Carpadium Consulting

I was reading a piece linked from DaringFireball yesterday and something really leapt out at me. Check out these two quotes pulled from the linked article, one from Tim Cook, Apple’s COO, and the other from Steve Ballmer, Microsoft’s CEO.

Here’s Cook’s quote:

“Windows 7, from our point of view, is just another opportunity to remind everyone to switch to a Mac,” said Apple Chief Operating Officer Tim Cook. “People are sick of all the headaches that go along with Windows.”

And here’s Ballmer’s quote:

“Let’s face it, the Internet was designed for the PC. The Internet is not designed for the iPhone,” Ballmer said. “That’s why they’ve got 75,000 applications — they’re all trying to make the Internet look decent on the iPhone.”

I really don’t understand Ballmer’s point. Leaving aside for a moment that there are 2 errors of fact and an irrelevance in the space of 3 sentences – what is he trying to say? It just does not make any sense. It even has an air of the Chewbacca Defence about it. Just what is their message? I have noticed this coming up again and again in recent Microsoft comments and not just from Ballmer. I guess if the message is confused at the highest levels, it’s difficult to see how it can get any clearer down the chain.

On the other hand, the message from Cook could not be clearer. And not only is it clear, but it’s said in a completely positive way. It’s a brilliant piece of communications that uses Microsoft’s own weight against it. It’s 31 words without a skerrick of weasel. It’s a piece of PR jujitsu.

M@

I just spent a few minutes answering an Apple email survey, and it contained a very interesting question.

It asked me if I would be interested in “cloud based business applications including hosted email, CRM, accounting and storage solutions”.

I wonder what they are up to? I guess it could explain this, this and this.

M@

I have made several comments about Windows Mobile over the last 12 months or so. As anyone who has read those would know, I really think its the laggard in terms of mobile operating systems (at least ones that are actively being developed).

Today there has been some interesting chatter about a bond issue by Microsoft to the tune of US$3.5b, which some have seen as a little odd given that they have about US$25b in cash.

I like the SmartMoney suggestion that it could be a way for Microsoft to test the mechanics of the bond market, to get familiar with it and allow the market to become familiar with Microsoft. This kind of makes sense if you have something planned that would require a big chunk of debt down the track, but equally, that amount of money might be all they need for something specific. Its this kind of speculation that has led people to wonder what Microsoft is really up to.

Perhaps we can tie some of these recent events together?

Over 12 moths ago, Microsoft purchased Danger. I’m surprised this didn’t get more attention at the time than it did, but it has always stuck in the back of my mind as an interesting move, particularly given public commitments to Windows Mobile. My suspicion is that Microsoft was far more interested in the hardware than the software, and I suspect we are about to see the next phase of a big, new platform play by the Redmond Giant, but more on that later.

More recently, Oracle purchased Sun. This surprised me enormously at the time, but listening to the subsequent commentary, it seems like there is a very clear plan for Oracle to try to build an end-to-end model, not dissimilar to Apple. With Sun, they get hardware and an operating system, plus a huge (and profitable) storage business. This play makes a lot of sense if you can pull it off, and one thing Oracle has been doing pretty well lately is acquisitions. All up, this sounds like Steve and Larry got together over a beer and had the “own the whole widget” conversation.

You could argue that Sunacle makes things interesting for IBM, but I think it definitely makes things interesting for Microsoft. Oracle can now go in and provide a whole-widget enterprise stack from the storage and hardware layer, right up through the middleware and into the application. It’s a good story for Oracle, but the consequence for Microsoft is that it ends up with a tough job trying to sell Windows Server into the mix. It’s just not necessary anymore.

So back to the platform. Like I’ve said in the past, dominance comes from building a platform, not just having a good product.

We’ve seen it with Windows, where Microsoft owned the content (Windows and Office), while at the same time commoditising the endpoint (the PC business) and stitching up distribution by tying the sale of Windows and Office to the sale of new machines. All up, it was brilliantly commercially successful.

More recently, we’ve seen Apple build an amazing platform around the iPod and iPhone (endpoints), iTunes Music Store and App Store (distribution), and via deals with record labels to sell digital music (content). It’s been an amazingly successful strategy, both commercially and technically, as many would argue. In fact, it’s been so successful that it seems to have changed the game not just for the mobile business, but for the PC business as well.

I think we’re already starting to see the platform play from Oracle. They certainly have the pieces now: servers and storage (endpoints), vertical and horizontal applications in a ever widening number of domains (content), and one of the best sales forces in the technology industry (distribution). It all fits.

When you add these together, you can pretty quickly start to see why Microsoft is worried. They already lost the race in mobile, were never in it in portable media, chase 3rd place in gaming, and although the jury is still out, there’s a huge opportunity for them to fall out of the race in the enterprise stack. This really only leaves them with the desktop, and unless Windows 7 rocks everyone’s world to the point of psychosis, Windows XP might end up being the last successful thing Redmond ever does.

Which leads me to ponder if Ballmer is about to try something radical.

Ballmer needs a win, because not a lot has gone right lately, either strategically or with mindshare. They failed to make the Yahoo takeover work, the Zune seems to keep sucking no matter what they do, and not much more can be said about how totally lacking in awesome is Vista.

About the only thing that they have been good at (and exceedingly so) is making bucket loads of cash. Which has to say something about the competitive position of the Windows franchise with respect to the rest of the market. Very few organisations get the opportunity to stuff up like this, and still have the trucks backing up to their offices dumping cash. But that’s another topic altogether.

So if Microsoft is getting ready for a big move, what could it be?

Here are some absolutely crazy, it’ll-never-happen prognostications that might explain why a company with US$25b in cash is out borrowing money at a 95 basis point premium to the Fed rate:

1. Microsoft to buy RIM?

Of the three ideas, this is the one that makes the most sense, and its the one touted around by the commetariat today. There is a very strong technical tie in between the Blackberry platform and the Microsoft messaging platforms, so it is a very good fit. The problem here is would RIM shareholders sell out? I’m not sure. I think it makes a lot of sense for Microsoft because they would have a strong mobile platform, with huge enterprise penetration that would be a very credible competitor to the iPhone. I don’t know if RIM would play, and I don’t know if a hostile takeover of this scale could really work.

2. Microsoft to buy Dell?

I know this sounds crazy, but consider this: Dell’s share price is depressed ($11.21 as I write this) a price not seen since the last century. It’s currently valued at about US$21b or so, which would be easily digestible by Microsoft, presumably with a combination of stock and cash, some of which it would source from debt if today’s bond activities are anything to go by.

But it’s not just the price. This is a classic Microsoft emulation move. There’s nothing original in the idea, but its so ingrained in Microsoft’s DNA to watch what is going on elsewhere and first try to suppress it, and if that doesn’t work, just copy it. They might be seduced into thinking that it too can own the whole widget and start making hardware in addition to software.

I am not really seriously suggesting that this is going to happen, but it just has that ring of craziness about it that so often surrounds massive corporate deals done by organisations prospecting for a clue. I can see Redmond understanding how to do this, and I can see some Dell shareholders liking the opportunity to exist at a premium to today’s price. I’m not sure that Michael Dell would agree, and regardless of what Microsoft might think, I’m not sure that the market would think that this is a good idea. So let’s see.

3. Microsoft to buy Palm?

This idea also sounds totally crazy, but let’s consider for a moment that Palm really has done something amazing with the Pre. Early reports are certainly promising, and let’s face it, they outdid Apple once before – the original Palm blew the Newton out of the water (commercially) back in the day. Of course, things are very different now, but there can be no denying that Palm has the kind of corporate DNA that allows it to successfully innovate.

The other point to conemplate with Palm is how or why they managed to get such a big chunk of cash recently from Elevation Partners. Could this be because there is a quick exit on the cards for Elevation in selling out to Microsoft?

This deal doesn’t have the enterprise elegance of the RIM alternative, but Palm has built  Windows Mobile devices before, and it also knows how to make a smartphone, thanks to its experience with the various Treo lines. It’s also a whole lot cheaper, with a valuation as I write this of about US$1.5b.

If Microsoft went in with a healthy premium, that $3.5b in debt they picked up over the last couple of days would fit nicely. On recent form, any one of these options is going to be far more intresting than the Zune Phone.

M@

Update 2010-Feb-12: Kara Swisher has some more thoughts on the idea of a RIM purchase.

There is a crazy amount of speculation at the moment that Apple will release a new kind of device sometime this year, or at least announce one, possibly at WWDC in June.

If you believe the official line from Apple, this thing won’t be a Mac and it won’t be netbook – at least as they are currently defined – because Apple believes that it cannot make a decent quality product at that US$300 or so price point.

So let’s have a think about what is compelling about the current crop of netbooks. Obviously form factor is a hit with people who want to be ultra mobile. But from my experience with the animal in the wild (which is little more than having a heft of one in a PC store) the extremely small form factor is as much a curse as it is a blessing. They are obviously great for doing really simple stuff like reading your daily blogroll, posting a few tweets, or checking e-mail, but I’m pretty sure that the next Great Novel will not be tapped out on a netbook.

Price is also a huge factor. The pricepoints of netbooks (even here in Australia, where we tend to pay a premium for most hardware) are pretty good. For example, you can get one of these for about A$600 or A$700 or so. There are better deals, that was just the first one that came up in a Google search. That is quite a bit less than what you would pay for a full featured laptop, and rightly so, because netbooks are relatively underpowered compared to something like this.

So, what if rather than trying to scale down a Mac into a netbook, Apple scaled up an iPhone into the category?

I would like to propose a name for this new type of device: The Phonebook.

That’s phonebook, as in:

Netbook + iPhone = Phonebook

What would set the phonebook apart from a normal netbook? The first thing is that the phonebook has a slot for you to plug in a SIM card. Apple obviously has all of the hardware and sofware IP required to make a phone, so it would seem pretty straightforward for them to pull this together.

This has two benefits. Firstly, it gives the device an edge against the current crop of netbooks that need a WiFi access point, or some kind of external 3G hardware. But perhaps more importantly, it gives them a way to manage the pricepoint. Sold with an appropraite 3G broadband contract, these devices could be given away for free, just like most iPhones are sold now. This makes the entry price very competitive when compared to other netbooks.

There is also a further opportunity to solve one of the problems of the current generation of netbooks: the keyboard.

If you recall, Apple’s solution to the problem of fiddly keyboards on mobile phones was to throw it away alltogether.The same approach is possible with the phonebook: get rid of the keyboard and just go with the same kind of touchscreen technology that exists in the iPhone.

This would be obvious, but Apple rarely just does the obvious when it comes to innovation. So I was thinking about the possible size of such a phonebook, and it struck me that you might want to hold it with two hands, kind of like a book held sideways.

Compare this to the way that I (and many people) hold an iPhone, which tends to be in the right hand, with the right thumb doing most of the work, and the left hand coming to the rescue on occasion (or vice-versa for the sinister among us).

And with this tablet-like-a-book image in my head, I was reminded of a previous Apple patent application that described a mechanism that used the back of the device, rather than the front, for input.

The patent suggested that in touch-controlled devices of a certain size, the user’s hand and arm tended to get in the way of the user interface as it was being used. The solution was to make the back of the device touch sensitive (I am not sure how this would work), so that whilst one hand held the device, the other hand could control it by touch from underneath. Here’s a link to an article discussing the patent.

So, on reflection, what I think we’ll see is a device that is far more iPhone than it is Mac, but it will be something arund the size of the Kindle. For example, I think this is probably as good a guess at what it will look like as you will find.

In addition to that design, I think it will have phone capabilities, and I would really like to see it make use of the back-of-the-device touch patent. Here’s an idea: perhaps the device could have a cover, the inside of which was touch sensitive. When the cover folds around to the back of the device, it works as touch panel. That could work.

M@

Update 1: Looks like some of this might be on the cards. Here’s a little bit of extra rumory goodness (via 9to5mac) that suggests the next MacBook hardware rev might contain builtin 3G wireless.

So, pretty much everyone got this one wrong!

There’s a lot being said about this Oracle/Sun merger right now, but there’s three interesting things that stand out for me in the deal.

Firstly, when was the last time a software company bought a hardware company? At least on this scale. I know Sun is not exclusively a hardware company, but it’s certainly their pedigree. And Oracle is definitely a software company. If you wanted an analogy (apart from the scale) it’s a bit like Microsoft buying IBM. I wonder how the culture of the two organisations will mesh? I can definitely see some friction between the sales-led Oracle and the engineering-led Sun over the next couple of years.

And the second thing is: what happens to Java? I really am surprised that IBM let this one go. Let’s face it, Java is the new COBOL (or will be) and that means that the future of IBM is so heavily intertwined with the future of Java, that I am amazed that IBM did not have another crack at this deal. I can anticipate some tension here if Oracle takes Java down a path that in any way closes off IBM’s options. Perhaps we’ll see a fork? What do you call coffee in Armonk?

Finally, I wonder if Sun considered a break-up of some sort where IBM got Java, Oracle got MySQL and someone else (Cisco perhaps?) ended up with the hardware business. In fact, there was even talk of an Apple angle for the storage business given the ZFS tie-in in Snow Leapord. I can see a good fit in each of those deals, and from a shareholder point of view, I wonder if you couldn’t come up with a set of numbers, say in the order of $3b in each case, such that Sun shareholders ended up better off than the $7b and change that they walk away with now.

Who knows.

M@

Update 2: This is some of the best commentary I have seen on this topic, from an insider.

Update 1: Apparently, Oracle sees Sun as a “software gem … ripe for cost cutting”. Ouch.

In an earlier post, I was pondering where Microsoft was going with the Windows Mobile platform. As I mentioned in that article, it appears that they are now, at best, 3rd in the smartphone market which is somewhere they are not used to playing.

I find this fascinating, because it highlights a really interesting schism in Microsoft. On the one hand, you have the outrageously successful Windows and Office franchises, not to mention their development and tools platforms, where Microsoft’s ability to generate cash is well documented. Then on the other hand, you have the XBox, Zune and Windows Mobile.

You have to ask: what is the difference between Windows / Office / Tools, and these other products?

The answer is lock-in.

Regardless of the mechanism by which it was established, Windows has a huge lock-in factor with the vast number of hardware OEMs that build Windows compatible PCs and peripherals, and an equally huge (if not bigger) lock-in factor with all of the ISVs writing applications, using Microsoft’s portfolio of developer tools.

Office has lock-in too, but of a slightly different form. With Office, lock-in comes from the vast array of documents, spreadsheets and presentations that exist in businesses who use Word, Excel and PowerPoint for everyday business productivity. Even if someone could build a better word processor, spreadsheet or presentation application, users are still faced with the daunting task of porting existing documents to the new applications.

By way of example, I worked at a bank a couple of years ago that was contemplating an upgrade from  Office 97 to Office 2000. The total real cost for this project included an amount for document conversion that dwarfed the software licensing and upgrade costs by a factor of 5. That’s a big hurdle for any business, and this just was an upgrade to a new version. The costs for changing to a new application would almost certainly have been prohibitive.

Don’t get me wrong – I am not suggesting that lock-in is a bad thing. If a business manages to build a product platform that can generate even a modest degree of lock-in, then they are on the way making a successful product. Look at the iTunes Music store and the iPhone AppStore if you need any clearer example of a great piece of lock-in!

The point here is that Microsoft is not successful competing when it is not dominating. In fact, the evidence of the Zune and the XBox suggests that when they try it, they end up loosing a whole lot of coin. Arguably so much coin that you would need to be extracting supernormal profits from something else to afford to sustain them. But that’s a whole other story …

Apple is a little different. Although they are certainly dominant with music players, Mac market share only pushes around 10% for desktop PCs, and although they do very well in laptop sales, they are not dominant to the same extent that Microsoft is with desktop operating systems.

The only time I have ever seen Microsoft succeed is when they only have daylight behind them. But I’ve seen Apple (and others: Porsche?) do very well when they are far from the front, at least on the measure of marketshare.

Which leads me to wonder about the future of these products, so I’ll go ahead and make some predictions:

1. I think the Zune will be the first to go because it really hasn’t worked at all. I wouldn’t be surprised to see that happen in the first half of this year.

2. The XBox is a little trickier. I don’t think anyone would have predicted the success of the Nintendo Wii, which turned what looked like a 2-horse race between Sony and Microsoft into something altogether different. I would expect Microsoft to keep hard at the games market, even if it is losing a lot of money doing so. A wildcard alternative scenario here is for Microsoft to divest from the XBox altogether. I don’t know who would buy it (Sony?), but I could see it doing better out on its own.

3. Unless something remarkable happens with Windows Mobile, I think it will continue to languish. However, I don’t see Microsoft giving up this franchise lightly because thre is just too much at stake in the mobile platform market. The only outcome I see for Windows Mobile is that it is forced into price competion against Linux. Good luck competing with $0.

Microsoft has entered these other markets largely, I believe, because of its subconscious desire to dominate. It’s in the DNA of the organisation and it seems like they don’t know how to operate any other way.

It’s possible that the current economic climate could bring about a change at the top. Things haven’t exactly gone swimmingly well for Balmer recently. I’m sure that a different CEO would see things differently, particularly if they came from outside the organisation, and these divisions would end up being not long for this world.

M@

PS: A confession: the reference above to iWork is a little cheeky on my part, because I still use Word, Excel and Powerpoint for pretty much everything I do. I am a proud owner of iWork, and I have even recently upgraded to iWork’09. However, I am an example of precisely the lock-in that I’m talking about. I have so many documents and templates, that it would take me a couple of weeks to port everything over from Office to iWork. Even though iWork opens and reads Office format documents, it doesn’t get them quite right, and when it comes down to it, I’m a bit of a pedant with document presentation, so I’d be forced to rebuild my templates in an iWork-like fashion before I really made the switch. And who has time to do that? Now, if the file formats were open and public, then the balance would be entirely different …

In response to this post, I guess the answer is a resounding ‘no’. Oh well.

M@

We can be sure of a few things this time of year: an over abundance of family, food, hangovers … and of course, Apple rumours. There’s the ongoing iPhone Nano chatter, some thoughts about an iServer, and a few questionable and unsubstantiated rumblings about the ongoing health of Steve Jobs.

To avoid being left out, I thought that I would chip in, not with a rumour as such, but “prediction” might be a better word.

I’ve been thinking for a while about the appropriateness of the name iTunes. Both the online service (iTunes Music Store) and the desktop application (iTunes) have grown in features and functionality well beyond the original tunes name. In addition to music, they now encompass videos, podcasts, TV shows, movies, ringtones, not to mention the recent (phenomenally successful) addition of the iPhone application store.

iTunes is now a complete distribution platform – indeed it has been this for a while.

We saw back in 2007 that Apple dropped the “Computer” from its name, emblematic of the shift from personal computers to consumer electronics.

I think its now time to change the name of iTunes to reflect the maturation of the platform from music syncing software to a complete content distribution and commerce platform. The question is: to what?

The obvious name would be iStore, but a quick Google search – not surprisingly – reveals it’s already taken. Interestingly, Apple is the first paid search result under iStore, which would seem to indicate that they already think of iTMS as the iStore, or at least anticipate that punters think that way.

What else might Apple use as the name of a re-branded iTunes?

M@

This is a turn-up for the books. This is not only the end of Apple at Macworld, but it would also seemingly appear to be the end of Steve in the Keynotes.

I’m sure that we will be hearing a lot of rumour and scuttlebutt about this leading up to January 6th.

M@

It’s an unfortunate fact, but writing business and technical requirements is a task that many engineers (and non-engineers working in and around technology) find incredibly difficult. It is disappointing we are so bad at requirements, particularly given the fact that “lack of requirements” or “poor requirements” or “changing requirements” are the perennial laments of just about anyone who ever has anything to do with building software.

Marty Cagan (author of “Inspired: How to create products customers love” [3]) makes the point:

“The PRD describes the product your company will build. It drives the efforts of the entire product team and the company’s sales, marketing and customer support efforts. It’s hard to come up with a more important, higher leverage piece of work for a company. The purpose of the product requirements document (PRD) or product spec is to clearly and unambiguously articulate the product’s purpose, features, functionality, and behaviour. The product team will use this specification to actually build and test the product, so it needs to be complete enough to provide them the information they need to do their jobs. If the PRD is done well, it still might not be a successful product, but it is certain that if the PRD is not done well, it is nearly impossible for a good product to result.”

Unfortunately, far too many software organisations fail to get the importance of the PRD, and consequently, end up building products that no one wants, needs, or even cares about.

One of the most important steps in building a good PRD is to define credible user profiles. A user profile in this context is a short story that describes the motivations, goals and objectives of a potential user. It is important to actually create a real persona (often this process of requirements capture is referred to as persona definition) that captures the essence of what the user is all about. For most non-trivial applications, there will almost certainly be multiple personas, and defining these in a simple, concise and credible way makes the process of requirements capture much more human. Personas differ from the traditional use case role by actually giving a degree of personality. This has the same advantage over just defining roles as the development of user stories has over just defining the mechanical steps in a use case. Importantly, user profiles should not be too large. A user profile should be short and sharp enough to fit onto a couple of paragraphs.

I have seen this requirements technique used inside several companies (for example, at Microsoft in the US in the Visual Studio Development Team and also in the X-Box Team, and at a retail bank here in Australia) and it works very well. Personifying a user with a name and a set of clear motivations, goals and objectives, helps to deeply connect the technical and business teams with their eventual users.

One of the biggest pitfalls in requirements capture is the tendency to jump to solution. Another way to look at this is the notion of what versus how. Requirements are (or at least should be) all about what the system is supposed to do. How it goes about doing is a question for another time. Engineers are notorious for trying to prematurely solve problems. In lieu of direction, many engineers will actually resort to making up their one problems just so they have something to solve. This is not meant to be a criticism, it’s just the way the engineering mind works. I know, because I find myself doing this all the time!

While it can be manageable in some cases, the place where this tendency needs to be entirely stamped out is during requirements capture, and particularly so when you are dealing with the parts of the system that touch, or are touched, by users. If you can’t state the requirements in requirements language [2], or you can’t represent it as a use case or user story, then the chances are it’s not a requirement. It’s probably some part of a design, and it should be left alone.

In his great article [1], Marty Cagan goes on to describe 9 more steps as well as a bunch of pitfalls to avoid when writing requirements. It is well worth checking out if you are tasked with writing a requirements document in the future.

Here are some other useful links relating to writing good requirements documents:

[1] How to Write a Good PRD
The guys at the Silicon Valley Product Group are World’s best practice when it comes to product management. This little gem of an article presents a short and sharp set of instructions about how to write a good PRD. It’s hard to go past it as a reference point for good requirements.

[2] Key words to use in RFCs to indicate requirements levels
This is the standard that defines the language to use in a requirements document. If you follow this approach, then your requirements will be clear, atomic and unambiguous.

[3] Inspired: How to create products customers love
Provides great insights into how the best software product companies go about building products. This is a must read book if you have anything to do with product management.