This week Microsoft gave evidence that it will continue to be a major force for at least the next decade. The company outlined its products and strategies that more fully embrace the "cloud," such as the Azure set of cloud services; Web-based, lighter-weight versions of Microsoft Office applications; and the latest iteration of the Live Mesh middleware. Google may have won the search war, but Microsoft isn't about to cede the global cloud to the search engine giant.
Ray Ozzie explains Azure to CNET News correspondent Ina Fried.
As in past epochs in its 33-year history, Microsoft ties its success to the developer community, having an army of loyal, or at least well or modestly compensated, software warriors. The Microsoft mantra is: "Build a platform and an ecosystem of developers, partners, fans, and people willing to spend their money will follow." A compelling platform and the potential to reach a large audience of buyers, which Microsoft can deliver, attract the developers, who build the applications and services that attract consumers and business users.
Microsoft also now understands that its platform must span every kind of device--PC, notebook, smartphone, car, home, etc.--and offline scenarios. Microsoft missed the Web search revolution, but it's not going to miss out on the much bigger revolution--the move to the cloud over the next two decades.
Google is building a competing ecosystem from the ground up with similar characteristics and a desire to attract millions of developers. Amazon is pushing its elastic computer cloud, and Rackspace, EMC, IBM, and many other companies are trying to get a piece of the action. Most the cloud companies are focused on hosting services, but the biggest piece will be platforms-as-a-service with developers creating and running their applications for on a cloud operating system.
An early example of this trend is Salesforce.com's proprietary Force.com platform. Sun Microsystems, the company that coined the phrase "The network is the computer," has all the pieces to construct a planetary cloud but seems to be missing from the discussion. As my friend Steve Gillmor notes, Sun is on the ropes.
Openness is a major issue as the global cloud materializes. Businesses don't want to be locked into a particular cloud, and also want various clouds and services to interoperate via standards. Speaking at the Professional Developers Conference last week, Microsoft's chief software architect Ray Ozzie said that the foundation level in the operating system cloud would run in Microsoft's data center, but SQL services, .NET, and Live services can be mixed and matched by developers inside and outside of the company's datacenters. The Azure cloud is also cross-platform, but the various clouds will extract a toll and by nature it won't be dead simple to move applications using foundation services from one cloud to another.
Microsoft's cloud computing efforts have gotten off to a slow start compared with competitors, and it's on the scale of a Manhattan Project for Windows. Azure is in pre-beta and who knows how it will turn out or whether consumers and companies will adopt it with enough volume to keep Microsoft's business model and market share intact. But there is no turning back and Microsoft has finally legitimized Office in the cloud.
Ray Ozzie has a track record of slowly but surely getting things done and Microsoft is famously persistent and cash rich. But building a platform, or Internet operating system, at planetary scale supporting billions of users and trillions of transactions per day, and having fleet Google as a primary competitor will be a major test of Microsoft's brain trust and resolve. Don't be surprised to find a recharged Bill Gates parachuting into the fray as Azure evolves and the cloud war for developers escalates.
See also:
Scoble: Never underestimate Microsoft's ability to turn a corner
Amazon founder and CEO Jeff Bezos loves to talk about the Kindle e-book reader. He's even got media mogul Oprah Winfrey pitching the device: "I'm telling you, it is absolutely my new favorite thing in the world," she recently said.
Every time I go to Amazon I am greeted with a huge Kindle ad that takes up most of the screen space. Amazon's computers know that I have seen this ad hundreds of times but they persist in showing it to me instead of products that are based on my viewing and purchase history and would have a higher probability of getting me to spend money.
At the same time, Amazon refuses to talk about the number of Kindles sold, but willingly discloses that the wireless device provides instant access to more than 185,000 books, blogs, newspapers, and magazines.
Apple, on the other hand, is happy to let the world know that 6.9 million iPhones and 11 million iPods were sold in the last quarter, and the iTunes catalog has 8.5 million titles.
One can only presume that Bezos worries that the sales numbers are not sufficiently stellar to share with the world. Disclosure of what could be perceived as lackluster Kindle or e-book sales would heap a lot of negativity on the fledgling device on Amazon, which pulled in $4.26 billion in its last quarter.
For Bezos, the Kindle is a second revolution. He started Amazon more than a decade ago as an online bookstore, and gradually added other product lines. As iTunes and Netflix took off, Bezos moved into digital music and movie delivery, and with the Kindle he is laying the groundwork to empty Amazon's warehouses of physical books.
During the Q3 earnings call, Bezos downplayed any cannibalization of print book sales by the Kindle: "Kindle's effect is additive to physical book units. Post the purchase of a Kindle, owners buy 1.6 times as many book titles and the same amount of physical books."
Reading his statement, it's apparent that Kindle buyers are already book lovers, and haven't yet weaned themselves off of print. But Bezos is very patient, and clearly willing to invest long term in his Google-like vision--digitize the world's information and sell it through Amazon.
Perhaps with Oprah's help and a new and improved version due next year, the Kindle will achieve escape velocity and Amazon can stop showing me the annoying Kindle ad and disclose how many units have been sold.
As for eliminating physical books from the warehouses, books are lagging music and video. The end of print is not near, but the writing is on the virtual wall. The economics of the Internet, as well as technology innovations such as improved virtual paper, instant translation, and always on, fast connections to a universe of knowledge indicate that Bezos is on the right track, just as he was in creating a virtual shopping mall for physical goods in 1994. And, he will have lots of company, or competition, as the digital age gets into full swing.
In this week's EIC Squared podcast, ZDNet's Larry Dignan and I talk about how the economic crisis will impact the tech sector. Both the House and Senate have passed the bailout package, but the legislation doesn't mean that tech or any other industry sector will reverse the downward spiral. Tech companies and financial analysts are rapidly cutting estimates to prepare for a potential nuclear winter in the global economy.
We also discuss Microsoft's forthcoming moves into cloud computing and the state of citizen journalism following the fake Steve Jobs heart attack story that showed up on CNN.
Microsoft is applying its tried and true formula of creating software platforms that can attract millions of users and developers to the hosted applications world. It will be the next major frontier for Microsoft to conquer, competing with companies such as Amazon.com, EMC, Google, IBM, and others. And it's safe to bet that Microsoft becomes one of the major players in the cloud. More to come at Microsoft's PDC event later this month.
On this week's EIC Squared podcast, ZDNet Editor in Chief Larry Dignan and I debate whether Amazon.com's Kindle e-reader is the next iPhone.
That is a big stretch, especially given the way the iPhone has turned the smartphone business on its head, at least from a product design standpoint. The Kindle is a nice product, and Amazon could bring music, video, and other kinds of content to the device, but it's doesn't have the Steve Jobs touch.
In addition, all the talk about Kindle's skyrocketing sales doesn't ring true. If the Kindle were on such a hot streak, Amazon founder and CEO Jeff Bezos would be talking up the sales numbers. All I know is that I keep getting huge Kindle ads in my face every time I go to Amazon.
After a few hundred times, Amazon should figure out that I am not interested in the Kindle and should show me something that I might actually buy based on my history and the recommendation engine. That would certainly be a more lucrative way to use the front door advertising space.
In the podcast, we also discuss Best Buy becoming an iPhone distributor (good for both companies and not for Wal-Mart) and Gartner's endorsement of the iPhone as enterprise-ready. In addition, we note Dell's latest refresh of its Latitude laptops, including a quick-start feature and a battery that can give up to 19 hours of juice.
Dear Amazon: Please stop spamming me with this advertisement when I visit your site. Show me something you know I might be interested in buying.
On this week's EIC Squared podcast, ZDNet Editor in Chief Larry Dignan and I discuss the news of the week. It was a big week for Microsoft, with several announcements and teases from its meeting in Seattle with financial analysts. Steve Ballmer is still bullish on the online space, but not on Yahoo. We also talk about Kevin Johnson's departure from Microsoft. (See coverage on the Microsoft financial analyst meeting from Ina Fried and Mary Jo Foley.)
We spend a few minutes debating the impact of Carl Icahn joining the Yahoo board and what it means for Jerry Yang's future. Larry thinks that Yang bought himself more time to turn things around. If so, he will need to speed up delivery on the Yahoo Open Strategy and build a social layer into Yahoo's collection of services.
Finally, we discuss the impact of Facebook Connect, which will let users access and feed their Facebook profiles and friends on any Web site. It's Facebook's way of extending its platform to embrace other services and get more data and pages flowing through its social portal.
In the early morning at Structure 08, AMR Research's Jonathan Yarmis described various tech trends around cloud computing. Mendel Rosenblum, a founder and technical lead behind VMware, outlined the role of virtualization in data centers.
Amazon CTO Werner Vogels
(Credit: Dan Farber)Now Werner Vogels, vice president and CTO at Amazon.com, is talking about why Amazon is in the cloud computing business, how it got there, and why customers should want it. Instead of every company or developer doing the heavy lifting, dealing with the "muck" as Amazon CEO Jeff Bezos likes to say, Amazon opened up its software-as-a-service stack (Amazon Web Services) and infrastructure (Elastic Compute Cloud, S3, and SimpleDB) to external parties.
I've heard the Amazon story many times, but Vogels offered a few new tidbits, such as S3 is storing 18 billion objects and how Amazon thinks about building to its 1,000 services.
"Amazon built these services internally as tools, not as a framework. Each team can use whatever development tools they need. Infrastructure services need to be very generic and people can switch to competing services internally," Vogels said. For example, users could work with Amazon EC2 and a different storage service than S3.
Vogels outlined the core objectives and principles that cloud computing must meet to be successful:
Vogels noted that cloud computing is in its infancy, but it's not difficult to see the broad outline of how it will evolve. Nick Carr's book The Big Switch tells the story.
Click here to see more of CNET's stories from the Structure 08 conference and on cloud computing generally.Sanford C. Bernstein analyst Jeffrey Lindsay is betting that Google and Amazon.com will loom as the two giants of Internet. According to Lindsay's report, "U.S. Internet: The End of the Beginning," cited by Reuters, "Both Google and Amazon.com are still racking up annual growth rates in the 30-40 percent range, with only a relatively modest slowdown in sight."
Given how those two companies own their respective fields, it's not a stretch to forecast them as long-term winners in the coming years. Google and Amazon have done the best job of creating clear value propositions for online users in the last decade, although Google has the better margin business selling ads on search pages.
Google owns search, with a nearly 70 percent share, and is moving into the applications space; Amazon is the premier online, personalized retail shopping site; and both are poised to become major providers of computing infrastructure services for the planet
.Google and Amazon have momentum and traction, but that doesn't mean they are invulnerable. They have only a decade of history, and they would acknowledge that they could be knocked off, just as they knocked off a variety of competitors on their road to greatness.
A scenario in which Google or Amazon are taken down isn't likely in the next several years, however. The two are well established and the online market is reaching early adolescence, making it more difficult for newcomers to be supremely disruptive to incumbents. If competitors become a nuisance, Google and Amazon have the clout and deep pockets to acquire or extinguish them, if they see them coming.
The two big winners in Lindsay's report could take some lessons from Microsoft if they want to stay on top. Microsoft can provide examples of how to diversify and grow, as well as cautionary tales about treading on antitrust laws, getting big and missing major shifts, such as the initial phase of the Internet. Having the smartest people in house has helped Microsoft and the newer giants succeed, but ultimately they have blind spots. They would do well to heed the advice of former Intel executive Andy Grove: Only the paranoid survive.
CARLSBAD, Calif.--Amazon.com founder and CEO Jeff Bezos kicked off the morning proceedings here at D6 after a night of polite carousing by industry luminaries. During the interview with D co-host Walt Mossberg, Bezos announced a streaming-video service and explained his foray into hardware with the Kindle e-book reader.
On the subject of video and music delivery, Bezos said, "We are working on a new version of video-on-demand, a for-pay streaming service we will release in the next couple of weeks. The streaming service will start instantly, and it's a la carte, for pay."
Regarding competing with Apple's iTunes services, Bezos said it is clearly in the self-interest of music companies to have competitors.
Walt Mossberg asks Jeff Bezos about the Amazon Kindle.
(Credit: Dan Farber/CNET News.com)The Kindle is clearly a passion for Bezos. It follows on his love for selling books online, which was the origin of Amazon, and developing a new market for digital content delivered over wireless networks.
"We base our strategy on customer needs instead of what our skills are...Customers will eventually need things that you don't have skills for, so (you) need to renew yourself with new skills," Bezos said. If Amazon doesn't extend into new product categories, the company will get outmoded, he said.
Bezos wouldn't disclose Kindle sales. "On a title-by-title basis, with 125,000 titles for Kindle, and you look at Amazon's physical sale of the same books, Kindle sales are more than 6 percent of the universe of 125,000 titles," he said. Amazon reduced the price of the $399 Kindle by 10 percent this week.
While Bezos said he was happy with the sales of the Kindle, the price cut and the heavy promotion of the device on Amazon's site could mean sales aren't spectacular. The Kindle could be a meaningful financial component in Amazon's business, Bezos said, but he didn't put a figure on the Kindle's contribution to annual revenue.
Regarding the fate of physical books, Bezos said the vast majority of books will be read electronically. Just as horses haven't gone away, books will be around, he quipped. "We see Kindle as an effort to improve the book, even though it hasn't changed in 500 years," he added.
"You can't ever outbook the book, so you have to do things that you can't do with a book, such as in-stream dictionary lookup, changing fonts, and wireless delivery of content in 60 seconds," Bezos said. "We have to build something better than a physical book."
Bezos said he did research into the smell of the book--glue, ink, and mildew. "We can never capture that," he said, adding that the container is not important; the narrative is. He wants to make long-form reading more frictionless so that people read more.
Mossberg asked Bezos about adding new features to the Kindle and its utility as a Web browser.
"There are things that fit into the Kindle form factor and don't interfere with the purpose of the device. But the device is not a cell phone or bunch of things. It should be able to browse the Web," he said. "If you were trying to build the perfect Web-browsing device, you wouldn't use electronic ink. It's not the right display technology for high-quality Web browsing."
"You might say the Web is the most important book in the world," he added, but that's not something the Kindle is designed to read as well as other devices.
Click here for full coverage of the D: All Things Digital conference.
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.
On the road to the elusive Web 3.0 (something to do with semantics, meaning, and context rather than just data, links, and AJAX), core infrastructure is beginning to move from the edge to a center inhabited by companies such as Amazon, Salesforce.com, Joyent, and now Google with its new App Engine.
Call it Web 2.5, where the platform-as-a-service providers allow developers to create Web applications via the cloud and for users to consume them on any Web-connected device, anytime and anywhere. It eliminates what Amazon's Jeff Bezos describes as the "muck," the undifferentiated heavy lifting, such as setting up and maintaining servers, databases, storage, and networks.
It also leverages data centers from large players like Amazon and Google that were built from the ground up to support Web applications at huge, virtualized scale and with high reliability and relatively low cost. And, it creates potentially giant subscription-based revenue streams for the platform-as-a-service providers. They become utilities providing Web services to the planet and managing the high-value personal profile data.
Google App Engine, which was unveiled tonight at Google's Mountain View, Calif., headquarters, offers similar capabilities to Amazon's EC2, S3, and SimpleDB services. Google App Engine is limited to using the Python language, Google APIs, and a relatively modest amount of storage, compute cycles, and bandwidth per day currently, but you can see where this is heading.
Google could parlay its search and advertising technology, market dominance, and its infrastructure prowess into a powerful engine that runs and monetizes thousands or millions of externally developed applications.
Salesforce.com provides a more mature example today with its Force.com platform. It allows developers to write applications, mostly CRM-oriented, in a variety of languages that can run natively on the Salesforce.com software platform and data centers.
(Credit:
salesforce.com)
In many ways it is the Microsoft model--you need a subscription (license in the old days) to the platform to run your application. In this case, "run" means that Salesforce.com provides developers all the software and hardware services in exchange for a fee, which is based on specific metrics, such as Web services calls.
Rival NetSuite, as well as smaller outfits such as Bungee Labs, are seizing on the concept of providing complete cloud-based development and deployment platform services.
Microsoft hasn't yet shown its cards in the platform-as-a-service arena. Nor has the object of its affection, Yahoo. Microsoft has talked about SQL Server Data Services and the grand synchronization mesh, but it hasn't revealed any plans for an end-to-end hosted platform-as-a-service for developing and serving applications from the cloud. Mary Jo Foley has some insight on that topic.
Web 3.0 as envisioned by Tim Berners-Lee is not around the corner, but it is busily percolating. In parallel, platform-as-a-service is evolving, the plateau of Web 2.5. When the two meet, Web 3.0 will have arrived.
