Microsoft Apps on the iPad and beyond…

I guess at first it sounds rather odd that the rumor mill is swirling with a pending release of Microsoft Office for the iPad.  I mean honestly for years Microsoft had been hell-bent on creating and owning the tablet market and now it sits at somewhere less than zero in the space.  Now it is reduced to playing Apple (and Google’s) game.  Granted we are being told great things will come with the release of Windows 8 somewhere later in the year, but in the mean time Apple is king and Google’s Android is the only thing making a run at that mountain.  In the meantime more reports are starting to surface that Microsoft Office is on the verge of releasing a version of Microsoft Office for the iPad.  It sounds a bit strange but we could make an argument for history repeating itself or we could see a battle ensuing between the two crown jewels of Microsoft: Windows vs Office.

When Steve Jobs launched the original Macintosh computer back in 1984 it ushered in the era of the graphical user interface (GUI).  He was not the first to do this as it was based on work done at XEROX PARC Labs, but he was the first to bring into to a mass audience.  One person saw the immediate impact and value of what the GUI would bring and set to learn all he could: Bill Gates.  Next his company, Microsoft, would start creating apps for the Mac, such as Word and Excel.  This is all, so far, common knowledge and those in the industry know the rest of the story.  But the question I put forth is “is Microsoft Office taking the same approach to Tablets as Microsoft did with the Mac”?   The reality is by the time Windows 8 ships it is pretty likely Apple will have sold another 25 million iPads.  I would also bet pretty strongly that when Windows 8 ships its initial year, it will not sell anywhere close to 25 million tablets (last quarter Apple sold 15.4 million iPads).  I am sure the Microsoft Office team, under the able leadership of Chris Capposella have had these discussions.  I am also sure that if they know those numbers they are asking,  “Are people buying tablets instead of PC’s and are we in danger of losing market share”?

The second thing, and  I can only speculate here, is that this type of development is not going down well with the Windows 8 team.  A release of Office on a tablet other than Windows, before Windows releases their tablet. There was a time that  Windows and Office seemed to work hand in hand.  Those days are long gone.  With Steve Sinofsky hard at work releasing Windows 8 and launching Microsoft into the tablet space (yet again).  I am sure they would love to launch the first version of Office for the tablet as a competitive edge.  But based on what the rumor mill is saying, it sounds like Office cannot wait for that train, they will be catching an earlier one.  The market will be over 100 million tablets when Windows 8 launches and the reality is the Office team cannot wait for its brother in arms to catch up as the train will have long since left the station.  The good news for Windows is that at least for now it is limited to iOS and there seems to be no plans for Android.  But unless Windows 8 makes substantial headway in a short amount of time, the temptation and reality for the Office team will be too much to ignore.

A final question would be the viability of desktop productivity applications in a Tablet, a device with no mouse and no keyboard.  Would I find myself using Excel to make pivot tables on my tablet?  How about animation slides with PowerPoint?   Probably not.  I would hope that the Office experience would have been rethought with the different type of interaction between human and technology with the tablet.  Technology is in an exciting phase where we are no longer confined to the desktop, but can access technology solutions wherever and whenever we would like.   For a long time Microsoft Office has been trying to be part of that experience.  Pocket Office for Windows Mobile anyone?  They are not wrong to try but maybe the challenge is they are trying to create a mass consumable experience that nobody really wants.  When I am hard at work on an important presentation or financial review , being at a desk in front of my desktop or laptop makes sense.  But when I am out one the town do I need Office with me?  When I am on my tablet am I doing business or browsing the web?  Playing games?   All questions that have answers.

Microsoft Office is the most successful productivity suite in the industries history.  But as technology changes so are people’s needs and understanding of technology.  A lot of the ninety percent market share can be attributed to people buying PC’s that came pre-installed with their purchase.  That did not necessarily mean that people were actively using Microsoft Office.    It reminds me of the days when Windows Mobile launched and there was a lot of bickering between Windows Mobile and MSN.  MSN was on mobile platforms such as Symbian and RIM, where as Microsoft Mobile felt they should be only supporting one; Windows Mobile.  The problem was that if MSN had done that it meant the prime competition at the time, AOL and Yahoo would east up the rest of the market share, which at the time was the other 85 percent of the market.  Moving forward it seems  one of those titanic shifts is taking place in technology that occurs every  five years. It is rethinking the boundaries of how we consume and experience technology.  A final point is any time you ship a device with Office, you add cost.  Yes Microsoft expects money for its service.  In an increasingly cost conscience environment is Office something we need so bad on our tablet?  As part of the Apple App store how many people will actively search for and pay for Microsoft Office?  The question for Microsoft Office, in order to maintain 90 percent market share does Windows have to be content with 50 percent

Good Night and Good Luck

Hans Henrik Hoffmann February 27, 2012

Categories Uncategorized

Facebook IPO – The new tech bubble…not quite

With the hype leading up to the Facebook IPO there is the beginning of a lot of discussion around a new Dotcom boom and bust. Just like we had back in the late nineties. Though I can see the similarities I don’t think this is going to be like the last tech boom. I believe we have come along way since the bubble and I view this upcoming tech bubble with a lot of optimism and I think with good measure.  But Wall Street, like any other media outlet love,s a good story and history always provides us a window into the future. But in the end there are a lot of reasons for my optimism around this new tech boom.  But before we move forward Let’s  consult history and what it taught us.

In the tech boom and bust there were a lot of things that went wrong, but maybe most notably was a loss of common sense.  A lot of discussion was around new business models and throwing away the old all due to the internet.  Though this was most certainly true it did not mean we replaced balance sheets, income statements and cash flow.  Second, as exciting as the internet was, the infrastructure was simply not in place to support some of the grand ideas.  Yes we were laying down fiber that would cir cum navigate the globe many times over, but most people were still connecting via a 28.8 modem with ungodly slow connection speeds.  The initial Application Service Provider (ASP) model was a precursor to Software as a Service (Saas) or what we refer to as the cloud today.  Your Facebook experience would have been very different and don’t even think if adding photos.  Another thing that was interesting was many companies you could not figure out what they did, it was like Wang computers all over again.  The classic was the Razorfish founders being interviewed on 60 minutes, nit being able to answer the question, “What is it you do?”  It was like asking Bob Dole, “Why do you want to be President”.  Just think Mark Cuban made billions all because he wanted to stream Indiana Hoosier basketball over the internet.  The sucker there was Yahoo, who bought a pile of nothing.

I am optimistic this time around.  Exactly for the two reasons I outlined above.  Today we have a viable and always improving infrastructure for the internet.  Not just via lanline support but wireless connectivity has improved in leaps and bounds beyond what we could have anticipated.  We can thank the iPhone for making the wireless internet an enjoyable experience.  We can now view so many applications and services wherever whenever we want.  Services like Netflix, which will destroy the need for a DVD player in time.  New services are springing up all the time to further improve and enhance our online experience.  Though a lot of videos I stream through YouTube still need to be viewed in the Flash player within the browser, more and more video contents is being done in HD and allowing me to view full screen.  Within the next five years that will simply be the norm.

More importantly many of the IPO’s filed of late have business models and real revenues.  It’s not a promise of a better future, because the future is now.  The idea that old business models are, well old is not exactly true.  A solid income statement and strong balance sheet still matter.  In the case of Facebook they are starting to capitalize on their status as a “place to hang out” on the net.  The filing with the SEC already shows a company that makes $3.7 billion a year.  In a recent coffee I had, someone had met with the Microsoft Advertising team in New York.  the word in the street was that companies looking to spend online ad dollars wanted to deal with Facebook.  Back in the dot-com days you did not hear stories like that and certainly did not see revenue like that in the SEC filing.  It was always just a promise of a brighter future.  With Facebook the word one the street is they are set to grow and grow fast.  When you consider how much time people spend on Facebook versus Google or Bing there is more than just hope.  Advertisers want to spend with Facebook.  Facebook just needs to execute.

Many of the companies pre-Facebook have been impressive LinkedIn, Pandora, Zynga, and Zillow.  Are they Facebook?  No but with such a huge captive audience who is.  They are, however, companies with existing business revenues and opportunities to build on what they have.  This then just becomes a question of vision and execution.  It is by no means guaranteed.  Some I am not sure they are thinking big enough and attracting the audiences they have.  Pandora, as much as I love, needs to think of themselves as digital entertainment and not just music.  But the opportunities are there as we have come a long way since the original dotcom boom days, where we had grand idea just not the infrastructure or platform to execute those ideas.  We have those now.

There will be challenges along the way and as I have said before when America gets excited it starts to see riches, and a bubble will be born.  Our gold rush mentality makes it so.  We will over value companies and do so until basic economics takes us back to earth.  There will be those who time the market and capitalize on its excesses.  We call them Mark Cuban,the numbers of what happened in that transaction for a pile of nothing are staggering.  Mr. Cuban’s company, generated $13.9 million in revenues in 1999.  It was sold in 1999 to Yahoo for $5.9 billion.  I don’t think this time around well see those type of valuations as business fundamentals will rule during this go around.  But the opportunities to cash in for a great profit will be there again.  Hopefully most will have learned this time around when to cash in.  Only god knows how many paper millionaires we had the first go around.  I met many of them and saw their egos rise and then fall back to earth.  The thud was rather distinct.

Good Night and Good Luck

Hans Henrik Hoffmann February, 7 2012