News and Analysis to 26th May 2006
Microsoft to groom emerging markets
The software giant has recognised that PC penetration in
the emerging markets is low. This of course puts a cap on the extent to which
Microsoft can profit from its software offerings in these untapped regions. To
address this, Microsoft has come up with a pre-pay PC offering called FlexGo.
In essence users will be given a ‘free’ PC. They will then have to buy credits
to use the machine. The beauty of this model, it would seem, is that it enables
Microsoft to generate revenues from poor people. That said, the user will gain
ownership once they have purchased a certain number of minutes. Microsoft will very likely create a new
variant of its operating system, possibly named Windows PP (for Poor People).
This might also get around software piracy issues if the software is tightly
coupled with the hardware. Maybe this is the argument Microsoft will present to
competitors when they discover that their generally Windows compatible
applications do not run on Microsoft’s new poverty PC.
Sap’s lonely
One of Sap’s senior executives set tongues wagging
recently when interviewed by FT Deutschland. Apparently he pointed out that
there are only three potential Sap buyers, namely IBM, Microsoft and Google. He
also stated that he was amenable to the concept of being acquired. This idle
thought seems to coincide with Sap’s new alliance with Microsoft (see below).
So are we to assume that Sap will soon be a Microsoft division? This wouldn’t
be the first time the two have considered tying the knot. IBM as a buyer would also make sense, as
Sap’s offerings would naturally extend IBM’s service capability. A Google
purchase is almost unthinkable. Google’s power stems from its grip on the web.
Would organisations feel comfortable trusting their corporate data with an
online advertiser? How appropriate would it be to have Google adverts down the
right hand margin of invoices? Particularly if the invoice was destined for say
Cox Communications.
Empty L
Finance MBA case study, NTL, has announced that it will
unbundle 6,000 staff from the 17,000 generated by its merger with Telewest. I
am fairly confident that this will not impact their customer support staff,
which I presume was already at approximately zero. I know this because I have
been waiting in a phone queue for a number of years now hoping that someone
will explain why their TV channel clicker has a built in random number
generator when I attempt to change channels.
Microsoft plays online poker
The poker game between Microsoft, Yahoo and Google is
heating up. Latest fiscal reports show that they each put circa $500m into
online research and development. For the next round of the game, Microsoft
plans to up the stake to $1bn. This is on top of its planned $5.2bn R&D
spend in its other business units. Microsoft is perhaps bracing itself for a
browser-based future, which will make the choice of underlying platform a
non-issue. This makes MS Windows less important, which in turn is likely to
make Microsoft less important.
Enterprise Office
Sap and Microsoft appear to be courting. Their joint
applications offering, called Duet, is set for a June launch. Users will
benefit from better integration between Microsoft’s Office suite and Sap’s
enterprise applications. Sap would appear to be the winner here. Both vendors
compete in the enterprise applications space and so Microsoft is giving away a
key differentiator by allowing a rival to have good Office-enterprise apps
integration. Possibly the tie up is an
attempt to assuage the ant-trust brigade in respect of their fears that that
Microsoft is gaining too much dominance in the software space. Or perhaps
Microsoft does not see its own enterprise applications as a strategic offering
and has plans to buy Sap outright once the market gets comfortable with this
courtship. Let’s hope both business leaders resist the temptation to sing
together at the Wedding reception.
Go open
Industry analyst IDC has joined the open source cult that
is spreading across the IT industry. It is beseeching service providers to add
open source to their portfolios at the first opportunity. They appear to have
got the concepts of open standards and open source mixed up. The former is a
noble attempt to reduce the power of vendors by promoting vendor-independent
standards, the latter is amateur-hour software development that is
professionalised by the likes of IBM purely to irritate Microsoft. Should IBM
et al lose interest in bating Microsoft in this manner then open source will
turn into an open vortex for the users.
