.   

IBM’s nice white paper, which I briefly touched on before on my food and retail-blog, describes a model for mapping how customers make decisions in a given setting. It looks at three types of retail-outlets: Grocery, consumer-electronics, and apparel (clothing), and explains how each type of store has different types of customers, with different motives for visiting, and different in-store behaviour.

For instance, with grocery-shoppers, they map two types of shoppers, those that shop for replenishment and those that shop for convenience. The figure below shows the different reasons why they would visit a store and what they value inside the store:

Really, what this flows out of is an analytical technique, IBM calls: “consumer decision process (CDP) modelling,” which analyses consumers in five phases:

1. Qualitative market research, to identify elements that impact target decisions: what, who, when, where.
2. Create individual CDP maps and organise elements into stages
3. Validate and create a market-representative view
4. Develop quantitative model to prioritise impact of 100s of “why” elements
5. Leverage CDP insights to drive revenue opportunities

In English: data is collected through traditional research methods, and IBM crunches this data into a system that scores different variables according to their importance and comes up with focussed advice on how a retailer can improve their marketing strategies and the shopping experience.

For instance, in the case of customers for complex electronics, like high-end sound-systems, customers would benefit from a focus on education at the beginning of the decision-making process, and on a high level of technical support after the purchase had been made. This has implications on staffing and marketing. At the same time, this can also affect stock-inventory. With products like these, where people prefer home-deliver and possibly installation, it is often not necessary to carry large amounts of stock within the store, again reducing costs on that front.

Note: this article is mirror-posted on my blog, Sounds + Food ‘n’ Retail.

Yesterday was a landmark in the young history of the European software industry. World leader in enterprise resource planning software, Germany-born and global company SAP, stroke a USD 7.5bn bid for Paris outskirts-born and global company vendor Business Objects – also a San Jose CA-headquartered world leader on the business intelligence market (USD 1.7bn turnover in 2006).

Splitting parts with the invincible “good or bad?” question, this deal has a number of direct implications on the technology landscape. Here are a few notes in this respect.

• Acknowledgement of the Shai Agassi ‘globalization’ legacy…

Or, put it bluntly, the victory of Silicon Valley guys over the old guard from Walldorf. Shai Agassi, a young computer wizard who had made its way to the job of CTO at SAP AG before leaving the company in March 2007 to start an renewable energy startup in Israel, had worked hard to ‘globalize’ development teams. Many feared the so-so recent results of SAP would urge the Board to centralize R&D. In some ways, the acquisition of global software vendor BO acknowledges the legacy of Shai Agassi. Successfully manage a distributed software company is a very tough challenge (even Microsoft doesn’t do it yet) that I’m sure SAP is prepared enough for.

• Puts SAP on the map of potential acquirors

Some excitement to expect from SAP on the investor side

Fresh air in strategic exit scenarii on the enterprise software market

Good for the enterprise software market as a whole, especially from an emerging software ecosystem view point (venture capitalists + startups)

• SAP – Oracle – Microsoft – IBM now at loggerheads: towards an ‘oligopolization’ of the enterprise market? Maybe not – see next bullet point!

Oracle sells its own databases; Microsoft embeds business intelligence capabilities in its databases; SAP, a long time rival to Oracle, has no database but just acquired a business intelligence company that competes directly with Microsoft. IBM wants to renew its aging DB2 database offer and enter the business intelligence market – maybe through M&A, Cognos maybe? Consequence: strategic relationships @ and cross-selling (eg SAP ERP with Microsoft databases & BI components; or Microsoft ERP with Business Objects BI suite) between these 4 companies are likely to shrink. I think this situation is good for none of the protagonists, including clients. Hope a sense of realpolitik will make software giants look beyond immediate product competition and punctually co-opete on innovative projects rather. My 2 cents on IBM: the more IBM enters the application software market (front end), the more it loses. However, IBM is a great middleware company so it definitely has a role to play (database, etc.) in this consolidation.

• Enterprise software architecture value chain integration implies there is room for independent database vendors & independent innovative business intelligence solution vendors: you always need alternatives

I am to purchase stock of any database (MySQL?) or business intelligence (KXEN?) vendor that goes public. Industry structure and dynamics makes of it a no brainer: in this market, you’re either huge or unsignificant. So there’s room for large specialists of one market.

• M&A as value-creation drivers in the software industry

It’s sad to say because I don’t like making the case for acquisitions rather than building companies to grow and last – but figures don’t lie. I see this acquisition, looking beyond price, as a smart pre-emptive move by SAP against Oracle, and an even smarter move by Bernard Liautaud, Chairman of the Board and cofounder of Business Objects, who had acquired Cartesis as soon as Oracle purchased Hyperion: SAP could then only turn to BO to build an Oracle competitive solution. I’m not quite sure SAP would’ve acquired BO had Business Objects not eaten Cartesis the blitzkrieg way. Hence the drawing for this post…It’s a fish-eat-fish world.

• Deal will damper the French software industry? Not quite…

Anyone saying loosing France’s #2 software vendor is bad for France doesn’t know how it’s been like to work at BO recently. Speak with anyone at Business Objects and you couldn’t avoid talking acquisition by Oracle or SAP or IBM right away, usually the first or second sentence: BO guys couldn’t stand not being acquired yet. Many employees must be relieved: the company is 17 years old so it’s likely most stocks have vested and employees will either join other startups to ‘do it again’ (good for startups), start their own software companies (even better for the economy), or, for the wealthiest, become business angels in the business of software (great, we badly need them). On top of that, all BO developers or consultants I met were crème-de-la-crème people: Business Objects is one of the top software developer schools in the world, and I believe this is why SAP AG agreed to pay a premium to acquire this business intelligence company.

CEGID is likely to be acquired some time soon as well. Again, the decentralized structure of the company will make it likely to foster the birth of many software startups. Which at the end of the day is good for the industry and the economy.

By the way, as far as I’m concerned, since my job consists in spotting the next Dassault Systèmes, CEGID or Business Objects, to enhance its growth through leveraging the MS technology stack, I’m happy to realize I’m not out of a job yet…

Last point: after business intelligence, I see CRM as the number one software consolidation playing field. Don’t ask why.

Here’s a little fact sheet mixed with some thoughts on Green IT. Green IT is a truly serious topic that should be thought over and tackled over a long period of time. There is not one answer to the sustainable development challenge. On thing that’s pretty sure though is that Information Technology, an industry that grows steadily, represents a part of the problem and probably has the potential to generate the bulk of the solution.

CURRENT SITUATION

• According to the Gartner Group, 2% of greenhouse gases in the atmosphere are generated by computer networks. Airlines are responsible for the exact same percentage of gas emissions. This figure is bound to increase due to the fact that 3 million new Internet users join the web every month – the bulk of them surfing from their cellular phones; and the huge investments Web players do in datacenters (I noticed something like one third of funds raised by self-hosting SaaS or web startups are aimed at datacenter investments).

• Consider a file. In its entire life cycle, it will consume 10 times more energy than it took to create because: it will be edited, saved, stored on a client hard drive, printed, sent by email, stored on a server, etc. For every new file created, 400 Gbytes of bandwidth need to be added to the Internet (think Video on Demand or advertising banner…).

• Every second that passes sees 24 Kg of PCs produced, 1.8 tons of raw materials aimed at the Information Technology market, half a ton of CO2 generated by hardware heat, 108 Kg. of PC-related garbage.

• Today, there are about 315 million PCs obsolete enough to need a recycling. Huge market! Any creative entrepreneur in the room?

• 2 billion more Internet users will cost 3 times more energy to connect.

THREATS

• Permalinks urge servers to be connected 24/7/365. Albeit it unleashes positive collaborative energies, Web 2.0 is extremely resource consuming.

• VoIP is a fantastic cost-killing opportunity. But it increases traffic dramatically. This issue will have to be tackled at some point. Again, there is huge a market for a VoIP secure compression standard just in case some genius entrepreneur happens to read these lines. We are still in need of an MP3 or DivX standard for IP voice messages.

• RAID redundancies imply  purchasing 2 hard drives. Which actually increases consumption by a factor of 2.

• Cellphones do more and more things everyday. Will a printer be embedded in every mobile phone in a future?

SOLUTIONS

• Multi core processors (produce less heat, more powerful)

• Grid (calculation resource mutualization)

• Working from home from time to time saves time (you don’t waste 2 hours a day in traffic) to yourself and money to your company (more time to work resulting from commute time saved). Furthermore, leaving the car in the garage lowers CO2 emissions.

• Bicycles to go to work (see the Velib initiative in Paris, designed and operated by JCDecaux & user interface + inventory system built on the Microsoft platform) cf. picture above

• Electricity consumption optimization software solutions like IDEAS program startups KalibraXe (a marketplace that allows your company to lower its electricity bill through lowering sourcing costs by making suppliers compete on price) and DOTVision Streetlight Vision (that help cities reduce their electricity bills: who hasn’t  seen a street lamp switched on during the day?). Both ‘undergo’ severe 4-digit growths and I actually believe there is a huge market for clean tech + software solutions. Most of the time, sustainable development and economic performance constrains are aligned. I don’t think these could ever part ways.

• Creative ways to lower server load: use [RSS + cache] combinations as included in Google Reader or use solutions like FaceBook in consumer environments, or blueKiwi in enterprise environments to lower the number of emails, which reduces storage and bandwidth needs through centralizing all the information within a social entity on one single location (eg Facebook group or blueKiwi topic board).

• This is something we do at Microsoft: every file printed out has its own cover sheet mentioning the author. This way, people save the first page (that mention the author) by putting it in a recycling bin and are bound not to take print outs that aren’t theirs – you know, when you realize you took someone else’s printouts – it’s often too far to go and put it back…

• Use recycled paper for draft printing AND corporate communications AND product brochures. Basically, use recycled paper as much as you can. Some people say the recycling process is more energy-intensive than the process of destroying. I don’t believe recycling has no future: I see it as a very convenient solution to start working in the right direction.

• Server virtualization has turned the tables: running many environments on a single machine made the computer industry paradigm shift from “1 application = 1 server”. In many companies, when there used to be 8 servers used at 10% each, you now find one server used at 80% of its capacities + 1 back-up server. On top of that, it all results in costing less in Air Conditioning to keep the room cool. I therefore bought some VMWare stock recently …

Over the last 6 years, the Oracle has consistently outperformed its arch rival SAP (see chart below: SAP’s in red)

Could M&A be more virtuous than organic growth after all? This is a real, tricky question: Oracle mostly grows through a well-thought acquisition strategy whilst SAP has always preached organic growth. Most people, including my humble self, would tend to answer “no” intuitively: organic growth has to be better than external growth. But isn’t the Oracle example proving us wrong?

Large high tech corporations are famous for acquiring technologies, engineers, and intellectual property rather than market share. In other words, disruptive startup acquisitions (CISCO is probably the best example of a company with a real acquisition integration know-how) rather than larger company mergers. With its bullish-at-utmost approach, Oracle has truly turned the tables: Oracle has kept acquiring large enterprise software publishers like JD Edwards, Temposoft, PeopleSoft, Siebel, Hyperion, Agile. Since 2004, Oracle has acquired 35 companies for a total amount of 25 billion US dollars (average price: US$ 700m). Integrating these companies has been and remains a challenge for Oracle: internal wars between people from different acquisitions are still going on here and there. These could be qualified as counter-productive for Oracle. However, why does its stock do so well? How come Oracle provides such a track record of supposedly ‘worse practices’ while at the same time, it has never performed so well in its history 2007 (revenues: close to US$ 20bn; net profit: close to US$ 5bn; current revenue growth: +20%, largely due to acquisitions; earning per share increase: 25% +)

ex-Oracle entrepreneurs: born or made?

The culture of Oracle is said to be extremely tough, result-oriented – which produces highly aggressive and effective executives, but is no pick for people looking for a mild atmosphere at the workplace. As a result, Oracle as a workplace is one of the most controversial places in the high tech world. I believe it shouldn’t: Oracle has produced some of the best entrepreneurs in the software industry. For instance, Bernard Liautaud and Denis Payre, founders of Business Objects, were Sales executives at Oracle before starting up BO; Charles Ferguson, founder of Vermeer Technologies (which produced Frontpage and was later acquired by Microsoft) had worked 6 months at Oracle before returning to his Ph. D. research; Marc Benioff had spent 13 years at Oracle Corporation between 1986 and 1999 upon founding Salesforce; mBED and NetLedger, later renamed NetSuite, were founded by Evan Goldberg who had priorly worked with Larry Ellison for 8 years at Oracle; and I’m not even mentioning the hundreds of Oracle spin offs or startups ran by former Oracle execs…By the way, I may have forgotten some of these. Which other large high tech corporations are famous for producing (or not producing) executives keen on founding great startups?