The Wisdom of Shutting down Windows Phone

Well it seemed inevitable, maybe even late but Microsoft’s phone division went through another downturn,  announcing that it is all but exiting the smartphone business and taking a $950 million charge and laying off 1,850 employees, primarily in Finland.  In a way it seems like the end of a long miserable journey.  A journey that cost a lot to Microsoft financially as well as cost a lot of its industry reputation as a visionary company.  In many ways it caused Microsoft to age faster than it would have or should have.  As bad as this all may sound this could be a crucial and a positive step for Microsoft, causing it to search for new lucrative revenue streams rather than spend time and money trying to recapture something lost that will never come back again (I call this the Ronald Reagan syndrome).

A lot of time could be spent and has already been spent on what went wrong.  I, personally, having sat in the building with the Windows Phone team, am at the point where I feel I could write a book on the subject, but frankly what purpose would it serve? Possibly a historical one, but it would simply be repeating a lot of what has already been said and is known.  I am sure there are many college graduate courses that are covering the subject in detail.  We all took hear them in business school, lessons in business on what not to do. The simple fact is Microsoft blew it, but now it is time to move on. Microsoft is a very proud company, but sometimes it is better to just swallow your pride, and move in a new direction.

I can only conjure up what Satya Nadella and Terry Myerson and team could have been thinking, but depending on who you listen to and what stat you like, since Microsoft acquired Nokia for more than $7 billion, its market share has never been much more than 5%,  Over the past few years it has simply been declining.  The question had to be asked, “how much more are we willing to invest so we can increase market share?”How much do we need to invest to get to 10%?  How do you get emotional appeal like Apple?   How do we differentiate?  I can only guess the numbers involved in product and marketing investment would have been in the billions.  Then you also have to ask, “By the time we get there will the market have moved on to somewhere else?”  Again I can only guess,but the answer must have been, “Can we do better placing our bets elsewhere”?  the answer is simple, “Yes”.

The industry is lining up behind a lot of new initiatives and technologies.  First for Microsoft is the cloud, and Microsoft is competing here with Office365 and Azure.  Are there threats?  You bet, but Microsoft is competing against leaders like AWS and upstarts like Google Docs.  They are in the hunt and generating revenue.  Money should be spent here as it represents the future growth of the company.  The demise of Windows Phone will be an opportunity to double down on this strategic business at Microsoft.  It can place bets on new markets, existing profitable business and growing businesses within the company.  Microsoft is in the game and up near the forefront with Amazon.  They are already generating $20 billion in revenues, the only concern being what will happen to the other $74 billion?

We have a lot excitement in  the industry for new emerging markets such as the AI initiative that is still in the early stages of market development.  To me AI is a horizontal platform play.  Once you create something of industry interest it will be something that can be incorporated into a variety of technologies such as voice and driver less vehicles. Fundamentally the companies or companies that get this right will be able to entice developers to their AI platform.  Something that would greatly appeal to people at Microsoft, since they lost so much developer mind share in the mobile phone upheaval. Not to mention since it would be a horizontal product by nature in could span industries, such as financial, retail, telecommunications etc..This market is in the early stages of development with a lot of grand talk, but no proven market leader at this point in time. The key for Microsoft will be to be in the game when it starts to take off and not fall too far behind. If you are not in the game at the inflection point, all will be lost, as competition accelerates into the future.

Microsoft Satya Nadella has used the term Mobile First, Cloud First world to reignite the innovation pipeline at Microsoft.  On the latter he is doing just fine.  The former will be a challenge to redefine and it is having an impact in other areas.  The failure of Windows Phone means Microsoft currently has no play in Mobile search, Google is sitting pretty with over 90% share.  Could Bing meet a similar fate as Windows Phone?  Probably not as the learning from search will be value in products across the company.  We already see how Google has expanded with search across industries.  I do not see Microsoft catching Google anytime in the near future but the learning alone can lead to new ideas and applications.  In time this will extend to the Cloud First world where Microsoft is quite competitive versus Amazon Web Services.

There are certain technologies that extend themselves.  If you think of Google Maps, it’s a natural technology that has made its way into our cars, whether it be in our car or on a iPhone or Android Device.  The next step will be the driver less car, whose next big hurdle will not be a technical one, but the ones our lawmakers put in front of it. Can government more fast enough.  This emerging market is one that is moving fast but there is still a window of time for Microsoft to be the automotive platform of the future as well as look internally at technologies they own and see how they can be extended into new markets.  I think anywhere we use the term platform, is a natural one Microsoft should play in as it is part of the corporate DNA in Redmond.

As was pointed out at the beginning the death of the Windows Phone need not be something to lament very long.  Rather than waste valuable cycles on what is lost it is time to look at opportunities on where it can gain.  There is a lot of valuable and painful learning that came out of the Windows Phone, but that can be used to springboard the company to the future.  Microsoft will need to make big bets n Cloud, AI, Big Data, and IoT.  It needs to be not afraid to fail, but take those failures as valuable educational opportunities and apply to whatever the next big bet will be.  Where we are today as an industry is in large part due to the early work Microsoft did in the PC and then extending that into the enterprise.  It still spends billions on R&D.  It has the second largest cash n hand on the planet (next to Apple).  In short it has a lot of assets that play to its advantage.  The next five years will challenge Microsoft to define and execute on its big initiatives, but it will no longer have to look over its shoulders as to what is happening on the iPhone, it will only need to look forward.

Good Night and Good Luck

Hans Henrik Hoffmann June 7, 2016

 

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The next Technology Tidal Waves

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

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The Rise of of Google Chrome

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

 

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The Shanty Towns of Seattle

It seems as if it is one of those things that has been around forever in Seattle and in all of America,seemingly ignored but always in front of us; the plight of the homeless. But in recent years the issue has grown in visibility throughout my home town of Seattle. This despite a booming economy that has been a developers dream. Has led to a huge influx of new people to the city (Seattle is now in the top ten cities in America in terms of population density).  It has created the cyber center of the digital universe in Amazon. We are calling ourselves “The Cloud” capital of the technology sector.  It has a vibrant start-up community.  Real estate values through the roof, back to where we were before the financial meltdown.  The median price of a house in Seattle is at $533,000 and not going down anytime soon. Seattle is a billionaire playground of Bill Gates, Jeff Bezos, Paul Allen etc..Yet despite all this new wealth when I drive down I-5 and look to the divide between the freeways I see small enclaves of tents, accompanied with a lot of filth strewn around the encampment.  Even as our city grows with new development, hand in hand it seems the number of impoverished tent communities has increased as well. Littering any empty available space and creating a new open wound on the city, maybe bringing us back to earth from our lofty heights.

You see the homeless faces at every freeway off ramp.  In ragged clothing, usually looking as if bathing is a foreign concept.  Many times nearby is in encampment.  They have some creative signs, some not so creative.  All asking for any money you may have. From a drivers perspective as you pull off the freeway and up to the stop light you make a conscious effort to not make eye contact.  Sometimes you see the same face often enough you begin to recognize them, though never on a personal level. There are gimmicks, like the wheel chair.  The I ran out of gas idea has been tried and proven. Homeless veteran is used so often I am not so sure that any are veterans, but then I feel guilty for thinking that, as some surely are.  In the end you just become numb to their existence.  Man kinds worst problems are the ones you grow accustomed to.

As you drive north or south along I-5 you see on the side of the freeway, in between the freeway and under the freeway a lot of encampments.  Tents clumped together, clothing hanging out on shrubs and small trees.  There is garbage everywhere around them.  For as clean a city as Seattle tries to be there are these pockets of filth all over the city.  The worst part is there seems no solution in sight.  The numbers seemingly just increase. The reasons unknown.  Some of these shanty’s have names, like “The Jungle”,  There are always people there loitering around.  Seattle’s drug problems are not hidden, but out in the open.  It is like Switzerland’s failed attempt of creating a needle park in Zurich (Platspitz Park), minus the clean needles.  The only difference is no vote was taken and no government official endorsed it.  But with a blind eye we all accept it.

Seattle has the fourth largest homeless population in the US, behind New York, LA and Las Vegas.  The first two not surprising given just their sheer size. I would guess as a percentage of population Seattle is far greater.  It seems weekly in our local news there is discussion and debate about these tent cities.  The number if homelessness is increasing rapidly.  In a count recently the number of people sleeping outside has risen 19% year over year to 2,942 (luckily the winters have been fairly mind the last several years).  Many claim a local zip code as their last address (recent survey had 84%, but 30% refused to respond). We have tent cities that have sprung up throughout the town.  These ten cities pop up in church parking lots where they will stay for three months, call these people urban Bedouins.  Moving from parking lot to parking lot, from Seattle neighborhood to neighborhood.  In almost all instance sparking an outcry from local inhabitants. Seattle Mayor Murray announced a state of emergency for the homeless.  He designated three locations for  homeless housing, they are not really houses but shacks made by the same company you would by a shed for your backyard.

The areas designated are in three distinct areas of Seattle: Ballard, Interbay and the Rainier Valley.  It seems an effort to centralize our homeless problem, while providing shelter for those in need.  Visiting the encampment at Interbay, you first notice that is hidden from view down a side street.  It sits in a vacant lot in the middle of an industrial area.  It does not have any structures, but is a cramped mass of tents and blue tarps. There are people mulling about in the camp, but it seems calm (I was there at around noon).  It seemed I think many people would like it to be, you do not know it is there.  In contrast the location in Ballard is right on Market Street, the main drag in the community.  Better yet it is right next to the Old Sloop Tavern.  Convenient?  The encampment had several sheds that were tall and narrow along with tents and tarps. Signs were hung on the fence surrounding the shelter saying “Velkommen til Ballards”, a tribute to Ballard’s Scandinavian heritage and “Nickels-ville”a tribute to our former mayor.  The activity here was not as encouraging.  A man walking in the middle of the street.  Another group of three with one rolling around on the ground, pants half down, drunk.  A group mulling around the entrance of a small market store. all in all not a very pleasing social scene. The third encampment is in south Seattle, near the Othello transit station.  Like the others it was a vacant lot and the city provided some basic shelter.  One nice thing is all the shelter were painted in soft tones, color can enhance anything. The light blues, reds and yellows made it seem more livable.  Like the first one in Interbay you did not notice a lot of activity.

Next to my house not 200 feet away we had a tent city at the local church.  We were told just a few weeks before it was due to arrive in the fall of 2015.  We were invited to the church to hear from the church leaders, a community rep for tent city, and the citizens of this tent city.  The one we had was a smaller tent city with less than 30 inhabitants. We met at the church one evening and were greeted by the pastor. The a man who worked in helping locate and set up tent cities.  There were rules, you paid $1 per day to stay in tent city.  Daily cleanup around tent city, so local residents did not notice accumulation of garbage on the streets.  In short it was run like a commune. Some of the residents spoke and they seemed nice enough and willing to talk with us.  One was Filipino who had served in the Gulf War and said when he got back things did not work out so well and life just fell off the rails.   They were designated to be there for three months with an option for four.  Time passed quickly.  We did have one family, it looked like a father with two young children .  He would walk them to school each day we would see them as we walked our youngest to school as well.  And then one day they were all packed up and gone.

With all these efforts to provide housing what has not come to the forefront is how do we provide help to those in need and not just a handout, but actual help.  These can cover a lot of categories.  Some have serious substance abuse issues, others suffer from mental issues, and then there are those where life simply fell off the rails and need help getting back on their feet, some job training or educational opportunities.    What originally welfare was intended to do.  Get people back on their feet.  It is complicated as some of these discussions go beyond homelessness.  Mental illness seems to find its way into gun rights issues and rightfully so when you consider the number of mass shootings that have taken place in the United States. Homelessness was also due to the financial crisis we weathered, as people bet beyond their means.

I have grown up in the Seattle area and I have seen prosperity that is the envy of the world.  We have 4 people listed in the top fifty wealthiest in the world, with a combined net worth of around $160 billion.  One of the highlights of the holiday season was all the Christmas lights on all the building cranes downtown, and there were many.  Yet despite all these indicators of success we are a city with a wounded soul, as in our good intent we have seemingly failed those at the bottom of societies hierarchy.  We have worked to provide shelter, one of Maslow’s basic hierarchy of needs, but much more is needed if we are to make our city whole again.  I know we will never fully solve the problem, the sad reality is that some of the homeless are simply beyond help, but even for them we need to provide some level of comfort. To make existence tolerable.  Global warming has made for mild winters and therefore we have not heard of people freezing to death.  We have a gaping wound in our city that we have been slow to bandage, we have taken action but only time will tell if it is enough.  In the meantime we shall watch our wounds grow and all be lesser for it.

Good Night and Good Luck

Hans Henrik Hoffmann March 29, 2016

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Yahoo!

Well Yahoo is at it again. Of course not in a positive light. The news is not good, missed earnings, layoffs and lawsuits…oh my! It does not seem that long ago they were high flyers in tech (I am showing my age it was 15 years ago). I would see employees on planes…I could tell as they wore their badges. I was at Microsoft and the blue badge had lost its bluster. Not that I ever wore it on a plane.  But Yahoo at the time, like many companies in the Silicon Valley, was a high flyer and a recognized name in the industry. Their CEO and founder Jerry Yang was one of the many “new” Bill Gates wannabe’s, Steve Jobs re-emergence was still several years off.  As has been taught over and over again in this industry business models change and the wheels can come off very quickly. Yahoo has tried to maintain some level of luster, but in technology when the glory is gone, it seems never to come back.

Like many companies in the industry you can have tremendous value and sometimes a bigger opportunity lies just in front of you within your grasp, only to be missed and sadly slip from your hands.  In the case of Yahoo it was search.  Back in the dotcom boom everyone monitored their website traffic.  Claiming millions of views.  Bragging of the number of unique visitors.  The problem was no one had figured out how to monetize it.  There were a lot of search engines such as Yahoo, Lycos, Alta Vista etc..but then came Google and the whole game changed.  Jerry Yang was irrelevant before he knew it, but it took a long while for him to figure it out (still not sure he has).  The new kings were Larry Paige and Sergey Brin.

Microsoft has lost its luster and though they were tinkering and perfecting their existing revenue streams (Windows, office, Server software etc..) They were looking for the next big bang.  Ballmer and Gates admitted they blew it on search.  I have not always been nice to them on this point, they never would have figured this out.  Advertising revenues were a foreign concept to Microsoft.  They had no experts in the subject in-house so they had to build from the ground up.  They went through MSN Search, Live, AdCenter etc..Each came and went with a failing grade.  In the mean time Google just churned out more and more revenue.  In the end Microsoft got a bit desperate and offered Yahoo a whopping $44.6 billion for the company.

Enter Jerry Yang, seemingly back from the dead and horrified by Steve Ballmer’s proposal.  He fought tooth and nail against the buyout.  He was not going to let his baby fall into the hands of the evil empire.  he fought for pride and ego and not for business. In the end Jerry would prevail and will go down in history and in MBA courses as an idiot.  Not realizing that the battle for internet supremacy had been lost, there would be no tomorrow for Yahoo.  In the end Yahoo would do a deal with Microsoft where it would use Microsoft’s back-end technology for search,thus lowering costs.  Jerry Yang would step down as CEO, replaced by Carol Bartz.  By 2012 Jerry would resign from the board and have no activity with Yahoo. In the end he left on a downward spiral but his current net worth is $1.5 billion, so no tears shall be shed for Jerry.

The saga would continue as on 2012 Yahoo would snatch Google exec and starlet Marissa Mayer.  I do not know the details but I would hope Marissa would have consulted with Google God Eric Schmidt on what to expect when taking over a techno loser.  if you remember between Sun Microsystems and Google, Eric was CEO of Novell Networks.  A true techno  loser.  They had it all before Windows Server and the Internet killed them off.  Marissa came with excellent credentials having lead various search businesses at Google, but the trapping of power have a away of corroding all and in 2012 she was recruited to take over struggling Yahoo.

Yahoo under Marissa would try to re position itself and make itself relevant again. Through a series of acquisition and partnerships it seemed to want to redefine itself, but in the end it seemed to resemble nothing more than a web portal, a term more associated with the dotcom boom.  Not to say it was bad, I actually use it every day, but it was nothing really cutting edge.  It almost plays more like an internet gossip column, the People magazine of the web.  That is not a bad thing unless you are trying to position yourself, because of your legacy, as some type of leader in the industry,  There is a perception difference between the New York Times and the Enquirer.  In the end corporate executives are competitive and cannot refuse a challenge.  It can lull you to sleep and see and believe things that are not there which is what happened to Marissa.  Yahoo was dying before Microsoft made a bid and nothing really changed afterwards.

As of Yahoo’s last earning it seems the wheels are starting to come off, thought Marissa managed to bring the stock back up to previous high’s in the end it does not seem enough.  In my view Yahoo! struggled with its identity.  They had to compete against Google, but it never seemed their heart was in it.  They did “trending now” but that was more of Twitters area.  They were more or less forced into a partnership with Microsoft, lest they look like complete fools for not accepting Microsoft’s buyout offer (which in the end they did).  They created a nice web-portal, but that was out of style.  Failed to capitalize on mobility.  Yahoo is still alive but down the road will we see them in the morgue of missed opportunities like so many other tech companies who road the technology shooting star. Only time will tell,but it seems as if it is just that a matter of time.

Good Night and Good Luck

Hans Henrik Hoffmann March 16, 2016

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Twitter

It seems like Twitter is getting hammered of late, ok may be not of late but ever since it went public. I have to admit, though I have had a Twitter account for years, it really is only over the past couple of years I have used Twitter.  That being said I actually use it quite a bit as my Social Media hub, even more so than Facebook.  A big reason is news. Twitter aggregates the news sources I want to view with out the opinion of  my acquaintances on Facebook , which in many instance I find offer opinions that I can either “Like”or not like (no button yet for this).   I really just want news so I can make my own opinion.  Twitter has become part of the internet dialog.  It seems all people of celebrity status, business, politics, and every day people have Twitter accounts and are tweeting.  With its troubles you would think they are like Yahoo even though as a daily activity they resemble Facebook.  At one time Twitter was feared and possibly is still feared by Google.  With its trending now service, Twitter was the pulse of the internet.   The question is why all the troubles, why all the worry?

It is easy to compare Twitter to Facebook.  Both are giants of Social Media and yet while Facebook has a good habit of continually blowing out earnings and capturing the hearts of Wall Street, Twitter has not enjoyed that same success.  Facebook has over 1 billion “users”, how active they are is another question but overall there are many people who are very active.  What this has translated to is Facebook has been very successful in monetizing the very large user base.  Twitter has “only” 320 million unique users and gets criticized for not growing fast enough.  I think there are a lot of companies on the planet who would like this problem.  Where Twitter has failed is not being able to monetize those users.  Where Facebook routinely beats Wall Streets expectations, Twitter seems to struggle to keep pace.

Another difference starts at the top.  Jack Dorsey left Twitter and then was forced to come back.  He also is CEO and Founder of Square, a mobile payments company.  The guy is an entrepreneur and a successful one.  However as companies grow and go public some needs change.  The startup mentality has to be replaced with a  sense of maturity tempered with a driving passion for the company you lead.  With Jack coming back we are waiting for the latter two.  Contrast this with Facebook founder Mark Zuckerberg ,, who has stayed true to Facebook.  It went through a rough first year on Wall Street.  the initial IPO was mishandled, but through the process we saw Mark mature and maintained his belief in the company.  The results have been staggering.  Listening to Mark Zuckerberg he reminds me quite a lot of a maturing Bill Gates.  Bill could be very hostile to the media, but when talking to employees he was always very calm and certain of the direction of both the company and the industry.  He could inspire.  Mark seems to have that same demeanor, minus the ridicule of the press.  The question for Twitter has Jack Dorsey returned to be a Steve J0bs type of figure or will he look to hand the reigns over to someone else.

Twitter has very much become a part of the internet’s social dialog.  I cannot watch a television show, whether it be “Men in Blazers” or CNBC or my favorite soccer team without following them on Twitter or having them direct me to their Twitter account.  It is a good problem to have. This is why they are not Yahoo, which is a company that is struggling to survive.  Why Jerry Yang fought the Microsoft takeover will live as one of the dumb egotistical moves of business history.  Twitter just needs to become more professional and more disciplined.  the audience is there before them, they just need to develop a business model and fine tune it to monetize that user base.  Twitter needs to understand its users better.  Facebook has done a phenomenal job in doing this and the results show it, in amazing fashion.  This to me is job number one and then take that understanding and start generating ad revenues to match its user base.

An area where Twitter has stagnated is innovation.  Twitter has not gone on a grand buying spree or provided regular updates and new features to its service.  Where as their competitors have made big bets and thrown out some pie in the sky ideas, we have yet to see that from Twitter.  A large part of that is the instability in senior leadership.  I think if Jack Dorsey can provide some focus, Twitter can attract some talent.  Once that is done then the hope would be we would stat thinking a bit outside of the box.  There is a lot happening in the industry.  Big Data seems easy for Twitter to capitalize on as they house a lot of data.  Can it be analyzed and action taken upon that analysis?  Where will Twitter fit in AI, Robotics, IoT etc..These are all areas where there is potential for Twitter to play, we just need them to stabilize and deliver.

Twitter so far is a failure not because they are a bad service, quite the contrary in Social Media circles they remain a relevant and great service.  However they frustrate as they seem incapable of seizing a unique opportunity.  In many ways you hope a more mature organization like Google or Facebook would buy them out.  Twitter should succeed.  They have mind share.  Most young people are using Twitter today.  However these windows of opportunity only stay open so long.  We remember MySpace and now most people do not remember them.  they are one of technologies historical artifacts.  I will continue to pay attention to cable news and other media outlets to see if they still reference their Twitter accounts, are using hash tags.  It is time for this company to start executing upon its potential.  Otherwise they can join along list of companies in the technology cemetery.

Good Night and Good Luck

Hans Henrik Hoffmann January 29, 2016

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The Great Convergence

We live in a time where technology seems to have reached hyper drive or warp speed, which ever sci-fi genre you like will work. It seems as if we have a series of mega-trends before us ranging from Cloud to Big Data to Robotics, to name but a few.  Every major tech company seems to be hopping aboard.  The technology sector is notorious for creating these type of panics, god forbid we miss the next over-hyped trend.  In some instances the big players seems to want to tackle them all, be it Microsoft, Google, Facebook or Amazon.  At other points in time it is a Billionaires men’s club with Jeff Bezos or Paul Allen funding some pie in the sky idea.  But maybe it is bigger than they all think and as complex as it all seems maybe it is being made too complex.  We have before us a lot of “big things” – we have the Internet of Things (IoT), Big Data, Cloud, Robotics, Artificial Intelligence etc.. All these trends driving tremendous change in society, in how we will live our day-to-day lives.  Is it wise to focus on one or will we need to focus on all.  From a company perspective it may be wise to place bets with just one or two of the big emerging trends, for the larger players they will, and may have to, tackle them all.  One thing is clear in my mind and that is they are all converging into one it what will be called, “The Great Convergence”.

Convergence is one of those industry overused terms.  Not long ago we talked about digital convergence.  First our music went digital with the advent of the compact disc.  Our computer networks were already digital.  Than communications went digital as we moved from analog to new services like Voice over IP.  In addition to voice we had SMS, email and a host of other forms of digital communications.  We had debates in the halls of congress as our television went digital.  How would we support all those old televisions?  As is almost always the case the advances in technology moved so fast it just swept over all of us like a tidal pool.   These debates and changes, which in reality were not that long ago, now seem like ancient history.  We now take these things for granted as we use services like Skype, WeChat and Netflix.  Like so many things in technology they just burst upon us and before we know it, the terms surrounding them and their use become part of our day-to-day living.  Think back to the washing machine, there was a world before the washing machine.  Hundreds of years went by with women washing clothes in a river or a tub.  Now no more.  However with tech it no longer can be measure in decades or years, the change happens very quickly and then in some instances it is gone (think of the FAX machine).

If we look at the emerging trends, the best way to visualize them is as a bunch of tributaries all feeding into a massive river like the Mississippi River (I purposely avoided the term Amazon river for obvious reasons).  One small river would be IoT, which would capture data from every device on the planet and feed into a mega data repository.  This “Big Data” would be centralized in a distributed database in the Cloud, from which we would perform complex analytics.  Other tributaries would be robotics, which would spawn more data.  Drones capturing data from the sky.  Vehicles capturing data from the road.  More humanoid devices wandering the streets and buildings capturing more data, perhaps observing human behavior and uploading that data.  As AI improves, these bots would start making decisions and based on the results if the decision uploading that data.  All converging and feeding Mark Twain’s, mighty Mississippi.

The days of gigabytes and petabytes are behind us we pass through exabyte and zettabytes and move right into a yottabyte.  As quantum computing takes off we can analyze data that used to take years down into minutes or even seconds.  A new form of computing will have emerged making our lives easier and yet more complex within the wink of an eye.  Algorithms that once took decades to solve not solved in minutes.  Predictive modeling will become more sophisticated.  We already live in an environment where online shopping s constantly analyzing our buying habits and trying to make recommendations based these habits.  The immense amount of data once utilized will change how we live.  Capturing data has become routine, the ability to analyze that data and act upon it will fundamentally alter our lives.

At times we may squirm hearing all this, but technology is like a tidal wave, once it has garnered momentum it is just a matter of time before it comes crashing down on those in its wake.  We fret over security and privacy even as we willingly give it up to have our iPhone locate us wherever we may be.  You may not want people knowing where you are but once captured that data is stored somewhere.   It can all seem so overwhelming but than what did you think self and immediate gratification would be?  Despite what biblical scholars may debate, paradise was never going to be free.  There are major positives coming through, in particular in health care as there may be alight at the end of the tunnel.  In the coming decades we may cure cancer.  We will have a greater ability to monitor our own health.  We will have our current state of life measured in real-time. We will be a part of the network, not separated physically but willingly opting into the digital world.  All you will have to do is hit the “OK”button.

The doomsayers now have a voice that only grows louder by the day.  They have been around for a while, as in humanities entire existence.  However now some of the areas traditionally reserved for science fiction novels and films.  As devices become more intelligent and AI improves the question of humanities future existence will become more pervasive.  In education we push for more STEM funding seeing that as the future of our economy while deriding the humanities as less important.  Part of it is simply our competitive nature in the US as we cannot fathom the idea of some other nation doing things better than us.  We make sacrifices rather easy in order to push ourselves to the forefront.  The Great Convergence is upon us.  Like it or not we have opted in. We will move forward regardless of the consequences.  In great part because we cannot help ourselves.  We more or less created the oil industry and all its environmental catastrophes.  As our nation grew so did our appetite for energy.  Now that the demand price for oil has taken a downturn we see the impact in our 401k plan as so much of our economy is based on energy.  The 20th century created that much like the 21st century.

Good Night and Good Luck

Hans Henrik Hoffmann January 26, 2016

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