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Techaisle Blog

Insightful research, flexible data, and deep analysis by a global SMB IT Market Research and Industry Analyst organization dedicated to tracking the Future of SMBs and Channels.

Don’t Blame IBM - Blame Adam Smith

In this WSJ article, the Congress is investigating the meteoric rise of Huawei, China’s major telecommunications equipment provider and accusing it of using technology theft and government handouts as the path to its’ incredible growth. The article insinuates that IBM is a major cause of this situation because they have shared advanced technology and management best practice approaches as a shortcut, and summing it up with:

“U.S. government concerns culminated this week in a report by the House intelligence committee that labeled the company a security threat and warned U.S. telecom companies against doing business with it.”

Huawei counters that they have spent over $400M with US consulting firms like IBM, Accenture, BCG, PWC and others since 1997, and at one point after signing a strategic agreement, they had 200 IBM consultants onsite to optimize core systems and train management in the most efficient approach expand internationally. If there is real evidence of technology theft (none in the article), that would be basis for retaliation, but it did not seem like IBM and others were complaining during the bonanza: Gerstner’s IBM made the transition from antiquated mainframe manufacturer, about to be broken up, into the world’s largest professional services provider on the back of international deals like this, and probably got a couple of large US government contracts in the process. McDonalds, Wal-Mart, Oracle and Boeing have done pretty well also, and American consumers have been blessed with an abundance of all the “stuff” they can buy for the absolute lowest price (not cost). According to the venerable Adam Smith:

“Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.”
-Adam Smith, The Wealth Of Nations, Book IV Chapter VIII, v. ii, p. 660, para. 49.


This is a technology blog and we try to steer clear of politics, but sometimes you have to scratch your head when you read articles like this. We have written on the effects of optimization on society, including the leading role of IBM with its’ Smarter Cities initiative to build global intelligent and optimized networks.

Married to China - Economist CartoonThe telecom services and equipment segment is a cornerstone of a country’s infrastructure and economic development, which is why virtually every country controlled it through government monopolies and trade barriers until global trade pressure forced them to open it – through direct pressure or infrastructure loan programs that directed spending. There was certainly value to opening the markets, as it is impossible to function in the global economy without a robust telecommunications infrastructure; the point is that there is a balance between internal development of capabilities and purchase of imported materials. We discussed this last week in our post comparing the evolution of the Internet in China and Korea. The article also hinted that trade friction was caused by onerous conditions that went into the negotiations between GM, GE and Google: “Companies such as General Snatching the Pebble?Electric Co. and General Motors Co. have had to contribute valuable assets and technology to participate in markets such as aviation and automobiles that China considers critical to its economy. Google Inc. lost market share after moving its Web- search and other services to Hong Kong to avoid complying with China's censorship policies.”

Some might find it difficult to find sympathy for those three - didn’t GM get a public bailout to prevent it from disappearing? And doesn’t Google own the market in virtually every country in the world except China? And how many times does GE fail to negotiate profitable terms in international infrastructure projects? By making them such a large trading partner and buyer of our national debt, we have become inextricably linked to China economically. Decisions have long term consequences.  They are flexing their muscles and  it is not the first time, nor will it be the last, especially as their economy continues to slow.

Again, from the Father of Capitalist thought:
“It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages.”
-Adam Smith, The Wealth Of Nations, Book I, Chapter II, pp. 26-7, para 12.


In other words, China is going to do what is good for China and America is going to do what is good for America. Don’t be surprised when the pupil tries to snatch the pebble from the master’s hand.

 

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Power to Do More meets Simplicity at Work

Dell (Power to Do More) is buying Quest Software (Simplicity at Work) for US$2.4B, its second largest acquisition after Perot Systems. Combining power and simplicity is not easy to achieve but is a potent combination if done successfully. And throwing Wyse and SonicWALL in the mix can lead to a catalytic reaction in the right direction that may become hard to contain and beat. It is all in the execution, messaging and channel commitment.

A lot has already been written about how the Quest acquisition is a brilliant move by Dell to augment its software portfolio and complete its end-to-end solutions offerings from PC hardware, servers to security, storage, software, datacenters and integrated datacenters. It is not important to know, understand, praise or fault Dell for how vWorkspace will fit into its partnership with Citrix or VMware, or how Quest’s Identity management will be combined with SonicWALL or how Dell will address Windows migration with Quest tools and on, and on. What is important to understand is that Dell is demonstrating its steady and unflinching commitment to be an end-to-end solutions company for enterprises, SMBs, government and education segments.  Dell gets it.

Following the announcements we had the opportunity to speak with senior executives at two of Quest’s partners, dinCloud and En Pointe Technologies; Ali Din, Senior Vice President and CMO, dinCloud and Naveed Khan, Director, Vendor Management at En Pointe. dinCloud provides hosted desktop and server services and En Pointe is a Quest software VAR. On one hand, dinCloud is eager to start a relationship with Dell, whereas on the other, En Pointe, already a Premier partner of Dell has had some preliminary discussions with Dell. They are at two spectrums of the same light and both are excited about the opportunities that can be explored, exploited and consolidated with Dell as a vendor.

There was a common refrain of hope and aspiration from both dinCloud and En Pointe. Quest has lots of business units; most of the times these units and their products are not integrated with each other. The hope is that Dell will be able to assimilate and integrate the business units and products quickly. And both were unflinching in their commitment to Dell and for that matter even other vendor partnerships they have. Committed partners have the capacity to make the ‘power to do more’ and ‘simplicity at work’ even more noticeable. Combined Dell and Quest can solve big problems for IT with products and solutions that are simple to use.

Techaisle’s recent survey shows that 72 percent of SMBs agree that IT vendors should work towards simplifying technology. 54 percent also mention that their technology pain points have increased in the last 3 years and 44 percent agree that technology has become more complex to understand now as compared to 3 years ago. To these SMBs Dell may want so say, “we give you the power to do more combined with simplicity for your business”.

Anurag Agrawal
Techaisle
@anuragtechaisle
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Mobile Apps: Forget About Content. Context is King

As of March of this year, half of all US mobile phone subscribers had a Smartphone. This in my opinion is more than just a number. It is a tipping point for applications. It is safe to say that we are now in an app economy as far as mobile phones are concerned. But the number has significance beyond just being a tipping point because it is a tipping point for thinking about applications.

What do I mean by that? Applications designed for the desktop or enterprise environments typically exist in a sandbox. That sandbox can be as small as a user’s desk or the entire enterprise but nonetheless a sandbox. Their function and focus is to provide the tools needed to complete a task within the confines of that sandbox. But these apps for the most part ignore user contexts. For example, a CRM application typically does not take into consideration a user’s location nor does an app like MS Office (other than language localization). But mobile apps need to be different because mobile is different. A mobile phone is not just another device. It is a beacon in your pocket that is constantly aware of where you are, what’s around you. It is also aware of your preferences and social network and what transactions you prefer. And one more thing – mobile identifies the user uniquely, not just from a device standpoint but as an aggregate of all the factors mentioned above. So it follows then that Context must define Content. But what are these contexts that app developers should consider? There are fundamentally three.

    • Location

 

    • Contacts/social network

 

    • Calendar/time



Not all apps can take advantage of all three but should take advantage of at least one. It is hard to say that one of the above mentioned contexts is more powerful or more important than the others. Each can be powerful depending upon the app or the content. For example, ecommerce applications benefit significantly from taking advantage of location while for a CRM app, contacts and calendar are more critical than other contexts.

Context = Creative Destruction

The use of contexts in app development is not just about driving new user experience and value for users; it is about driving new business models as well. The use of contexts increases the app’s value to the point where in many instances a new revenue model can be implemented. For example, wireless phone companies that by design are able to capture user locations can monetize this “data” in a variety of ways, advertising being one of them. Similarly apps that used to be sold on a per license basis can shift their revenue models to leveraging contextual data as opposed to per user charges. In that respect, context is not only valuable, it is disruptive. The first wave of context aware apps we see have typically been those that would anyway have been free - Apps such as Instagram, Pinterest and Zoomingo (local shopping application).

Increasingly, I predict that we will see whole industries that shift their business models to take advantage of contexts. Newspapers and media are a prime example. While many newspapers are experimenting with paywalls, I believe that a larger opportunity exists for them to exploit user contexts. News publishing today uses what could be termed as an “in-out” model, that is publishers and editors decide what content should be created, publish it and hope that readers will find it interesting. It is the traditional content first driven approach. But what is relevant to me as a reader depends upon my current context. And what is relevant for me today may not be relevant tomorrow. It calls for a more dynamic approach to presenting content, where content to be presented is selected based on a combination of contexts. In other words, an “out-in” model. Doing so improves their ability to deliver advertising thereby potentially increasing revenue.

The same is true for retail. Most mobile retail websites are mere reproductions of online properties but should they be? Online retail websites suffer from the same contextual ignorance as other apps. For example, a mobile retail app would be much more powerful if it could detect a person’s physical proximity to a store. Imagine how small business retailers could benefit from such capabilities. Think about applications like Endomondo that track your physical fitness activities. Well over 5 million users have downloaded and use Endomondo. Consider how useful that data would be to an outfit like REI for targeting and creating customized offers. Here’s another example and a personal one. I am an avid photographer, but not a very good one. I try to learn about photography but that typically happens before or after I am out taking photographs. But the most appropriate context for me to quickly learn tips is when I am taking photographs. Cameras already track locations and embed them in pictures. They already sense light conditions. But this data is not used to educate the photographer! Could it be used to provide tips at the time the photo was being taken? Or could suggestions be given as to how to improve the photograph with examples of the best possible settings? Would it make amateurs like me to more likely to buy a particular camera brand? Would it facilitate brand loyalty? I believe the answers to all of the above are a resounding yes!

Context = Engagement

Indeed, most websites retail or not suffer from the same issue. Even corporate, customer facing websites are mere one-way information dispensing media rather than a context aware, interactive medium that facilitates two way engagements. In fact the very term “engagement” needs to be redefined in the mobile age.  Engagement was largely defined in terms of giving users the content they want/need. But in the mobile age, I believe that engagement should be about the interaction users want and need. It follows then that if context defines interaction then adding contexts fuels a more powerful engagement that can impact costs and revenue.

In Conclusion

Successful mobile applications need to score high on relevance. Relevance is a function that takes into consideration not just content but also all the factors that surround and influence the appeal of that content. This means that app developers have to re-think their applications for the mobile age. And not just re-think but they have to get mobile DNA into the entire organization.

 

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Empower Me! - The Coming Change in SMB IT Priorities

Download Techaisle SMB PerspectivesOver the last two decades, the global small and mid-market businesses, SMB (1-999 employee size) market has been the growth engine for the IT industry at large. The reason is quite simply that SMBs account for over 80 percent of businesses in any country – developed or developing. For much of those two decades, SMBs have primarily focused on building core infrastructure with the bulk of their investment allotted towards buying PCs and desktop applications such as Office, desktop publishing and other industry specific software.  This initial phase was followed by a longer continuing phase wherein SMBs shifted their investments to Networking technologies. However, this was still part of core infrastructure investments made by SMBs.

The reason for this lengthy investment cycle was that investments occurred at different times for different SMBs depending upon firm size and geographies. SMBs form the essential thread of the economic fabric of any country and to a great extent their fortunes and investment capabilities are dependent on the economic situations and policies of the countries they represent. So as the fortunes of the emerging world turned favorable, so did the investment capacity of these SMBs. Conversely, as economies have stalled in recent times, investment capacity of SMBs has been deeply affected. 

Tough economic times bring investment decisions into sharp focus. The result is typically lower investment levels. It also sharpens medium and longer term priorities. That leads to smart investments. But also investments made at this time become longer term drivers of investment for adjacent areas. We at Techaisle believe that the recent economic implosion acts as a catalyst for such action and change among SMBs.

The New SMB Imperative: SMBs are sharpening their medium and longer term priorities leading to smart investments.
Value Shift: SMBs are now looking beyond infrastructure investments as their respective countries slowly emerge from the global downturn.
Enablement v/s Empowerment: SMBs are being driven towards empowerment technologies that are outside of normal technology adoption curve.
Empowerment Technologies: SMBs in emerging market countries show greater intentions of investing in these new priorities than SMBs in mature markets.
Implications for Channel Partners: Shift to newer priorities is and will impact channels the most in next five years.
Conclusion: New priorities bring to light new opportunities for vendors and channel partners to positively impact the success of SMBs on a global basis.

Download Techaisle SMB POV DocumentDownload Detailed Techaisle SMB Point-of-View Document
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