Thursday, August 16, 2012
This was published in 1998 (click near the page number for larger view):
Now, back to my popcorn.
Tuesday, June 19, 2012
The Surface announcement is the best demonstration of the systemic weakness of the Wintel ecosystem, ever. While multiple sources of pressure have been building to strain this long-standing duopoly, Microsoft's decision to manufacture its own tablet device may well push the water over the edge of the dam.
In addition, as a Microsoft shareholder, I'm concerned about the impact of this announcement on the company's overall performance. More on that later.
First, the industry impact. If we set the wayback machine far enough, we can go back to a time when personal computer manufacturers actually added substantial value beyond the semiconductor components supplied by Intel and its competitors.
A company called Compaq, for instance, distinguished itself in the business market by spending significantly on R&D to make Intel-based hardware reliable and serviceable enough to be taken seriously by enterprise customers. They were able to charge a premium for their work.
Compaq's competitors, like Dell, were happier to take Intel reference designs, which were not quite as robust, bend some metal around them, and compete on price. Intel and Dell responded by labeling Compaq solutions "proprietary" and simultaneously adding features into their reference designs, reducing their value to commodity levels. Dell and its ilk won.
Intel was also working hard to migrate more and more value of a PC into its chips. They were fairly successful at this, ultimately capturing most of the value in a PC and leaving table scraps of margin for their OEM partners. Years ago I imagined that Intel might just go ahead and put the OEMs out of their misery, but it dawned on me that Intel was brilliant in outsourcing the misery - why would they want it?
The other winner at the head of the PC food chain was, of course, Microsoft. They basically collected a tax on every Intel-based unit sold by every company except Apple. Life was good in Redmond.
Meanwhile, at the end of the value chain. PC companies were fighting over increasingly smaller scraps. The shakeout killed Micron, Gateway, and, ultimately, Compaq. IBM had the good sense to see the handwriting on the wall and rebuild its company around services. Now HP and Dell are trying to catch up.
Meanwhile, Wintel-based product design has suffered from a combination of consumer malaise and OEM fear, resulting in underspending in R&D. Above the chip level, Intel has maintained a leisurely R&D pace, with the ultrabook reference design a recent example. But, as we all know, Apple spoiled the party by creating a new category and nailing it with the iPad and its app ecosystem. Android tablets piled on. Wintel OEM response has been ham-fisted at best, partially because neither Intel nor Microsoft was ready with a fast response.
But Wintel OEMs are also fighting for their survival, are being pulled in multiple directions from external and internal forces, and are shedding resources like clothing on a hot day. Microsoft must have felt that, left to their own devices, it would take so long for OEM partners to come around that it would be impossible to play catchup.
In addition, Microsoft could do the same bill of material arithmetic everyone else was doing and conclude that, for some devices, ARM had a place and an Intel premium was not worth paying.
The result - Microsoft takes matters into its own hands. It uses an ARM processor to compete on price, and an Intel processor to ride its Office monopoly. These are not dumb moves.
But, Microsoft has hit its OEM partners squarely in the face. This is not a Zune. nor is it a Microsoft mouse, each of which could have complemented an OEM product. If successful, Surface devices will take lots of dollars away from mainstream OEM products.
Intel probably views the ARM-based Surface as a minor annoyance. They have seen Microsoft move to other processor architectures before (NT on Alpha, anyone?), and know they can usually play the long game and win business back.
But the PC OEMs are a different story. I'd hate to be at HP while I watch the last vestiges of any proprietary advantage in tablets with WebOS walk out the door. I'd like to think that Google might use this event as a reason to really woo PC OEMs with a non-balkanized version of Android, but I'm not holding my breath. Besides, Google would have to come up with a unified Android app marketplace that OEMs could white label, and share revenue. That could happen. And pigs could also fly.
It's no sure thing that Microsoft will make Surface work. But let's suppose they do. As a MSFT shareholder, I can therefore look forward to some increased revenue, and lower gross margins as hardware gross margins become a more significant part of the Microsoft product mix. And I'm wondering, why in heck isn't there a new arms-length company being formed to do this, so margins aren't diluted across the enterprise? Intel continues to outsource value chain misery, and here is Microsoft jumping to take it on.
For an outside observer, the new array of moving pieces created by this announcement is awe-inspiring in its complexity and unpredictability. The Surface announcement party may be over, but the real fun in Wintel-land is just beginning.
Tuesday, April 17, 2012
Verizon has raised my rates since then. Grrr.
This bolsters my argument.
It’s always dangerous to give me spare time, an Internet connection, and a calculator. I have been thinking about this particular issue for many years — any kind of “all you can eat” model has always struck me as suboptimal, and my reaction to the growing popularity of flat rate Internet connection pricing based on connection speed is the same as my reaction when Pets.com offered free shipping on 50-pound bags of dog food back in the day: buy all you can, ‘cause this deal can’t last.
- 425,532 packets/day
- 557 bytes (60% of traffic)
- 934 bytes (weighted average packet size)
- 11 GB/month
This deal is too good to last.
1 - Slaptijack. “Average IP Packet Size.”
Facebook Note, 18 March 2010 (www.facebook.com/note.php?note_id=377237673965).
2 - Verizon offers Web mail and other services for this price. For simplicity, I have ignored all bundled
services in this example.
3 -3 Lieberman, David. “New AT&T Smartphone Users Won’t Get One-Price Net.” USA Today,
4 June 2010.
4 -4 Frommer, Dan. “Apple’s New iTV Could Finally Force ISPs to Give Up on All-You-Can-Eat
Internet Access and Jack Up Your Bandwidth Bill.” BusinessInsider/Silicon Alley Insider,
23 August 2010 (www.businessinsider.com/appleitv-metered-broadband-2010-8).
Friday, October 14, 2011
Talent hits a target no one else can hit;
Genius hits a target no one else can see.
-- Arthur Schopenhauer
Wednesday, August 31, 2011
My mom, brothers and sister filled dad's hospital room with stories and laughter to the point where nurses were poking their heads in to see the party — and we encouraged visitors to add their voices to the conversation. Over the course of many days, I was reminded that my siblings each had a unique relationship with dad, but all of those relationships were based on the same values we learned by repeated example: curiosity, integrity, loyalty, uncompromising excellence and love.
Dad's varied accomplishments in life derived from his unwavering adherence to those values. They enabled him to become an outstanding competitor, leader, craftsman, husband, father and grandfather. My mother's expressions of love and loss for her partner of 57 years were an equally compelling commentary on the meaning of marriage.
I loved my dad. I miss his presence already, and will remember his lessons forever.
Monday, May 17, 2010
|Written June 25, 2008 for SearchWinDevelopment.com|
I met a traveler from an antique landI sincerely hope that Bill Gates' legacy is yet to be created, because what passes for common wisdom about his contributions to the computer industry will either fade from memory or be relegated to the arcana of business scholarship.
Readers may raise Microsoft as an objection to my argument. My trite reply is: Thomas Watson and Google. The former built a computing colossus but has faded from everyday IT awareness faster than most would have predicted. The latter is the current darling, a young star yet to experience the ravages of success and time.
People talk about the "genius" of Bill Gates. I find this an overly fawning accolade when I compare him to Einstein, Feynman, Hawking and their (rare) ilk. There is no "Gates algorithm" left for computer scientists to ponder. Yet, he was an unequivocal business success. Is there a different dimension of perception or behavior that warrants the genius label when applied to his accomplishments in the industry?
Maybe. Unlike Einstein's quest for a theory of general relativity, Gates had plenty of competitors racing to make small computers pervasive. But he came from a socio-economic background that enabled him to aggressively follow his dream. He had family connections that put him in contact with the highest levels at IBM at the time when the IBM PC was being developed. He had the great sense to say "yes" when IBM asked if his company had an operating system for their fledging PC. He was, shall we say, shrewd, in his acquisition of MS-DOS. He was equally shrewd in his proposal to IBM that allowed Microsoft to resell DOS to IBM's competitors. And he was triply shrewd when he convinced PC manufacturers to pay for DOS regardless of its residence on their PC products. The fact that the U.S. Justice Department was asleep at the switch during this period made this last move ultimately effective for Microsoft's development. If this be the definition of business genius, then Bill qualifies in spades.
IBM is hailed as a company that recovered from the brink of death, a place where many feel Microsoft, at current course and speed, could be headed. IBM's recovery only happened after a parade of less-than-capable CEOs drove its Board to bring on the highly-capable Lou Gerstner. Perhaps Microsoft has not had enough CEOs to develop a corporate sense of what defines inadequacy at the top. Therefore, I suggest another candidate for Bill's biggest failing is his long-standing and apparently continued support for Microsoft's current CEO.
Where my respect for Bill Gates is unbounded is in his decision to use almost his entire fortune for the common good. Unlike so many Silicon Valley "successes" who seem to require personal fulfillment by recreating Japanese palaces or building ever-larger sailboats, Bill's actions in the future could make a real difference in the lives of millions of people and the planet we all share. That legacy might endure.
Saturday, May 8, 2010
Monday / Tuesday
I awoke to clouds. Since another call to the hotel had been made, I was eager to check on the hot water situation. There was some progress – I had hot water in my sink. I wondered if there was a Hindu god of hot water I could appeal to as I took yet another chilly shower.