The Open Road

Cisco Systems CEO John Chambers calls video "the killer app," but apparently, he hasn't been paying attention to trends on the Web, or even to his company's own emerging-collaboration story.

Video, while great, takes too long. We e-mail, instant-message, and tweet for a reason: it's short and to the point. Who has time to watch a video each them they want to communicate?

Perhaps even more critically, as Hampus Jakobsson pointed out to me (over Twitter, no less), video "requires full attention--the scarcest of all resources."

Cisco gets this. At least, groups within Cisco get this. That's why Cisco Senior Vice President Doug Dennerline's WebEx team has been adding presence and instant messaging through Jabber, e-mail through PostPath, and more to its Web-conferencing suite.

It's also why Cisco will almost certainly add some form of office productivity suite to WebEx, despite protestations to the contrary from Alex Hadden-Boyd, director of marketing for the collaboration software group at Cisco. (Apparently, Hadden-Boyd didn't see the memo from his boss, Dennerline.)

Zoho, anyone?

Zoho is a leading competitor to Google Apps and, in many areas, actually surpasses Google Apps. While some of Zoho's applications directly overlap with Cisco's current products, the sheer breadth (and, in some cases, depth) of its office productivity and collaboration story must be intriguing to acquisition-hungry Cisco.

Some suggest that Google will struggle to make it in the enterprise due to security concerns with Google Apps. Cisco doesn't have that problem. Its brand oozes "enterprise." As such, it may well be Cisco that changes the face of enterprise computing...by initially changing the way we communicate and collaborate within the enterprise.

Just don't hold your breath for video to part the waters. Video has its place, but it's a highly verbose form of communication, and the Web's most popular technologies increasingly teach us to speak sparingly.

Indeed, I think that we'll see Cisco acquire Control Yourself, the company behind open-source Twitter lookalike Identi.ca, before it changes the world through video.

Follow me on Twitter @mjasay.

Eating dinner with Larry Augustin in London this weekend, we fell to talking about open source's relevance to the SMB (small- and medium-sized business) market. Augustin is currently CEO of SugarCRM, a company with over 5,000 customers, many of them SMBs.

But SugarCRM is the exception to the rule. Open source has long been billed as a savior for the SMB market, but the reality is that open-source adoption has largely been an enterprise IT phenomenon, despite other exceptions like KnowledgeTree, which recently updated its product suite to further appeal to this market.

Why aren't more SMBs adopting open source? Following recent Forrester data, Savio Rodrigues of IBM points out that many SMBs still cling to the perception that open source is not secure and is overly complex.

In many cases, it's not perception. While it's tough to generalize about open source at this point in its history, it's absolutely the case that some open source is complex, some open source is not secure, etc. Much open-source software mimics the enterprise software world it strives to leave behind.

Dell is trying to overcome these concerns by selling prepackaged open-source applications, and I would assume we'll see more companies following Dell's lead.

While some big vendors like Cisco already have significant SMB focus, others, like Oracle, SAP, etc., could use an open-source runway to the SMB market. Unfortunately, as noted, open-source vendors haven't necessarily penetrated the SMB market any better than the proprietary vendors have.

This suggests a strategy for open-source vendors, one that could lead to a big exit: figure out how to pitch to the SMB market, then sell to those big, proprietary vendors that need an entree to SMBs. The new hybrid model for open-source vendors might well be to make the "enterprise" version the one that is easiest to administer and use.

First, however, open-source vendors need to start making software easier to use, and not emulate all the wrong behaviors of the proprietary past. Fortunately, the way to make software easier for SMBs and to monetize it might actually be cloud-based computing.

How fortunate.

Disclosure: I am an advisor to SugarCRM.

Follow me on Twitter @mjasay.

In December 2008, Cisco decided to pay developers to stick a finger in the Microsoft eye with a $100,000 bounty for writing Linux-based applications for its AXP (Application Extension Platform) and Integrated Services Routers (ISRs). Nine hundred registrations and 75 countries later, Cisco has announced its 10 finalists.

What's intriguing about the contest is the diversity of the participants, most of whom are individuals, though there are a few two- or three-person teams. The finalists hail from North (three) and South (two) America, Europe (three), and Asia (two).

Perhaps this diversity lends itself to explaining why the applications developed and ultimately selected represent a disparate mix, especially when one considers that the applications were each designed for a router blade.

With all due respect to Cisco, how exciting can a blade be?

Apparently pretty interesting. The applications include everything from a call processing gateway, live video streaming service, HVAC monitoring for buildings, IP telephony, network fault discovery, rich media advertising, security breach detection, and so on. Pretty impressive.

Now, during the second phase of the contest, which will run from May 15, 2009, until August 15, 2009, the top-10 finalists will work with Cisco to bring the applications to maturity using Cisco resources on Cisco virtual AXP blades. After a final judging period, a winner will be announced in October 2009.

You can follow the contest's Twitter feed, as well as keep abreast on of updates on the contest Web site.

However you choose to follow it, something is brewing at Cisco. It involves open source, and it's aimed at Microsoft. The fun is just beginning.

Follow me on Twitter @mjasay.

By just about any measure, Red Hat dominates its open-source competition and holds its own with big proprietary peers like Oracle and Microsoft, as this Wolfram Alpha analysis suggests. Though far smaller than Oracle and Microsoft, it continues to outpace rivals in year-to-date returns on its stock, among other things.

But where does Red Hat go from here? Or, more pertinently, where does it grow from here?

Red Hat's open-source business model has proved financially sound, but it's unclear that it applies beyond complex infrastructure software like operating systems and application servers. Red Hat's own CTO, Brian Stevens, once said as much:

I don't think you can take one finite element - like Apache - and make a business out of it [using our model]. You need product complexity.

This may prevent Red Hat from entering the most profitable markets like enterprise applications, focusing instead on being a leading infrastructure-only player. That's fine, and there's plenty of room in infrastructure, especially as Red Hat moves into cloud computing and other growth areas for infrastructure.

But it means Red Hat will never really compete with Microsoft, Oracle, IBM, or other big software vendors, all of which have strength in infrastructure but compete in applications, too.

This is by no means a bad thing for Red Hat, but it does mean it will always be more acquisition target than peer in this group of the Big Four.

It also means it will spend all its time fending off open-source upstarts in open source's primary hunting ground: infrastructure. It's therefore not surprising that Red Hat's new JBoss Choice program appears to be a thinly veiled attempt to crimp SpringSource's style, given the ubiquitous open-source Spring Framework and the threat it poses to JBoss Application Server.

If this is the future of Red Hat - duking it out with small (but growing - SpringSource grew subscription revenue by over 300 percent in 2008) open-source competitors? I think Red Hat is well-positioned to win this battle, but at what cost?

Red Hat's successful integration of JBoss into its product line suggests that it's competent to compete higher up the software stack than just the operating system, but it's still unclear that its business model can accommodate applications. Every significant open-source vendor - without exception - has eventually capitulated to a hybrid open-source model. While I don't personally have any problems with this, I suspect many within Red Hat would.

Red Hat has a choice. It can hold to its successful business model and focus on being the leading infrastructure vendor, and make a ton of money in the process. Or it can choose to embrace applications, which will almost certainly require a different licensing model, and take on a full enterprise software strategy, going up against Oracle, Microsoft, Cisco, and IBM.

Which would you choose?

Follow me on Twitter @mjasay.

Stephen Fry, British author and host of a book/BBC series on his travels in the United States, offers up a paean to America in the May 9 edition of The Spectator. At times lightly scabrous, often hilarious, Fry gives a depiction of America that sounds much like Silicon Valley today:

[With some not insignificant exceptions]...America is comprised of the descendants of men and women who at some point over the last 300 years or so wanted to improve their lives. They left their miserable shtetls and peasant hovels and urban slums and blighted potato fields and sailed the Atlantic. 'We can do better,' they said as one. '___ Europe.' They were animated by a restless desire to move on and make something of their lives...A belief in improvability is written into the gene pool of their descendants, today's Americans....

We Europeans, on the other hand, we are descended from those who said, 'Oh, well, could be worse, I suppose. Not getting into one of those nasty ships and going to a new world. Typical of uppity cousin Frank to think he can just march off and start again. Who does he think he is?'

Regardless of whether you buy into Fry's depiction of Europeans, I think the first paragraph describes very well Silicon Valley's gene pool and, indeed, the gene pool of the wider technology community. It's no longer about becoming American, per se: it's about becoming a techie.

This is why it's so critical to open that gene pool further to immigrants, as Microsoft's Bill Gates has been arguing since 2005. It's also why we, as the technology industry, need to "___ Europe," as it were, by discarding a too plodding and careful approach to innovation.

Cisco is a good example here for the wider industry. Despite its massive heft, the company is using its cash hoard to attack 30 different markets, as BusinessWeek reports. Cisco could content itself with simply incrementally improving its network equipment business, but instead it's dramatically challenging the industry's status quo well beyond its core business.

We need more of this. We need to continue to push the envelope on innovation. We need to continue to import those modern-day pilgrims that leave China, India, Europe, and elsewhere and ensure that they want to stay.

That's what Silicon Valley and the technology industry have long been about. It's in our gene pool. Especially now, downturn be damned, we must do more.

Follow me on Twitter @mjasay.

My post on Tuesday suggesting that Oracle, IBM, Cisco Systems, and Microsoft are the last remaining big (software) ecosystem vendors caused a stir. "But what about EMC, Hewlett-Packard, SAP, Adobe Systems, Symantec, and...X?" came the flustered responses.

HP's public-relations firm even took the time to send me this plug for HP's software business:

IT management software is critical for enterprises to keep up with the continuous pace of technology change and growing business requirements. As the leading IT management software vendor (according to Gartner, Forrester, and IDC), HP's software solutions helps customers manage IT like a supply chain that is aligned to the needs of the business, and makes sure they spend money on all the right things that will deliver the most value to the business.

Let's assume that's true. It still doesn't answer the underlying premise of my original post: identifying the most relevant, broad-based software vendors in the market, the ones with hefty ambitions and product portfolios to complement them.

HP has a strong IT management portfolio, as well as some content management software, among other software assets. But it doesn't come close to approximating the breadth and depth of what I deem the Big Four ecosystem players. Nor does EMC or Symantec.

Having $1 billion in software sales doesn't make you a Big Four, disruptive-software vendor. Vision and ambition also factor in.

With this in mind, the big software vendors that are dramatically changing the face of software include Oracle, IBM, Cisco, and Microsoft. Other software vendors may be relevant in their markets (who could discount SAP in the enterprise resource-planning market, even despite its earnings disappointment?), but they aren't changing the face of the software landscape.

Except, perhaps, Red Hat, which today lacks in the size, depth, and breadth categories but arguably makes up for these in the ambition department. Or, on that score, perhaps Google and Salesforce.com should make their way onto the list?

However you assemble the list, it's clear that it grows smaller by the day. Within a year, I think that we'll see SAP in the hands of one of the Big Four (Microsoft, perhaps?), and we may even see Red Hat factoring into an ecosystem vendor's product strategy, rather than crafting a go-it-alone open-source story.

Which vendors are most relevant to you? If you disagree with my list, please let me know why. Who should be on the list that isn't, and who should be off?

Follow me on Twitter @mjasay.

Enterprise software is coming down to four big choices: Cisco Systems or IBM or Oracle or Microsoft.

Hewlett-Packard? HP is doing very well in hardware, but it lacks the overarching software strategy that fuels these other four.

Even as the industry consolidates into these big ecosystem vendors, it's becoming ripe for a new kind of hegemonic, all-out war.

It's a fun time to be in the industry. For one thing, it's fascinating to watch (and, in some cases, assist) each of the Big Four to use open source as a strategic club with which to pummel their neighbors. Open source, thy name is capitalism.

But open source is just one part of it. The bigger part is conflicting product-level competition. Microsoft dominates the desktop and uses it as a "home base" from which to compete in other markets. Cisco spreads the power of the network into a wide variety of complementary businesses. Oracle uses the database as the center of the enterprise-computing universe, but surrounds it with a host of exceptional software.

And IBM? Well, IBM enriches its massive software business with integrated hardware and services that no one has yet been able to match.

Each, of course, is starting to infiltrate the others' safety zone with new initiatives. IBM, as announced on Monday, is pairing up with Brocade to go after Cisco's core networking market. Cisco, for its part, is stepping on just about everybody's toes with collaboration initiatives that veer toward Microsoft's SharePoint, even while it adds a server line to compete with IBM.

Oracle announced the acquisition of Sun Microsystems to help give it a leg up on IBM and Microsoft through Java, Sun's hardware lines, and MySQL. Microsoft, for its part, is expanding into everyone else's markets with the ubiquitous SharePoint.

This is only the beginning. The question is, "The beginning of what?" In some ways, this dramatic industry consolidation reduces customer choice. But in other ways, it enhances it.

Given the centrality of software to this enterprise cage match, it also begs the question, "When will SAP join the fray?" Last week, I spent time at the Open Forum Europe conference, where I repeatedly heard the question raised, "When will Europe produce a dominant software company?"

SAP's strength in enterprise resource planning, or ERP, software could serve as a nice complement to one of the Big Four's product lines--or as a beachhead for the assembly and deployment of an additional, independent software ecosystem.

Red Hat could do the same, fostering an open-source ecosystem to rival that of the Big Four, mostly proprietary software vendors. While the company has shown little ambition beyond infrastructure software, there are hints of a growing interest to sell (and build?) solutions. Red Hat's recent channel expansion through Synnex suggests that it may be toe-dipping its way toward a larger vision of being the hub of the open-source "wheel."

Given this waxing and waning of competition in enterprise software, I suppose that the real question is, "On which ecosystem are you betting your business?" Enterprise IT is a study in heterogeneity, but for how long?

Follow me on Twitter @mjasay.