HP and Palm, Beyond Smart Phones

Enough has been written about HP acquiring Palm that I don’t think it’s that newsworthy today… however something has been bouncing around my hamster cage since reading the coverage yesterday that I’m not ready to let it go.

Maybe this isn’t about smart phones at all? Put another way, of course this is about smart phones but maybe the value of Palm to HP goes way beyond smart phones. Arguably the two assets that Palm has which are worth something are the credibility of the Palm brand and the critically acclaimed (by geeks that is) WebOS. As Apple and Google have proved with the iPhone OS and Android respectively, there is nothing about these platform operating systems that requires a voice communication capability be attached to them… in other words a smart phone doesn’t have to be a phone.

HP already has a tablet and netbook business, one that depends on Microsoft, and I can imagine the frustration that HP executives must feel to have invested so much into that line of business yet have it muddle around in the back of the pack with regard to mindshare. Similarly with smart phone handsets, HP has respectable entries and while it’s long odds that HP would walk away from Windows Mobile, especially on the verge of Windows 7 Mobile, I can believe that HP wants more control over their OS platform for these devices.

Furthermore, the market has declared that they are welcoming of competition at the platform OS level, using Windows Mobile is no longer a safe choice for handset makers and arguably it is a liability as consumers, business and mass market alike, view this as the regressive choice.

There are risks, of course, and if building out the required app marketplace around WebOS were easy then Palm would have done it, but the core risk is that the market consolidates around Android and iPhone OS for tablets and other types of mobile web devices and being 3rd or 4th in that market means you aren’t in that market. In such a scenario HP is in big trouble because they own the mobile OS, which means hitching their wagon to Android becomes problematic (HP already has an Android netbook but is a minor entry in their offering so I expect it will go away now).

All things considered, the risks are significant but the market is still in the formative stages and I doubt it will be winner take all like desktop computing was. The value of the acquisition is roughly 1% of HP’s market capitalization so from a financial standpoint they are not exposed like they were with Compaq,in other words investors will give them a lot of latitude as they make this work and investors will clearly appreciate that HP has elevated themselves into a new peer group with Google and Apple for the mobile marketplace.

On balance, I like this deal a lot in spite of significant forward risk for making it all work.

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Women in Tech: Susan Scrupski

My friend, and I use that term in its true confidant sense, Susan Scrupski was recognized by Fast Company magazine for being one of the most influential women in technology. I am very proud of her for this recognition but more so for all the hard work she had devoted herself to which this list recognizes.

To help ease that transition in big corporations, Scrupski founded the 2.0 Adoption Council last June at the Enterprise 2.0 conference (of which she also sits on the board). The council gives up to two seats per company to enterprise 2.0 evangelists who work for companies with more than 10,000 employees and are actively involved in a 2.0 adoption effort, then offers advice and leadership on how to make the switch. “It’s about winning the hearts and minds about the corporate workforce,” Scrupski says. “There’s a lot of discussion about change management and the philosophy of working in a 2.0 way.” The council is nearing its first birthday and already has more than 170 members, including giants like Disney, Johnson & Johnson, IBM, and Nokia. –Zachary Wilson

[From Susan Scrupski, founder and CEO of the 2.0 Adoption Council | Fast Company]

If you know Susan you know she is relentless and hard working even when pursuing her ideals causes her to assume great financial risk. In a word she is truly an entrepreneur… a builder of things rather than someone who profits from the doings of others.

Susan deserves this recognition from Fast Company even though she doesn’t do what she does for the purpose of being recognized for it.

Smart Meters: PG&E Lost What Little Credibility They Still Had

This one sentence sums it up:

After months of denying any technical problems with its SmartMeter program, PG&E publicly detailed a range of glitches Monday affecting tens of thousands of the digital meters.

[From PG&E details technical problems with SmartMeters - San Jose Mercury News]

This is the first time that PG&E has publicly acknowledged technical problems with the meters, and I’m wondering why it took 43,376 confirmed problems for them to admit this program has problems. Given the willful obstruction by PG&E in acknowledging the problems with smart meters, any proposal that suggests PG&E can be trusted with auditing and reporting smart meter reliability testing and problem resolution is outright laughable on its face.

As I wrote last year, the closed system nature of utility smart meters in California risked making them the new e-voting machines when it came to trust and public support. PG&E has accomplished turning that risk into reality.

My own experience with smart meters indicates that something is very wrong… my bills remain significantly higher and comparing monthly consumption to previous year bills (non smart meter enabled) details higher consumption in current periods. The problem is that nothing in our physical house or family patterns has changed. There is simply no reasonable explanation for why my current period consumption is higher than years past so Occam’s Razor would suggest that the meter is wrong, or the old meter was wrong… and if the latter then a reasonable expectation would be that consumers are grandfathered into their old bills rather than absorbing the financial impact of a utility fixing a long standing inaccuracy.

Salesforce.com and VMware Spring Together

Salesforce.com and VMware announced a significant joint service called VMforce that allows developers to run Java applications inside Salesforce’s cloud. I would encourage you to read Salesforce’s blog announcement on this as it is quite detailed with regard to what it is and more importantly, why it matters.

From where I sit this seems pretty significant even if Java has strong competition from other development environments for hosted applications. What it means is two things, enterprise Java apps now have a clear path to the cloud, and secondly Java developers have the ability to write apps that take advantage of well established database, identity management, integrated search and mobile capabilities without having to adopt new frameworks or toolsets.

Time will tell whether or not Salesforce is successful in wooing Java developers but I have no reason to believe that they will not be. This partnership takes advantage of widely adopted services like Tomcat, Eclipse, and the Spring Framework, which reinforces the core messages that Java developers are welcome up in the cloud.

Several Enterprise Irregulars have offered their views, I would encourage you to read them:

Larry Dignan

Vinnie Mirchandani

Bob Warfield

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Link-o-Rama

- Here’s an update on the potential for hydrogen in energy production. Nothing terribly surprising but it does sum up the major hurdles that are being crossed in developing this technology.

- Facebook may not be Skynet but it is getting smarter and that’s bad for Google... yeah, it’s a parallel web that allows data in/out only through authorized channels. I’m wondering if it’s not just bad for Google but bad for everyone else as well…

- How America’s ruling class buys its way into elite colleges. If there were ever a case for the destructive consequences of “two Americas” it is in our education system.

- In-Q-Tel, the CIA’s venture fund, participated in a funding round for LensVector. This company has a really fascinating technology for camera lens that results in completely solid state focusing systems with no moving parts.

- The FCC reveals a rather embarrassing initiative aimed at reviving the failed CableCard technology as an internet browsing technology… I guess the FCC is trying to rebound from the ass whooping they took in the Comcast case.

- The California PUC has ordered utilities to give up data collected from “smart meters”. I wrote about this last year when I covered my own experiences with smart meters, concluding at the time that utility companies just don’t have a mindset that allows them to think about data as a service they are providing. I’m glad the PUC ordered it but like all things involving utilities (and telcos), I’ll believe it when I see it.

- Nielsen reports that Facebook’s ads actually work pretty well... go figure.

- Ben Horowitz pens a thoughtful post detailing the challenges of bringing big company executives into startups. My favorite bit was “force them to create”… which I guess translates into “force them to actually do stuff… something not required in a big company”.

- The iPad could cripple sales of in vehicle DVD systems… is there anything the iPad can’t do? This is actually a pretty solid argument and maps well to something similar I wrote last year about how the iPhone (and competitors) could kill in vehicle navigation systems and car companies have no one to blame but themselves.

- Dell’s Android handset, the Thunder, looks like it’s bringing a little lightning with it as well. It looks hot, I’m almost ready to say I want one. I say almost because my experience with my wife’s Droid taught me that Android has a lot of sizzle without the steak (she ended up ditching the Droid after having it replaced 3 times for screen failures, she’s back to her trusty Blackberry now). Windows 7 Mobile is also getting a lot of good reviews, will be interested to see how that looks when it hits the market… competition is good.

- 5 popular photography techniques.

- Altimeter’s Ray Wang has a slick new website up and running.

- HP released a 3D printer that takes 3D CAD drawings and converts them into ABS (plastic) models. At $17k this is no impulse buy but it is at a price point significantly lower than CNC carving machines while appearing more capable and easy to use than CNC variants.

- Is God a mathematician? Good question.

- My friend Tom Foremski’s new initiative “every company is a media company” is spot on.

- Dion Hinchcliffe joined the Dachis Group (as did Susan Scrupski’s 2.0 Council) and wrote a really interesting missive on “The Social Enterprise, a Case for Disruptive Transformation“. I keep thinking about this as I ponder social CRM… Don Bulmer (SAP) has been writing some really good stuff on the “boundaryless enterprise”, I’ll track down the links and tweet them.

- John Hagel: From Push to Pull. It’s a must read piece.

- Really interesting look at Kachingle. Not only does this introduce a really innovative revenue model for media sites but the experience of Kachingle trying to sell it to big newspapers should be a cautionary tale for anyone interested in this market.

- The 20 worst VC investments of all time… no real surprises here and the schadenfreude isn’t that fulfilling.

- A compressed air powered car sets a speed record at Bonneville.

- Sesame Street parody videos target Google.


You Really Do Live Forever in Facebook

SafariScreenSnapz002.jpg Today Facebook suggested that I write on my friend Jeffrey Walker’s wall… which made me sad because Jeffrey died last year after a long struggle with cancer. I clicked on his Facebook profile and sure enough, lot’s of his friends have been leaving messages as if he were still with us, and it was nice to read the notes because it reminded me of what a good and decent person he was.

Interestingly, I could find no data element that denotes someone is deceased… you just live forever unless your account is deactivated. I wonder how that will evolve as Facebook grows and, well, more people die?

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Salesforce Enters Data Services Market

The announcement that Salesforce.com is acquiring Jigsaw caught my attention for a couple of reasons.   

Jigsaw’s unique Wikipedia-style crowd-sourcing model delivers the world’s most complete, accurate and up-to-date business contact data

The combination of Jigsaw and salesforce.com will allow companies to easily find, purchase and manage data that is seamlessly integrated with their CRM apps

Salesforce.com makes strategic entry into the $3 billion market for cloud-based data services

With Jigsaw and salesforce.com, data service providers like D&B, Hoover’s and LexisNexis have the opportunity to expand existing partnerships to deliver new services in the cloud

[From Salesforce.com Enters into a Definitive Agreement to Acquire Jigsaw -- SAN FRANCISCO, April 21 /PRNewswire-FirstCall/ --]

First, now we know what Salesforce is doing with the $500 million in debt that they raised back in January. At the time it was expected that they would go on an acquisition binge with the fresh capital but I think most analysts expected that they would be making some very large acquisitions using the cash and their relatively rich stock currency; I, like most, did not expect that they would be doing acquisitions like this for all cash. It’s somewhat academic but interesting nonetheless because it provides a window into the mindset of Benioff and team… they expect their stock to continue to go up in value.

Jigsaw is in itself an interesting company, if for no other reason than they prove rather conclusively that a company can weather the criticisms of Silicon Valley and build a business that has intrinsic and sustainable value. I’ve met CEO Jim Fowler on a couple of occasions and have always been impressed by what they are doing. I also like the fact that they have a maniacal focus on a specific opportunity and have plowed forward to realize it over the course of many years.

Lastly, this is an interesting acquisition because it puts Salesforce in competition with data service providers who would have previously considered themselves strong allies of Salesforce, namely D&B and Hoovers, both offering applications on AppExchange. One really has to wonder what the tone of conversations going on inside of those companies is this morning. To some degree this also puts Salesforce.com on a competitive intersection with LinkedIn, both companies now offering the ability to build an organizational chart for a target organization (aka sales prospect).

It will be interesting how the integration of Jigsaw plays out in the near term but I suspect this is not the first data services acquisition we will see Salesforce.com pull off. Congratulations to Jim and his team, they weathered a lot of criticism and derision over the years, it’s nice to see that they are being rewarded for it.

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Google… The Worm Turns?

Google has been a remarkable company to watch over the years, operating as a pure product company that reflected Microsoft in it’s prime, which is just to say when Microsoft could make or break a new market by simply introducing a new product. Google also adopted Microsoft’s strategy for empowering product managers with great and absolute authority over products.

Over time Microsoft was defanged by endless interventions by government into their product process, the result of which is that Microsoft is no longer feared by startups and investors even though they still enjoy immense power in the marketplace.

Like Microsoft, Google has made mistakes with products in the past and come under regulator scrutiny for their M&A and product privacy issues. However, unlike Microsoft the attention focused on Google has not been debilitating and Google today is a force unlike any other company, even eclipsing Apple in this regard.

With Google Buzz the heat being applied to Google has become uncomfortable, causing the company to quickly recognize that the blunder was more serious than previous over-reaches. We have seen Google respond very quickly with product fixes and an executive level communication campaign but I wonder if what we are seeing with Google Buzz is the dawn of a new era where Google products are vetted much more comprehensively than in years past in order to avoid issues that product managers are not accustomed to putting front and center, like the reactions of international governments.

Privacy officials from 10 countries Monday sent Google Inc. a letter demanding that the Internet giant build more privacy protections into its services, the latest sign of increasingly international anxiety over Google’s power.

[From Ten Countries Criticize Google in Letter for Privacy Abuses - WSJ.com]

Revolutions in Consumer Buying Behaviors

Groupon is getting a lot of attention for their latest round of funding, which values the company “above $1 billion”.

Groupon features a daily deal with a huge discount on a wide range of things–from spas to skydiving–in dozens of U.S. cities, including Chicago, Boston, New York and San Francisco, for large groups of potential buyers on the Web, through email or via social networking sites like Facebook or Twitter.

[From Groupon Grabs $135 Million From DST and Battery–Valuation Above $1 Billion for Social Buying Site | Kara Swisher | BoomTown | AllThingsD]

Rather than focus on the valuation issue, which really isn’t that meaningful aside from generating a lot of attention and completely screwing up stock options for new employees, I’d like to look at the big picture here, which is the evolving nature of consumer buying behaviors.

Every generation, or every decade if you prefer, consumer shift their spending according to evolutions in retail business models and technology.

  • In the 1970′s and 80′s consolidation in retail led to the department store phenomena and suburban shopping malls. These not only appealed to population shifts to suburbs but also to consumers who increasingly took advantage of credit card financing for purchases, credit cards that were only available as a result of the scale that department store chains enjoyed which provided access to credit markets.
  • In the late 1980′s and 90′s the warehouse club reigned supreme, offering strongly discounted goods offered in bulk or bereft of packaging that appealed to families and commercial entities. I also group Walmart in here because they, like Costco, built a business on direct to manufacturer relationships, white label, and technology driven logistics advances that resulted in an ability to offer lower prices than competitive retail channels.
  • The 1980/90′s also saw the rise of the Home Shopping Network on the backbone of expanding cable and satellite broadcast television
  • Late 1990′s and into our current generation is clearly dominated by .coms, I don’t think it’s necessary to say more beyond that.
  • If Groupon is an indicator of the next generation, group buying is a major trend that offers the potential for big consumer benefits and the ability to build a highly valuable businesses as a result.

Groupon is not alone, Gilt and HauteLook have built enviable businesses generating in excess of $100m in annual revenue by offering a club like shopping experience for fashion. Winestilsoldout.com and Cindarella Wine have really interesting concepts, offering 1 premium wine per day until it is sold out… essentially becoming a channel for wine labels to “dump” product not moving through their retail channels without impairing their existing channels.

Mobile coupon services like Mobiqpons also stand to gain from the expansion of location based mobile services, offering great convenience and cost savings for users.

All things considered it is a good time to be a consumer, intense competition in the marketplace is forcing a reshaping of the landscape for every retail segment.

NetSuite, The Forgotten Man

Last week I took advantage of the opportunity to visit with NetSuite during their annual user partner conference held here in San Francisco. I wasn’t expecting anything earth shattering, if only because this company has been around for a long time now, 12 years to be exact and probably as well known for it’s largest shareholder, Larry Ellison, as being a pioneer in software as a service business applications.

This is the point of my post title, NetSuite really is The Forgotten Man, not receiving the respect it is due so I wanted to get caught up and what I found reinforced impressions I already had but also revealed a more complex and interesting company that I expected.

Particularly interesting was the conversation with CEO Zach Nelson, who aside from presenting a confident and knowledgeable front for the company is a very likable guy who is willing to field tough questions and deliver thoughtful responses.

Netsuite has always had a couple of dings attached to them, first a weak channel strategy and somewhat related to that is a haphazard approach to partners. I have also heard from other people I respect that their customer service isn’t great but is improving.

The company recently brought on board a Salesforce.com veteran, Ragu Gnanasekar, to deal with platform and partner opportunities. It’s clear this directive is not to build an AppExchange clone, in fact having said that “nobody makes money with marketplaces” I am inclined to believe they bring as much challenge as opportunity. If not an app marketplace then what… suite extension is the answer and their release of a cloud development platform certainly supports that intention.

According to NetSuite, SuiteCloud 2.0′s capabilities enable enterprises to take full advantage of the significant economic, productivity and development benefits of cloud computing, including multi-tenant, always-on SaaS infrastructure and scalable, integrated applications for Accounting/ERP, CRM and Ecommerce.

Suite extension is not a new concept, large ERP players have relied on 3rd parties to extend their suites into verticals and app functionality that was deemed either to be non-strategic or too small to worry about. NetSuite appears to be taking a different line of reasoning, which is that their opportunity is to be the cloud of choice for core ERP functionality and then cede the extended functionality and verticalization to partners. I think this is smart because even the largest of software companies can focus successfully on a handful of markets, in Zach Nelson’s words NetSuite will focus on delivering an application suite for tech companies and service companies, the rest of the market they are committing to partners.

Admittedly “service companies” is a pretty big segment of the economy and subject a lot of interpretation so Nelson’s magnanimity may not be so commendable but it’s still noteworthy that Nelson is drawing a line in the sand across which they will not cross.

Building an integrated channel strategy is no small feat and while NetSuite is showing progress here it’s also clear they are still in the building phases. A relationship with Fujitsu in Japan was highlighted and based on some previous experience I have with Fujitsu I am inclined to believe this could be quite lucrative. It’s probably not an accurate representation for me to categorize their efforts as “building” but rather increasing their dependence on for future growth.

Their efforts to extend their suite are showing real progress, one partnership in particular captured by attention if for no other reason than the complexity of the solution shows that NetSuite has good legs under them. Rootstock, a Bay Area based company, has built an MRP solution on top of NetSuite’s core ERP platform, which for those of you familiar with manufacturing software will know is no small feat.

EasyAsk and Pacejet were also highlighted as demonstrative of NetSuite’s progress in building software company partnerships, both companies offering compelling solutions built on top of NetSuite’s cloud.

One question that I had which remains unresolved is how a company like NetSuite retains the discipline to not encroach on partner built solutions when their own strategic goals are potentially impaired in the process. This is an issue all software companies face, whether on demand or on premise, but the fact that it’s not a new issue also means it’s not a major impediment.

Nelson and I had a good exchange about something he said that all SaaS companies say that really bothers me… which is that on demand customers have more power than with perpetual license companies, because they can just stop paying if not satisfied. I completely disagree with this statement. On demand app customers are just as much locked in as perpetual license customers because they don’t control the computing assets, as in if you stop paying NetSuite, or Salesforce, they can turn off your service, depriving you of not only the application but all of your data and even when you get your data back what good will it do for you as the schema is specific to a service you don’t have access to. At least with an SAP or Oracle app you can stop paying for maintenance and still keep using the app (or go to a third party maintenance provider).

Having said all that, if I were a mid market company looking for an ERP solution, NetSuite would certainly be at the top of my short list. The idea of spending the kind of money that you have to spend to get an on premise solution up and running is simply a non-starter for most of the mid-market. Netsuite provides, by most accounts, a comprehensive ERP application service with minimal setup costs and that makes it a winner in this market.

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