Red Hat has set the standard for world class software support, consistently earning top marks with CIOs for its efforts. On Thursday, however, Red Hat outdid itself, introducing a new product support plan called Extended Update Support. In a nutshell, Extended Update Support enables customers to run their mission-critical systems for longer stretches of time without having to take production systems offline to update them.
From the announcement:
Extended Update Support allows a customer with a large mission-critical deployment to reduce server administration and management costs by standardizing on a single update release of Red Hat Enterprise Linux for up to 18 months--all while preserving stability and data security.
As Red Hat explains, most software companies allow customers to standardize on a minor, "point" release for 6 to 9 months, or at most 12 months. Through its Extended Update Support program, however, Red Hat is letting customers pick a Red Hat Enterprise Linux build and stick with it for up to 18 months, up to three times the industry average. That means less downtime and less need to re-validate software stacks running on RHEL.
The Register provides some additional insight:
While Red Hat commits seven years of support for a major RHEL version, the dot releases within the versions change about every six months. Within those dot releases, the company ensures application compatibility because it doesn't change the runtime environment, the area where the Linux kernel interacts with applications. So even if there are patches for security or bugs and whatnot in the dot release, customers do not have to go through application testing and certification, which can take many months, as long as they stay within a RHEL version.
This is a great service to Red Hat's customers, and provides further evidence that Red Hat's subscription model helps it to be more attuned to customer needs. Red Hat isn't selling an upfront license: it's selling the continued value of an ongoing subscription. By tuning that value to actual customer needs--in this case, the need to disturb production systems as little as possible to reduce risk and save money--Red Hat ensures renewals.
Subscription models align vendor interests with customer interests. Red Hat's Extended Update Support for Red Hat Enterprise Linux is setting the pace. It will be interesting to see who follows.
Making money off social-network advertising may prove tougher than originally thought.
eMarketer on Tuesday revised its projections for social-network ad spending in the U.S. this year to $1.4 billion, down from the previous projection of $1.6 billion. The Internet market researcher said the poor economy was partly to blame for the revision.
"Social-network sites are still trying to figure out what sort of advertising works," Debra Aho Williamson, a senior analyst who authored the report, said in a statement. "Tapping into consumers' conversations and spreading brand awareness virally has proven more challenging than companies originally thought."
The researcher also revised its forecast for how much advertising money would be attracted by the two leading social networks, MySpace and Facebook. In its previous prediction, eMarketer said MySpace would bring in $755 million, down 11.2 percent from eMarketer's original $850 million estimate. Facebook advertisers are expected to spend $265 million, a 12.9 percent drop from the earlier forecast of $305 million.
Still, the market research firm expects the sector to grow by 55 percent in 2008.
The revised projections come on the heels of Rupert Murdoch blaming the U.S. economy for putting the squeeze on advertising budgets. Fox Interactive Media, which oversees all News Corp. Internet business, including MySpace.com, announced that it expected to fall $100 million short of its ambitious $1 billion annual revenue goal.
Compelling gadgets are the key to consumers' hearts--and wallets--during a recession, according to a consumer spending study.
Of those surveyed, 37 percent of U.S. consumers say they plan to cut back when it comes to entertainment purchases this year, according to an upcoming report from The NPD Group, "Entertainment Trends in America." Just under half of the 11,000 interviewed for the study said they'll likely spend the same amount this year as in 2007.
But what's more interesting is that 18 percent say they plan to spend more, despite widespread concerns over an unstable economy. More specifically, respondents in that group say they see themselves buying gadgets more than content.
"These are the people who tend to be in a higher economic situation so the cost of technology may not be such a barrier for them, whether it's a Blu-ray player or a gaming console or a new iPod," said Russ Crupnick, entertainment industry analyst for NPD. "Those are the things they seem to be anticipating purchasing...That's not to say they're not going to buy movies or music, but their expectation is if they're spending more, they're spending on devices and consumer electronics."
In the recession in 2001, spending on entertainment devices and content remained relatively steady, but this time around, as the price of gas and food continues to climb, the landscape of the consumer electronics industry is very different.
In 2001, there was a new PlayStation game console, and DVD and CD sales were still on the upswing.
"What you're looking at now that's different, especially in music is CD sales have been down pretty significantly. DVD is starting to look like a mature product category," said Crupnick. "The willingness of people in bad times to collect things is less than it was five, six, seven years ago."
Despite gloom and doom hitting the economy, the fear factor largely hasn't eroded IT budgets for this year, according to a Gartner CIO study to be released next week.
IT budgets worldwide are expected to grow 3.3 percent this year, and 62 percent of those surveyed by Gartner expect their budgets will remain unchanged despite the changing economic winds.
And surprisingly, 15 percent of the CIOs surveyed said they plan to increase their budgets this year, by 15 percent on average. Woohoo.
While all this may cause a sigh of relief among IT providers, the industry isn't totally out of the woods.
Of the 1,011 CIOs surveyed during a four-week period spanning mid-February through March, 23 percent said they planned to cut spending on average by 10 percent. And in the U.S., the growth rate for IT spending is slowing to 2.3 percent for the year, from a growth rate of 3.1 percent in the previous period.
"Overall, the majority of CIOs reported no change in their 2008 committed budgets. This indicates that IT budgets are not the 'target rich' environment for cost cutting they have been in the past. However, there is some softness, particularly in the U.S.," said Mark McDonald, research head for Gartner Executive Programs, in a statement.
Win some, lose some.
For online advertising, the word is that portals are out, but search, entertainment, and social network sites are in.
(Credit:
Avenue A/Razorfish)
During 2007 total online ad spending through Avenue A/Razorfish was $735 million, up 36 percent from the year before, and the number of Web sites on which ads were placed doubled to more than 1,800, according to the "2008 Digital Outlook Report."
The share spent on portals dropped from 24 percent in 2006 to 19 percent, while search share rose to 31 percent from 28 percent, vertical sites rose to 39 percent from 37 percent, and spending on ad networks was flat at 11 percent. More dollars went to the top five ad networks.
"This endorses the strategy of the portals to buy ad networks" and beef up their paid search efforts, Jeff Lanctot, senior vice president of media at Avenue A/Razorfish, said in an interview.
Microsoft's new AdCenter and Yahoo's Panama are aimed squarely at reducing Google's dominance in the paid search market. Meanwhile, the major portals also recently acquired ad networks: Microsoft's acquired DrivePM as part of its Aquantive purchase, Yahoo bought Right Media and Blue Lithium, and AOL purchased Tacoda and Quigo.
Asked about what effect a recession would have on online ad spending, Lanctot was fairly optimistic. "If there is a widespread recession, all advertisers will be impacted, but digital is more insulated than other channels" because of the accountability it offers--the ability to track its effectiveness better than other types of advertising, he said.
However, search might not be as well shielded, because even if marketers keep placing ads, searchers will be cutting back on their online shopping to try to save money, Lanctot said.
MENLO PARK, Calif.--Companies used to give away pens, squishy balls and coffee cups to worm their ways into the hearts of customers. Now, they pass out database software.
That is, in a sense, Sun Microsystems' strategy with its $1 billion purchase of MySQL, said Sun CFO Mike Lehman at Sun's Global Media Summit here today. Very few customers have or will pay for MySQL, he admitted. However, they are installing it in large and growing numbers and that gives Sun an opportunity to visit them and try to sell them servers and storage systems.
In Sun's 2009 fiscal year, which begins in the second half of 2008, MySQL will add 1 percent to revenue, but cause operating income to drop by one percent, Lehman said. But in fiscal 2010, MySQL will increase operating income by one percent.
Sun CEO Jonathan Schwartz noted that more than 11 million customers have installed MySQL. Only about 1,000 of these will sign service contracts. "But almost all of them will buy hardware," Schwartz said.
So there you have it--the world runs on giveaways. History shows it works. too. Dell used to only have a minor share of the Intel-based server market. The company, however, began to give servers to large customers after they bought a certain number of desktops. Dell sales reps would then ask to see how well the servers operated when they visited. The giveaway helped Dell overtake Compaq in this space, both Dell and former Compaq employees have told me.
After a few turbulent years, Sun has been recovering and growing for the past year and a half and has regained its confidence. Overall, Sun as a company will see revenue growth of 5 percent in the second half of the fiscal year 2008, which is basically the first two quarters of calendar 2008.
"We are delivering a very healthy bottom line," said Schwartz. "We have made improvements in operating profitability, which have come as a result of income in business and gross margins and not cost cutting. We are now very orientated toward growth."
Schwartz said it's tough to gauge the impact of any economic slowdown in the U.S., but he was generally upbeat. "We're not immune to any economic trends, but around the world we see more companies spending more time and more money to use technology to expand their business," he said. The U.S. represents 40 percent of Sun's business.
Over the long term, he added, there's nothing out there that seems destined to slow down the pervasiveness of tech into society and business for the next fifty years.
Other notes from this morning's session so far:
• Sun is seeing a lot of pickup in sales of its Sun MD, which is a data center in a shipping crate, said Schwartz. (It used to be called the Blackbox.) Roughly 80 percent of Sun's customers are asking about it, he said. One of the more interesting customers that has moved ahead with it is MTS, a cellular carrier in the Russian republics. The company needs the mobile data centers because of the wide geographic swath it covers and the lack of top-quality infrastructure across central Russia.
While most customers worry about the cooling systems in these mobile systems, MTS' biggest concern is snow. The system has to move into parts of Siberia that get 15 feet of snow. So Sun installed snow cages.
Other customers will ship these to Beijing for the Olympics to render footage from events.
• Emerging markets will remain an engine of growth. Sun's revenues are up in single digits in the U.S., but 66 percent in Russia, 20 percent in Mexico, 26 percent in India and 18 percent in Greater China. Social-networking companies and Web 2.0 customers are buying, too. One social-networking customer has 10,000 servers already and is growing its IT spending 5 percent a week. That's on par with a financial services company, said Schwartz.
• Sun will concentrate, said Schwartz, on three markets: enterprise infrastructure, Web infrastructure, and high performance computing. Expect to see Sun make more acquisitions in these spaces---Cluster File Systems was one of the company's more crucial acquisitions last year--and more emphasis on R&D in these spaces.
• Schwartz also threw out one of those zany "what if" scenarios he's fond of. Think of Sun as a media company, he asked the crowd. It's intriguing, but ultimately it boils down to Sun will provide back-end hardware, software, and services to help publishers.
Some believe that a recession won't hit IT hard, but IDC and Forrester are now projecting significant declines in the growth of IT spending in 2008. IDC is pegging global IT market growth of $1.38 trillion, or 5 percent (down from 6 percent growth in 2007), while Forrester sees the IT market growing by 6 percent instead of the 9 percent it had been projecting.
Andrew Bartels, Forrester Research vice president, said the firm's forecast is based on a "mild recession in the U.S. economy in the first two to three quarters of 2008," adding that there is no certainty that the U.S. economy will in fact experience a recession.
I don't see it. Everything feels like a harder recession than the analysts are projecting. The fact that the analysts keep revising downward their projections is an indication that they don't really have a clear idea of just how bad it could be.
BARCELONA, Spain--Cisco Systems' CEO John Chambers gave a little more color Monday to comments he made last week regarding a slowdown in IT spending.
John Chambers
(Credit: Cisco)Chambers, speaking at a preview event at the Mobile World Congress ahead of his keynote speech Tuesday, told analysts and reporters that the company only started seeing a slowdown in customer orders of its networking products in January, the last month of the second quarter of Cisco's fiscal year 2008. He also said that the current blip in orders is not as bad as previous downturns, most notably the major telecom bust of 2001.
"In situations like this, the classical approach is to look at how long will this last and how deep will it go," he said. "Based on what we've seen in the past, we think this will be relatively short in duration and relatively shallow."
Last Wednesday Cisco beat analysts' second fiscal quarter sales, but the company indicated that its orders on new products had slowed in Europe and the U.S. as companies pulled back on technology spending. The company said it expects growth in the third quarter of only 10 percent instead of Cisco's long-term growth rate expectation of between 12 percent and 17 percent, a range that Chambers expects the company to get back to within the next two to five quarters.
The news last week spooked investors, who sent the company's stock down about 8 percent. Cisco reported second quarter revenue of $9.8 billion, compared with $8.4 billion in the period last year. Net income for the quarter was $2.1 billion, up from $1.9 billion last year.
Forrester just released a report that should be required reading for enterprise software vendors who insist on inflicting the 20th century on their customers. According to Forrester, "software licensing and pricing continues to be marred by complexity, soaring maintenance costs, and a lack of flexibility and alignment with business goals."
In the French version of the synopsis, Forrester gives even more detail. For those of us who compete with these bloatware kings, this isn't news. But for enterprises who haven't been on a buying spree lately, you're in for a rude awakening:
... Read more
The Huffington Post's new "Fundrace 2008" feature allows you to see who the big donors are in the 2008 presidential race campaigns, with a Google maps mash-up that lets you search by region, donor name, party affiliation and donation amount. It's a light-hearted but also serious look at who the big donors are (it mostly tracks donations over $200) and, in some cases, you can see who's playing "both sides". They also track donations from employees at specific companies. For example, Microsoft and Google employees have primarily given to Democrats by over 2:1 ratios.
A great example of using technology to bring greater transparency to the democratic process.
