Month: May 2016

In tech things always move quickly. In my career I have talked at length in many business meetings and marketing presentations of the hockey stick curve and when a particular product or technology hits the inflection point and begins to take off. At that particular point as a company you are either in the game or left in the dust.  It’s a moment that is hard to predict but in hindsight always easy to identify.  A good example would be the launch of the Apple iPhone in June 2007.  Smartphones were a known and growing commodity before the iPhone launch, but ownership was not very high.  After the launch the old flip phones and dove bar phones began to fade away very quickly as they were replaced with a much more useful device.  Only one company , outside of Apple had the vision to see this change: Google.  Everyone else faded into the distance Nokia, Microsoft, and RIM. Companies that were dominant players relegated to footnotes in history.  With all the industry players having recent developer conferences it seems we are marching to new inflection points.   Not a single inflection point, but multiple points which will change the corporate landscape. Points that will have a greater influence on society and how we will live in the coming decades.

Amazon has been vocal this past year, and it is not just Jeff Bezos’ spat with Donald Trump.  Beyond the cloud we have heard a lot about the voice of Alexa and the Echo device.  The idea that the device can earn your behavior and respond to your questions. Not that any of this is new, but it is one of those moments where its time has come.  Voice is one of those technologies that may be reaching its inflection point and be ready to take off.  Their cloud business will continue to grow.  As they focus on more enterprises they are poised to continue to be the leader in this growing space.  Bezos was recently asked about their failed foray into mobile with the Amazon Fire, He simply responded with “If you thought that was a big failure we have way bigger failures ahead of us”.  Taking risks is essential in this industry, you must have a few misses.

Google recently held its Google I/O conference for developers.  In reading about the event I came away with the impression they have a lot in the fire working on thongs like AI and Virtual Reality.  I find it amazing that we are really talking about AI and the impact is far-ranging.  It will impact the current trend if web bots and down the road will impact robotics, in fact it already is.  Today’s robots are simple and tasked oriented (think of iRobots Rumba), but down the road will be self learning and perhaps even able to reason.   Virtual Reality is still in the “dork” phase but as it improves it will lead to new ways to communicate and interact.  As of today we are still wearing ugly head-gear, similar to the early mobile phones which were big bricks (watch Michael Douglas in the movie “Wall St). Driverless cars are also starting to take off.  Google is leading but Uber is making noise and there has even been discussion of Apple.  This inflection point may happen sooner than expected as competition is like wind feeding the flames, when that happens the flames spread quickly.  We have not even broached the Internet of Things (IoT), which is happening, with Google’s NeST group.  This will alter our households and every other structure as we implement smart devices.

Apple at the moment seems stuck in the success of the iPhone, which will be a cash cow for years to come, but has left many wondering “What’s Next”?  Apple suffers from its success and excessively high expectations.  It is competing in voice with Siri, who is still the most famous voice on the planet,  Rumors of automotive.  Apple TV is there but certainly not redefining our television viewing experience yet.  The good news is Apple has by far more cash on hand than any company on the planet with over $200 billion in its coffers, but I have yet to see any company with lots of cash on hand make any aggressive commitment with it.  They seem to spend more time complaining about US corporate tax policies and parking money off shore.

Facebook is that company we are learning not to doubt.  They continue to blow out earning quarter after quarter and were one of the first in on Virtual Reality, buying Oculus Rift.  As mentioned this is still early and rather dorky looking, but Facebook bet early and may reap the rewards, though Google and Microsoft are keeping a close eye an are not far behind.  Facebook to its credit has proved disruptive and I find Mark Zuckerberg a calm and steady visionary at the helm.  The idea of using solar-powered wings to provide internet access to remote areas of Africa was an interesting new take on an old idea.  In the nineties Craig McCaw and Bill Gates teamed up to create Teledesic, which was going to use low-level orbiting satellites to provide access to remote regions.  What Facebook is proposing will be far cheaper and ultimately may prove a more financially successful model.

Microsoft is in the process of reinventing itself and knows it needs to do so in a hurry.  Past mistakes will hurt them, such as Mobility, GPS etc..But they are showing a new willingness to take risks and are competing in voice with Cortana,  Working on Virtual Reality, with Hololens.  They stumbled out of the block with the Microsoft bot Tay (it was taught racism), but have not blinked and remain committed.  They have a big ship to turn, as changing a culture takes time (with contractors Microsoft has over 200,000 employees) but the noise coming out of Redmond is improving and there seems to be a new spring in their step.  They are also admitting mistakes and cutting their losses, Windows Mobile being the prime example.  It’s best to cut losses and forge ahead in areas you can succeed, rather than pour money down the drain that you may never recover, no matter how had you try.

I think in the current industry landscape you need to take the attitude that no matter how far off in the future you think a technology is, it happens to be a lot closer than you believe.  Invest big now, thinking you will profit in ten years, when in fact it may only take five or seven years.  Beyond the companies mentioned there will be other players who could make an impact, I briefly mentioned Uber as one.  There are other small startups like Otto, which seeks to use driver less vehicles to change the transportation and shipping industry.  When I look at many of these emerging technologies I see intense competition as many of the old and new players realize if you miss the inflection point you will cost yourselves billions in future revenues.  The bets will be big.  They have to be.  Taking risks will be imperative.  A desire to fail in order learn so you can achieve success.  Do not cut corners, if you are too concerned about costs best not to play.  There is a lot ahead of us: IoT, Robotics, AI, Alternative Energies, Building a new Grid, and as always something unexpected.  Each of these new technologies will span across industries and will generate billions, if not trillions in net new revenue.  Catch the wave or be pulled under, but do not get out of the water otherwise all will be lost.

Good Night and Good Luck

Hans Henrik Hoffmann May 25, 2016

It is one of those questions I pondered recently as I saw via the media that according to NetMarket Share that Google Chrome was now the most popular browser in the world having surpassed Microsoft’s Internet Explorer.  How did this happen?  It seemed for a while that Microsoft would own the browser world, this despite the DOJ trial and its efforts to placate Jim Barksdale at Netscape.  Microsoft had owned this for over a decade.  As is so often the case in technology you can be out in front or get left behind.  This is a subject near and dear to my heart and it is a story of failed vision and failed opportunities on the one hand and a successful vision and realized opportunities on the other.

In 1995 I was working at Microsoft and we as a company were gearing up for the launch of Windows 95.  I was working in a inside pre-technical sales team, called the Developer Solutions Team (DST).  We were always loading software in beta form from Microsoft and toying around and with this thing called the internet were now being let out of our cages to surf the web.  Of course to do this we needed a browser and there were a few out on the market, but the best was Netscape Navigator.  A few smart folks realized early on that these “newbies” were the enemy.  Something about Marc Andreeson’s quote “we will reduce Windows to a buggy set of device drivers”. Anyone who dared criticize Windows in those days was asking for a beating.  Next thing you know is Bill Gates does a speech in December 7, 1995 saying everything we do at Microsoft moving forward will be about the internet.  Bil Gates had said often through the years he feared a smaller nimbler company coming up and displacing Microsoft. From that point on enemy number one was tiny Netscape Communications.

A little over a year later myself and three others in inside sales were moved to a pilot group focused on calling down on every ISP in North America.  I got the Central Region and Canada.  It turned out to be a really fun job as it was high impact and high visibility. The primary focus was getting ISP’s to use the Internet Explorer Administration kit (IEAK) versus using Netscape Navigator.  The IEAK allowed ISP’s to brand IE, Netscape did not.  The IEAK was free, while Netscape, still trying to figure out a business model, was around fifty bucks.  In addition to the browser wars we started to hear and learn about Linux and Open Source.  To host web sites the name Apache came up a lot. At this point in time the LAMP stack was still not there as did not hear much at the time abut MySQL and PHP.  We were a team promoting Microsoft technology and capturing a lot of valuable intelligence.  It was really the latter that brought to attention the new technology landscape that was starting to blossom.  As a company it would take many years before we fully grasped Open Source.

As we turned to the end of the century Microsoft made some simple decisions. Jim Allchin head of Windows wrote a memo saying we should just bundle IE with Windows. At the time a smart decision.  However as we marched on it would come back to haunt Microsoft.  It was becoming increasingly clear that we were improving our browser with IE v3.0 and starting to take market share.  We were making headway and Netscape was floundering.  They decided to make a big bet on corporate email, after much fan fare it had a hard time getting off the ground and in my opinion was a bad choice.  They were going head to head with Microsoft and IBM.  One thing Netscape was doing was a lot of PR around how many hits to their homepage, millions.  What if they had done search instead of corporate email?  Just saying, things could have been much different.

The DOJ trial hit but Microsoft ability to take more market share did not stop.  Within 5 years Microsoft’s Internet Explorer had become the dominant browser.  Really no Safari, Opera, etc.. Then a interesting thing happened, Microsoft released Internet Explorer 6 on August 27, 2001. It was well received and continued Microsoft’s browser dominance.  Then Microsoft just kind of stopped.  The next release would not come out for over 5 years, in technology terms a life time.  At the time Microsoft was operating on a outdated model, believing maintaining Windows market share was all important and in the short term the revenue numbers would support that, but in the long term it would harm innovation and access to new markets.

In the interim a non-profit open source project got underway and launched the Firefox web browser.  It would develop a cult following and offer new things that Internet Explorer 6 did not, the big one being multi-tab browsing.  By the time Internet Explorer 7 came the market was set to go significant change, primarily due to search and mobile. By October of 2006 Google had developed a business model around their search engine that was generating billions in revenues with huge upside.  A little less than a year after the release of Internet Explorer 7, Apple would launch the iPhone with Google as its search partner. Mobile browsing would be done in Safari.  The rest is history.

In September 2008 without a whole lot of fan fare, Google would release the initial version of its web browser, Chrome.  I remember the day it came out a person next to my cubicle at Microsoft had loaded and we were playing around with it.  What it had from a UI perspective was typical Google simplicity, not a lot of clutter.  Simple Google search box and off you go.  When I left Microsoft a year later it was time to try non-Microsoft things, so I bought a iPhone and used Chrome as my default browser.  The UI was a bit more elegant than IE.  I also loaded Firefox, but I think because it is an open source project it has a lot of techie bells and whistles I do not need.  Over time Chrome has become my default web browser.  The speed of the browser and simplicity of the UI were attractive and after a while it becomes a learned behavior.  Start PC, click on browser.

Chrome did a lot of things correctly. Getting developers to write extensions. Using it to help maintain their share of search revenues.  Always focusing on performance enhancements.  They have now created Chromebooks, which have yet to seriously take off, but are gaining some traction. Google has lots of money so they can fund this PC displacement effort in the short run for revenue gains in the long tun, it is still a bet at this point.  Google has been pushing the browser and web-based technologies.  Google is the one browser that has a Chromecast option that allows me to stream content to my TV, provided I have a Chromecast device (I do) Since more and more content is video this is a handy feature.

A lot of the reasons Chrome has succeeded is the simple understanding of the evolving world and the important role a browser plays in it.  While Microsoft was focused on the next version of Windows they were failing to understand that life was in the browser, not the OS.  Google realized in order to have more understanding and influence with customers they were going to need something more than a search engine.  The browser was the obvious choice as it has become our window to the world in which we live.

Microsoft has in recent months re-engaged in the browser war, but in my view it has backfired.   The marketing folks believed the Internet Explorer name was old and tired and replaced it with “Edge” and it ships with Windows 10 and is only available in Windows 32 bit or 64 bit versions.  There is no support for Android or iOS, which is a bit surprising given the change in views about competing OS’ at Microsoft.  So much I feel of what goes wrong is not so much technology but marketing.  I think Microsoft is so broad in its efforts that it struggles to maintain and sales and marketing momentum behind any particular product.

I was on a team that worked hard to build the identity and market share of Internet Explorer, but probably because it was free it was devalued at Microsoft. But I ask is anyone not on the internet? social media? following the stock market? Latest Football score? Streaming video via Netflix?  In all cases you need a window to get there, and no it’s not Windows, it’s the web browser.  In the digital economy it is very valuable real-estate.  We have gotten so tied to it, from a business perspective we may forget its value. Through Chrome, Google will set its business agenda.  If Microsoft is to realize its dreams in the cloud, Internet Explorer will be a very important component of that vision.  I really enjoyed those early days of the web, it was innocent.  Those days are gone replaced by extreme sophistication.   No need for a telesales team of 4, but glad I had the opportunity.

Good Night and Good Luck,

Hans Henrik Hoffmann May 9, 2016