Outside the Lines

This week on the EIC Squared podcast, ZDNet's Larry Dignan and I discuss the latest reports surrounding the Microsoft-Yahoo mating dance. We expect some news later Friday or early next week as to which way Microsoft is leaning--fight or flight.

I visited with IBM executives this week, and share with Larry my thoughts on IBM's focus on the mainframe and its budding relationship with Google. In addition, we discuss Sun's challenges in turning free, open-source software into profits for the company. And we talk about the upcoming JavaOne and SAP Sapphire conferences.

At a kickoff event for collaboration between IBM and the University of Southern California to explore the intersection of creative arts and science and technology, five IBM scientists offered their best guesses on how life would be different in 2050.

In keeping with the Hollywood theme, the moderator of the panel, Bill Pulleyblank, noted that the Mini Cooper automobile has more computing power than Apollo 13--the space capsule that "almost got Tom Hanks killed," he said, referring to the 1995 movie of that name.

Bill Pulleyblank

Pulleybank led the development of IBM's Blue Gene systems, which account for 4 of the world's top 10 most powerful supercomputers. By 2050, he predicted, the capabilities housed in those giant supercomputers will be available in the palm of your hand.

Harnessing photosynthesis
Sharon Nunes, who leads IBM's green-research initiatives, launched IBM's Computational Biology Center. She predicted that by 2050, clean water and energy would be available to the entire planet.

Nunes is looking to synthetic biology and systems biology to help solve the critical problems the planet faces. "We have to try to learn from nature and the 4-plus billion years of knowledge," she said.

She gave an example of applying an understanding of the chemical and biological processes of photosynthesis to building solar cells and converting algae into environmentally friendly fuels. "We have to learn how to scale (these developments) and make them affordable," she said.

Sharon Nunes

Life extension and parallel human processing
Don Eigler was the IBM scientist who, in 1989, took a small number of xenon atoms and spelled out "IBM" using a liquid helium temperature-scanning tunneling microscope that he had constructed. In his 2050 predictions, Eigler focused on embedded and nanoscale technologies that could lead to life extension.

"In the labs today, people are discovering how to fabricate new nanometer-scale structures for regenerative medicine," he said. Eigler believes that this technology could blossom over the next 10 to 15 years and that it eventually will result in pharmacies built into the human body that automatically administer medicines based on readings from internal sensors.

He also discussed parallel human processing. The idea is that a person could think about two problems at once consciously. This capability could be realized through training or symbiant embedded devices.

Don Eigler

"This kind of human augmentation raises some immediate concerns, but it is a trend we are living with," Eigler said, pointing to pacemakers, cochlear implants, and even Bluetooth ear pieces. "It's a personal responsibility to use technology wisely. The challenge comes when we, as a society, struggle with what technology to outlaw or keep."

Eigler also said that by 2050, we would have a laptop with 100,000 times more horsepower than the state-of-the-art machine today.

"What would you do with it?" he asked the audience, and he answered his own question. "We'll find new ways to use the computer. I just can't think of that today."

Personal genomes and regenerative medicine
Ajay Royyuru leads the Computational Biology Center at IBM's Thomas J. Watson Research Center, researching topics such as bioinformatics, functional genomics, and systems biology. He predicted that before 2050, everyone will have personal genome.

"We will figure out everything that can be told from the genome, but still struggle with the basis of disease," he said.

People will have access to a steady stream of genetic data, and they will use that information to make choices of what to eat, for example.

Ajay Royyuru

"We will teach ourselves when not to touch the 'trigger,'" he said. "Today, we don't know how the machinery works. The genome is a parts list. We will get to a point where we can re-create things so we understand how it works or fails." The result will be a personalized, predictive model of behaviors based on an individual's genome.

Stem cells and synthetic biology (design and fabrication of biological components) will cure diseases in specific places rather than tolerate the absence of an organ or other tissue, Royyuru predicted.

Collective intelligence
Jeff Jonas, an IBM Distinguished Engineer, is chief scientist of the Entity Analytic Solutions Software Group. He works on projects such as data correlation, using irreversible cryptographic hashes.

Jonas predicted that by 2050, a 14-year-old will make $10 billion working in his bedroom in a day. It took Facebook's Mark Zuckerberg three years to be worth $1 billion. More pertinent to his research, Jonas said "collective intelligence will be in the cloud and available to all."

He described collective intelligence as lots of piles of data, much gleaned from a ubiquity of sensors that have to be stitched together and put in context. In 2050, collective intelligence is your personal digital agent, locating and telling you what you need, he said.

Jeff Jonas

Jonas gave the following example of this advanced collective intelligence. There is a pile of data about the current status of an individual. There are also piles about the current migratory status of birds and the weather. The three piles are correlated, resulting in the individual being told to "jump to the right" to avoid being hit by a descending pile of bird excrement.

"Collective intelligence is great when it serves you and your doctor, but you hate it when the police are looking at you," Jonas said.

Jonas also expects that people will be spending more time in virtual worlds in 2050. "It's a way to escape the trails you create by popping into an avatar."

The informed crystal-ball gazing took place at the USC School of Cinematic Arts, with film students and alumni including producer-director Jay Roach (his works include the Austin Powers movies and Meet the Fockers), in attendance.

Faculty member Richard Weinberg hoped that his collaboration with IBM researchers would result in portraying the future in films more accurately. The reality is that science fiction writers and filmmakers are far better at predicting the future than scientists. Their thinking is not bound by what they know, but rather by what they can more purely imagine.

LOS ANGELES--Google Chief Executive Eric Schmidt gave a speech and chatted with IBM's CEO Sam Palmisano onstage Thursday at IBM's Business Partner Leadership Conference here. The two talked up their relationship, which primarily involves a joint research project. In October, Google and IBM announced a cloud computing initiative, based on Google's expertise in distributed, parallel computing and IBM's industrial enterprise management technologies, for public use by universities.

IBM is taking some of the learnings from the project and plans to operate a cloud that will allow partners to house their Web-based applications and sell them to customers, Palmisano said. "It is the first time we have taken something from the consumer arena and applied it to the enterprise," he said.

Google CEO Eric Schmidt joins hands with IBM CEO Sam Palmisano.

(Credit: Dan Farber/CNET News.com)

Schmidt said that over time there won't be much differentiation between consumer and enterprise architectures. The major difference is that enterprise customers will pay for software and services, with required security and other features, and consumers won't.

Schmidt gave IBM lots of credit for pioneering many of the technologies that underlie today's computing architectures. He noted that IBM, which has about 87 years on Google, has figured out that the underlying platform is a server and Web services.

"Cloud computing is the story of our lifetime," Schmidt said. "Eventually all devices will be on the network." Both IBM and Google, and a host of competitors, have the same idea, which was actually first promoted by Sun with its "the network is the computer" slogan. Google figured out how to monetize the fruits of the pages its massively parallel servers manage.

IBM wants to provide the infrastructure and support services to the planet, and Google wants to provide the world's information, and some applications, on its platform. "The two companies are great and have lots of innovation in their gene pool," Palmisano said. "There isn't a lot of overlap in the strategies." Both are committed to open standards and an open Internet, and they are both going in the same direction, he added.

Google's YouTube captures 10 hours of video every 60 seconds, and IBM might like that business if it could figure out how to make money at it. But eventually, IBM, Microsoft, Sun, Google, and other big players will look more similar in their technical architectures and business models.

Google and IBM have more in common than a shared view of the world and an academic research project. It turns out that Google outsources its accounting to IBM and that Schmidt considers IBM's sales organization important to Google's enterprise software efforts.

As more companies look for Web-based tools, mashups, and standard applications, such as word processors, Google stands to benefit. "IBM is one of the key planks of our strategy--otherwise we couldn't reach enterprise customers," Schmidt said.

While IBM isn't selling directly for Google in the enterprise, IBM's software division and business partners are integrating Google applications and widgets into custom software solutions based on IBM's development framework. The "business context" is the secret of the Google and IBM collaboration, Schmidt said. Embedding Google Gadgets in business applications, that can work on any device, is a common theme for both Google and IBM.

Currently, Salesforce.com is selling Google Apps as an integrated part of its platform. It's not far-fetched to think that Google would seek out IBM's help with its business partners to spread the Google word in the enterprise.

LOS ANGELES--Following renditions of "Goldfinger," "Mission Impossible" and "Star Wars" and other movie inspired themes, IBM CEO Sam Palmisano took the stage at the Nokia Theatre here to address 1,000 of the company's top business partners.

Regarding the current economic climate, Palmisano, who is also IBM's chairman and president, told his business partners, "We are going to weather the storm and come through it stronger than most. Just like IBM had to rethink its business model, you have to pick the segments of space and prioritize the opportunities. We have to invest and we have to invest together."

IBM chief Sam Palmisano

(Credit: Dan Farber)

So far, it appears IBM is doing exactly that. The company blew through first quarter earnings expectations with $1.65 per share earnings on revenue of $24.5 billion.

Palmisano took over as IBM's CEO in 2002 after serving as president and COO under Lou Gerstner. He commands an army of 386,558 employees generating nearly $100 billion in annual revenue. During his 35-year tenure at IBM, Palmisano has run business units such as IBM Global Services and Personal Systems and the Enterprise Systems groups.

In his remarks, Palmisano also dropped broad hints that IBM would provide a marketplace for applications using Google-like technical infrastructure. "Through collaborating together, we could create an application marketplace with business partners, with some applications in the cloud or some on premises," he said.

He described how the world is changing, requiring different kind of investments. "If you have expertise, capabilities and can innovate, you are of value in this world. If you don't, you have a strategic issue to work on," Palmisano said.

The so-called mid-market, with a million potential clients and $500 billion in revenue, is a key new target for IBM. Palmisano argued that smaller business need help and providing the right-sized solution that solves problems is a big opportunity. IBM has stepped up its focus on the mid-market with vertical solutions in 120 sub-industries and in 20 countries, he said.

Much of IBM's business is focused on the data center. "We have to solve problems end-to-end in a holistic way. Clouds have a role in the enterprise, many times behind the firewall because of issues of security and protection of information," Palmisano said. "Virtualization is key, but don't dumb down the problem. If the answer is to take four Intel servers down to one, they will ask you to take your PowerPoint and go home. The problem is more complex. We have to work together and help out."

"We are pretty well positioned," Palmisano told the crowd of partners. "We are at a point in time where we will have to make some investments and commitments to each other. You have to do self assessment of skill sets, of our people and your people."

He concluded, as you would expect, that IBM is a better bet for its partners. "When you are old, you are disciplined. You've seen it all before and you re-prioritize investments and go for share because you have the balance sheet," he said.

Steve Mills runs IBM's $20 billion software business. He obsesses about large enterprises running thousands of transactions per second with terabytes of data and a need for absolute certainty of execution. It's a stack of enterprise software writ large, but don't get the idea that Mills has his head in the cloud. The 34-year IBM veteran doesn't put a lot of stock in the latest IT disruptor--cloud computing--for his customer base.

IBM software czar Steve Mills

(Credit: Dan Farber)

I met with Mills at IBM's Business Partner Leadership Conference in Los Angeles this week and asked the senior vice president of the IBM Software Group about his company's view on cloud (on demand) computing. "We have been running multitenancy [running multiple customers on a single machine with a single application instance] for decades and decades," he told me.

"It's a mainframe model where things run together but in isolation. The issue is whether the machines will bear up under the load of diverse work or will they grind down and you'll need to provision another machine. You need reliability, security, auditing, privacy, data integrity, automation and full isolation. You need to have a lot of layers in the environment."

In 2000, IBM resurrected the mainframe by bringing Linux and WebSphere to the platform and lowering the price of entry, according to William Zeitler, senior vice president of IBM's Systems & Technology Group. "You can build out a thousand smaller servers that need to be connected to ports and a fabric. You end up with a complexity crisis that has to be rationalized," Zeitler said.

IBM Systems & Technology chief William Zeitler

(Credit: Dan Farber)

As proof of its mainframe devotion, IBM is in the process of internally replacing 3,900 servers with 33 mainframes by the end of 2009, he added, noting that issues such as data center space and energy savings make the mainframe a cost-effective investment. Since 2000, units of installed mainframe capacity from all vendors has grown from 4 million to almost 13 million today, Zeitler said.

Mills dismissed the idea that Salesforce.com, NetSuite and others running enterprise applications are fully multitenant, meaning they run multiple customers with a single application and database instance with data isolation across a distributed network of servers and virtual machines. "This is a topic of much illusion. You can't change the laws of physics. Don't let anyone tell you that they have found the Holy Grail of multitenancy. Few will let you in to see if it is fully multitenant," he said.

Zach Nelson, CEO of NetSuite, responded in an e-mail to Mills' comments about multitenancy. "We don't run our data center on a single mainframe-like machine, we run it on hundreds of small machines," he said. "However, on each of those machines, we do support multiple customers on a single instance of the application and a single database instance (using virtual private database technology within Oracle). And the amazing thing is we are able to do this without re-inventing a single law of physics."

It could be that Mills and Nelson don't totally agree on the definition of multitenancy. Mills makes the case that software-as-a-service and multitenancy are and old concept that grew out of mainframe computing.

IBM launched "service bureaus" in early 1990s and continues to host about 1,000 customers today, he said. The hosting service ranges from running a whole company to partial outsourcing, as well as its services organization running a company's data center on premises.

"Everything goes back to the beginning, the mainframe. Today we have the same problem, but it's heterogeneous and distributed and not inside the box with a single control," Mills explained. He called MVS [mainframe operating system] a "40-year-old tour de force" that is packed with preventive code built up over decades that "fights like mad to keep machines running with extremely high reliability."

He contrasted IBM's industrial strength iron, whether on mainframes or racks of servers, with the infrastructure platforms from Google (App Engine) and Amazon.com (EC@). "Our corporate buyers are running mission critical apps, and they are not going to pick up their businesses and take them to some amorphous and ill-defined data centers," Mills said. "The cloud as some amorphous concept that meets all needs and requirements is science fiction."

That said, IBM is an arms supplier to the cloud vendors. IBM also has created a "Blue Cloud" initiative to provide data center infrastructure for Web sites. The rack-based iDataplex server is part of the initiative and is being tested by several sites, including Yahoo.

I asked Mills about entering the on-demand applications business (acquiring Salesforce.com or NetSuite comes to mind) beyond some parts of the Lotus collaboration suite. "With higher bandwidth and higher performance to make the remote seem local, the [market] opportunity has gone up. It's not clear that every company in the world sees it as an attractive next step to get IT function. It won't be one size fits all," he said.

At the Business Partner Conference, Ravi Marwaha, general manager of IBM Global Business Partners, said that emerging markets and the 1 million mid-size firms, with less than 1,000 employees, are key growth areas for the company. If IBM is serious about going after those sectors, which don't necessarily want to invest in hiring large IT staffs and building their own infrastructure, it will have to present a more clear strategy.

Mills said that IBM is happy to provide infrastructure, but not the enterprise applications. He explained that IBM gets its greatest return on investment via collaboration with the thousands of software developers in its ecosystem rather than competing with them. "There are enterprise apps such as SAP and thousands of others that serve the enterprise. For every $1 for their software licenses, there is $5 for related hardware and lots of services."

IBM is focused on working with its ecosystem to build more solutions--hardware+software+services. It is the trifecta that powers IBM's revenue and profit growth today. But what happens if the $5 becomes $4 and the $3 even less as customers move toward on-demand platforms that don't have all the complexity of today's IT hairballs that require IBM service interventions.

"We are constantly tracking where things are moving to with the IT automation providers. Our challenge is to make sure we sell to them," Mill said. "You take some Isaac Asimov a thousand years into the future where all businesses source services from service providers, but it's not likely to happen in my lifetime, my children's lifetimes or their children's lifetimes. There won't likely be only two companies left in business services. There is enough diversity for different business models to exist, and the service bureau model will get bigger and we can sell into it."

Google still rules Millward Brown Optimor's annual BrandZ top 100 list, which annoints the world's most powerful brands based on financial performance and a global consumer-opinion survey.

Technology-related companies did especially well, taking more than one-third of the top 30 spots.

(Credit: Millward Brown Optimer)

No. 7 Apple was a big mover, increasing its brand value by 123 percent, and BlackBerry (from Research In Motion) increased 390 percent, positioned at No. 51. The staid IBM's brand value increased 65 percent, and Amazon.com, at No. 61, was up 93 percent.

(Credit: Millward Brown Optimer)

On the downside, No. 62 Yahoo took a 13 percent brand value hit. Microsoft, at No. 3, was up 29 percent, and No. 1 Google increased its brand value 30 percent year-over-year.

It's not clear whether hooking up with Microsoft will help burnish Yahoo's declining brand value as calculated by Millward Brown, but we may find out soon.