Month: June 2011

Harnessing the Power of the Web

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It was often said at Microsoft and highlighted in the industry trade rags that one of the great strengths Microsoft had been its legion of developers. To be successful in technology it has always been paramount to court the developers, help developers make money and continue to innovate so they stay loyal to you.   To be stagnant is to die.  I was thinking about this as I read about Google’s new technology SPDY (pronounced speedy).  It is a technology designed to help load web pages faster, thus improving web site performance.  If web site performance is better customers, users etc..are likely to stay on the page longer.  It is a win-win for everyone involved.  What I found most interesting is that once it has matured enough Google plans to give it to the open-source community.  It is a strategy that has worked before for Google so I see the appeal. Where is the largest community of developers on the planet?  They are on the web.  So what does the future hold for the developer and how technology goes from inception to reality?

As I have written before the Open Source developer community at its core is that heavenly place on virtual earth that they can come closest to their god…one’s and zero’s ( for assembly developers that one is for you..for the rest just read on).  It is the wild west where everything is available for free, so they can download and get to the actual code of whatever they are working on.  Could be writing and compiling code.  Getting access to the kernel code of the latest Linux OS.  Asking questions to the community about scripting tools like Ruby or Java Script.  Developers love a challenge and the open source community is great for asking questions, getting answers and learning about the next great challenge.  I equate Open Source with “the Borg” from Star Trek – The Next Generation (ok I have crossed over into “über” geekdom, but it was the best analogy I could think of – next blog: “The life of Giorgio Armani”, how’s that for recovery?).  But open source does provide for a network of a broad and collective minds and tapping into those minds and getting them excited is a way to tap into a huge potential financial windfall.  The support of the developer community is the quickest way to start generating “buzz” and once that starts others quickly come on board to try to get on the wave early before it crests,

Sales and Marketing is one of those things the open source community equated with the ills of a capitalist society and was and sometimes still is frowned upon.  I can see the appeal of the net to bypass this need for sales and marketing but even the internet has evolved.  Despite the appeals by some to minimize this skill set it will always be necessary to some degree as they are the ones that develop and deliver the message you are trying to convey.  Open source started as a grass-roots movement but as it has matured corporations have started to be more willing to embrace.  There a multitude of services behind it, could be ad driven models or service driven all requiring the S&M (oddly appropriate) folks to get involved.  In terms of generating “buzz” they were core in getting Google’s Android off of the ground and into the minds of developers.

Moving forward it is  also important to developers that whatever platform they are writing software for, that the company they stand behind is perceived as a leader towards the future.  Developers have responsibilities to and want to make sure they see bright employment horizons beyond the current year.  Apple, which is anything but open source has been able to get developers revved up for its platform by being perceived as a market leader and innovator with a strong grasp of what the future will hold in terms of opportunity. They also do a great job of sales and marketing with the Apple logo and tens of thousands of websites, TV personalities saying ” go to www… and download your iPad app”, not to mention the many websites I visit with the download your Apple app, “click here”.  The flip side is Google’s Android, which shows the velocity one can generate through the web.  Apple had jumped out to a considerable lead.  Had Google opted for a apple’s to Apple’s approach, I don’t think they ever would have caught Apple.  It is already projected that Google will catch Apple and exceed Apple in market share and applications.  By engaging and embracing the open source community, Google was very quickly able to generate excitement and mass in its platform.  It engaged the open source community and the “buzz” generated spread like wild-fire.  If they had tried to build their own more closed community it would have taken years to be successful.

It has  become apparent that to generate mass quickly that you have to consider trying to harness the power of the web communities to gain access to your ultimate customer – the consumers who use the web.  In an ever increasing competitive environment to reach existing and new audiences the internet is the fastest way to success.  That of course does not just mean put it in the web and you will be successful.  It does take some skill and experience.  However if you can excite the army it is a very large army you will have at your disposal.  Everyone wants an army of support.  It’s in intimidating and historically successful and right now, and for the foreseeable future, the largest army is on the web.

Good Night and Good Luck

Hans Henrik Hoffmann June 29th, 2011

A Society of Fear

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For all the progress we have made with the technological revolution there has been a cost to our daily lives. Like so many things for every two steps forward we take one step back.  Despite Microsoft Chairman Bill Gates’ always optimistic view of what technology can accomplish, it does not always seem to me to be all so rosy out there on this big orb we call home.   The information age at times produces information  overload, which causes us to have to segment what we read and hear. We are filtered a stream of negative news briefings, in a manner we simply cannot keep up with.  We just accept what is written as we do not have the time to question. With technology bringing us so much freedom, society as a whole seems gripped by fear.   We base our lives on what is wrong with society and lose sight of what is right. In many ways it is defining us.

When I look back at my childhood it seems that I had unlimited freedom to go and do whatever I pleased.  I had a lot of wooded area around the house I grew up in – amidst some good size neighborhoods.  I would wander into those woods alone or with local kids with no fear.  The woods were a haven of fun, it was like “Never, Never Land”.  The games and space seemed endless. I would be gone sometimes for hours but would always return safely home.  Maybe a little dirty or with a bruise but no one seemed to have any concerns, least my father and mother.  It all seemed so normal.  Today with our kids, we rarely let them out of our sight.  We fear letting them go in the woods alone, who knows who else prowls the forests near our home.  When I turn on the TV and see John Walsh host “America’s Most Wanted”, my stomach turns knowing what happened to his son and in a local department store.  Then the “what if” scenarios start in my mind as I think about my children and I crawl into a self-made illness.  Based on what I see today it seems amazing my mom ever let me or my brother out of her sight.

School was different to, as the levity extended kids was more forgiving versus today where if you say or threaten anyone, or simulate a weapon, it could lead to a suspension from school.  In sixth grade  I got in a fight and bloodied up a fifth grader pretty good ( I have since learned that the fifth grader in question went through a massive growth spurt and I am lucky to be alive).  I was brought to the principles office.  He was very stern with me and punished me by telling me to  go home and tell my parents what I did (yeah right…).    My parents never new, though I suspect my dad would have been proud, he was a fight fan.  I was in school the next day.  These days I would be suspended for a week and have to see a councilor.  In fairness to the schools things have changed.   There had been numerous incidents in our schools – in the inner city where gang violence has raged.  Even when I was in high school you heard about security guards in inner city schools, in cities such as Detroit or Philadelphia.  The poor with no hope.  One event changed that perspective… Columbine.  Then it was not just an inner city problem but everyone’s.  A sad statement on where we are today, but true.   There seemed no reason or justification for such an event. As we learned more about the perpetrators we came to see they had fairly normal upbringings    The aftermath of that event left a country shaken and wondering how and why?  Now every high school in America seems like it has airport level security, or better.  Reality is cruel.

In college I saw an interview with Tom Petty discussing his song “Jammin Me”.  This was the late eighties and he was discussing how much information we receive and the difficulty of processing it all, which was the basis for the song.  It was true then, it is naive now.  The interview was before the internet and we still had less than 60 cable stations.  Today we receive information so fast we find ourselves constantly having to read the latest report regarding a disaster of mother nature. or a new report on what we should be eating or not eating.  Many stories and reports have valid claims but it depends on the source and today there are so many different sources.  We move so fast it seems we do not have the time to question and without that ability it is difficult to find resolution.

The media often times does not want to confront it as they are never to blame for anything, they are just doing their jobs for the greater good of society and since they control the airwaves they get to dictate their points.  They do however care about viewer ratings and if negative news can generate ratings then they are in the game.  I tire of the right and left feeding this frenzy, always with the same mantra, “It’s not your fault. it is someone else’s and you are being made to suffer because of it”.  Feeding fear with its favorite friends, hate and anger.  But rather than challenge or question many tend to retreat to their favorite talk show host or extreme website.  To gather more information to fuel the fire.

There are a lot of reasons for these attitudes and emotions.  It seems as a society we easily fall prey to the notion that it is not my fault but someone else’s.  It is easy to do when life is not going so well, it seems to lessen our burden.It would be great if that lead to happiness, but the emotions associated with this attitude are not of sunshine and blue skies, but of anger and vindictiveness.  As we get more information we learn more about the remote corners and remote horror’s of society.  Leading us on and never-ending.  It would be nice to set ourselves free and simply start living.  Enjoy a ray of sunlight or a drop of rain.  To simply appreciate being.  But alas the excitement and rush of the information we receive has a grip on us that it will not willingly let go.  It has become hard to be disconnected, even when we want to be.  For all of technologies promise we are more scared than we ever have been.

Good Night and Good Luck

Hans Henrik Hoffmann June 22, 2011

Microsoft Licensing History and Challenges Revisited

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Sometime in my blog posts I like to revisit older posts to see if thing shave changed or not.  With the Microsoft Fiscal Year coming to a close June 30th I thought I would revisit this one.  It may be a bit dry to some but this one is for all my old co-workers in the field, hoping the year has treated you well:-)

With the end of the Microsoft fiscal year coming around I thought I would write a little about what my fellow co-workers make their living on – the licensing of Microsoft Software. It actually is a rich and exciting history and good insight to the future of Microsoft. In 1976 Bill Gates wrote a letter titled “Open Letter to Hobbyists” in the MIT Homebrew Computer Club newsletter which expressed his frustration that many were using Microsoft’s BASIC programming language and distributing it without having paid for the software. This letter is probably one of the most important documents ever written, not only for Microsoft, but for the entire technology industry. The Open Source community may decry my assessment of this as the most vile and evil thing ever written, but without this document they would have no enemy. If you don’t have an enemy you really don’t have much of a cause. The letter established what Microsoft was going to do to build a business model that would lead to billions of dollars in revenue. All in the name of the right to profit on intellectual property. Amen.

When I started in 1991 one thing that had been in place for a while and was generating a lot of revenue was the OEM model. I wrote about this earlier but this was the simple process of licensing software (early on MS-DOS and later Windows) to hardware companies who manufactured PC’s. It was a great model for a new industry that was still trying to find its footing. All these new PC manufacturer’s needed an operating system and at the time MS-DOS was cheap and could be licensed. Some of those names became big players in the industry like Dell, Compaq and Gateway. It was cheap for Microsoft. Once you had created the disc you just made some copies and shipped to eth OEM who installed on their hardware. It was simple math. My cost is $1 to duplicate the disc and I charged $75 (this is a rough estimation). The margins in the intellectual property business are usually greater than 90 percent. It has become multi-billion empire within Microsoft. Whenever you watch CNBC or read the Wall St Journal and it says PC shipments are up, it means Microsoft is making hundreds of millions of dollars.  The millions are counted in seconds.

What was beginning when I started at Microsoft was the more structured process of licensing to businesses. Like all things it started small, but it represented a real “green field” opportunity for Microsoft. Remember at this time the idea of personal computing was still new to many companies and with it they received a whole host of benefits, but at eth same time they had new headaches they had not experienced before. When a new operating system was released did the company have to go to the local reseller and buy new copies of the OS? would they get a discount after they had purchased so many copies? Why did they have to do this, why couldn’t Microsoft? Bing (no pun intended), a new licensing model was created. First there was Select Agreements, soon to be followed by Enterprise Agreements. Stay with me on this one as I know licensing is about as much fun as watching paint dry, but it is super important to helping one understand how Microsoft makes money and the challenges they face in the not so distant future.

First lets tackle a Select agreement. In simple terms this is just a negotiated price sheet. Only two things occur here. The customer and Microsoft negotiate what will be on the price sheet. The second being what will the discount be. They are always three-year agreements. From a sales reps perspective it is pretty simple – when they sell additional software into a company they place an order through their reseller who provides the quote back to the customer and collects the purchase order. Pretty simple stuff – there is one additional things – maintenance or the current term software assurance (SA). I purchase this at the time of order and if I want all future releases of Office I pay for SA, when it ships I automatically receive as part of my contract. Usually however a Select agreement is not alone.

Now we hit the big agreement the Enterprise Agreement. I will say my bias in this whole blog is towards these EA agreements as I spent over half my career at Microsoft calling on Fortune 1000 companies and working with our account teams to facilitate the growth of these large cash cows. The EA in short is a commitment. A three year commitment. It is a large part of the Microsoft licensing machine. For many sales reps it is their lifeblood (or death depending on how the deal goes). So what exactly is it? It is a list of products a customer commits to that includes a product (Windows) with Software Assurance and payments are spread out over three years. If you do a $60 million deal then it..(I take it most of my readers are good at math). So there you have it you are all now Microsoft Licensing Specialists. There is a job title at MS for Licensing Specialist, so apply now you are qualified.

Early on in the early to mid 90’s this was all greenfield opportunities for Microsoft sales reps. Most companies needed an agreement with Microsoft and the products were really not many – in fact the first ones would be dominated by Windows and Office. It was a great time to be in the field. It created an odd sales model as well as when reps made and exceeded quota they were not compensated with huge commission bonuses but stock options. As we all know in those days the stock options were the road to riches. It also created a very Redmond centric environment where the Product groups were all-powerful and the field was simply a delivery vehicle. I only say the sales model is odd because to a large degree that mindset remains today and though bonuses are available the Microsoft field rep is not compensated like other industries. Redmond still holds the view that they are the kings of the company. It always cracked me up and made me angry when product managers would say “the field does not know how to sell our product”. This despite the fact that they spent so little time in front of customers. This is why so many senior leaders who have joined Microsoft say that Microsoft truly lacks a sales culture.

To follow-up on this some more the days of stock options are gone and the EA agreements that were originally Windows and Office have grown. Early on that was a good thing as Microsoft added more and more value into the EA. However starting even before the financial market meltdown the agreements had encompassed so many products from Windows to Office, development tools, Server products (SQL, Exchange, BizTalk, OCS, MOSS etc..) all with client licenses, it had become apparent companies were in many instances paying for stuff they did not use. When the market meltdown hit companies really started taking a closer look at not just Microsoft agreements but all agreements. The challenge the field is now facing at Microsoft is how do you grow a business when companies are trying to shrink what they buy from you? The answer from current Microsoft COO Kevin Turner has been “you take share from your competitors”. I always found this a bit simplistic since in my view you are always trying to take share from your competitors – in the good times and the bad. When it comes right down to it the acct execs and other sales professionals at Microsoft get brought into a spreadsheet excercise and provided the account team has done their job the numbers either go up or go down.

Moving forward and looking towards the horizon there are big changes in licensing under way as the industry starts to look at cloud computing and subscription based services and move away from the traditional licensing of software. It is not entirely new. I was there at the beginning when we introduced at Microsoft Service Provider Licensing Agreements (SPLA) in 1999. It has just taken a while for the technology to catch up and the market to be ready to make this move. For sales reps it represents an entirely new “green field” opportunity. You can see based on the latest sales hiring activities at companies like VMWare and SalesForce.com. For Microsoft it represents both an opportunity and a challenge as they have to transition from traditional licensing models to new licensing models. It is the challenge of having a legacy, which many companies entering the cloud do not have. I have no doubt Microsoft will overcome th technical challenges it faces but the ability to handle the financial transition from “old school” licensing of IP to the modern world, in my view, will play a huge part in determining the success or failure of Microsoft in the next five years.

Good Night and Good Luck.

Hans Henrik Hoffmann June 15, 2011

Microsoft Store versus Apple Store…my research project

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I admit when Apple opened their first stores I was a bit surprised, as a technology company going into the traditional retail world seemed at odds with what technology was all about.  Technology was all about the future, retail did not seem a part of the equation. But it did not take long to see that these stores were a screaming success.  They had a “cool” factor about them and parents seemed to flock there during the holidays.  I read emails by coworkers who went into these stores just to experience them.  Everyone seemed amazed at the “buzz” that these stores were creating in the industry, not to mention the great advertising it was for Apple.  Then the buzz started around the Microsoft campus. Why can’t Microsoft do this?  We have way more stuff to offer than Apple.   And so it began.

It probably really began when Microsoft hired former Wal-Mart CIO Kevin Turner to come in and act as COO for Microsoft. It was not long before he began bringing in Wal-Mart experience to the retail division, hand picking 25 year Wal-Mart vet David Porter to run the strategy around building a world-class Microsoft retail franchise.  Kevin was a new leader with a different type of history.  One that frankly seemed stuck in the past and not suited for the future.  But this was retail and retail carried with it a lot of history  Kevin had met with and learned from the king himself, Sam Walton.  How could Apple stand a chance against that?

Around the time I took my new job I had plenty of opportunities to visit the Microsoft Bellevue offices.  If I had some downtime I would take the opportunity to visit the nearby mall where Microsoft had just opened its first in-state retail store.  They were positioned just a couple of stores down from the Apple store, which was situated near Nordstrom’s, a much coveted retail space in the world of shopping malls.  If we looked first at the store sizes they were vastly different.  Apple almost seemed to be following the Subway franchise model with a narrow floor space.  If you stood back from the door 10 feet you could see into the whole store without moving your neck.  The Microsoft Store on the other hand occupied the old Eddie Bauer space.  It was probably 3-4 times the size of Apple’s floor space.  If you stood back from the door ten feet your neck definitely had to move right to left to take it all in.

I would often count how many people were in the store – usually the Apple Store was twice as crowded and every employee in the store was engaged in some type of activity.  Helping customers, restocking, doing demos.  There was a lot going on in that small space.  In short the space was lively. The Apple employees all clad in blue, running all over the place.  The noise level always seemingly on the rise.  In contrast the Microsoft store,  though stocked with lots of items seemed relatively tame.  As stated earlier it was so much bigger. There were a lot of employees just standing around and far apart, because they could be.  All clad in different colors (Red, Green, Blue and Yellow…the colors of the Windows logo) Some tinkering on laptops.  Then there was the challenge that there actually was so much stuff.  You had a Windows Phone section, Zune (OK, that’s going away), XBOX, etc..the last one would seem to be the one to generate a lot of excitement and interest but even when there were the same number of customers as Apple’s store it still managed to feel…dead.  It was very quiet in comparison. It probably did not help that the Microsoft store does not and continues to not offer a Tablet.  In today’s tech world experience is everything.

It brings to light an important difference between Microsoft and Apple…the channel.  The Microsoft model and Apple model are very different when it comes to partners .  Where Microsoft has always had a partner led model built on choice, Apple is much more controlling. To get the Apple experience I go to the Apple store.  To get the Microsoft experience I have lots of stores and partners I can go to.  Another problem is price.  Apple controls everything so my widest range of choice for Apple products will be at the Apple store and the prices will be right inline with what I get at other stores, like Best Buy.  Not so with Microsoft store.  I can choose to buy products there but they can be found for cheaper elsewhere.  If they did drop their prices they would create their own channel conflict and make for a lot of unhappy partners.

I am not going to be recruited by CNBC anytime soon to be their retail analyst on the morning show (CNBC please call me!!) but you can observe a lot by just walking the mall and paying attention to what people are doing  and how they look doing it.  You can tell if a store has excitement or not.  You can tell by looking at the people who work in the store.  Sitting around looking board is never a good look, for anyone.  But when you represent a brand it is imperative.  Especially when you are talking about two of the most recognizable brands on the planet.  In my unscientific study it seems apparent that on the Microsoft side something is missing from the formula.  I can only guess that this is a rather expensive en devour, one which if Microsoft were to fail would be a significant blow to the company.  It seems like this defeat of Microsoft by Apple is ongoing, it would be somewhat ironic if it was the retail stores, not the Tablet or Phone that put the nail in the coffin.

Good Night and Good Luck

Hans Henrik Hoffmann June12, 2011

Categories Uncategorized

Execution by Hunger

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A recommendation to me by my former soccer coach and an excellent one at that.  The book “Execution by Hunger” by Miron Dolot, details a human atrocity behind the iron curtain of the Soviet empire, specifically Ukraine.  You can divide the book up into two pieces.  The first being the process of collectivizing the farms by the Soviet Union.  Having read quite a few books of life under Stalin, this was new and a welcome surprise.  For those who do not dare tackle Alexsandr Solzhenitsyn’s  “The Gulag Archipelago”, this is a much shorter and riveting route to understanding the terror of life in the Soviet Union under the Stalinist regime.

Set in a small rural farming village in the Ukraine the first half of the book start’s in 1929 detailing the process of collectivizing farms.  Collectivizing meant handing over your family farm to the state. This was because in a communist paradise everyone worked for the greater good and thus there was no need for people to have private property. The first part of the book deals with getting the farmers to “buy” into the new systems.  What one comes away with is the system put into place to essentially bully the farmers into voluntarily joining the system.  They would divide each section of farms into communal organizations and force them to attend nightly propaganda meetings.  The point being to indoctrinate the people and if they did not sign up things would only get worse.  One instance was the “Path Treaded” where if a farmer did not sign up they would be told to take a note to another commune.  Once there they would essentially be questioned once again.  the paths in the snow that were created would become known as the “Path Treaded”.

As time passed the efforts made to get people to collectivize would become more severe.  Coming to homes and confiscating items.  Those who would not join, well some would be arrested and sent away.  They would be referred to as “Kurkuls” (in short, private farmers) and based on the propaganda machine they were “enemies of the people”.  Most of these men perished in the gulag.  What is most impressive and horrifying is just how organized and well run these propaganda machines were.  They were like a well run American Corporation, but the end results were not a product just brainwashing.

When all the arm shad been collectivized it was time to get ready to plant and harvest.  As part of the communist five-year all wheat was transported to Russia little food was left for the villagers.  During the harvest they received a small stipend, but when winter set in they were all on their own.  It was important for the Soviet Union to show the world how productive they were, that communism was leading to a new world order.  In this case it would just lead to death.

During the two winters the villagers were locked up in their homes.  Many of the men were gone, locked up and removed to the remote regions of Russia, leaving just the woman and children to fend for themselves.  Many would die mercilessly in their homes as first the child would die and then the mother.  Sometimes by freezing to death and sometimes by suicide.  The pain endured by these people is unmentionable.  They became just corpses frozen until the spring thaw.  Those who ventured out would be found on the road side in a field.  Some not appearing until the snow melted.

In one chapter the mother and son venture to the village, walking for miles in the bitter cold.  As the approach the village they come across a garden of grotesques statues.  The statues however are not marble but human bodies lining the road into the village as if to warn strangers from venturing closer.  As they enter the village things only become more horrific. At one point the son turns the corner to see a pile of human corpses reminiscent of what we would later see in the Nazi Holocaust.   The son says it is a site etched in his memory.  With all the horrors he has seen it’s amazing he could differentiate.

Hunger may be one of the cruelest struggles humanity has to face and luckily for most of us we never face it.  In this case it was forced upon farmers not to teach a lesson but to simply destroy what vestige of humanity was left.  Hunger also leads to insanity. So in the end, it is no surprise, that in the harsh winters it led to cannibalism.  Our main character and his younger brother confront his wretched disease.  What amazed me in the writing is as horrific as the incident was there was no bitterness towards the man as it was just a sad result of human suffering.

If there is one character I admire it is the mother.  Her strength throughout the book is awe-inspiring.  Whether confronted bu the communist machine or in the face of hunger she alway protects what is left of her family.  She even takes others in when possible.  During the period of the iron curtain I imagine there are probably a thousand stories of courage that took place similar to this mother.  Most of which we will never know or hear about, just passages in the sands of time. Blown quickly away, never noticed never seen.

Good Night and Good Luck

Hans Henrik Hoffmann June 7, 2011