Category: Opinions

Google – the egregious corporation

Google the OgleDoes being the Jack of all Trades and the master of none apply to Google? I fear so. Having oodles of cash has tempted Google into all manner of strange ventures but it’s pretty clear that some of its wacky ideas are way off kilter.

Take the supply chain, for example, and Google’s venture into being a hardware company. The evidence is that it simply doesn’t have a clue about the very complicated infrastructure in Asia – the original design manufacturers (ODMs) need to be cultivated and have learned from the School of Hard Knocks that most of the trouble in the world come from vendors that make microprocessors and operating systems.

To be fair to Google, it has been consistent. It has, like Amazon, destroyed more industries than it’s created.  Bookshops. What are they?  Books? Google will take care of that problem, thank you very much. Google has also undermined the publishing and the advertising industries. You might say that is a good thing, but ask any large publisher what they think of Google and you will hear a torrent of bad language that would make a navvie quake.

Then there’s news. Google News is one of the stupidest concepts on the planet and is well on its way to destroying journalism, with hacks everywhere not bothering to cultivate contacts but simply copying what other hacks have written. So much for investigative journalism – Google News has turned hackdom into a crazy carousel.

The Google search engine is, of course, bloody useful, but it encourages laziness too and the search results are tainted by Google adverts.

Google’s motto about doing no evil implies it is doing evil.  These mottoes invariably turn into their opposites – think of the League of Nations, think of the United Nations.  Any organization that uses the word harmony contains within itself the seed of chaos.  Catchlines are minetraps.  Google is a money making organization and altruism is no part of that.

Don’t let yourself be bullied by Google. Nor by Microsoft or Intel. Rant over.

Windows 8 gear set to get cheaper

pc-sales-slumpThe PC market is in the middle of its worst slump ever, but there might be some light at the end of the tunnel. PC makers believe prices of Windows 8 devices will fall dramatically in the not so distant future. 

On Wednesday Acer President Jim Wong said Microsoft is becoming increasingly considerate to its hardware partners and that it is finally starting to listen to their suggestions and ideas. Shifting the focus to cheaper products seems to have been the loudest suggestion. Wong also pointed out that touch enabled devices will open up a lot of possibilities for PCs, but he also warned that many simply don’t need touchscreens on their trusty PCs.

On the other hand, more touchscreens and mouth-watering price points could spell more competition in the cutthroat tablet market, dominated by Apple and Android gear. A number of manufacturers are already working on smaller Windows 8 tablets as well. The success of the iPad mini and even cheaper 7-inch ARMdroids did not go unnoticed, but it will take some effort to make Windows 8 truly competitive in this market, which is already becoming overcrowded.

First of all, Windows 8 is a bloated operating system by tablet standards. This means Windows 8 tablet designs need a lot more storage than their iOS or Android counterparts, which tends to drive the price a bit higher. Windows 8.1, or Windows Blue, could try to tackle this shortcoming. Secondly, they need very efficient x86 chips to be economically feasible, but upcoming x86 SoC designs from Intel and AMD should go a long way towards addressing this issue. Finally, Redmond has to cut Windows 8 prices, plain and simple.

However, Asus CEO Jerry Shen warns that there is no quick fix for Microsoft’s tablet woes. Windows 8 tablets are quite a bit pricier than their Android counterparts and they cost at least $150 more. Shen believes the price gap could narrow to about $50 this year, which should considerably improve Microsoft’s competitiveness.

Acer Chairman J.T. Wang said Microsoft’s willingness to adapt to change is a good sign for the PC industry, reports the Wall Street Journal.  He was rather blunt about it, too.

“In the past we consider they (Microsoft) live in heaven,” he said. “But now they go down to earth and they start to learn how people living on earth think.”

Although tablets are generating all the buzz lately, there are some changes on the PC front as well. An increasing number of all-in-ones and more powerful mini-PCs are hitting the market. Ultrabooks sales are still failing to impress, but there is some good news to report on the notebook front as well. Prices of Ivy Bridge notebooks are seeing double-digit cuts, as Intel partners gear up to introduce Haswell-based models over the next few months.

Ivy Bridge notebook prices slashed

Intel-logoThe UK market is following in Taiwan’s lead and slashing Ivy Bridge notebook and desktop prices in preparation for Intel’s Haswell launch, resellers have said.

However, they have warned that in the current climate the company is doing itself no favours with the price reductions.

The comments come after a report in DigiTimes suggested  that retail channels in the Taiwan market had begun to slash prices of Intel’s Ivy Bridge machines, which retail from $611, by an average of 10 percent. However, other models were reduced further with discounts between 20-30 percent.

And the orders from above have filtered down to the UK with resellers also feeling the pressure to slash.

“We’re getting orders for reductions too for the same reasons. But, this isn’t anything new, it’s the way the cycle works,” one reseller told ChannelEye.

“I’m not sure about the 20 to 30 percent reductions. At the moment we’re seeing five to 15 percent. But as the date of launch comes closer we’ll probably be forced to slash prices even more.”

However, others claimed the company wasn’t doing itself or the new launch any favours with the reductions.

“Whenever Intel is about to make a new release we see the old models, even if they haven’t been on the shelves for long, slashed in price,” another reseller added.

“While it works for us in terms of not carrying so much surplus stock, for companies it means they are losing potential customers and money with consumers and businesses now taking heed of these sales and waiting until these price cuts happen.

“Once the new products are launched the sales circle starts again.”

Another agreed, telling ChannelEye: “This is nothing new. It’s the way of retail life. But it’s not a good model to follow, especially in this climate where consumers are waiting to pounce on bargains and refusing to pay full price for anything.

“Maybe Intel should concentrate on getting existing lines right before making price cuts and new products that will no doubt be left sitting on the shelf.”

Demand for SSDs to stay strong

hdd-hugeAlthough the PC market has seen better days, shipments of solid state drives are expected to grow more than 600 percent by 2017, according to the latest figures released by IHS. However, even at this rate, two thirds of PCs shipped in 2017 will still have mechanical hard drives, although many of them will probably be hybrids. 

PC SSD shipments are expected to hit 227 million units in 2017, up from 31 million last year.

Hard drive shipments will drop to 410 million by 2017, down 14 percent from 475 million in 2012. In just five short years SSDs will claim 36 percent of the market, up from just six percent last year. HDDs will account for the remaining 64 percent, but memory makers stand to cash in from them as well, as hybrid drives hit the market in ever increasing numbers.

The driving force behind the SSD boom will be ultrabooks and other ultrathin devices. IHS analyst Fang Zhang believes ultrabooks and ultrathins, combined with touch screens and convertible form factors, will become very compelling machines, designed to lure consumers away from smartphones and tablets.

Of course, none of this is possible without more consumer interest. Although enthusiasts have been buying SSDs for years, the standard PC box buyer doesn’t care too much about the latest storage technology, which is still too pricey for mainstream adoption. Ultrabooks are slowly changing the public perception of SSDs are geeky devices for gamers and enthusiasts. Consumers are slowly starting to appreciate the added agility and responsiveness of SSD-based systems, and prices are tumbling as well.

On Tuesday Seagate announced its first series of SSD products designed to cover all market segments. The news was closely followed by an announcement from Western Digital and SadDisk, who will collaborate on new hybrid drives. Traditional HDD churners simply have to transition to SSDs and hybrid drives, it is just a matter of time.

“SSDs have dropped in price this year. The industry would probably put this down to supply and demand – but if I’m honest I think it’s all down to competition. Big players are moving in and really taking this industry to the next level – this week WD and Seagate separately announced their SSD push – and it wouldn’t surprise me if these larger players triggered a price war to push smaller players out of the market,” a reseller told us. “In terms of getting consumers more involved isn’t it just a case of making them a more prominent feature of gadgets and cost points? The average consumer just cares about what they can get and for how much.”

More marketing cash from the likes of Seagate and Western Digital will help, but so will tablets and smartphones. Consumer are already enjoying the perks of speedy solid state storage on their iPads and Androids, which means they are far more likely to go for an SSD based PC next time they upgrade. It is basically a case of not downgrading from a horse to a donkey, as Balkanese old wise men would say.

McAfee, Stonesoft merger bad news for channel

Intel-logoCompetition in the security market is increasing, meaning businesses and consumers could eventually end up paying higher prices to keep their PCs protected, resellers have warned.

The comments come as it was announced that Intel’s McAfee was splashing $389 million on the purchase of Stonesoft a security company that delivers software-based customer-driven cyber security products to secure information flow and simplify security management.

McAfee said Stonesoft’s product portfolio of next-generation firewalls would help it “extend its leadership position in network security.” It said it planned to integrate Stonesoft’s offerings with other McAfee products such as its cloud-based Global Threat Intelligence services.

However, resellers aren’t convinced the company is doing it to perfect the security world, claiming the buyout will stifle competition and keep customers “over barrels.”

“Intel and other big vendors are gobbling up smaller companies, closing the competition,” one told ChannelEye.

“This means that eventually we’ll be left offering clients only a few security software options at higher prices for the vendors but lower margins for us as we try and compensate for their greed.”

Another agreed, claiming companies were using the fact that everyone needed security to rake in the cash.

“The security world has gone mad. But then big security companies can afford to splash the cash. Not only do they charge extortionate amounts for security but have many over a barrel. It’s like car insurance,” he told ChannelEye.

“Everyone needs it to be safe but no one wants to pay the premiums for it.”

Others also pointed out that although it was a good time to be in security, resellers rarely benefited.

“It’s big money in the security software market if you’re at the top, as this proposed buyout has shown,” he said.

“However resellers like us rarely see the fruits of the profits. Our clients are often quite au fait with security and buy off the shelf, or won’t spend the money we require to see rewards.”

Overseas online sales to soar to £28bn

poundsAccording to  research from OC&C Strategy Consultants and Google, British retailers could see their overseas online sales soar to £28 billion by the end of the decade.

Researchers concluded that growth in online sales will outpace domestic growth and eventually account for 40 percent of total online sales by 2020.

British retailers are already doing quite well abroad. In fact, international consumers spent £7.4 billion on British online retail sites last year, making up about 14 percent of total online sales. This year British retailers are expected to net £10 billion from cross-border sales.

OC&C Strategy Consultants and Google found that growth will come from multiple regions, with western Europea leading the way. Sales in western Europe are expected to hit £9.8 billion by 2020, up from £1.5 billion last year. Central and Eastern Europe will see plenty of growth as well, with sales reaching £6.9 billion by the end of the decade, up from £400 million last year.

Sales in Asia are expected to hit £4.5 billion by 2020, while North America will lose its position as the top market for British online retailers. The North American market is currently estimated at £800 million and it is set to expand to £2.7 billion in 2020. The American market is simply more mature than the rest of the world, which translates into slower growth.

“We have seen a significant increase in the volume of searches for British retailers and brands coming from overseas,” Peter Fitzgerald, director at Google, said. “The majority of non-UK searches are currently coming from Europe, followed by North America and Asia, driven by the increased popularity of British brands abroad. Retailers can use search data to identify pockets of demand and move quickly to meet the needs of customers.”

Anita Balchandani, partner at OC&C, said e-commerce has already transformed the retail game, which was once anchored in local markets.

“There are a number of reasons why growth in e-commerce is changing the rules of internationalisation. Firstly, geographical proximity no longer determines which market is best suited for expansion – the internet allows customers seek out the best offers from around the world,” she said. “Secondly, the nature of risk has changed. International expansion is much less capital intensive and this is creating growth opportunities which have a more controlled exposure to risk. Thirdly, the speed with which companies expand has also accelerated – over 40 of Britain’s top-100 etailers serve customers in more than 40 countries.”

Disties stick up for Windows 8

Windows-8A recent report laying a fair chunk of blame on Windows 8 for the demise of PC sales has been queried by distributors.

Speaking with ChannelEye the sources have said it was unfair to lay the blame just on Microsoft and Windows 8, pointing out other factors such as Apple kit and the ongoing economic crisis.

Their comments come as IDC published its latest Worldwide Quarterly PC Tracker, where it pointed  the finger at Windows 8 for disrupting the market in tough trading conditions.

It found that shipments totaled 76.3 million units in the first quarter of 2013, a decline of 13.9 percent compared to the same quarter in 2012.

The Windows 8 launch was blamed partly for the decline. Bob O’Donnell, IDC Programme  Vice President, Clients and Displays said it not only failed to provide a positive boost to the PC market, but had also slowed down the market as a result of the “radical changes” to the UI. This included the absence of the Start button, plus the costs associated with touch had made PCs a less attractive alternative to dedicated tablets and other competitive devices.

However, disties have stuck up for the company.

One told ChannelEye: “I don’t think it’s fair to put all the blame on Microsoft for disrupting the market, PC sales were flagging long before it bought out Windows 8 to the forefront. If you really want someone to blame then look towards Apple, which has totally changed the landscape with its fancy products.

“It’s tablets, not PC innovation that’s disrupted the pace of PC life.”

Another pointed to the economic climate, saying the recession has a huge part in the slow growth and decline of PC sales as consumers opt for laptops that can be used by everyone in their family.

“Businesses are also cutting down on IT spend, usually opting to repair or reuse their current kit,” the distie said.

However, there were a few choice words for Microsoft’s OS.

“Windows 8 has a small part to play in the way it has disrupted the landscape, offering people touchscreen products and making older, less feature-based PCs seem less glam,” the distie said. “Maybe people are waiting for other operating systems to come out mimicking this, hoping that competition will drive down the prices and get them the bargain they are looking for.”

Hard drive market shrinks, again

hdd-hugeEuropean outfits don’t seem to be gobbling up nearly as many hard drives as they should. According to consultancy firm Futuresource, shipments have gone from bad to worse over the past two years.

The total capacity purchased last year dropped year-on-year for the first time in history and there are no signs of recovery yet.

A multitude of factors contributed to the slump. The disastrous Thailand floods in 2011 pushed prices up for several consecutive quarters, and just as supply started to improve, the tablet craze and PC slump hit hard, compounded by the ever increasing popularity of cloud services. The fact that SSD prices are tumbling did not help, either. Hard drive shipments peaked in 2010, with 28.1 million units, but they dropped to 25.9 million in 2011 and 21.5 million in 2012.

Mats Larsson, senior market analyst for Futuresource, told The Guardian that he doesn’t expect the market to recover to 2010 levels anytime soon.

“We think this year shipments will show between 5% to 10% growth – likely about 7%,” Larsson said. So although some growth is expected, it’s not nearly enough to come close to 2010 levels.

The other issue is the size of drives purchased last year. While it is still growing, it is not keeping up with the drop in unit sales. As a result, the total capacity dropped from 25.4 petabytes in 2011 to 23.6 petabytes in 2012.

Larsson said some retailers held back on buying drives last year, in the hope that distributors would drop prices. That didn’t happen. Hopes that increased demand for tablets would result in higher NAS shipments were also quashed. Shipments of NAS systems in 2012 dropped to 1.12 million units, down from 1.27 million units in 2011.

Dell could go down like Richard III

Battle_of_BosworthTin-box shifter Michael Dell has found himself in the middle of a three-way proxy war for control of his company and might go out like Richard III screaming for a horse and ending up under a carpark.

Dell hit the headlines by allying with Silver Lake in a bid to take his company private. Really, that should have been the end of matters. Dell owns a big chunk of company stock, he founded the company in the first place and it desperately needs a restructuring.

Shareholders should logically be pleased to see a return on their cash at all, as the value of the outfit is likely to get a lot worse before it gets better, if it gets better. For some reason they are not.

Instead we are seeing the various big shareholders ganging up to try and take control before Dell can get the company private.

The question is what they hope to gain. In the middle of a recession, where Dell’s traditional buyers are saving their pennies, the company is paralysed. The only part of the IT industry that is moving at all is the mobile sector and Dell is not a big player there. Dell is doing alright in enterprise.

Logically a company in Dell’s position should restructure, cut back to basics and survive on its cash reserves until things pick up.

This is the opposite of what shareholders want. They want the company to show continual growth so that the share price will increase. By going private, Dell is protected from the wrath of shareholders and can look to the longer term.

While all sides are talking about having the best interests of the company and shareholders at heart, it is fairly clear that the only one who really cares about Dell as an ongoing concern is Michael Dell himself.

Blackstone, Carl Icahn, and Silver Lake Partners all have ideas to take the company private. But their idea can only be to take over and flog off all the company assets and distribute the last of the cash.

This can be the only reason why they are swarming around Dell like flies.

Otherwise any observer who lifts the bonnet of Dell has to take a sharp intake of breath and admit that in the short term Dell is buggered. Its core business market is rotting and its quarterly sales in its consumer sector are sliding.

A management plan presented to the board last July expected $5.6 billion in operating income this year. That was later reduced to $3.7 billion, but is likely to be revised lower still.

Global shipments for PC makers declined 3.2 percent last year and are predicted to fall more than 10 percent in the current quarter. Dell has not really seen any benefits from the launch of Windows 8 or the Ultrabook.

This puts Dell’s board in a difficult position. So far they have supported Michael Dell but now they have to work out if offers from Blackstone and Icahn will lead to a better bid than the one from Michael Dell and Silver Lake.

They will have to look at the deal in terms of cash. They can’t take the perspective that it’s better for the company to go with Michael, they always have to say “the average shareholder will do better”.

The three rival offers are critically different. Dell and Silver Lake will buy out shareholders for $13.65 a share, valuing Dell at $24.4 billion. If the preliminary offers from Blackstone and Icahn do not firm up, this is the best shareholders can expect. Currently you can pick up a second hand Dell share for $14.50 so a lot of people will be out of pocket.

To make matters worse, few people will invest in Dell shares while there is a big argument about the outfit’s future. Corporate buyers thinking about getting in a few Dell boxes want to know if the company is going to be around in a few years.

Blackstone’s offer of more than $14.25 a share to all investors who want to cash out would mean that Dell is worth $25 billion.

Icahn, on the other hand, is offering to buy 58 percent of shares for $15 apiece.

At the moment, analysts say that Blackstone has the highest chance of success. That could cause Dell some major headaches. For a start it is likely that Michael Dell himself will be removed from the company.

There are rumours that Icahn submitted his proposal only to keep discussions going, because he thought Blackstone may not submit an offer. It is likely that he will walk away from the deal but wants to make the most of his billion dollar investment in the company. He will want a large special dividend before he ties up with a rival bid, probably Blackstone.

Michael Dell’s own involvement with Blackstone would seal it, but it does not seem to be playing out that way. Earlier this week the Blackstone deepthroats were telling the press that he would be fired if they had anything do do with it. Officially, though, Dell has said that he will “explore in good faith” the possibility of working with Blackstone or Icahn.

He claimed he would be like Switzerland in favouring a form of armed neutrality.

But Blackstone wants to asset strip Dell’s financial services unit, worth an estimated $5 billion, and has apparently asked ex HP chief Mark Hurd about running the company. Dell, who is always a little hands on, has good reasons why he would not want this to be the case.

Either way all this is going to get a lot messier and is going to take months to sort out. What the three factions have to realise is that Dell, the company,  could be killed off by their final Battle of Bosworth.

Intel forced to take axe to Ultrabook prices

titanicThe writing was on the wall for Intel-based Ultrabooks well over a year ago.

Overpriced, underwhelming, and facing massive competition from tablets and smartphones and trends such as bring your own device (BYOD), few families would take the risk of spending over $1,000 to have a bright shiny Ultrabook and keeping an eye on jobs and the general economic situation, large corporations weren’t going to splash the cash either.

So the news that Ultrabooks are set to cost far less for the holiday season this year is probably a case of too little too late. It also begs a number of questions about Intel’s business model which remain to be resolved.

Intel’s phenomenal growth was due, in a large part, to the monopolistic hold it had on the PC industry.  True, AMD was around to mitigate that, but it was only in the days of the AMD Opteron that Intel was forced to react.  Because it holds such a large X86 market share, that meant that the revenues from sales of its microprocessors allowed it to finance developing the next generation of its CPUs.  Building fabs is not a trivial matter and involves billions of dollars of investment.  Intel could afford to do this because during its so-called “tick tock” cycle, it was able to maximise profits on its current generation of semiconductors, while developing its next generation.

However, this continual growth could never be guaranteed, and disruptive technology, in the shape of tablets and smartphones, meant that given a choice, lots of people preferred to pay far less for tablets and smartphones rather than go for Ultrabooks at $1,000 plus.

And with this we come to applications and the realm of the other great X86 monopolist, Microsoft.  It’s certainly true that typing on a smartphone or a tablet is not nearly as convenient as using a conventional keyboard.  And if you are into solid beancounting, you’ll certainly need a sophisticated spreadsheet to manipulate the numbers.  Despite the now decades long promise of the paperless office, people still print stuff.  Microsoft, with Windows 8 and its tablet ready interface is too expensive.  It, like Intel, has lost its grip on the electronics market.

There’s another factor to consider, too.  Right now, Intel is in an interregnum period.  Paul Otellini, the current CEO, is due to leave at the end of May.  Intel is actively recruiting for another CEO, but that means, in the short term, that no-one is going to make huge company wide decisions.

In truth, it’s hard for me, as a seasoned Intel watcher, to see quite what rabbit the new Intel CEO, whoever she or he might be, might pull out of the corporate top hat.  Intel has been in fixes before, and because of its size and its sway can never be underestimated.  But it’s hard to see it making very much more than a ripple in the smartphone and tablet market, leaving it between a ROC and a hard place. It’s also hard to see where the complex supply chain it generates is going to end up, too.

E-commerce generates demand for mega-warehouses

warehouse-openOnline shoppers are not just killing main street, they seem to be taking creating a lot of demand for oversized commercial storage units suitable for logistics and delivery outfits. In other words, small warehouses are going out of style, fast.

Property Magazine International reports that 25 million square meters of retail space will be needed over the next five years to keep up with e-commerce trends. That is the equivalent of 3,300 football pitches and some developers might end up driving white Bentleys, just like Premiership footballers.

It is estimated that online outfits will also need an additional three million square meters of specially equipped e-fulfilment space over the next five years. Another 22 million square meters is needed to keep retail stores and satellite warehouses stocked.

The growth of e-commerce will also drive further development of so-called dark stores, which is basically a fancy name for huge warehouses where goods are packed and shipped to consumers.
Jones Lang LaSalle executive Paul Betts argued that many retailers have simply outgrown their supply chain infrastructure and they have to work out new logistics models for multi-channel retail.

Surface tablet sales fall short, resemble Zune

surface-rtOh dear. It looks like the sceptics were right, Microsoft’s Surface tablets are lemons. Bloomberg is reporting that Microsoft has sold about 400,000 Surface Pro tablets since their debut last month. In addition, it only managed to sell a little over a million Surface RT tablets.

Microsoft reportedly ordered three million Surface RT tablets last year, but sales never picked up and Redmond was forced to scale back the order. 

The lacklustre figures come as no surprise. Earlier this year it emerged that the RT faced high return rates and very low sell-through, with shipments totalling just 900,000 units in the first quarter of sales. The Surface Pro did not fare any better. It got relatively negative reviews and since it is quite a bit pricier than the RT, consumers don’t seem keen to make the leap of faith.

JMP Securities analyst Alex Gauna told Bloomberg that Microsoft has failed to prove that Windows has a place in a new world dominated by touchscreens.

“It’s pretty clear that things were bad entering the year, and at least for the moment they’re getting worse,” he said. “The path to a successful Surface, in the same way that they were successful with Xbox, is not very clear to me right now.”

Apple still commands a 50+ share of the tablet market, although it is projected to slip under 50 percent later this year. Analysts put Apple’s iPad shipments in Q4 at 22.9 million units, which dwarfs every single competitor. However, Apple is losing share to Android, not Windows.

IDC reckons that the share of Windows RT tablets will stay below 3 percent through 2017, while Windows 8 could end up on 7.4 percent of tablets, in 2017 of course. In other words, Windows tablets are going nowhere, fast.

VMware needs luck as it sticks its head in the clouds

cloud (264 x 264)VMware has given up trying to wait for its partners to help it become an important name in the cloud space and has decided to do it itself.

Yesterday the outfit unveiled vCloud Hybrid Service to investors. Well we say unveiled we really mean that it told the world that was intending to set up a public cloud service. But it caught everyone on the hop because it was only a couple of months ago that VMware’s Pat Gelsinger sounded so dead set against the public cloud.

Speaking at the VMware’s Partner Exchange Conference in Las Vegas, Gelsinger said that VMware needed to own the corporate workload. He said that the company would lose if they end up in commodity public clouds.

With comments like that to suddenly come out and launch your own public cloud seems a little silly. However what Gelsinger appeared to be saying was that he did not want corporate data on other people’s public clouds.

“We want to extend our franchise from the private cloud into the public cloud and uniquely enable our customers with the benefits of both. Own the corporate workload now and forever.”

But Gelsinger’s plans might be a little tricky to pull off.

When it comes to public cloud there is a lot of top notch competition including Amazon, IBM, and HP who don’t take too kindly to strangers in the market. To make matters worse VMware’s offering will not be around until at least the second quarter.

VMware has chucked a bit of money trying to get the idea of the ground. Former Savvis Cloud president, Bill Fathers, will run the vCloud and has said that the idea will get a level of investment appropriate to that priority and to capitalize on a $14 billion market opportunity.

One of the crucial differences about what VMware is offering is that it is the service “hybrid” so that enterprises should see it as part of the VMware’s packages. The software which the vCloud is based on is called Director. It uses an IaaS environment and lets workloads become managed either in the cloud or in the office in the same way.

But all this is being set up because VMware could not interest its partners in building something similar. VMware had a crack at offering similar products through its ISP partners. But these were a little spooked that vCloud implementation would commodise their products. There were mutterings from ISPs who did not want to pay VMware licensing costs when they had cheaper open source alternatives.

VMware has a job on its hands to prove to VMware Certified Professionals that the public cloud is an extension of the data centre while at the same time convincing them that there are some advantages over the “non-cloud” environments they use now.

The public cloud will be aimed at its existing customer base and sold through its existing VAR and SI channel.

However most of VMware’s channel partners don’t have the skills to help their I&O clients transition from static virtualisation to cloud. So somehow VMware is going to have to give its channel the consulting skills and hope they can bluster their way through conversations where real cloud is needed.
Either way the company has a long way to go before it can sit comfortably among other cloud players. It might just pull it off, but it will take a bit of time and a lot of luck.

Industry thinks digi-wallets and NFC are overhyped

google-walletThe payments industry is slowly starting to adopt new mobile payments technologies, but industry leaders believe that the digital wallet concept is overhyped, along with NFC.

The Payments Innovation Jury, an anonymous group of 25 industry leaders gathered in a hollowed out volcano, reckons the next wave of e-payment innovation will come from Asia rather than Europe.

The secretive Payment Innovation Jury features members from 14 different countries whose names are kept private, so they can speak freely. Most members are or have been high level execs in companies such as MasterCard, PayPal and Visa, reports Venture Beat

In their latest report, the jury concluded that NFC and digital wallets are overhyped, and we tend to agree. Most members don’t believe NFC will live up to its hype and many reckon there is no demonstrable need for contactless payments from consumers. However, it is worth noting that NFC has plenty of applications other than mobile payments. More than half of the group believe digital wallets will replace credit and debit card payments, but a sizable number don’t agree.

“The Jury offered their views on which payments innovation has the greatest hype rating and therefore the biggest risk that the business case will not be achieved,” the report said. “Hype is particularly prevalent in payments, with many organizations trying very hard to talk up their chosen innovation in order to achieve the necessary critical mass.”

In other words it is beast to tread carefully, just in case. Many outfits are indeed trying to talk up their solutions, but we are still a long way from widespread adoption and standardization. One jury member argued that progress in Europe is hampered by standardization initiatives such as SEPA, but a lot of innovation is expected from Asia and Africa.

Interestingly, the group found that cross-border remittance services have a lot of potential. Sending money abroad via mobile payment solutions could be the most profitable niche over the next five years. It is a rather big market. Plenty of countries in Eastern Europe, North Africa and practically the entire third world have sizable expat communities who send money back home on a regular basis.

Tech execs still dislike Windows 8

msWindows 8 has failed to rejuvenate the PC market and even hopes of a Win 8 tablet push are slowly evaporating. Jun Dong-Soo, the head of Samsung’s memory division, recently said Windows 8 is no better than Vista, which is pretty much the worst insult one can bestow on a Microsoft product.

Dong-Soo pointed out that the PC industry is still shrinking despite the Windows 8 launch and he also said Redmond’s Surface tablets aren’t doing well, which is hardly a secret. What’s more, Dong-Soo is not alone. Computerworld reports that an HP exec recently said that the Surface RT is too pricey, slow and not very nice to use.

Acer president Jim Wong also believes Windows 8 is not successful. However, Wong told the Wall Street Journal that he expects sales of Windows 8 touch enabled devices to pick up in the second half of the year. This does not mean that we will see tons of tablets, as it is more than likely that the bulk of Windows 8 touch devices will be Ultrabooks and hybrids.

Many are now looking to Redmond for some action, any action will do. IDC analyst Bob O’Donnell told CNET that it might be time for Microsoft to start thinking about some changes.

“There were certain decisions that Microsoft made that were in retrospect flawed. Notably not allowing people to boot into desktop mode and taking away the start button. Those two things have come up consistently. We’ve done some research and people miss that,” he said.

In retrospect, the decision to ditch the start button was probably a wrong call on Microsoft’s part, as many Windows users tend to be rather conservative and fear change. O’Donnell says it is time for Microsoft to rethink its design, relying on input from PC makers. He argued that Microsoft should change the OS, allowing it to boot to desktop mode, as many users simply dislike the new Metro UI.

However, Microsoft is is still not saying anything on design changes or possible price cuts. O’Donnell believes Windows 8 sales are “horribly stalled,” so it might not be too long before the company is forced to take action. In doing so, it will tell the world that its Windows 8 strategy was flawed, on top of its flawed tablet strategy. And smartphone strategy, search strategy, social strategy, consumer electronics strategy and just about every other botched idea that came out of Redmond since Vista.