Hans Hoffmann's Blog

The competitive landscape was always changing and dynamic and with Microsoft always moving up the food chain and trying to crack the enterprise it was inevitable we would start encroaching on existing companies territories.  It was also likely that some of these companies might innovate.  One of the brightest and certainly most vocal competitors Microsoft faced was SUN Microsystems.  They were led by the ever vocal and brash Scott McNeely.

The history of SUN was interesting.  The name stood for Stanford University Network.  Originally the building complex they were in, housed two other companies Silicon Graphics (SGI) and a company called Cisco.  All three companies can lay claim as Silicon Valley legends. Scott was with a group of techies and when they chose roles he became President because he was a business guy and frankly did not know a whole lot about technology.  Check the archives of “60 Minutes”if you want to verify.  Coincidently he was a Detroit guy like Steve Ballmer.

I was always impressed with SUN as they made hardware, but beyond hardware, they designed the chip (SUN Sparc), the Operating System (SUN OS) and then manufactured the boxes.  This was in contrast to Microsoft which had a philosophy – you either made hardware or software, but you did not do both.  They also had some very smart people who qualify as Tech Legends.  Bill Joy was the CTO and a software guy at a hardware company.  At Berkley he had written a OS called BSD.  A forerunner to Linux and I believe something Linus Torvalds and company learned from, in particular what not to do.  James Gosling a key player in architecting Java and Eric Schmidt, who went on help some startup called Google.

For some of you reading this post who are not as technical you may ask what is Java?  To put it basically it’s a programming language.  So people who wrote applications for a living had the option to choose Java as the language they want to write in.  But why?  Well this is where it gets interesting. For this of you have followed my blog you, if you remember my blog on Novell I discussed their failed effort to unify Unix.  Novell had the right idea, just the wrong approach.  SUN had a different approach.  I probably heard this summarized best at a Microsoft technology event by Corporate VP Paul Flessner.  SUN was following what Microsoft was doing with Windows NT Server and realized  that with the marriage of File and Print services and application services Microsoft had a winning formula for developers.   At the time Unix devs chose whether they wanted to write apps for IBM AIX, SUN Solaris, HP UX, to name just a few.  So SUN came up with the Java Virtual Machine (JVM) and said write to the JVM and then it will support and take care of the underlying OS.  So whether you were running Windows, HP UX, AIX Solaris etc..if you wrote to the JVM your app would be supported (in theory).  As Paul said, it was the smart thing to do.  In the dev world the marriage of Java and the JVM is what we refer to as managed code.  You do not have to worry about the underlying OS as much since the JVM handles everything (in theory).

As SUN gained popularity and Java really went crazy in the enterprise another thing took place, the dotcom boom.  Two things really happened in the dotcom bubble for SUN.  The first being that a pivotal player in dotcom was the Telecommunications carriers.  Anyone who followed the stock market at this point realized that the stock valuations globally of Telco’s really went through the roof at this time.  To shed a little light on history here, AT&T Bell Labs created the UNIX operating Systems.  The OS that runs the phone system we are all on today is predominantly UNIX based.  As these carriers built out their networks – the developer problem they had was solved by what SUN was providing with Java.  They also wanted the lowest cost UNIX system, which at the time SUN was lower priced then what other vendors like HP or IBM had to offer.  The second thing that happened was this Telco evolution that was going on extended to all the Dotcom startups.  I spent a lot of time traveling to Silicon Valley in those days and all over the place were the SUN billboards, “Sun Microsystems the . in Dotcom”.  During this period SUN was blowing away it’s quarterly earning’s every quarter.

During this rise to glory it was the first time Microsoft was starting to hear that we were evil.  It was hard to take.  It was not new, but in the past these types of evil jabs were from people in the industry.  These new attacks seemed to resonate out to the general public.  It became common at Microsoft to walk into an office and see a picture of Scott McNeely on the wall being used as a dart board.  As I move forward on my blog I will come back to this area of perception, but these attacks really made a lot of Microsoft employees angry and they hurt.

Microsoft did respond and we came out with our own Java tool called J++ and started showing up at conferences.  I had an opportunity at a Microsoft class once to hear then VP , now President of the Server & Tools Division, Bob Muglia talk about this.  Bob was a short stout man with a high-pitched and squeaky voice.  Bob said that Microsoft went to a conference for Java developers and not only showed up with our own IDE (Integrated Development Environment), but it was the best one at the event.  SUN was quick to recognize what was going on.  If we built our own empire of Java Developers we could start defining and taking ownership of the JVM.  If we were leading the developers on how to write the JVM, well then Sun would be minimize..  Sun Microsystems did what all smart companies do, they filed a lawsuit.

During all this SUN had what they perceived as a big problem with Java.  Make no mistake Java was huge in the industry.  However SUN was not making any money on Java.  They refused to hand it over to the standards bodies (which in my view would have been the smart thing to do).  They also were more clueless about Open Source then Microsoft.  I think they missed the point on this one.  They did conferences for Java, but they really should have built a strong program around the developer community – once you have developers they can write applications to your platform (and others).   They could have created a strong developer brand around Java.  They would have owned the direction of the community. In the end  SUN was so afraid of seeding any control of Java, that they did nothing.    They were also a hardware company and they had a huge hit with software.  Hardware is great for revenue,  you can get really big numbers, because it is expensive to buy, but your margins are not that great.  On the other side software is cheaper and you really need economies of scale to drive big revenue numbers.  However software margins are huge, usually around 90% so Net Profits are great.  The one thing I will say having sold developer tools for a number of years is as developer technologies progress prices usually fall.  Making money on developer tools is not like Windows or Office, average growth is around 11.5%.  SUN really needed to build a home run software application that ran on the JVM that  they then could have market to the Enterprise masses, sadly that was just not in their DNA at the time.

As the dotcom boom died so did SUN Microsystems.  The problem SUN had was that so much revenue was being generated by the dotcom boom that when it went bust all of SUN’s eggs were in one basket.  It was surprising to see how much revenue was being generated for SUN by the telecommunications industry.    Having called on the French based telecom equipment maker Alcatel, I knew that these accounts were large (if memory serves me correctly Alcatel was a $40 million a year account for SUN).  A second thing that occurred  was the rise of Linux.  What was interesting was for all the Open Source Community talk of anything but Microsoft, Linux did not impact Windows, but it killed all the high-end high-priced UNIX OS’s.  I love penguins.  The biggest winner of all with Linux was IBM.  Another story for another blog. 

Sun Microsystems would exist for a long time afterwards, but it never regained the voice it had in the industry .  Most of the really brilliant people have left though a few remain.  They recently completed the process of being acquired by Oracle.  Too bad, they were an exciting company to follow, but in the world of the internet, empires rise and fall faster than ever seen before.  Moving forward it’s only going to get faster.

Good Night and Good Luck,

Hans Hoffmann May 18, 2010

The year was closing out and my experience on the incubation team had been a tremendous success.  In fact so much so they had decided to make it into a real group with funding and a new manager.  Greta was not going to take the role so she was passing it on to a new manager, Linda Griffin.  Anyone who ever met Linda did not forget her.  I had actually done an informational with her a few years earlier.  A petite woman, who dressed well, wore lot’s of make up, smoked like a chimney and talked very fast she would end up being one of the best managers I ever had in my career.  Because beneath all that material exterior, she did something unique in management, she cared about her people.  The team would expand as we added in addition to the ISP team a Lotus Notes compete team and Sun Microsystems compete team.  The two teams were targeting the IBM and Sun reseller channels.

Since we were turning into a new year at Microsoft, July, we started off this new team in Orlando at Microsoft’s annual Global Sales Conference.  In my opinion this would be Microsoft at its peak.  Going into this conference we had every reason to be sky-high – the stock was continuing its climb up, we had competitor’s on their death beds – WordPerfect, Borland, Novell, Netscape,  – where ever we went Microsoft was the serpent waiting to strike its next victim.  It seemed like we could do no wrong, as the competition just crumbled at our feet.

The event was at the Disney compound – most of the sessions took place in the Swan Hotel, I was staying at the Boardwalk hotel.  I am not big into vacationing at trendy resorts and have actually never been to Disneyland or Disney World, however having called on Disney as a sales rep throughout my career at Microsoft I can say they run a first-rate resort

The format every morning we would start with exec talks, go to break out rooms and end with some exec talks.  A few were memorable.  In those days Ballmer was still the Sales guy.  He would get up and talk about how well we did  and then announce next years quota (what we were telling Wall Street).  The Global Summit to this days always lands the week we announce our yearly earnings.  After which the sales reps would yell, “it’s too low, more, more..”.  No one ever does that now,  Ballmer also had a GM come help with a demo.  I cannot remember what.  The GM was a guy named Pieter Knook.  As Steve ws talking Pieter drove th demo, until it crashed.  Steve kept talking and Pieter left the stage.  When Steve turned to ask Pieter he saw no one, but just uttered “Pieter..Pieter??”  The rest of the conference had a slogan, “Whatever you do at Microsoft, just don’t Knook it”.   Pieter went on to land some senior exec roles at Microsoft and is now an exec at Vodafone.

Microsoft had earlier in the year released interactive Barney.  A talking Barney doll for kids.  This would lead to a legendary presentation by Microsoft Office Exec Pete Higgins.  Pete was kind of a drab guy to listen to, but on this day with the help of Barney he caught fire.  For those who are not technical  you may not get the humor, but try to follow.   Pete went through the normal here is Office and here is what is coming down the pipe.  We got the standard demo’s.  It was stuff I have seen, it seems like, a million times before and a million times since.  He then ended with our lovable friend Barney.  He did a cute Barney demo where they chatted.  he then showed the Powerpoint of what was to come “Professional Barney”, “Network Barney” and “Cluster Barney”.  As the crowd roared with laughter a chant began “Barney! Barney! Barney!”.  Pete was walking at a fast pace all over the stage with Barney held high over his head, egging everyone on.  Pete would retire not that long after, but it was one hell of a way to be remembered.   Barney, well he joined Microsoft Bob and they are quite happy together. 

One day I had a little extra time so a few of us went down to check out the pool.  As part of ou little gift bag we got some sun glasses.  It was Orlando so it was bright and hot.  All seemed to be well.  As I sat there by the pool I noticed some other Microsoft folks there from one of the foreign subsidiaries.  Some were on the pool and one was looking at me saying something.  He was actually saying it in Danish and funny thing I speak Danish.  So I understood everything, “look at that idiot with the Microsoft sun glasses on sitting over there, he forgot to take the sticker off the glasses”.  At this point it seemed like a worthwhile endeavour to go introduce myself….in Danish.  I did just that to the guy in the pool.  If you could have seen the look on his face, suddenly he looked like a meek, wet rat as a look of shock came over his face.   His name was Hans Gufler and we remain friends to this day.  If someone I didn’t know came up to me and made fun of me everyday and I ended up being friends with that person I would welcome an insult a day.

Well we reached the last day and as usual one more exec speech before the show (Kool and the Gang).  As usual we got an hour break and then went back to the Swan for the Bill Gates keynote.  It was like a rock concert as everyone lined up before the keynote and waited for the doors to open.  The doors swung open and everyone tied to get as close as they could.  We then sat and awaited the highlight of the week.  Similar to a rock concert the lighting darkens and the stage lights start to flash.  In the back of the stage a ring appears with smoke and up pops the shadowed image of Bill, hands folded.  I remember quite distinctly that Bill came out and said “I don’t have any Powerpoint’s today so I am just going to sit here and talk”.  He pulled up a stool and spoke of all that was happening in the industry and where Microsoft was positioned to succeed.  The audience was entranced.  It was similar to a father speaking to his children and telling them all that he knew and helping guide his children to greater success.  It was Bill at his best and the most memorable talk I ever saw him give.

The conference party happened.  We had a dinner before hand.  It was the last time I would see Bill seated with the field reps fo dinner.  For the first time I noticed security around Bill. I don’t remember much from the party except for my new manager Linda hitting some guy with a beer bottle (I said she was entertaining).  The next day I flew home.  My flight was delayed by 5 hours and I had to be re-routed through Dallas.  My experiences with Delta Airlines have never been that good.  I left the conference confident and cocky about Microsoft’s future.  But things would change the following year, slowly Microsoft would begin to lose the innocence that had made it so much fun, but in Jly of 1997 it was still a pretty awesome place to work

Welcome back and Happy New year everyone.  I missed my blogging efforts over the holidays so here is the first release of 2010.

It was 1997 and I had been in my job as a channel sales rep for about 6 months when I was offered an interesting opportunity. My direct boss was Cindy Ranz, who was employee number 16 at Microsoft. but it was her peer Jeff Browne who would offer me up a chance to join an incubation team of telesales reps.   A group known as the Internet Customer Unit (ICU) had been formed about a year earlier and was led by Cameron Myrvold (brother of the founder of Microsoft research Nathan).  As was noted at the MGX in Montreal all things were focused on competing against Netscape.  The issue around the internet was Microsoft really did not know a whole lot about the makeup of the internet community.  One thing that was apparent was that everyone and their mother could start their own Internet Service Provider (ISP) business.  The decision was made by ICU to purchase a list of ISP’s for the US and Canada and have a small group of Telesales reps call down on them and basically find out what makes them tick.  I was one of the reps selected.  It would launch one of the funnest times I ever had in my career.

The team that was selected would reunite me with two of my former teammates from my days in DST; Steve Bissell and Ken Fiore.  Our manager was a bright young woman named Greta George. We were given lists of ISP’s, broken out by region – I had Central and Canada.  Ken had the East and Steve got the West.  There were many ISP’s, I think my list was over 1000.  Like any new industry there were a lot of start-ups. Beyond calling down on these ISP’s and doing intelligence gathering  we had products to promote and sell.  For the browser we had the Internet Explorer Administration Kit (IEAK) and the Microsoft Commercial Internet System (MCIS).

The IEAK was a pretty simple tool.  Microsoft had decided with its browser that we would allow ISP’s to customize the browser with really just two things:

1. The ISP could set the start-up page (Netscape defaulted to their website)
2. The ISP could put their logo in the browser

The MCIS product was a suite of 8 different server products.  I am going to forgo a detailed description of what they did but simply say that the problem Microsoft had at the time with our server products is that none were designed withe the internet in mind.  One product in the suite was an Internet Mail server, the reason we had this product in MCIS was simple.  Microsoft’s Exchange Server could not scale to support the internet nor was it architected to support the internet.  I think the previous point highlights a significant challenge then and moving forward for a company the size of Microsoft. When change happens in technology it happens quickly and companies are faced with a challenge to start with a new product or try to nut and bolt together what you already have.

We started our jobs and were basically thrown on the phones to start calling and selling.  What quickly became apparent was that the browser was not really that interesting, but something else…Open Source.  We quickly learned as a team a whole new list of words and acronyms that we had not been exposed to before,  At the time DSL and cable modems were just being discussed in the industry for eth most part it was modem banks and ISDN lines (56k).  Every ISP had a modem back to receive all the incoming calls.  When a user was on the internet their phone was busy.  the technology these ISP’s used was cheap as in free.  They used things like Linux as the OS  or they used one of two flavors BSDi or Free BSD.  The web server was almost always Apache.  The email was send mail.  For the most part all these things were free stuff you down loaded off the internet.  Another thing is these systems tended to be one-dimensional.  To a Microsoft person it was a question of how could this be?  We were used to multi-tasking and running lots of applications at once.  These systems seemed stupid.  But they did offer one thing: they were secure and stable.  A lot of the  calls were interesting as the Open Source community tended to talk to us like we were yesterday’s news. Initially it was a defensive posture we took (Steve, Ken and I).  How dare they talk to Microsoft in such a condescending manner?  Do they not know who we are?  We invented the software industry.  What is this communist plot to create a paradise for the software community by sharing valuable IP?  We are the definition of the capitalist dream, Open Source still believes the Berlin Wall is standing.  Looking back Microsoft as a company, was still in its very, very arrogant phase.  When you are winning every battle it is nothing to be ashamed of, it’s a necessary attribute to maintain success.  However looking at things from the other side we can look back to Sun Tzu and quote “When confronted by superior numbers it is wise to change the battle field”.  In the packaged software business you were not going to beat Microsoft, but this idea of free stuff was new and could impact Microsoft’s margins.  At this point though Ken, Steve and I were on the cutting edge.  The vast majority of people at Microsoft did not know what was happening on the internet. When you are in the edge in technology you ware in one of the most exciting places in all of business.

I will add here there are a few things I noticed early on I did not like about the internet.  This idea of anonymous I did not like.  I heard people on McNeil – Lehrer, hype it as great.  When I see what people sa and on the internet behind their secret identity it strikes me as weak and cowardly.  In many cases they are doing illegal activities, but in others they just want degrade and crucify people in a way they are simply too scared to do in person.  If you have an opinion stand behind it.

A second thing was in calling these ISP’s a lot of them were dealing with pornography.  This to me just illustrates that the adult industry will always be on the cutting edge of these types of changes in video distribution.  As the writer Paul Theroux recounts in his travel books when talking about pornography, “Much of it is disgusting, but they do it because there is a market for it”.  It’s legal and it’s capitalism.  At 28.8k modem speeds some people must really have wanted the content.

During this time we would forge relationships and travel to meet customers.  This would really launch my career on planes.  We had a lot of visibility in the company, which would cause Greta great stress.  People were very interested to hear what we knew.  Greta and I would talk a lot in her office enduring this time.  She was having to pull spreadsheets together and Powerpoint to discuss the data we were collecting.  I think a lot of that stress was brought on by the fact that an even though we were capturing  a lot if data I am not sure how good it was and it required a lot of assumptions to be made.  Greta then would present to people like she knew, something I don’t think she was comfortable with.  Even in today’s Microsoft with all the date being collected  it still requires a lot of assumptions to be made.  Greta was just ahead of her time.

As a team we had fun.  We went on a golf outing at Mount Si.  I am not a  golfer so take this opinion with a grain of salt.  I do not think the golf course is the most challenging course in Washington, however on a sunny day it really is beautiful to stand in the shadow of that mountain and enjoy golf and beers with great co-workers.  We went out to eat at Chandlers Crab House , very good sea food.  For those making a trip to Seattle I recommend.  Especially during Copper River salmon season  I got  one of the best reviews in my career and one of the largest raises. My career was moving forward I was happy at home with my wife and new house.   Life was very good at Microsoft.

Welcome back and apologies for the delay in getting this latest blog out, seems when you have 3 young boys the holidays are kind of big.  In the latest issue of Wired an article appeared recalling the launch by Oracle CEO Larry Ellison of the “Network is the Computer” initiative.  Given where I am in my timeline and remembering this period fairly well it seemed a good time to reflect, comment and look forward.  When the internet age launched there were no lack of big ideas.  It also launched the period of anything but Microsoft (ABM).  At this time Oracle and its flamboyant CEO, Larry Ellison were not that well-known in most technology circles.  Like so many ideas at the time, the idea of the “Network as the Computer” was not a bad idea at all, it was just ahead of its time.

For those who read my blog let’s recap what this idea was and possibly put it in the context of today.  The idea was simple all your date and applications could be run off a server on the internet and the desktop would not have to do much just render the pages as they came across the web.  To go back further in the history of computing your desktop device would be a “dumb” terminal, like those green screens many people had used in the seventies.  As the article rightly pointed out this would sell more Oracle databases and make Larry famous, which was important to Larry.  I will say I admire Larry Ellison I think he is incredibly smart, a sharp businessman, who has led Oracle to incredible success.  Oracle is also the one software vendor to stand the test of time in competing against Microsoft.  He is also the consummate playboy and may have the world’s largest ego.  After Larry presented his idea, a lot of companies jumped on board, primarily IBM and Sun Microsystems.  They had a lot of buzz going.  In the tech industry generating “buzz” is paramount to success.

Sun Microsoystems really jumped on this bandwagon.  They were hell-bent on taking down Microsoft.  No one in the industry was more focused on this than Sun (I will focus on Sun in an upcoming blog).  They developed a terminal for the “Network is the Computer” initiative and launched the device to the world.  It was an elegant “dumb” terminal. They even managed to sell a few,  However what I remember was the pictures of the boxes being removed from customers after a failed trial.  These circulated around Microsoft so pretty much everyone saw them as a Microsoft employee was there at the scene to take the photo’s.   Still early in the digital camera age as they were not prevalent at time.

IBM started down the path, but then CEO Lou Gerstner, backed off and redirected IBM back into services.  As the saying went “No one was ever fired for going with Big Blue”.  I give Gerstner a lot of credit for redirecting the ship at IBM and generating the success they have seen that continues to this day.  The lesson for IBM was, do not forget what you are known for and good at.  Today’s Microsoft may want to revisit what IBM did in the mid nineties. They remain one of Microsoft’s biggest competitors.

What were the limiting factors?  Well at the time it was still early in the dotcom bubble and what was really happening was a build out of the internet infrastructure.  Fiber was being laid down all over the globe.  Data Centers were popping up all over the place.  You learned a lot about railways as they had what was known as “Right of Way” and a lot of fiber that was laid down ran next to the train tracks.  The build out of the internet was often compared to the expansion of the rail roads in the latter 1800’s.  Finally there was the “last mile”.  This was what ran into your home.  At the time and still today three entities own this (Telecommunication Carriers, Cable Companies, and the Utilities).  The problem was what we have today was still early on so very few had Cable Modems or DSL Lines.  So despite all this infrastructure build out to deliver these services, the service was still very slow and frankly not very good.  Not just the speed but the applications being delivered.

Today this idea has resurfaced in the form of cloud computing.  Where cloud has it right is it is not billing itself as a replacement to the PC, but focusing more on the value to the end customer.  This initial effort has been led by Amazon , but in the last couple of years everyone has jumped on board – Microsoft, Google, IBM, Salesforce.com. etc..The economic downturn we are still in has helped drive the value proposition for cloud computing – off load your IT costs and save money.  We are still at the early stages of cloud computing – having presented the Microsoft version to customers, many know they need to do it as costs are driving decisions, but they do not know which applications to offload, let alone which cloud platform to trust. 

What the network is the computer and today’s cloud computing offer is just an updated version of yester years mainframe, which is a centralization of computing.  I fully expect and predict down the road when we master multicore computing and have a processor with 16, 32 or 64 cores, development will shift back to the client.  When you have that kind of horse power on a client PC, someone will figure out how to leverage it.  If you go back through the history of computing these things tend to be cyclical.  At one point the industry focus’ on centralized computing and at other times it moves back to the end-points.

The “Network is the computer” was a big idea, like so many things in the dotcom era, however I truly believe that the tech industry is built for big ideas.  Most times they don’t pan out however they lay the foundation for great work to be spun off from the initial development or to be re-introduced later and greater.  Remember Microsoft started as a big idea, “A PC on every desktop and in every home”.  It took 20 years but through many efforts it eventually came true.  With the explosion in data (video, digital pictures, music etc..) the idea of the cloud is ripe for both the enterprise and end users.  Even my wife is concerned about our data and asks me if there are online back up services.  Tech people create the ideas, but end users drive the market for those ideas to success or failure.  Have a Happy New Year everyone!!