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Archive for November 23rd, 2007

The Blogosphere is Dead, No, It’s Only Lame!

Posted by Bob Warfield on November 23, 2007

Another burst of handwringing about whether blogs matter has hit the web.  I’ve written about this before, but some of what’s being said makes more sense than the last round.  Some doesn’t. 

Umair Haque says the blogosphere lost its Mojo and to be more precise that pro-blogs have lost their Mojo.  This is not unlike the writings of Fred Wilson who felt that when Uber Bloggers like Om Malik and Michael Arrington succombed to using big teams instead of doing all the writing themselves a lot was lost.

What this is really all about is the intrusion into the blogosphere of folks who are perhaps overly mercenary in their desire to use it as a total tool for their business interests.  Never mind that the older school could be accused of using it as a tool for self-interest, this is a low down baser more subtle and at the same time stupider approach.  It’s bipolar.  Stupider are the linkbaiting pay per view black hat SEO tactics some will use.  Subtle is just the practice of copying mass media.  It’s ambulance chasing boiled down to meme chasing.  Doesn’t matter what the meme is, if it rises quickly we have to write about it.  I do it myself sometimes, but I try to stick to memes where I think I can actually add something to the conversation.

That’s the other problem conventional media has.  It doesn’t want to offend, because that might cut it off from some interest group.  So it doesn’t add anything to the conversation.  This comes up over and over again because people who troll the blogosphere for real insights find the rest to be spam.  And because it is a natural evolutionary process that as soon as you provide a way to keep score at any game ranging from NASCAR to blogging, people will try to cheat in order to win over others.  In this case, we’re talking about the Internet, so cheating is done with computer tactics, much like the SEO’s use.

Personally, I don’t think it’s too bad yet.  It’s under control.  How do I know?  Because I still come out way ahead by searching the blogosphere before turning to Google when I want to learn something new.  That only works because the blogosphere isn’t so polluted with spam as the mainstream web search space.  However, for those who give up their RSS feeds and just stick to reading Techmeme or even something like Robert Scoble’s excellent link feed, you’re giving up a lot of juice.

I like to get the juice.  That’s why I keep looking beyond the Techmeme’s.  At his suggestion, I’ve started taking Scoble’s Link Feed.  I like it, but I’ve decided that what I really need is some combinatorial capabilities in Google Blog Reader.  I want to be able to take aggregator feeds like Techmeme, Scoble’s Link Feed, Y Combinator’s Hacker News, and similar sources, and set it up so I only see articles on those feeds that aren’t already on my other feeds.  That’s probably going to be pretty hard to do, so right now I just read those kind of feeds last and do a quick scan deleting everything I already heard about and then going back to see what I missed.

Posted in strategy, Web 2.0 | Leave a Comment »

More Microsoft Bashing (Not Really, But the ‘Softies Will Think So)

Posted by Bob Warfield on November 23, 2007

I’ve written before and gotten a lot of comments on what I call “Microsoft’s Expensive Rift With the Web“.  Many of the commenters mistakenly thought I was positioning Java against .NET and bashing Microsoft.  I don’t as Microsoft Bashing so much as identifying an area where their tactics are hurting Microsoft more than the competition.  In reality, I was lamenting that Microsoft’s “winner take all” view of everything makes their life more difficult than it has to be in these times of Open Source. 

Stowe Boyd passes along a similar article that Matt Asay wrote that has a good way of showing how their approach as applied to the Office Suite Wars Part II (they won Part I) is their Achilles Heel.  In essence, his view is that Microsoft is fighting the new war with the old tactics.  They’re fighting a rear guard action to hold on with the desktop when they hsould be fighting to win the Office in the Clouds War.  Shades of Dunkirk if they aren’t careful.

Then there’s this edgy (sorry, no pun intended!) comment from Umair Haque:

No one’s gonna give up preference info to a player like Microsoft – because no one trusts Microsoft. And trust is at the heart of value creation in the edgeconomy.

Part of the problem I’m writing about is this trust issue.  And the lack of trust comes when a company tries to hard to make themselves a winner by making everyone else the loser.  As Haque puts it:

The fundamental problem is that Microsoft is playing massconomy games in an edgeconomy. Coercion doesn’t work; closure doesn’t work; and, most definitely of all, evil doesn’t work.

And those games are wired into it’s DNA. Microsoft will never – ever – pioneer new market space, explode a value proposition, or redesign a value chain.

The one place I think I’ll disagree with Umair is that I hate to ever say never.  The guys at Microsoft are smart.  They just haven’t been able to learn a new strategy.  But maybe with enough new faces there will be a new strategy.  Time will tell.

Related Articles

Take heart, Microsofties.  I think Oracle will more likely be slaughtered first by the Cloud than Microsoft Office.

Posted in business, strategy | 3 Comments »

Software Companies Push Service Because It’s the Poor Man’s SaaS

Posted by Bob Warfield on November 23, 2007

Ben Worthen of the WSJ writes that the first thing tech companies are pitching is “professional services.”  On the question of why, his answer was:

Because the margins are often higher than in software and tech equipment, John W. McCain, vice president and general manager of H-P services, tells the Business Technology Blog. That’s especially true for strategic consulting. Plus consulting gigs are a great way for tech companies to sell more of their products. McCain says that his consultants often recommend H-P products to help clients address the problems the consultants identify.

The margins are higher than software perpetual license sales?  I find that very hard to believe, at least with respect to gross margins.  IBM itself, mentioned in Worthen’s article, continues to find more profit in software than consulting, not that they don’t continue to build their consulting business.  The real reasons are alluded to when McCain says it helps sell the other products.  It would be hard to sell the other products unless there was a great customer experience going on there.

Professional Services can deliver many of the advantages of SaaS when properly deployed.  Creating a better customer experience can lead to more product sales.  In fact, for an on-premises perpetual license company, Services are the key to customer experience and satisfaction.  A well-run Services organization can make sure the customer succeeds.  Unfortunately, this is difficult to do and still maintain high Services margins, so there is often a tug-of-war over what’s more important.  If your company is starting out and still trying to build its reputation, you’ll have to give away Services to help build that reputation.  If you have a customer that gets into hot water, you should give away more Services to fix the problem if you value that relationship.  Most software companies, surprisingly, won’t.  Hence we have the huge crash and burn projects that have surrounded companies like Siebel, Oracle, and SAP where customers sometimes even resort to law suits.  Adding a System Integrator clouds things even more because the SI is never incented to give away services on behalf of the software vendor.

SaaS realigns this mess around customer satisfaction.  Typically there will be no boil-the-ocean project to install SaaS–that’s a non-starter.  The service component of SaaS is indistinguishable from the software piece for the most part, so we don’t have the conflict of a Service Group being asked to give away free service to make a customer happier when they’re paid on margin for their Services business.  Lastly, there are fewer opportunities for SI’s and the customers themselves to get themselves into hot water.

The other poor man’s SaaS result of Professional Services is recurring revenues.  At least for the term of the engagement, payments keep coming.  Smart Services people somehow manage to make that term almost infinite as they find more to do when the original goals are met.  Service’s revenue has become the life ring that sustains quarterly results as perpetual license sales have been flagging and unpredictable.

If you have a perpetual software business and you’re wondering about SaaS, ask yourself how well you’re running your Services business first.  Are they an integral part of increasing customer satisfaction?  Or are they simply a profit center that’s decoupled from the software piece?  Until you can focus them on customer sat, it’s hard to see how you’ll do very well at SaaS.

Posted in saas | 2 Comments »

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