Thursday, August 26, 2010

Cloud Computing: Google Versus Microsoft

It's no secret that Google has been making a play for SMB market share, a territory long under Microsoft's control. It's a logical goal to pursue as business computing continues to evolve from the local machine to cloud computing—Google's wheelhouse. But can Google succeed at taking customers from business software incumbent Microsoft, even while fending off newer cloud-based competitors?

Cloud computing has made the SMB market a goldmine for service providers. Vendors can offer and tailor services (such as databases, programming platforms, unified communications, and more) that would have been out of reach for small businesses due to cost or technical expertise requirements. Still, Google hasn't made significant gains in the enterprise space. I addressed the reasons why businesses have been slow to embrace cloud computing in a recent analysis of Google Apps.

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Saturday, August 7, 2010

Microsoft Needs To Buy Research in Motion

Microsoft is in a very unique position that they haven't experienced in my 17 years in the technology business.  They're at risk of losing control of the client.

For the past 10 years or so, clients have been transitioning from a stationary box connecting them to their network and the internet to mobile devices like notebooks and more recently smartphones.

Clients are rapidly becoming more dependent on their iPhone or Droid than they are on their PC or notebook.  This has Microsoft executives losing sleep at night. 

Microsoft partners have been selling tablet PC's for years, but Apple releases the iPad and society treats it like a technological breakthrough!  They sell millions of them within months of it's release.  Without the foundation laid by the iPhone, this wouldn't have happened.  Now Google is following suit with new Android based tablets being built by Motorola and distributed by Verizon.  This will lead to millions of more clients switching their loyalties from a Microsoft operating system to those controlled by Apple and Google.   

What the heck is happening here?  Microsoft is used to controlling 95+ percent of the client marketshare and suddenly they're getting schooled and seem to not even be a player any more.

Sure, they're coming out with a new Windows 7 Mobile operating systems and telling partners that this game has hardly begun.  But this isn't very comforting to me given their spotty history in the smartphone space so far.

They need to stop the bleeding and stop it quickly!  They need to buy Research in Motion.

This idea isn't new.  Reuters wrote an argument for this back in October of 2008.     

If Microsoft aquires Blackerry, it would instantly bring them to the big boy table and make them a major player in the smartphone game. 

Blackberry is still the strongest player in the smartphone enterprise space with Microsoft still controlling the majority of that backbone infrastructure.  The combination of the two would be a huge blow to Google and Apple since neither one of them has been a major player in the enterprise space so far.

Will it happen?  I don't know.  Microsoft certainly has the financial muscle to pull it off, but there could be some antitrust concerns.  I'm sure that's the first line of defense that Apple and Google would take. 

There's also concerns that Microsoft would alienate many of their hardware partners who are going to be introducing the new Windows 7 phones.  Microsoft has traditionally avoided the hardware game by depending on their partners to utilize their operating systems and letting them each battle it out over features, pricing, and distribution models.  This works when you have 95% market share because no matter who wins the hardware battle, Microsoft would still get it's royalties.  This doesn't work so well when your operating system is a 4th or 5th place player.

Microsoft does have a precedent to look at.  It's called the XBOX.  Microsoft realized they needed complete control over the hardware, software, and distribution model to go after entrenched competitors like Sony and Nintendo.  This strategy is seeming to work pretty well for them in this space.

So make a splash Microsoft.  Buy Research in Motion.  Quickly consolidate their OS with Windows 7.  Introduce a KILLER APP store that will help designers get rich by creating Killer Apps for Windows 7 Mobile and Blackberry.   Then let the games begin!

Todd Swank

Amazon Cloud Revenue Could Exceed $500 Million In 2010

The Kindle e-reader may not be Amazon (NSDQ:AMZN)'s only cash cow.

Amazon Web Services, the cloud computing division of the Web retail company, is becoming a more important -- and more lucrative -- revenue driver for Amazon as more companies move their business-critical applications to the cloud.

So far, however, determining how much revenue Amazon has driven with AWS, which comprises Amazon's 12 cloud computing offerings like Elastic Compute Cloud (EC2) platform, Simple Storage Service (S3) offering and others, has been a challenge. Amazon doesn't break AWS revenue out when it reports its quarterly earnings and instead lumps it into the "other" revenue category. Amazon has only subtly noted that its AWS sales are growing.

"We're seeing rapid growth in Kindle, Amazon Web Services, third-party sales, and retail," Jeff Bezos, Amazon founder and CEO said in the company's second quarter earnings statement, offering only a glimpse into the cloud offerings' sales.

But a recent report by UBS Investment Research shines a little more light on just how much of money AWS is bringing in for Amazon.

In a report, UBS analysts Brian Pitz and Brian Fitzgerald predict that AWS revenue will hit $500 million in 2010. In 2011 AWS revenue will hit about $750 million, the analysts predict. And come 2014 AWS could capture roughly $2.5 billion in revenue.

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