Hans Hoffmann's Blog

There are a lot of technology industry legends that came from Microsoft. People who shaped the industry and brought about the PC revolution. Many are revered, and a few are even feared.  During Microsoft’s rise to PC dominance no one played a bigger role in the creation of their unique hardware ecosystem than their VP of the OEM division, Joachim Kempin.  He was a brash, arrogant, take no prisoner’s negotiator.  When you look at the revenue Microsoft’s OEM division generated it can be attributed to the singular focus of their leader.  But perhaps the most interesting thing is that really not much is known about Joachim Kempin.  If you look him up online you will find few pictures.  I can say during my 18 years at Microsoft he never spoke at a company meetings, a sales conference, technical forum or an industry trade show.  In fact I never saw him at all.  The story goes that even Bill Gates and Steve Ballmer stayed away from him.  He had his office and he did his thing.  Of all the big legendary names at Microsoft – Ballmer, Gates, Shirley, Allchin, Maritz, Muglia….Kempin remains the mysterious one.  In the title of his book it includes “…..the secret power broker”.  That would be a pretty fair self assessment.  Everyone at Microsoft knew of him, but very few knew him.

The thing Joachim did was create agreements with Microsoft OEM partners that were one-sided and always to the advantage of Microsoft. The internal discussions were well-known.  The agreements true or not were deals in which no matter what the OEM shipped, they still paid Microsoft.  If you shipped a PC with OS/2, since Microsoft was originally on board with the  design and development of the operating systems, somehow Microsoft still got a cut.  When WordPerfect Office shipped..great, the OEM’s were billed on shipments of PC’s so Microsoft still got a cut.  Are these stories true?  Maybe or maybe not.  However every OEM knew who Joachim Kempin was and they knew negotiations with him representing Microsoft was a dance with the devil.  In the end, it appears that the devil, Joachim, always seemed to win.

Why this sudden interest?  Joachim is getting older and I guess it was time to write his own account of what happened and normally I am not excited about technology luminaries writing books (see Bill Gates and Steve Wozniak…awful).  But the thought of reading Joachim’s book fascinates me. Simply because he was the one major executive at Microsoft, during my time there, that I never met or heard speak.  I am very interested in what he may share in his dealings with OEM’s and other Microsoft executives.  He has a view from inside that not many have, that he has not readily shared.  It should be an interesting voice to listen to.

His view on things that Steve Ballmer has done incorrectly as CEO at Microsoft are accurate but in many instances not new.  The lack of success Microsoft has had in social media, under Steve Ballmer, is more entertainment for how out of touch Ballmer is rather than the actual content of what he is saying.  Which is minimal.   The failure of the tablet…yes Joachim, Microsoft was working on this long before Apple.  To be blunt, however, the user experience sucked.  Microsoft never could get beyond the stylus.  The decision to make their own Tablet is a slap in the face to Microsoft’s OEM partners.  I could not agree more.  There was also the accusation of Steve Ballmer ousting everyone who was seen as a threat to his power.  One example was Rick Beluzzo, who was President for a very brief period.  I disagree a bit on that one as I was there and it was more a question of what was a President at Microsoft supposed to do.  Btween Ballmer and Gates, there was not a whole lot for a President to do. The second however was Ray Ozzie.  I really believe that Steve felt he new better than Ray.  After a year Ray was pretty much out of the loop in terms of the strategic direction of Microsoft.  I saw some of Ray’s memo’s at Microsoft.  The difference between Ray Ozzie and Steve Ballmer when it comes to technology is Ray is brilliant and Steve is average, which means Joachim is right.

The most interesting comment to be released so far is his scathing critique of the Microsoft Board of Directors.  He basically calls them caretakers and that they offer no real value.   I am surprised this has not been brought up more in public discourse.  To be fair back in the glory days there was not much to do.  You do not have to do much when growth always exceeds expectations.  The stock is always going up and splitting and then going back up.  Today I think the biggest challenge is your largest shareholder  is the guy who built the company, Bill Gates.  To top that Bill placed Steve in power.  Has anyone ever heard of someone standing up to Bill?  Someone challenge Bill and say, “hey this company is headed in the wrong direction and we need to make changes”.  Boards are there to provide guidance and advice, it may be time for Microsoft to have a board that acts that way rather than being caretakers as Joachim accurately points out.

If what has been pointed out in  press is accurate I look forward to reading Joachim’s book.  This is a person who during the DOJ trial is sited on many internal emails to the highest levels of Microsoft, that were referenced during the landmark trial.  I can only guess that during those days every effort was made internally at Microsoft that Joachim Kempin would not take the stand.  As much as I admired (and despised) the work of lead attorney Joel Klein, I think by not getting Joachim on the stand was one miscue on their part.  He was a lightning rod figure.  Joachim is a figure who in many ways deserves as much credit for the rise of Microsoft as Bill Gates.  He drove the deals that would make Microsoft Windows the default OS in the PC’s that we still buy today.  Within Microsoft and the industry he was a secret power, with an  emphasis on power.

Good Night and Good Luck

Hans Henrik Hoffmann January 25, 2013

The Technology industry always moves fast and is always forging ahead but I can’t help but think this past year has been a bit disappointing. When I look at the big guys I did not really hear anything that was game changing. What have been some of the big things over the past 5 years?  The launch of the iPhone was huge and created a blazingly competitive Smartphone market.  We had the iPad and the race for the tablet space.  Because of these innovations mobility took on a new meaning and social media in the form of Facebook and Twitter took off.  These past 5 years have been a very exciting times, however when I look back at 2012 to be honest despite all the hype, the  technology was kinda dull.  Lets review some of the players.

Facebook: Big news in 2012…a disastrous IPO.  Not sure if this will make a big dent in my life unless I buy low and sell high.  That is if Facebook can figure out how to monetize its user base and generate significant mobile revenue.  Right now we are in a phase of more promise than delivery. They already look like they are trying to tackle search in a new manner, with Graph Search.  However for Facebook I think 2012 was more about the IPO an d getting grounded as a publicly traded company.  I am actually rather optimistic that they can (I own zero shares), but as far as technology goes not a whole lot came out of Facebook in 2012, let’s hope for better in 2013.

Amazon: Though there were many before Amazon really seemed to have the right mix when it came to the eReader space.  They combined a slick device the Kindle with the right content as they had access to all the major publishing houses.  However 2012 was really just an improved low-cost Kindle Fire.  Though improved there was nothing earth shattering that came from this Seattle power house.  What I do see Amazon changing is the whole notion of a supply chain from end to end with their Amazon Cloud services on into their devices and how they hook in to the Cloud infrastructure, creating the underpinnings of a digital lifestyle.  Not sexy on the surface but down the road this could yield huge consumer rewards.

Microsoft: It was a big year for Microsoft with the release of Windows 8, the new Surface Tablet, what looks like a competitive Smartphone, so why am I do bored by it all.  For beginners a new OS with a new look and feel is nice, but when was the last time an operating system came out that actually changed our day-to-day lifestyles?  Windows 8 is not a game changer, it does not advance the world of the OS by using touch screen.  The Surface tablet was big but not for any great technical break through. It was radical in that Microsoft made it and opened up the competitive landscape by competing with its traditional OEM partners.  Finally the Windows Phone though nice and a compelling offering in the smart phone space, it is that just another offering

Apple: We had new Mac Books. the iPad Mini, and the iPhone 5 but these to me are just improvements on what already existed.  Yes they will sell millions, but there was nothing really “wow” in any of these releases.  All it showed was a competitive market becoming increasingly price sensitive.  Though Apple still can demand a price premium, due to its great consumer reputation and phenomenal customer loyalty, there was no game changing piece of hardware or software this year.  It becomes a question of what new market with Apple target and change, they tried to dethrone Google Maps (a really poor choice in my opinion) with disastrous results.   Apple is successful when they change the competitive landscape not go head to head in battle.   the next big battle ground and opportunity will be Television, one which Apple, Google and Microsoft are all trying to redefine in different ways.

Google: They have had a strong year and in some ways the best year of the aforementioned companies,  I am impressed that withe their Google Glasses and venture it robotics with their automobiles they are targeting new territories that may be uncomfortable, but down the road could be very profitable.  On the “today” front it was more of the same.  Some new Android releases, their own tablet, the Nexus 7, a new Chrome Book, better features in Google Docs…all very nice and I think in some instances will take market share.  However nothing really big on the consumer front.  I would add though in Chrome Books and Google Docs there is an opportunity to change the traditional computing a paradigm.  Technical folks will know the difference not sure consumers will except in their wallets.

Samsung:  To me Samsung is becoming the GE of the tech space, providing cool hardware .  They have taken the mobile market by storm with their slick Android based mobile phones and a lot of Galaxy tablets.  They are on the verge of releasing a phone with their own OS.  However I do not see Samsung now or anytime in the near future doing anything breakthrough.  They are a company that just takes an existing device and technology and makes it cooler, not a bad place to be and though I do not see them being a leader in innovation.  However they are more than capable of being a leader in taking market share.

Though I thought 2012 was kind if a dud on the horizon there will be breakthroughs that alter how we live, work and play.  Though I am not sold on the idea of Google Glasses I am excited on the idea of taking computing out of shrinking boxes (mainframe–>PC–>Laptop–>Netbook–>Tablet–>Smartphone) and applying it to brand new use cases.  The TV is set to undergo a fundamental change.  Now what that is remains to be seen and I am not sure if that will be 2013.  Here is hoping for a more exiting 2013 where we change the competitive playing field and where true innovation compels market competition.

Good Night and Good Luck

Hans Henrik Hoffmann January 18, 2013

In the technology sector this issue has been on the forefront for at least 15 years, perhaps longer.  the ability to hire talent.  A tech company is only as good as the engineers, software developers, mathematicians computer scientists etc that they can hire.  The big problem being that the US simply cannot graduate  enough qualified people with these desired degrees to fill the demand.  So companies are forced to look abroad for the necessary talent and it is there that the problems begin.  In order to get these people into the country they need to be granted visa’s, specifically a H1-B visa.  This is not an infinite number, but a highly regulated one. The H1-B visa is covered under what is known as the  Immigration and Nationality Act.  This sets the guidelines as to who can be permitted and what type of qualifications they must have to enter the country and work.  This, to be clear, is all fine.  I could type out everything and it would be a fine education for myself and those that read my blog, but the act itself is not the primary concern.  The section that covers how many visa may be provided is of concern.  Each year the US government grants 65,000 of these visa’s which are sucked up very quickly by the tech sector, many by off shore companies such as WiPro and Infosys.  Through some loopholes etc..the number rises to above 100,000.  These visa’s are usually all gone within 4 months of their availability.  Depending on where you as an employer are in the hiring process you may find and interview someone only to be denied a visa as they are all gone.  It strikes me as  a simple solution to double or triple the number for H1-B visas and increase the number of jobs created in the US for high paying US-based jobs.  But as is typical in the US congress these types of simple solutions get caught up in complex issues like immigration reform. An issue that  I find personally important is both rising cost of higher education and the increase in enrollment by foreign nationals in our university system.  When I say this I do not mean it to sound like I am being racist, that is not my intent, but when we educate a workforce it is with the idea of those graduates getting jobs and contributing to the growth of the US economy.  Two things are causing this not to happen in my view.

1. While the cost of tuition is increasing in the US making a college education ever more expensive, but the dollar rate is low making it attractive for foreign nationals to attend US institutions
2. Globalization provides an avenue for graduates to return home

AOL Founder and now venture capitalist, Steve Case had this to say about current immigration reform, specifically STEM jobs act of 2012 “My view is if there is a way to come together around broader immigration reform quickly, that would be great. But if that doesn’t happen, then we shouldn’t delay the issue because every year — and again it will happen in May and June next year — 40,000 to 50,000 people will be graduating with Ph.D.s and masters’ degrees, and half or so will end up having to leave. Some of those people will go back to their countries and start companies that could end up being the next Googles or Facebooks.” Go to any university campus in America and you will see in engineering and computer science departments a large number of foreign nationals.  Is this a bad thing? No.  But as institutions shed some of the weight of government funding and embrace a more capitalistic side of education they have to embrace the concept of what drives the most revenue.  If you have good grades and can pay a premium you are in.  This is all wonderful until you realize the work force you are educating, America is not benefiting from.

It is a compliment to the American higher education system that we have so many great institutions.  If you look at any list of the top 100 or 400 universities in the world you will find a large percentage on the list are higher education institutions located in the United States.  There are the ones you would expect like Harvard, Yale and Stanford.  To lesser known schools including my Alma mater, Washington State University.  It is a great sign that people from humble origins can attend a university and without knowing anything accidentally receive an education from one of the top academic institutions on planet earth.  Thus the frustrations of the tech sector. They are sitting on a gold mine but can not mine their rewards as either students are not opting into the programs with the desired skill sets they need or those that do attend are either going home to their birth place or cannot get the appropriate visa to stay in the country and work.

While all this is going on keep in mind the world in the emerging markets has changed drastically over the last 25 years.  Those markets are starting to create their own very strong and vibrant economies.  Their own strong higher academia institutions. Their own vibrant technology sectors.  I think in the United States we are guilty sometimes of thinking our way of life is desired by everyone and this view will last forever.  The world is changing very fast and some of those markets will change and be vibrant economies and societies on their own, enjoying many of the same opportunities and freedoms that we enjoy here.   We have a window of opportunity to bring talent into the United States.  However that window will not stay open forever.

At a time where our country has gone through a financial upheaval this seems a rather simple concept for job creation.  That he jobs are there, they are posted on many websites in some of America’s biggest technology names, which includes Microsoft,  Google, Facebook, Apple. Twitter etc..To be honest the tech sector is a shining star to the American get rich mentality, to our history of innovation and success.  If you started to fill these positions, which are really well-paying jobs many in the six figure category it will spill over into real estate and retail.  They will need transportation so the automotive sector will grow and all we need to do is have some congress person put a 2 or 3 on front of the 65 and we have directly created 200,000 or more jobs, not to mention the trickle down effects it has on local communities.  It’s a simple move with little risk, so lets take the dive, let’s take a chance and do the right thing.

Good Night and Good Luck

Hans Henrik Hoffmann December 17, 2012

For those consumers of fine film I shall take you back in time to the James Cameron classic “Terminator”. Where Arnold Schwarzenegger  first graced our screen (Conan was first but that was so-so bad) and was single. OK sarcasm aside it was a good film in the sci-fi genre. It had Arnold at his finest, big, buff and with very few lines to say. It was a rather dark film in portraying the future of mankind. Is the future ever shown as happy or is it always glib?  If you remember the movie you will remember the main character, Reece, explaining how the future came to be to Sara Conner (whom Arnold was supposed to come back in time and murder), he  discussed the government defense network (DARPA?) and how at some point the network “got smart” and decided the future of mankind in a nanosecond.  Extermination.  It may seem a bit far fetched but if you think about what was being described,it was a future with a convergence of technologies.  A ubiquitous network, artificial intelligence, robotics, nano technology all running really high end and effective software.  I am not sure James Cameron thought of all these things when he wrote and directed the screen play for the movie.  But if you look at where we are today a lot of those technologies either exist or are being developed.  The idea of a truly smart network is becoming more real with each passing day, with each passing hour, with each passing “nano” second.

Starting with the idea of a ubiquitous network, this piece is not that far-fetched.  In today’s society that is all we are striving for.  The ability to be connected all the time and any time.  Like the movie this is something that we are moving towards and will become a reality.  It all started of course with the internet.   It’s the smart piece that we are missing.. or are we?  The intelligence is a simple term, it’s software.  Software is what made the internet cool.  It was a small company called Netscape that really launched software  to the internet. Software is becoming pervasive in nearly every device we touch today so why not the network?  The reality is it already is.  It always has been in nearly every bit of hardware equipment in the network is running more and more software to provide higher levels if intelligence in how information is routed and delivered

Recently AT&T launched and turned on its 4g LTE (Long Term Evolution) network in Washington State and other parts of the United States.  It provides you a 20mb/s pipe.  To put that in perspective your home wi-fi network only provides 10mb/s.  The US carriers have gotten very good at increasing the capacity of their networks to deliver higher speeds and more content to the device.  It means we can send more and more information across the network.  We can issue commands across the computer,  We tell devices to turn “on” and to turn “off”.  But to date we have limited that to a lot of data center hardware.  More and more we see that capability entering the home.  It also means that the idea of a network is moving away from the physical way we have traditionally viewed networks.  Yes there is and will continue to be lots of fiber in the ground, but increasing amounts of data shall simply pass through the air.  In the not so distant future gigabytes will be replaced by terabytes.

Cloud Computing is on everyone’s mind these days, but that is just yet another example of more intelligence being moved to the network.  As more and more data is moved from company hard drives located in internal data centers to cloud based data centers.  The applications customers run live in the cloud and are accessed via a browser.  Even consumers are moving into the cloud as their digital content does need to reside on local hard drives in an office, but sit in iCloud or on Facebook.  However it is no longer traditional software applications that are being moved to the cloud, but entire network infrastructures are moving to software driven models.  Cisco has a software based router.  Traditional gateway appliances are moving from a hardware based appliance to software.  Load Balancers? Moving to a software based model.

A term we see increasing is machine to machine technology.  The concept is simple which is machines communicating (usually sharing data between one another).  we have companies like Nest and their founder Tony Fadell (one of the men behind Apple’s iPod)talking about the idea of M2M .  Nest today is working ion next generation thermostats.  But down the road the idea of a smarter thermostat will increasing play across all appliances.  Including stronger communications and integration withe the internet.  We see this type of technology being discussed in aviation   When a plane is in flight it can communicate information via wireless network back to a hub for collection and to be analyzed.  Cars can transmit information about driving habits back to your insurance company and be billed based on usage patterns.  These scenarios can and will be done  with n human intervention.  Just machines talking to one another.

We see increasing activity in the robotics industry as they come out with new robots  such as  vacuum cleaners, pool cleaning robots, gutter cleaning robots etc..as they become more pervasive how hard would it be to connect them to the “new” smart network?  Recently Google founders Sergey Brin stated we will be driving robotic vehicles within five years.  Having recently gotten a photo ticket I look forward to this development as a robotic car could actually receive information about motor ways from a smart network and automatically adjust the driving pattern of the vehicle so I can avoid a lovely ticket from local police force.  As Bill Ford of Ford motor stated, the automobile is becoming a platform, it is no longer a mechanical device.

There has already been work done where chips are inserted into humans.  These chips in the future could collect data on the daily activities.  Even Steve Wozniak is getting in on the act.  In a recent trip he talked about the iPhone 45, something so intelligent it will have more data about him than other humans do.  He won’t need friends.  Having read his book “iWoz”, this does not surprise me.  He seems to have an aversion to people.  Woz goes farther saying in 40 years we will have computers with impulses, with feelings.  This is starting to sound like Steven Spielberg’s film “AI”.  In this future that humanoid will be connected to the smart network.  Not to be out done Microsoft founder Paul Allen is funding work to map the human brain.  To understand each pulse and how it creates a human thought or reaction.  Understanding how the human mind works has long been a dream and a goal of science.  Today though it is more a goal and not so much a dream.

Do humans desires to move forward at an ever-increasing pace cause room for concern?  Could the smart network make decisions on our behalf?  Some for us, but some against us?  At this point it seems like fantasy, but had this been written 50 years ago could it have had as much current supporting evidence?   If I come back to this article in 10 years how much further will we have come?  Don’t worry there can be positives that come out of all this.  Our cars will be managed more efficiently as a result of the move to robotic driven auto’s.  Provided we can get alternative energies to scale we should have a cleaner healthier environment.  Our ability to readily and easily communicate across boarders and across cultures will be seamless. We could enter a world where there is no need to learn a foreign language.

Lastly the big question.  As this network grows in size and intelligence, what happens if it learns to reason?  To make its own decisions based on information it receives about the world around it?  That after all has been the goal of man since the inception of science.  The grand experiment started by Galileo in “The Dialog”.  Where science challenged faith.  To not just understand mankind, but to replicate it.  This is not going to happen in the next 5 years or even ten years but it will happen.  The simple reason being technology cannot help itself.  Technology is about ever-increasing pursuit of learning and doing it with ever-increasing speed.  Thirty years ago computing was done on mainframes. Twenty years ago most people did not have a PC. Ten years ago almost no one had a smartphone.  We used to talk about information at your fingertips less than twenty years ago and now we have it, whenever and wherever we want.  All because we are connected in new and exciting ways.  We now are talking about the ubiquitous network.  Being connected by high bandwidth everywhere we walk.

Will the network at some point flicker ever so slightly and start to have its own ideas .  How will it view humanity?  Will it discriminate between good and evil?   Will it even understand the concept which is tied more to human emotion than reason. From a stand point of logic can it comprehend the complexity of what makes us human?  The excitement or horror here is not what a “smart-network” will or will not judge, but the fact that technology is moving so fast that we can even contemplate and have such a discussion.   Whatever your thoughts you cannot stop this high-speed train as it left the station long ago and is whisking on into the future, with or without us.  In the end it may decide our fate.

Good Night and Good Luck

Hans Henrik Hoffmann Dec 4, 2012