An interesting debate took place at last week’s Cloud2020 gathering regarding the viability of futures markets for cloud computing capacity. I’m firmly at the skeptical end of the spectrum as the title of this post will attest. However, I had not given enough thought as to the reasons for my skepticism. Having reflected on it a little I’m more convinced than ever that any attempt to create either primary or secondary markets in cloud commodities is doomed. In short the lack of friction and a lack of volatility in matching cloud computing supply and demand means there is likely no window for 3rd party market makers to insert themselves into this value network. Continue Reading
We have witnessed a major shift over recent decades towards a digital services based economy. Exponential growth in the power of information technology enhanced by Internet driven network effects mean that even the most mundane manufactured products are seen as just one component of a broader digital services based value chain.
The shift to digital services has transformed the global competitive landscape. Maintaining competitive differentiation requires continuous innovation – and lifecycles are contracting. In other words change is a constant.
The dynamics of a hyper-competitive global market mean that static and long-lived models of company structure, operations and information technology services are no longer fit for purpose. We need a new operating model for the enterprise.
The economic evolution of computing platforms appears to be guided by a number of ‘Laws’ that are independent of any specific underlying technology. These ‘Laws’ help explain the evolutionary trajectory of mature platforms and can act as a predictor for the trajectory of emerging platforms and behaviors of those that control them.
The first three laws of platform economics are: Value always migrates up the stack, Value gets integrated over time, Those that control platform evolution get to define how value is extracted. A definition of each of the ‘Laws’ is provided below: Continue Reading
Over the last couple of years the term cloud computing has become become public relations shorthand for “Look, look, we’re also cool.” The expression is now so overused and is applied so widely that it has become almost meaningless. That’s a problem. Senior business decision makers have been set a drift in a sea of PR and marketing confusion just at a time when they need to be making strategic technology choices that may directly impact the future of their firms. I offer this brief guide to cloud computing in an effort to help cut through the fog currently enveloping this important topic.
Part 2 of this series of articles looked at how transitioning from scarcity to an abundance of fundamental computing resources enabled the historic one-to-one relationship between operating systems, applications and underlying hardware to be broken. Part 3 will examine how the ability to decouple hardware and software evolved into a new strategy for managing IT systems — saving company’s millions of dollars in the process — and laid the foundation for today’s cloud computing architectures. Continue Reading
Part I in this series of articles outlined the impact that the economics of scarcity has had on both software architectures and the structure of the computer industry over the last forty years. Part II of the article will discuss the transition from the economics of scarcity to the economics of abundance and how profoundly that has altered — and continues to alter — the computing landscape. Continue Reading
The underlying economics of computing resources have always had a profound impact on development of computing architecture and in-turn the structure of the computer industry. In this regard the emergence of cloud computing is no different. Cloud computing has emerges as the product of a fundamental transition in the underlying economics of computing resources and — as in the past — this economic transition will drive profound changes in the structure of the computing industry. The nature of this change can best be described as a transition from the economics of scarcity to the economics of abundance. Continue Reading
Imagine a world where all internet browsers are required to present users with a simple question: “Do you want your online browsing activity tracked, recorded and shared with marketing companies — Yes or No?”
What percentage of users do you suppose would answer “No?” My guess would be greater than 90%. If I’m anywhere close to being correct then Microsoft’s controversial decision to enable ‘Do Not Track’ (DNT) by default in IE10 and Windows 8 would seem to be very much inline with consumer sentiment. But advertisers, Yahoo, and the developers of both the Apache web server and FireFox browsers are all decrying Microsoft’s decision.
This relatively arcane debate over a new internet standard masks a much more critical issue: In the long-term, how viable is the internet’s — advertising based — ‘Free’ content model?
Advertising revenue is the internet’s predominant business model. This is of course the core business model that enabled Google to become the 800 lb. gorilla of the industry. But this business model is based on users accepting a ‘Faustian’ pact where they agree to increasingly invasive tracking of their online activities in exchange for free content.
There’s only one small problem with the current situation. Very few consumers have ever read or consented to the ‘Contract.’ Most of consumers have no earthly idea how invasive today’s internet tracking technology is and once they are aware they are not going to like it.
We are currently witnessing a major pivot in Microsoft’s core business model. It is starting to become clear that — as Steve Ballmer recently announced — Microsoft is deadly serious about becoming a global leader in consumer “Devices and Services.” Successful execution of this strategy will require the company to control everything from manufacturing, distribution logistics through to retail.
The company appears to be focused on executing a ‘Leader’ strategy in the devices business which would give them even greater control than Apple famously does over the end user experience. In addition the company is likely to repurpose its online service investments to add value to this new device-led strategy. A-la Apple, consumers will have no choice but to use Microsoft own services when using a Microsoft mobile device and competition authorities will be powerless to prevent it.
If correct, this pivot will has profound implications for the structure of the company, shareholder value and for the entire mobile technology industry. Continue Reading
This weeks Partner’s conference has once again exposed Microsoft’s complete lack of any credible consumer strategy. On the one hand Ballmer claims he’s going to leave no “stone unturned” competing with Apple. Yet on the same day he also states that Microsoft’s own Windows 8 hardware “Surface is just a design point.” Note to Steve: Those are two mutually incompatible objectives.
If Ballmer really is serious about competing with Apple then Microsoft will need to control its own hardware destiny — in pcs, tablets and smartphones — and be completely committed to that strategy. Unfortunately that will also require a willingness to throw the OEM partner community under the bus. Protecting OEMs while aggressively competing with Apple are incompatible strategies. A textbook case of the Innovators dilemma.
Shareholders are likely to pay a very high price if Ballmer continues to believe the fantasy that he can accomplish both these competing objectives and still be successful in the consumer business.