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Saturday, February 9, 2008

Yahoo says it is not going down without a fight

As I had previously observed, price does matter to Yahoo!. According to the Wall Street Journal, the Yahoo Board has rejected Microsoft's bid. The article also notes that Yahoo has adopted poison pill provisions to prevent an unwanted takeover. Anyone who thought this was a done deal now has plenty of time to reconsider their position.

Thursday, February 7, 2008

IBM: the Internet really should be a mainframe (NOT)

Nicholas Carr notes that IBM Research has published a paper hypothesizing we should collapse the entire Internet ecosystem into one big computer. Why? Because such a computer could be dramatically cheaper to create and operate than today's commodity clusters.

At present, almost all of the companies operating at web-scale are using clusters of commodity computers, an approach that we postulate is akin to building a power plant from a collection of portable generators. That is, commodity computers were never designed to be efficient at scale, so while each server seems like a low-price part in isolation, the cluster in aggregate is expensive to purchase, power and cool in addition to being failure-prone. Despite the inexpensive network interface cards in commodity computers, the cost to network them does not scale linearly with the number of computers. The switching infrastructure required to support large clusters of computers is not a commodity component, and the cost of high-end switches does not scale linearly with the number of ports. Because of the power and cooling properties of commodity computers many datacenter operators must leave significant floor space unused to fit within the datacenter power budget, which then requires the significant investment of building additional datacenters.
It's a terrifically thought-provoking vision. But its a vision we've heard from IBM in other contexts, when it pushed running Linux on Z-series mainframes as being more economical than buying its own Intel X-series servers. And last time I checked, IBM's X series servers were still selling just fine. Ultimately, customers, not research papers, will really determine the types of servers we use on tomorrow's Internet. But the factors that this paper leaves out are the very real and human issues of control, governance, and freedom. Yes, we need big iron clusters and servers to deliver services to consumers Anywhere. But we'll only see innovative Anywhere services emerge if the companies owning the the big iron doesn't have veto power over entrepreneurs wanting to build those services. And regardless of the economic benefits of a mainframe Internet, tomorrows Anywhere networks will need innovative services more than lower bandwidth and CPU costs.

The Microsoft-Yahoo deal: price matters Anywhere

MSFTextrememakeover has a nice financial analysis of the Microsoft-Yahoo deal suggesting that this hostile takeover bid is more ego than rational investment. Read the full analysis, but I think the conclusion is right on.

[From MSFTextrememakeover: Having Fun Yet?]

...there is no way that YHOO on paper is going to be worth this price. So at some future point, MSFT is going to have to take a huge charge to write down the "goodwill" difference between what they paid, versus what YHOO was actually worth. I guesstimate that that charge will be at least $1/share, and it could easily be $2 or more depending on what the final price is, how the integration goes, etc.. Needless to say, a $1-2 charge in some future fiscal will have the effect of wiping out a large part of MSFT's overall earnings for that entire year.

As I said in the last post, if you're a MSFT shareholder you should be hoping this deal gets kiboshed by either YHOO or regulators (however unlikely). Alternatively, you should hope that MSFT and YHOO come to some other accommodation. The best option there would be a standalone entity (either under the YHOO listing or a new one), into which both YHOO and MSFT contribute and MSFT shareholders get stock.

Putting on my Anywhere hat, I can understand Microsoft's need to buy a credible mobile content creator to be relevant to Anywhere consumers. But Microsoft's claiming that this deal makes sense is a bit like saying that I need to buy a $313,000 Lamborghini Murciélago to commute to work. I can understand the need, but the price really is over the top.

Wednesday, February 6, 2008

Nüvifone: Garmin's products are not just for navigation any more

I've been meaning to write for a while now about Garmin's new iPhone competitor, the nuvifone. Gizmodo reminded me about that today by posting the above Garmin marketing video.

The video tries to show how hip and cool is could be to combine navigation and communication in one device without the panache of the iPhone commercials. As concept ads go, it's really not bad. While they try to hit far too many points in a single video (tip to Garmin: next time try making a single point in each video. See the iPhone ads for examples), Garmin is actually emphasizing user benefits instead of just features in their marketing. Garmin gets it; consumers have to be excited about the device for it to succeed.

But I find myself agreeing with John Gruber who noted the sniff of vapor in Garmin's Web marketing materials. The screen shots in the nuviphone media gallery sport far more PhotoShop skill than anything real, since I find it unlikely the nuviphone is going to sport a 793x1400 pixel screen. And unlike the iPhone, no one has actually seen one of these devices in operation. I'm hoping some of my colleagues will see one at 3GSM in Barcelona next week, but I'm willing to bet Garmin will be showing mockups instead of operating phones behind glass as Apple did at its January 2007 launch.

But all that said, I have to agree with one of the commenters on Gizmodo: isn't it interesting that significant mobile device innovation is coming from manufacturers who aren't traditional cell phone makers?

Tuesday, February 5, 2008

Anywhere consumers comment on the US primary elections by mashup

Google has an amazingly cool mashup that geographically maps consumer Twitter comments on the US elections in real time. They also promise to present real-time election results tonight when the polls close. My biggest surprise watching this mashup was how many comments on the election are coming from other countries like Australia and France. People outside the US are quite interested in our primary results, but those voices get lost through the filter of the conventional media networks. Tools like this make them heard. When I was a kid, TV networks used computers to aggregate election results and predict winners. Now, we use computers to disaggregate results and to give individuals voices that can be seen all over the world. Technology marches on.

Pay no attention to the temporary site design

To any and all designers who may be reading and cringing at the Blogger standard template being used on this blog, it's just temporary. I just figured it was better to have a blog with a standard template than no blog at all while I found the perfect look.

Yahoo! Music: more proof music subscriptions don't work

Yahoo is its selling music service to Rhapsody America, exiting a business model that a myriad of companies have struggled with. As I wrote last year, the need for digital rights management software to ensure that a subscriber doesn't just download the world the first month and cancel the second is probably the biggest stumbling block to subscriptions, but it's not the only one. And with increasing interest in moving music to mobile devices like Blackberrys and iPhones, the whole business model is just being crushed under technical compromises. I think you're going to see two business models going forward: outright music purchases (i.e., iTunes and Amazon) and streaming music. But at this point, despite Rhapsody picking up Yahoo's customers, I think it's time to declare all-you-can-eat digital music subscriptions officially dead.

Apple and Opera give the mobile Web experience a boost


My iPhone and I have become inseparable as I wander around the Anywhere world. Well, today, Apple decided to up the iPhone ante by introducing $499 16 GByte iPhones and 32 Gbyte iPod touches. Add to that the fact that Opera Software ASA has just started previewing its new Opera Mobile 9.5 Web browser in time for the 3GSM conference in Barcelona next week, and we can see that the lines between the mobile Web and the desktop Web are starting to blur. Not so coincidentally, that's one of the themes of the research I'll be doing over the next year at Yankee Group. My sense is that it's going to become a hot and controversial topic.

Monday, February 4, 2008

Notes From Anywhere

Welcome to Anywhere™. That's the theme we at Yankee Group are currently using to describe our research into how we will communicate with anyone, anywhere, and on any device. It's a vision, not a reality yet. But it is this vision that shapes how we look at the technology landscape today -- and it informs the changes we see on the horizon. My name is Carl Howe, and my day job is Director, Enterprise Software Research, at Yankee Group on the 27th floor of the Prudential Tower in Boston. Read my bio if you want more background, but I spent the first 18 years of my career in Internet research and development, while I've been a professional technology and marketing analyst the last 10 years or so. I spent the last three years or so writing a blog over at Blackfriars Marketing, where my business partner Joe continues helping technology and other companies communicate better. But nowadays, I spend a lot of time in Anywhere. I commute a couple hours a day, and I travel all over the world, both for business and pleasure. I use a Macintosh PowerBook at work in a PC-focused environment, and I do the same from the gaggle of computers in my house. I read my email, check traffic, and browse the Web on my iPhone pretty much everywhere I go. I work in Anywhere just as much as I work at work. This blog is my unedited personal journal as I move around my personal Anywhere world. It's not an official publication of Yankee Group nor does it reflect the official positions of my employer, but it will include my viewpoints and counterpoints on some of those topics and positions. The blog will allow me to put out opinions on events in the news long before Yankee Group formulates an official view or publishes an analysis -- that means we're not always going to agree. Take it all as one person's opinion, not a corporate position. To those of you who come here after reading my work at Blackfriars Marketing, you'll find many of the topics I write about familiar, but I hope you will see a somewhat more mobile focus. All that said, I reserve the right to go off-topic periodically; this is a blog, after all. But best of all, this blog, unlike my Blackfriars one, should be able to support features that many people have requested over the years like in-line comments and perhaps some widgets. I'll know more as I get into it. So if you like this new focus, update your newsreaders and bookmarks because this is where I intend to spend my blogging time from now on. I hope you enjoy my notes from Anywhere.