Hans Hoffmann's Blog

Microsoft Apps on the iPad and beyond…

Published on February 27, 2012 by hansh51Leave a comment

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

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

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

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

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

Good Night and Good Luck

Hans Henrik Hoffmann February 27, 2012

Facebook IPO – The new tech bubble…not quite

Published on February 8, 2012 by hansh51Leave a comment

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

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

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

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

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

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

Good Night and Good Luck

Hans Henrik Hoffmann February, 7 2012

Apple, Apple, Apple…

Published on January 30, 2012 by hansh512 Comments

Though Steve Jobs has left us and leaves a tremendous legacy and hole to fill, he obviously left a great pipeline of products in place for Apple. Earnings for the quarter at Apple blew past every analysts expectations. They just seem to keep coming with quarters that seem beyond belief. As reported on Cnet, during the period, Apple posted $46.33 billion in revenue and a record profit of $13.06 billion. iPhone sales jumped 128 percent year over year to settle at 37.04 million units, while iPad sales rose 111 percent to 15.43 million units. Apple’s Macs got into the mix, too, soaring 26 percent to 5.2 million units sold. Those are huge numbers and daunting for anyone competing against Apple. If we break them down one by one it’s interesting to see the challenges for those competing and what to expect and do next.

Looking at the iPhone sales the number is staggering. They sold 37 million units of primarily the Apple 4s, not 5 but 4s. The 4s was what we used to refer to as a “dot” release, not a major release. Just a release with minor enhancements like Siri. To put in perspective Nokia has announced they have 1 million Nokia Lumia 710 in the channel. That is not in consumer hands but just to resellers. Apples number reflects units in people’s hands. The other thing is due to Apple’s channel that is pure money back to Apple. With Nokia they get most and pay back a small percentage to Microsoft for the OS. Then there is Google with Android, which is an indirect model as the hand set manufacturers keep the money and Google looks to make money via apps and mobile search. The units of Android phone is impressive but to date it doe snot have the bottom line impact of Apple’s iPhone. That could change as the mobile web grows and mobile ads increase the revenue to Google’s bottom line. Though Microsoft Bing is challenging traditional search, Google seems light years ahead in mobile search. With a major release from Apple due in 2012 with the iPhone5 could they beat 37 million? One can only wonder.

Tablets are the fashionable device of the moment. They have been since Apple made them so. Steve Ballmer said “they will never sell those things”. They sold over 15 million units in the quarter. Though there are Android tablets I have not seen the excitement for Android Tablets like I do for Apple’s iPad. The iPad seems to be playing its own game, in the short-term that could change with newer revs of Amazons Kindle Fire and further down the road with Windows 8 tablets. The challenge for the competition is they may be talking about exciting new releases but no one I know of is putting their purchase decision on hold to wait for an Android or Windows 8 tablet. I expect for the next 2-3 quarters that Apple to rule this domain, unchallenged. The question will be how far in front they will be when a competitive alternative enters the market. We will likely see a iPad3 this year, probably before Windows 8 Tablets hit the market, no one is waiting.

An interesting area of growth for Apple is its “old” business of Macs. They sold 5.2 million units in the quarter an increase of 26%. That is at the expense of Microsoft Windows. Apple with around 10% market share is in an enviable position as they are not the leader and can only grow their market share. As Microsoft Windows Revenue has flat lined (it’s still in the billions in terms of revenue) and Apple is enticing more and more developers to its platform you are seeing the first significant threat to the Microsoft crown jewel in over twenty years. It’s interesting that it is coming from a competitor whose environment is considered very closed. I think many people felt the most likely threat to Windows was going to come from the Open Source community in some variant of Linux. But with Apple’s success in Smartphones and Tablets I can see the traditional Mac business was going to follow and it has.

With all this success it has led to that great American problem. What do you do with $98 billion sitting in the bank? When I was ta Microsoft we had (and they still do) usually upwards of $30-$40 billion in cash. It would seem with Apples cash they could do almost anything they want, but in actuality it is a bit of a capitalist’s dilemma. The obvious thing to do is return money to shareholders in either a quarterly dividend or one time payment. They could also do a stock buy back, with a market cap over $400 billion this could further drive the stock up benefiting shareholders. They could do acquisitions, but Apple has never done the big multi-billion dollar purchases of tech companies. I am not a big fan of these anyway as in the short run they slow progress down and when complete the industry has moved on. It takes a couple of years for full integration, look at Microsoft’s acquisition of Skype for $8 billion and we have yet to see the fruits of this hit the bottom line. It’s not a bad problem to have but the one thing that is for sure is they will have to do something as sitting in all that money does not seem a viable option, nor will shareholders allow for it.

Apple is truly in a state of grace. It seems even when they do wrong, as in the previous quarter, they rebound. It would be easy to see a future where we all are using Apple products, luckily tech and society do not work that way. There will come a time when younger generations will not think Apple s cool as their parents think it is. We are in a time when tech trends start with the teenagers and young adults. Do I see a time when younger generations say “wow Microsoft or Dell is cool”. Right now I am having a hard time believing that scenario will ever happen. More likely it will be a young fresh start-up similar to a Facebook or Twitter. When will this happen? All I can say for sure is the next 2-3 years it is not likely to happen and the Apple strength will continue. There are exciting horizons with iCloud and AppleTV. But as I am fond of quoting Bill Baker, “The future comes slowly, change happens quickly”. This will be the case with Apple as well but in the meantime let us just enjoy being, “Wowed!”.

Good Night and Good Luck

Hans Henrik Hoffmann January 30, 2012

Is Microsoft .NET a second class citizen of the Cloud?

Published on January 24, 2012 by hansh51Leave a comment

This was sent to me as a possible discussion for a local user group. It is interesting that it would come up, but not surprising. The cloud is on everyone’s mind. It is the current “buzz” in the industry. It has long been said in the industry that the development platform of now and the future is the internet. As companies began to productize these web-based solutions a name was needed. Anyone who ever saw a whiteboard presentation, when you drew a network diagram when the diagram eventually went out to the internet, we drew a line to a…cloud. Amazon was the first to build a successful business model around cloud based computing and shortly thereafter everyone followed. Now it seems everyone is talking cloud offerings (Google, Apple, IBM, Microsoft etc..). Go to any tech companies website and you will see a cloud solution somewhere. To grow the business you need developers to follow you. The race is now on to get developers to create new and exciting cloud applications.. With the release of Windows 8 due later this year developers are being told by Microsoft, “Bet on Windows 8”. What maybe gets lost is during the previews at the Professional Developers Conference in 2011 a lot of what was discussed was Windows 8 integration with the cloud and cloud based services. But where does Microsoft’s cloud offering Azure fit into this picture? In a larger context where does .NET fit into today’s developer mindset?

It has been over two years since I was at Microsoft, but when I left we were on the .NET Framework 4.0. As I write today we are still on the .NET Framework 4.0. There has been little heard from Microsoft regarding the future of .NET. In the mean time the industry continues its march to the cloud. If you go to the Microsoft Azure page you will see for development a lot of tools supported other than .NET. Beyond .NET there is node.JS, Java, PHP and “other”. This highlights the Microsoft conundrum. Microsoft went down the path of .NET and for a long period more or less ignored what was going on in the world of development. Microsoft needs developers writing to the Azure platform, in fact for the Server and Tools division at Microsoft, its very life depends on it. But getting developers to pay for development tools when so many are available for free on the internet is becoming an increasingly hard challenge. Therefore they need to be “friendly” to the non-Microsoft development community.

Open Source is big and it is a developers paradise. It was one of those things when open source first became a household name at the dawn of the consumer internet. It’s the largest development community on the planet. There is a lot of innovation that is happening out there on the internet that is far larger than what 90,000 Microsoft employees can do, of which less than 1000 are focused day-to-day on these issues. On the net speed is everything. What I ship one day can be gone the next. At the same time on the net you can quickly generate mass, which leads to wide-spread user acceptance and “viral” marketing. One day Facebook was a university social network and shortly thereafter it was a global phenomena. The inability of Microsoft to effectively leverage the open source community has stunted its ability to attract new and emerging development communities. They do have something called Codeplex which is Microsoft’s open source community. However it is not as big as other development communities on the web. This inability to leverage the web development community to its full potential has fostered an environment where Microsoft is chasing innovation and is not driving innovation.

As we look at Windows 8 the discussion is around the Metro interface and writing applications to the Windows Runtime or WinRT. I guess when we talk about the Metro interface we are talking about a desktop UI, a question is how much time will an end-user spend within Windows and does a new UI matter a whole lot for Windows when the first thing I do when I log on is go the internet. A stat I heard several years ago said that 75% of development is focused on the web and 20% is focused on Windows (the other 5% is targeting hardware). That number may have changed, but I doubt Windows development went up and web development went down. Is Windows 8 development targeting the 20 percent? Which then brings us back to the central question, where does .NET fit into all this and what is Microsoft telling developers to do with .NET? I feel like .NET is going the same way of Silverlight…confusion.

When looking at the market for developers in the coming year I was sent the following list of top ten development skills (click here). It is interesting to note that Microsoft development skill sets are not a part of the list. That is not to say everything is open source as iOS development skills is in the top three. It does highlight where open standards and innovation lay a large role in the future development road map. It is apparent that Android and iOS are leading the way for mobile development and will do so in the coming year. This will be challenging for Windows 8, as developers can target an existing market or a potential market. In the end I think many will do both but it’s apparent that Windows 8 is not going to make anybody put aside their plans for developing on Android or iOS. It used to not be that way. The release cycles for the latter two is fast and furious and keeps the development community engaged. When your company is building a platform, engagement is paramount because it means they are listening. You could be presenting the worst crap on the planet, but as long as the developer are listening to your crap and not your competitors that is ok.

Finally the biggest and most important question moving forward is does .NET have a future?? It is known that current Windows Chief Steve Sinofsky is no big fan of .NET and the move to WinRT could be viewed as the death of .NET. But then if the development community is out their debating whether .NET is relevant to the cloud or not, what should they be doing? Silence is not an answer and providing a bunch of marketing spin until an answer is provided is just insulting. Changing direction is hard, especially when so many have invested in .NET Development, and will likely continue to do so. We could be looking at a situation similar to Visual Basic 6 developers, who refused to move to .NET, until around ten years later support was finally pulled from them. It is also a question of enterprise apps versus consumer apps. Enterprise do not move as fast as consumer based apps. Can you message a development platform to both with equal success?

Steve Ballmer likes to tout the largest development community with the largest market opp in the world when you target Windows 8. He is wrong. He has been wrong for some time. The largest market opp in the world is the internet and that is not going to change anytime soon. It seems rather stupid that I have to write the obvious. The viral ability of the net. Most developers are leveraging the internet for development so it comes as no surprise when they start looking at cloud development they look to open source to provide the tools and the guidance. It is really no different than society has always worked, when we look for advice we look to our peers. Now they are simply our virtual peers. Microsoft’s cloud message so far had been confusing and I think most so for developers. At the end of the day developers will do what they have always done, which is follow the money. No developer likes to write an app that nobody uses.

Good Night and Good Luck!!

Hans Henrik Hoffmann January 24, 2012

CES 2012

Published on January 13, 2012 by hansh51Leave a comment

Well this has been the week of the big Consumer Electronics Show (CES) in the glamorous city of Las Vegas. It is a show, sad to say, I have never been to but would love to go someday. Still with today’s interactive technologies it is pretty easy to follow from far away. The great thing about CES is that it gives consumers a window n how they might spend their money in the upcoming year. Or not. Last year was a big year for 3-D TV’s, but I don’t think consumers were ready to give up their new LCD or Plasma screens just yet to experience 3-D at home. This year promises a whole host of new gadgets and who knows what will be the biggest. But it is always fun to hear what the big industry players are planning. Even more exciting can be the young start-ups.

This year, as always, CES started with the keynote from Steve Ballmer, the loud and proud CEO of Microsoft. Of course the big news had already broke, this would be Microsoft’s last CES. This was the last chance to see Steve. It was a draw and then Steve went on to present, uh, well, nothing really at all. Most of which he talked about had already been announced in previous talks about Windows 8 and Windows Phone. The biggest announcement was really that Nokia was coming back to America with the Lumia 900. It is sad to see Microsoft leave the event. I am not thrilled that they have chosen to do big releases via internal style events and over the web. My preference is in person events but I may be a bit old school in that thinking. The problem I have with over the web is it usually means at a desk at work where there are many distractions. Such as Bob’s vacation or Steve i snot happy at work or..well you get the picture. You may see higher numbers but how many people are really engaged in what they are hearing and seeing? In any case we bid Microsoft a fond farewell.

Google Executive Chairman Eric Schmidt participated in a “pseudo” panel. Not sure what kind of panel this was intended to be as it sounded like a group of Google partners just nodding their heads to everything Eric said. But there were some valid discussion points, mainly the idea of ubiquity between connected devices. Just think of it this way..walk around your home and see how many devices, appliances etc have digital displays. You would find dishwashers, washer and dryer, clocks, stereo’s, etc..They should all be talking to one another and to the cloud. And according to Eric they should be built on a foundations of, drum roll please…Android. To be clear this idea is nothing new. Microsoft had this idea of Microsoft @Home over ten years ago. Novell had its embedded systems technology(NEST). But like so many things in technology it is not predicting the future, it is timing the future. As Eric points out with mobility and wireless pretty much everywhere making this “connected” home is much closer to reality. Google is taking the lead. Lets see how soon others begin to follow.

The term Gorilla Glass was new to me but it made a splash as Sony showed a Viao made out of Gorilla Glass v2. First question o I want a laptop made of glass? It will be a little bit heavier, but the environmentalist in me asks the second question: Is it recyclable? IN any case they did show hat this glass could withstand 120 pounds of pressure making it fairly durable. Given how often I drop things this is a good thing. From a pure aesthetics standpoint it would seem you would be able to do some pretty fancy stuff with color. I think more than anything this highlights advances being made in the materials that make up our technology toys. A good thing and though not “sexy” now it will be in the future.

When we look at the best in show winners there, as usual is some interesting stuff. Kudos to Nokia for coming through with the best smartphone of the show the Nokia Lumia 900. The Asus Memo 370T Tablet running Android and priced for $250. It has 16bg storage, oh how far we have come. The features are nice and with those low price points it makes total sense. I found the best software app, Bluestack interesting. It brings all 400,000 Android apps to Windows 8. It used to be the other way around, with competing platforms looking to run Windows Apps. Remember Apple had dual OS capabilities. If you want to be a real old-timer who remembers IBM OS/2 v2.0 with the Windows Subsystem? To be fair these type of subsystems traditionally ran slow and were painful. I would hope that Bluestack brings something new to the table and is…fast. Which it should be ok at since Android Apps for phones and Tablets are not like running Microsoft Office. Size matters. One thing to note Bluestack is not yet in beta. Murmur.

My summary of what I have read and followed about CES is there was a lot of focus on Tablets. A lot of new and upcoming releases tied to Windows 8 and Android. The one thing I am interested to see when Windows 8 Tablets roll out is cost. It seems like Apple has staked out the high ground and Android the low ground, and both have lots of applications. Is the middle ground a viable place to be? On the TV front I think we are waiting for the next big revolution. Google did some talk about interactive television, however we are not there yet. Apple has been strangely silent of lat in this topic. But I expect them to bet big on Television. I do expect in the next 2-3 years for this to be a huge focus of CES. The interesting question and one of great anticipation is who will lead. Overall though this was not a great year at CES as there was no break through announcements. No technology that came out and said this is what will be big in 2012, right or wrong (think 3-D TV). Looking at the products it was more claims of, “This will be a big improvement on what currently exists”. Take your pick, Tablets, Smartphones, mobile gaming etc…Next year will be bigger with Windows 8, though I don’t hear of anything ground breaking coming from Redmond…yet. But what we want from CES is not an upgrade but something that changes how we experience life.

Good Night and Good Luck

Hans Henrik Hoffmann January 13, 2012