Most entrepreneurs are lucky to sell one start-up. A chosen few manage to repeat the feat, building and selling two or more businesses. The folks at Zimbra have outdone them all, selling the same company...twice.
As Kara Swisher of All Things Digital reports, VMware is expected to soon announce the acquisition of open-source messaging company Zimbra from Yahoo. My own sources at VMware confirm the deal.
While Swisher's report gets the Zimbra ownership change correct, its indication of a distressed asset sale misses the mark.
It's true that Yahoo has never known what to do with Zimbra, leading it to shop the Zimbra business to various potential buyers, including Red Hat and Cisco Systems. But this is a reflection of Yahoo figuring out that it doesn't have a future in the enterprise, a place that Zimbra is increasingly calling home, after early success with Internet service providers such as Comcast.
You do the math.
(Credit: Matt Asay)Zimbra has delivered 100 percent subscriber growth, along with roughly 100 percent sales growth, according to sources close to Zimbra, through the worst economic meltdown since the Great Depression, much of that growth driven by sales to marquee enterprise customers such as Bechtel.
In other words, Zimbra is a growth asset, though the price paid by VMware is almost certainly lower than the $350 million paid by Yahoo in 2006. That's just the nature of valuing an asset carve-out versus a standalone company pre-recession.
Even so, Zimbra can be a highly strategic asset for VMware. It's not surprising that the virtualization specialist would be interested in Zimbra, especially as it seeks to differentiate its cloud offerings.
Last week, I wrote that an "application war is brewing in the cloud," a war that VMware, more than any other company, is set to launch with its acquisition of Zimbra. Infrastructure isn't enough of a competitive differentiator, especially since most applications aren't designed to run well in the cloud.
Customers, and particularly hosting and service providers, are therefore looking to their infrastructure vendors like VMware to sort out applications for them, or at least give them a head start.
This is where Zimbra comes in. The company's technology was designed from the start as a cloud application, and it should give VMware a viable contender to Microsoft Exchange to offer hosting and service providers, rather than having to peddle applications from cloud competitors like Microsoft and IBM.
With SpringSource, Hyperic, and its adoption of Linux, VMware was already increasingly the open alternative to the closed cloud offerings from Microsoft, IBM, and others. Now, with Zimbra, it is adding its ability to compete at the application level, while retaining its open-source approach.
It's a smart, bold approach. Ironically, it's also an indication that the first shot fired in cloud computing's infrastructure war looks an awful lot like an application.
Today's cloud-computing vendors focus on infrastructure, but that won't be the case for long. It can't be. As competing vendors seek to differentiate themselves, they're going to move "up the stack" into applications.
It's like the history of enterprise computing, played out in months and years instead of decades.
Just give me my !%!%! apps, already!
Oracle arguably set this strategy in motion when it acquired its way to a complete infrastructure-plus-applications portfolio to lower customer acquisition costs and improve its competitive differentiation for CIOs. IBM and Microsoft also went that route, though to differing degrees and in different ways.
Cloud-computing platform vendors are going to have to do the same thing, except they don't have the luxury of waiting.
It's not enough for cloud vendors to build the infrastructure and pray, "Field of Dreams" style, that customers will come. They won't. Not without applications and a host of other issues worked out for them, not by them.
Even Google, born in the cloud, recognizes this. Instead of forcing government customers into its public cloud, the company is building a dedicated cloud for government organizations in the U.S. Google's reasoning?
We also want to do our part to make it easier for government to transition to cloud computing. We recognize that government agencies have unique regulatory and compliance requirements for IT systems, and cloud computing is no exception. So we've invested a lot of time in understanding government's needs and how they relate to cloud computing. To help meet those requirements we're taking two important steps....
One step is certification, and the other is dedicated hosting. As much as Google may hope that its other prospective Google Apps customers won't have "unique...requirements," they do (or think they do). it's a losing battle to tell them otherwise, at least in the short term. If an enterprise giant like GE demands a private cloud, GE is going to get it.
This same pragmatism will drive Google and other cloud-infrastructure providers to build out their application suites. Why? Because enterprises that move to the cloud expect to see applications follow them there. Today, however, most enterprise applications don't work well in the cloud, leaving would-be enterprises buyers all dressed up with nowhere to go, in terms of the ability to run desired applications.
Vendors are jockeying to satisfy this demand for cloud-based applications. Google is already well on its way with Gmail and the rest of its Apps, and has been in the market lately for more, but others like Cisco, Microsoft, VMware, and IBM will be jumping into the M&A market to round out their offerings in order to deliver increasingly full application suites.
Microsoft has been actively courting developers to build cloud-ready applications for its Azure platform, while VMware bought into the Spring developer community for the same purpose. But in the winner-takes-most cloud platform war, the best short-term strategy is to provide applications, and not simply hope they get built.
Perhaps this is one reason IBM CEO Sam Palmisano claims to be undisturbed by Google's rise. IBM already has Lotus and more running in the cloud, and has a strong hold on enterprise wallets.
Some, like Red Hat or Amazon, may elect to sit it out and stick to their infrastructure-only guns, but such vows of paucity won't help potential service provider customers, and threaten to position them out of the longer-term battle for enterprise customers. Amazon can afford to refrain from seeking enterprise customers; Red Hat can't.
Microsoft is arguably best positioned in such a battle, at least from a portfolio perspective. After all, it has the applications--e.g., Exchange/Outlook, SharePoint, Office--that enterprises already use. What it doesn't have, at least, not yet, is experience running these applications in significant cloud deployments. But that will come.
Until it does, expect the big cloud-infrastructure vendors to buy competitive application offerings so as to distinguish their platforms to hosting and service providers. Sure, they can sell hosted Exchange, but that's a recipe for entrenching Microsoft in the cloud, just as happened on the "desktop" and server. Cisco et al. don't have much appetite for reliving Microsoft's glory.
Who are the likely targets? Zoho just became belle of the ball, of course, but there are others. I'd expect any application with either a significant following, like Acquia's Drupal, or significant cloud/hosting experience, like SugarCRM (Disclosure: I am an adviser to SugarCRM), to be up for grabs.
Follow me on Twitter @mjasay.
Cloud computing is still more attractive to venture capitalists than it is to enterprise IT buyers, and that's unlikely to change in 2010. As IT buyers warm to the idea and implementation of cloud computing, 2010 is going to prove to be a very big year for cloud-computing M&A as big-fish vendors like VMWare, Microsoft, IBM, and Oracle round out their cloud product portfolios with little-fish innovators.
Computing (and M&A) heads for the cloud
Some, like Oracle CEO Larry Ellison, suggest that cloud computing is simply a fad, one that attempts to solve many of the same problems that SOA, EDI, etc. already attempted to fix.
Tell that to the buyers. Gartner expects the cloud-related SaaS market to top $8 billion in 2009, which suggests that real customers paying real money.
They may not be paying enough, however, to support the mushrooming cloud vendor marketplace. Not yet.
Industry insiders are predicting a shakeout as pre-recession venture funding runs out for many of the early cloud vendors, forcing them into the arms of buyers or bankruptcy courts.
This is the inevitable separation of wheat from chaff, and it's a very good thing for an industry that has been long on hype and short on delivery to date.
But don't confuse the hype with vaporware. And don't for a minute think that any of the big (or small) vendors has a complete offering yet. As IDC research director Dan Yachi posits:
Cloud computing is more than just buzz. It is here to stay and is expected to take increasing shares of total IT spending worldwide. From a VC perspective, the even better news is that cloud computing is still far from maturity. There are many technology gaps that are not yet filled, especially in the areas of cloud enablement, management, monitoring, and security. In particular, VCs can find investment opportunities in start-up companies that develop solutions for hybrid cloud, which is expected to experience increased demand over the coming years.
Cloud computing offers real advantages, and has attracted a significant array of pent-up demand. Start-up vendors like Cloudera, VMOps, Rightscale, and others are inundated with requests for pilot projects as enterprise IT dips some very big toes into the cloud-computing water.
Indeed, it is start-ups like these that will help bridge the gulf between cloud hype and cloud practice in 2010, as the big vendors round out their offerings with the start-ups' technology.
Who will be bought? Those that solve real-world IT problems, not simply those that offer enterprises the ability to build private clouds or give them an on-ramp to public clouds.
Take VMOps, for example. The company's product suite enables service providers and others to build out private clouds. Where it becomes particularly interesting, however, is in the details.
While it sounds great to build a private cloud within an enterprise, the reality is that its resources will be funded by a number of different groups. There's no such thing as a common pool of funding in big enterprises. Among other things, VMOps has management tools for handling billing/resource allocation within private cloud deployments.
This sort of real-world understanding makes its cloud tools much more practical and, hence, much more interesting than those from competing vendors that may solve the technical difficulty of building a cloud but overlook the practical problems of managing it on a day-to-day basis.
Or, as Appiro predicts for 2010, "The real innovation will be in the business of cloud computing, not the technology."
This is why 2010 will be the year when the big vendors buy up innovative start-ups, in terms of both technology and business acumen, that help to make cloud computing reality, not theory, as cloud computing leaves the labs and becomes accepted practice in forward-looking enterprises.
It's a trend that should make enterprise IT very happy...and venture capitalists even happier.
Microsoft is in significant disarray, fettered by its destkop dominance as the world goes mobile. Would this have happened anyway, or is Microsoft CEO Steve Ballmer to blame?
Developers! Developers. Developers? Developers!?!?
Ballmer, after all, knows how to sing to developers, but he doesn't really speak their language. Former Microsoft CEO and co-founder Bill Gates did. Now, more than ever, Microsoft needs to get in front of developers but finds itself playing catch-up.
Gates announced his resignation back in 2006 and formally discarded his full-time Microsoft duties in 2008. But it has been a long time since Gates' hand was full time on the steering wheel.
That's a problem for the world's largest software company. It was Gates who saw the threat (and opportunity) the Internet posed for Microsoft--drafting his excellent "The Internet Tidal Wave" (PDF) memo in 1995--and alerting his troops to an array of threats that saved Microsoft from ruin...while helping it to ruin many others on its path to billions in profits.
Gates oversaw Microsoft's early, largely successful forays onto the Web. Ballmer has shepherded Microsoft to vanishing mobile market share (now just 7.9 percent of the market), a hesitant tiptoe into software as a service, and a general sense of retreat in emerging markets.
Hence, while former Microsoftie Don Dodge talks up his new employer, Google, with its food perks and 401(k), it's really the company's vision that has him jazzed:
Google has made three big bets on the future of computing; Chrome (browser), Google Apps (cloud), and Android (mobile). The trends are pretty clear. All the exciting new applications are running in the browser, with application code in the cloud, and the cell phone as the platform....2010 will be the year that enterprises of all sizes start their transition to Gmail and Google Apps, and take their first steps towards the vision of the future.
Dodge couldn't sell this sort of vision at Microsoft.
Microsoft has been playing catch-up for many years, but at least did so successfully under Gates. With Ballmer, there's a sense that Microsoft is always a half-decade too late on critical initiatives like search, open source, and mobile.
So is the problem Ballmer, or is Microsoft simply doomed, blinded by its own success with personal computers--a blindness that no CEO could overcome?
I hate to ascribe so much importance to any one person, but just as Steve Jobs is the soul of Apple and its revolutionary leader, so, too, was Gates the heart and mind of Microsoft. He understood developers, and they rewarded his belief in them by making Microsoft the world's largest software company.
Microsoft is the poorer for Gates' departure.
Even as I type this, Google keeps moving into the future while gouging Microsoft's past. TechCrunch is reporting that Google is acquiring DocVerse, which enables people to collaborate on Microsoft's Office documents. Microsoft is under siege.
This is just the beginning.
Developers are coding for Google projects, Twitter, and other new-style Web applications. Morgan Stanley is predicting the mobile market will be twice the size of the "desktop" market. Will Google someday dwarf Microsoft in size and influence?
Unless Ballmer can discover his recessive developer gene, the answer my well be yes.
Update at 2:10 AM Pacific on Tuesday: Newsweek predicts the ouster of Ballmer in 2010, but ZDNet's Mary Jo Foley cautions "not so fast."
Follow me on Twitter @mjasay.
It's reasonably clear that open source is the heart of cloud computing, with open-source components adding up to equal cloud services like Amazon Web Services. What's not yet clear is how much the cloud will wear that open source on its sleeve, as it were.
Eucalyptus, an open-source platform that implements "infrastructure as a service" (IaaS) style cloud computing, aims to take open source front and center in the cloud-computing craze. The project, founded by academics at the University of California at Santa Barbara, is now a Benchmark-funded company with an ambitious goal: become the universal cloud platform that everyone from Amazon to Microsoft to Red Hat to VMware ties into.
Or, rather, that customers stitch together their various cloud assets within Eucalyptus.
I caught up with Eucalyptus founder and Chief Technology Officer Rich Wolski to learn more about how Eucalyptus hopes to displace industry leaders like VMware, and the role that open source plays in growing the cloud-computing market.
While Wolski made a big deal about the company's open-source credentials, I found his argument about the open architecture of Eucalyptus more compelling:
... Read More[Eucalyptus] is architected to be compatible with such a wide variety of commonly installed data center technologies, [and hence] provides an easy and low-risk way of building private (i.e. on-premise or internal) clouds...
Thus data center operators choosing Eucalyptus are assured of compatibility with the emerging application development and operational cloud ecosystem while attaining the security and IT investment amortization levels they desire without the "fear" of being locked into a single public cloud platform.
Whether you're an enterprise or a consumer, ultimately your big concern in buying technology is "Will it do what I want it to do?" Sometimes components matter, but most people most of the time just want something that works.
Open source inside, but do you care?
I'm going to assume that at some point over the last 20 years you bought a car. So, how important was the car maker's use of just-in-time manufacturing to your purchase decision? I'm going to go out on a limb here and say it was of no consideration at all.
Well, I think we're fast approaching the point where open source to software will be like JIT to automotive manufacturing. While it will critical to the producers of software, woven into the fabric of its operations, it will be of no importance at the point of consumption.
As hard as this might be to accept, open source is not a value proposition in its own right.
As hinted above, this is mostly true. Customers do care about the things that open source offers (lower cost, higher quality, etc.). But they probably don't recognize (or care) that these benefits stem from open source, per se.
Consider the Web. Open-source software provides the fundamental building blocks for nearly all Web services like Facebook, Amazon, etc., not to mention the infrastructure for public and private clouds.
End customers aren't asking for open source on the Web or in the cloud. They're asking for well-managed services that solve their problems. It's the vendors who care, because it allows them to grow highly scalable businesses at a modest cost.
Indeed, many of the customer benefits of open source (i.e., the ability to view, modify, and redistribute code) disappear or get muted on the Web and in the cloud. This hasn't stopped customers from buying into the Web/cloud.
Red Hat may disagree. It's apparently betting that customers care about components in the cloud. Why else would Red Hat Enterprise Linux pricing be much more expensive than Windows on Amazon EC2, despite being much cheaper for on-premises deployments, as IBM's Savio Rodrigues finds?
But I suspect Red Hat will need to change its pricing, as the OS is even more commoditized in the cloud than it has been for on-premises deployments. Both Red Hat and Microsoft will race to the bottom in pricing, with the emphasis being on the applications that run on them.
After all, this is the thing that drives customers' purchasing decisions. Red Hat knows this, which is why it (rightly) makes a big deal of the huge ecosystem of applications that run on RHEL.
In the cloud, even more attention is focused on service that customers use. Open source, in such a world, is essential infrastructure, but it's infrastructure that every vendor shares or will soon share, making the battle all about end-user facing applications, and not about developer-facing open-source components.
This is a very good thing. It means we can get back to focusing on solving customer problems, rather than fetishing and battling over open-source licenses. It's about time.
For those entrepreneurs looking to make a living from open-source software, Index Ventures general partner Bernard Dallé has some advice: get thee to a cloud strategy.
Bernard Dallé
(Credit: Index Ventures)Why? At a time when enterprises may be less willing to spend on software, they're increasingly interested in spending on the operation of that software through cloud computing, an interest that can be bought...and sold.
The cloud isn't simply a clever way to provide social-networking services, either. As Dallé suggested in a phone interview on Wednesday, cloud computing may well be the best way to monetize enterprise-facing open-source software.
He should know. Index Ventures has been one of the most successful investors in the changing world of software, hitting home runs with MySQL, Skype, and more. So when Dallé says that as much as 70 percent of the investment opportunities they see now are cloud-related, and that this bodes well for open source, it's worth paying attention.
Given that the cloud renders software less visible to end users, I asked Dallé if cloud computing spells the end for open-source businesses. Far from it, he said:
I think it's good news. I don't think open source is going away. It's here to stay. The world is increasingly moving to a hybrid world: a combination of on-premises and cloud computing. We're not going to see a 100 percent cloud world.
If I look at our portfolio, even our "open-source companies" like Pentaho, OpenX, and DimDim are turning to the cloud to monetize their open-source software assets.
Open source provides a convenient on-ramp and off-ramp for customers, helping them evaluate the software at low to no cost and also gives a free (as in cost and as in freedom) exit in case things go wrong. Between that entrance and exit is a ripe opportunity to make a lot of money by delivering value to customers.
Dallé further explained that open source helps vendors reach customers through low-cost distribution, but cloud computing, importantly, makes the open-source software palatable to a class of customer that finds open source too risky, yet has no problem using it when hosted.
If this sounds like a potent mix, it's because it is. It's also a highly efficient, low-cost way to start and build a company. Dallé elaborates:
The other big trend, not related to open source, is cloud-on-cloud: cloud services running on other clouds. It used to be that everyone ran their own data center, but now an increasing number of companies are happily running their services on Amazon EC2 or other public clouds. This dramatically lowers the cost of starting a service, and starting a company around it.
This might raise the concern that we'll see too many open source/cloud companies, not too few. Dallé isn't worried: "The quality of an investment always comes down to the quality of the people involved and their execution."
If Dallé's correct, the right place to look for open-source businesses to flourish is at the nexus of on-premises open-source software and cloud computing. It could prove to be a potent mix. And while the cloud might not be the right delivery platform for some software, it probably does have a high degree of salience for many.
A recent survey suggests that CIOs are loosening the purse strings on IT spending. IT vendors may want to hold off their celebrations, though, because much of the spending appears to be headed for deflationary forces like cloud computing, virtualization, and their kissing cousin, open source.
An economic rebound never looked so dire.
That's unless you're an IT buyer, of course, suggests a new report from Goldman Sachs. In this week's report, titled "A Paradigm Shift for IT: The Cloud," Goldman Sachs said it expects that pent-up IT dollars will flow in the short term to building out next-generation data centers (e.g., cloud computing). But in the long term, less money is expected to find its way into fewer wallets:
After the initial build-out, Cloud Computing could drive some headwinds for the IT industry, as a result of two factors. First, we see virtualization as a deflationary technology. Second, we see IT spending consolidating in the hands of fewer buyers--the Cloud providers, hosting vendors, and large enterprises. These factors will likely dampen IT spending growth due to greater utilization and buyer pricing power.
Even short-term build-outs may prove disappointing, however, as Goldman Sachs expects large enterprises to grow existing virtualization and automation technology adoption in the rollout of private clouds, shifting slowly to an embrace of public clouds over time. The chart below gives some idea as to when cloud computing will hit its stride:
Who wins in this scenario?
According to the report, Red Hat stands to benefit from the cloud-computing craze. ("Red Hat is well positioned for the emerging Cloud Computing ecosystem, largely due to its open source background and current ubiquitous deployments in data centers, including enterprises, as well as in Cloud providers such as Amazon," the report states.)
But the real beneficiaries will be...the same old crew. "[K]ey suppliers for internal Clouds are likely to be those that have the most complete portfolio of hardware, software, and services," including IBM, Hewlett-Packard, Cisco Systems, EMC, and Oracle.
New boss...same as the old boss.
The other beneficiaries are the start-ups that provide critical components of cloud computing, with an emphasis on management tools. Here we may see open-source companies benefit, including Reductive Labs (Puppet project), Cloudera, and the two rising private cloud companies, VMOps and Eucalyptus, among others.
While open source doesn't factor heavily into this particular Goldman Sachs analysis, the firm has before called out open source's role in wringing more value out of fewer IT dollars. Open source is a primary driver of the global reset in IT spending expectations.
With less money flowing into the pockets of fewer vendors, we can expect to see both increased consolidation and fierce competition for the IT spending that remains. Those vendors that can help CIOs do more with less stand to benefit from this shift to low-cost, high-value computing.
And those that can't? Well, let's just say they may pine for the good old days of the global recession.
Ars Technica's Ryan Paul wants to know, "Can a [truly open smartphone] be done?" But the real question is, "Should we care?"
Hello? Can I get some freedom around here?
Hence, Bradley Kuhn of the Software Freedom Law Center expresses anxiety about the future of freedom in mobile...
We are in a very precarious time with regard to the freedom of mobile devices. We currently have no truly Free Software operating system that does the job.
...when he really should be concerned with choice in mobile. Right now, we're spoiled for choice in mobile, what with Apple's iPhone, Google Android, Symbian, LiMo, Moblin, etc., which suggests that users are free to move between devices.
In this case, it's not the license that makes users free. It's the market.
Open-source software plays an important role in ensuring user choice, but it's not the sum total of the freedom/choice equation. It's just one factor. As Tim O'Reilly reminds us, it's not even necessarily the most important factor, either.
Kuhn and other free-software advocates worry that the nuts and bolts making up the software on mobile phones be free, but this is surprising given the increasing irrelevance of single-node freedom when it's tied into a network. This is what I've described as "the Hotel California of tech," and it suggests we should be far more concerned with freedom between nodes than freedom of the nodes themselves.
In other words, the real concern should be over open data, not open phones. No matter how open my phone's software may be, it's meaningless if I can't move my data between devices or wireless providers.
Even here, there's cause for hope. For example, Funambol's open-source mobile cloud synchronization and push e-mail software is in use by 10 of the leading mobile service providers, as identified in a new report, which arguably should be more relevant to the Freedom fighters than whether Bluetooth is open source.
Glyn Moody, a journalist with strong free-software leanings, understands this. That's why he makes the case for an open cloud, and not simply "open node in the cloud":
Ideally, what we need is a completely open source cloud computing infrastructure on which applications providing people with things like (doubly) free email and word processing services could be offered....The trick here is not to fight the battle on the opponents' terms, but to come up with something completely different.
For example, how about creating an open source, *distributed* cloud? By downloading and running some free code on your computer, you could contribute processing power and disc space that collectively creates a global, distributed cloud computing system. You would benefit by being able to use services that run on it, and at the same time you would help to sustain the entire open source cloud ecosystem in a scalable fashion.
One can quibble with the feasibility of this approach, but at least Moody is thinking at the right scale. Those who are still stuck in the Open Source 1.0 of isolated, client-side software are not.
I suppose someone has to fixate on upper-case Freedom above all other priorities. Like usability. Or ubiquity. Or...well, anything.
But most of us don't think this way, because the world is a lot more complicated than Freedom on one hand, and Slavery on the other. Also, the focus of freedom has evolved in our networked world, though some free-software advocates seem mired in Freedom 1.0.
It's time to upgrade. Freedom is more than a license. It derives from a competitive market, one that is assisted by open source but not exclusively or even primarily defined by it.
Google was born on the Web and is increasingly giving Microsoft fits by forcing the decades-old software giant to compete on Google's terms. Like open source. Like cloud computing.
Microsoft may shore up its fortunes in the short term with a successful Windows 7 launch. But in the long term, its very success with outdated "desktop" products threaten to cede the market to Google.
We'll have all of it, please
It's not really fair to Microsoft. Microsoft is a victim of its own success, needing to cater to its existing clientele with each new release, in true "Innovator's Dilemma" fashion. Hence, Microsoft continues to make a lot of money, but its last two quarters have seen traditional strengths like Windows become a drag on earnings as enterprises spend more money with Google, Red Hat, and others.
Google's lack of legacy frees it to innovate rapidly and broadly, as Genentench CIO Todd Pierce, a Google Apps customer, suggests:
The rate of innovation at Google is - well I mean, the Oracle, SAP and Microsoft product cycle is five years; Google's product cycle is five days. It's incremental. In five days you're not going to be able to cancel your Microsoft Office license, but in five years, you won't have Microsoft Office.
Microsoft, for its part, is so concerned with "backward compatibility"--"Is this product/feature compatible with our ability to continue to monetize our 1980s-style desktop monopoly?"--that it continues to struggle to embrace the Web. CNET blogger Dave Rosenberg points out that Windows 7 should have been Microsoft's launchpad to cloud computing, but isn't.
There are a lot of "should have beens" for Microsoft when it comes to the Web.
Meanwhile, no one is slowing down for Microsoft. Let's stick with cloud computing for a minute. VMware dominates virtualization and has a strong claim on cloud computing, though open-source rivalry from Eucalyptus and VMops threatens to challenge both VMware and Microsoft as they seek to dominate cloud computing.
And then there's Google, which provides an increasingly wide array of cloud-based services to enterprises looking to untether themselves from the desktop. In an interview with CNET News, Google CEO Eric Schmidt argues that "The browser can be both enterprise- and consumer-capable. The architecture is driven from the browser. That is the story of enterprise IT today."
In other words, the desktop is simply the means by which a user loads a browser. It's a gateway. The value is not in the desktop anymore. It's in the browser, which is the new desktop, in terms of real functionality delivered.
Microsoft's big opportunity to stymie the threat from Google and others is SharePoint. Microsoft CEO Steve Ballmer has described it as Microsoft's new operating system, but it's in a recent interview with Forrester that he makes this meaningful:
In my own mind I compare (SharePoint) to the PC, the PC started off life as a spreadsheet machine, then became a programming machine, a word processing machine, (SharePoint is) a general purpose infrastructure that connects people to people and people to information....
I think SharePoint is considered a very serious development platform for rapid application development (by IT architects and developers).
SharePoint is Microsoft's best attempt to connect desktop applications like Office with centralized, cloud/cloud-like collaboration and storage. Yes, Microsoft has other initiatives like online Office, but none marries so well its legacy profit centers with future innovation. And, given that SharePoint is already a $1 billion and frenetically growing business, it has momentum that other initiatives don't.
SharePoint, then, may be Microsoft's best hope for marrying its legacy to the future of Web-based computing.
Microsoft needs something like this. It is losing in mobile, and not simply to Apple. Google's Android momentum is almost astounding, with AdMob data pegging Android smartphone penetration in the U.K. at 10 percent, as but one example.
If we assume that mobile will increasingly be the client platform of choice, then we see Google squeezing Microsoft from the top (cloud) and the bottom (client).
In both areas, open source is Google's weapon of choice, and it's one that Microsoft is going to have to figure out quickly if it wants to be a player on the Web. The Web is too big for Microsoft to control it, and the Web is overwhelmingly open source, as Lotus founder Mitch Kapor states:
The accomplishment of open source is that it is the back end of the Web, the invisible part, the part that you don't see as a user.
All of the servers, pretty much, they run Linux as the operating system; they run Apache as the basic Web server on top of which everything else is built. The main languages out of which Web applications are built - whether it's Perl or Python or PHP or any of the other languages - those are all open source languages. So the infrastructure of the Web is open source ... the Web as we know it is completely dependent on open source.
Kapor further suggests that Microsoft's war with open source is over, or should be over: open source has won. It's essential infrastructure now, and hence something that Microsoft needs to embrace, not fight. This isn't about open-source religion. It's about pragmatism. Pragmatism that Microsoft, like anyone else, can embrace.
Google is using the future (open source, cloud) to compete for the future, and its tactics threaten to hit Microsoft in its profit centers like Windows.
Microsoft, however, appears to be mired in its past. Windows 7 looks to be a serious upgrade over its Vista predecessor, but in 10 years time, will we care? Or will we have moved on, forgetting about those quaint days when we used to care about the operating system and applications like Office?
Follow me on Twitter @mjasay.
