A couple of posts today (Om Malik and a follow up on Skype Journal ) discuss a rumoured Skype Killing application that is allegedly being planned for. It seems that some of the Telco heavyweights want to build a VoIP based P2P calling service in order to stunt the success of Skype. Those providers in the consortium won’t change interconnection (on net) calls, but if you call another carrier’s number (and i’ll hazard a guess here) or even a POTS number within the providers number pool, you’ll get charged (like Skype out)

 
It’s a good strategy that has been successful before.  The basics are that you enter an adjacent market, tank the revenue pool in that market to such an extent that the incumbent (Skype in this instance) has no resources left to enter your market because its fighting for its life in its home market.

 
Great plan except for a couple of things fella’s.

Firstly Skype’s disrupting you!, Secondly you can’t tank what is already free, and thirdly Skype is already in your market (the opps too late moment!).

 
Apart from the problems with the strategy, i see a bunch of implementation ew issues with this the approach

 
1) Can these Telco’s work together
2) Can they get a value proposition that isn't "old Telco” going at the same time as “Telco 2.0” - BT is a strong advocate of the “Protect and Grow legacy revenues”. How will this fly?
3) Can they suffer the cultural change of not charging for calling?
4) Can they physically build it
5) Who will buy it? - only ray of hope is that they have financial security that Vonage etal don’t. They have a long way to go here. Skype’s adding 360 000 subscribers a day. That’s growth no Telco except China or India has dealt with ever.

6) Can they sell it? Big step change for a sales teams

 Thoughts on this anyone? Smacks of desperation to me.

A guest post from the unreasonablemen.net

I saw this from Ovum analysing SAP’s Q1 financials. There are a couple of take outs from this that really struck me with respect to SaaS and incumbent business models.

1) the company is still growing its core business (double digit growth no less).

2) The SME product group is going gang busters 18% growth

3) they’re SaaS offering is not performing (now there’s a surprise!)

4) they are going to address this by only focusing on selling SaaS (wait for it…..) into those markets where they have been successful selling on prem… uh oh!

Lets break this down a bit.

1) SAP are selling a heap of core enterprise apps, solutions (services) and mid market core app.

From the aggressive growth this you would have to postulate that the focus of the company is on … core stuff with big numbers. That’s like heroine. Try to stop using that and you are going to have withdrawals…stock market, staff and customers….

2) They’ve decide to “…. focus for the remainder of 2008 on Germany, the US, France, the UK and China, where most of its existing customers are located” and “SAP will reduce its “accelerated investments” in Business ByDesign this year by about €100m - a decision prompted by the slow uptake”

Basically selling SaaS into those very markets (and companies) where they’ve already sold on prem solutions to, but with a 'lesser' product. This is a multi faceted strategic faux pa, and they aren’t alone is doing this.

This whole situation highly reminiscent of a conversation I had with a leading SaaS CRM vendor. My contact had actually set up a meeting with Seibel in an effort to coach them on how to be more successful. He’d done this because their performance in the SaaS space was so woeful it was (in his opinion) damaging the growth of the SaaS market.

The key issue, they were targeting their existing enterprise customers with their SaaS offering, BUT only when they have failed to sell the on-prem version…. To put this in context, Seibel’s sales approach is approach their existing customers (who they’ve convinced to buy expensive on prem stuff), try and sell them more expensive on prem stuff, and when they loose the deal go …well we’ve got this SaaS thing that’s cheap… nice!

So what are the problems with this approach?

1) you are damaging your brand. If like SAP you are the king of the heap in a market, known for a certain thing, why risk damaging this with a competitive offering

2) The way you sell this is different. SaaS isn’t the cheap and cheerful part solution, it’s a fully functional alternative that has its own value proposition that needs to be properly articulated in order to be successful

3) Saleforce skills and rem. The only way to change this is to change the way your sales teams sell and are rewarded. They sell what you pay them to sell!

4) Sharemarket. The sharemarket isn’t exactly enamoured with the idea of you tanking your cash cow revenue stream. They only dislike that only marginally more than large investments in new technology that fail and essentially eat into their payouts. No way are they going to support you doing this long term unless you can show it’s a stonking success. Neither Seibel of SAP have done that.

In years to come, do you think students will read case studies on how not to embrace a disruptive technology that include SAP, Seibel or Microsoft?

I read a piece about 2 weeks ago that gave me one of those moments. You know, when a whole lot of pieces fall into place and your mind races. I was entitled 

You Become what you disrupt

 Since that moment i’ve become increasingly aware of this trend in the SaaS world. (Its like when you buy a new car, suddenly all you see is the same car). Its my contention that SaaS has itself fallen foul of some of the very (bad) traits it set out to remove. All for sound economic reasons, but the proof is there.

 
Lock in - Force.com , Amazon.com, Google.com  (plus a whole bunch more ). Here’s a list of the glittering stars of SaaS, internet and PaaS. All going after lock in. Tim O’Rielly comments on the Google App Engine.

Keeping the internet as an open platform is a choice. We didn't understand what was happening to the PC ecosystem, but we've seen this movie before, so we should recognize and fight this plot line when we see it happen on the internet. We need to keep our cloud services vendors honest, and tell them we want an open, interoperable platform, not one based on lock-in.

 Bob on Smoothspan suggests that Amazon should more aggressively move toward lock in to further its financial success. Hmm,  I thought lock-in was so last decade? Isn’t one of the tenants of SaaS the way you can change vendors easily?

 Interoperability. Hey software vendors, get this. We want our applications to work together!  Have a quick think about why Microsoft desktop applications are so wildly successful. They did two things - 1) they made it simple to use. The leap from DOS to GUI was massive in making PC’s mainstream. Secondly they made all the programmes you commonly use work together on the same platform. Its my understanding that way back when they brought the various services like word and excel together one at a time (the argument about how successful this was done is irrelevant for most people). They made it easy to do.

 
Fast-forward to Monday, SaaS commentator Phil Wainewright went into overdrive about the SFDC / Google Apps integration. Saying a bunch of stuff including.

This is a showcase for on-demand integration. Salesforce for Google Apps is a close integration of two distinct on-demand application stacks, in which both applications can continue to follow their separate upgrade and evolution paths without breaking the integration.

(In the interests of honesty & integrity, so did I about Salesboom .)

But think about that. So basically your saying wow, you can integrate two apps together. Ummm so like integrating your SAP GL with CRM from Seibel. Or how about Payroll with Accounts. Ok, i’m assuming it happened a bit quicker, but the mere fact that Phil is trumpeting this as a major event is…well sad.  This isn’t new, way back it used to be called EDI, then that became unfashionable so it became integration, then webservices and the latest mashup. Sorry, but I would have thought in a 2.0 world this was EXPECTED.

 
Identity, look at what is going on here. The fact that OpenID exists is to address the same issue users have been fighting since application silo’s were in nappies. The nirvana here is single sign-on. IMHO Google’s suite of products is so useful because i’ve got identity federation across them. This still isn’t addressed. Take the iPayroll / Xero example above. They got database integration, no identity bit. To the best of my knowledge none of the vendors allow for single sign-on (does Force.com? Does anyone?)

 Proprietary systems - ok here (with one large noticeable exception) SaaS providers seem to be doing quite well. The ability to create customisations (widgets or whatever) seems to be quite universally applied. My question is (and the point of this post), for how long? Using history as an indicator, this free for all can’t last. For a couple of reasons. 1) Vendor share, someone will dominant and change this. You’ll be able to write customisations, but for one company not many. Then you’ll see a bunch of small companies writing auxillary apps for the core…force.com anyone? And 2) Commercial pressures, freeware just don’t cut it. Ad funded apps, well for the time being ok. But the relevance of Adwords is declining, surely that makes that model questionable?  Sooner or latter the market is going to come under pressure. That means a couple of things, consolidation and pressures to retain (lock in) customers…

 
So has SaaS failed in becoming like the old established players? Who has it failed? Was it all inevitable? Am i way off base?

This one's for Rami at Salesboom.

 This week saw the announcement of Salesforce.com integrating with Google Apps. Ben Kepes covers it well here. The key point being that the announcement is a PR gag because the reality is that north of 90% of the enterprise  use MS exchange or lotus notes. To my mind it really misses the point 

So.... enter Salesboom.com. Who have come out with a Outlook Edition. As far as i can tell, its doing everything the salesforce thing does..but in a true enterprise app...

Nice one! 

Last week I wrote the post “Isn’t the answer mobile?” which created a great deal of interest, commentary & thought provoking questions (most on the diversity.net.nz blog). Thanks to those who commented, some of what you wrote provides the basis for this post, as well as comments on Rod Drury’s blog post about fibre-co.

I guess the best starting point is to say last weeks post should have been titled “Isn’t PART of the answer mobile”.  It’s clear from both these posts that mobile technology alone won’t suffice, but equally importantly neither will fibre. The FibreCo idea is audacious, and the vision both compelling and energising (which i suspect is the major goal behind it), however it does have a few weaknesses. I’m not here to throw stones at it, because i love that at least someone has provided some constructive solution to our fast internet conundrum, what follows is my own attempt at it.

In my opinion FTTP (key being P not H) is only needed by a small (but hopefully growing) group of businesses. Not everyone needs a raging torrent of internet access, just like not everyone needs Mac trucks, PDA’s, high definition printers or computers at all. Hand in hand wit this, I must also admit that I’m not sold on the 1:1 causality that goes with the belief that ubiquitous fast, cheap internet access will drive economic benefits. I don’t see massive queue’s of ‘weightless businesses” just waiting for fibre, I also don’t see all the other fundamentals (like wages, taxes and support) being addressed to drive the weightless economy. Maybe its chicken & egg, but I’m not convinced.  Simon Arnold also asks if you need ubiquity in his comment on Rod’s blog

But if you go back and look at the source of the benefits being claimed by NZI that make up the $2.7-4.4 billion per year (see http://www.nzinstitute.org/Images/uploads/Broadband%20aspiration%20Sept%202007.pdf) most are able to be captured with much lower than the 75% penertration they are justifying the need for public investment off. I do think a bit of hard nosed analysis of marginal cost of provision versus marginal benefit is warranted.

Secondly, if you do need that kind of data through put, you should take Bwooce’s advice …

If you want fast internet access for your business, site your business appropriately. ….. Just as you may choose to live next to an airport, you may choose to live in an area with crap internet coverage

If I may extrapolate this out a little, you may want to even have the position that if fast, large bandwidth internet access is important to you, you should pay for fibre to be connected. The great news is that Telecoms cabinetisation program will make this more affordable. The way I read it (& again-not an engineer!) Telecom will be laying a lot of ducts & the distance to the Cabinet is going to be a lot shorter… so it should the cost of getting Fibre installed will decrease. This position should hold true if you are a business or consumer who wants IP TV.

Having said Fibre is just one of the solutions its fair to say that i believe ADSL broadband has a role in our future. For some its more than adequate. Again, as Bwooce says 24 mbps is plenty for email, internet, video conferencing etc. By that, it addresses the NZI’s ‘Telepresence’ and ‘Remote working’ economic benefits. (as a sidepoint even Cisco’s full monty Telepresence system only requires 15 mbps & , that’s way more demanding than a web-cam type approach!)  For digital media and other data intensive sectors is ADSL going to be enough? No, see point 1, buy fibre…

Mobile….I caught up with some folks about my previous mobile theory. According to them (the royal them) there area bunch of things you can do on a cell site like sectors, carriers & polarisation which all work to decrease contention, optimise spectrum use and generally make the experience better for the consumer & more economic for the carrier.

Despite popular opinion, ISP economics is important, if they can deliver services cheaper (and make an operating margin), then generally the price to customers will be cheaper, but its not all about price. Again, according to ‘them’, doing all these things could allow you to deliver speeds of up to 1 Mbps (maybe more). This speed would definitely improve if high demand users went to fibre. I know 1 Mbps ain’t fantastic against global benchmarks, but again for some it would be a great leap forward and more than suffice. I’m thinking of people on dial (and there are still nearly 700 000 of those) or old plans (256kbps for instance, again plenty of those) Tom Chignall of Vodafone commented on Rod’s blog 

We don’t need a fibre vision - we need a broadband vision which connects the people of this country to each other and to the outside world.…. Our view is that wireless has a major role to play…., The technology is in place today to deliver as good an experience as I get over my Telecom service (resold thro ugh Vodafone!)in Auckland’s central suburbs. Wireless speeds are doubling very soon and we have Telecom and NZ Comms entering the fray with similar technologies.

I agree with Tom’s major points , we need a vision that connects NZ to the world in the most appropriate way for them. I think this vision means when you buy a fast internet plan, you are going to have to make some choices based on your particular needs. If you are one of those companies or people feeling massively restrained by ADSL (financially, gaming wise, IP TV wise) then you are in one camp. If you get on the internet to ‘get the email’ like my mum, dial or mobile technology might be fine for you. The reality is though, what ever you choose, you should be aware that you are going to pay for it ….. there are no free rides. To me this is the crux of the issue for NZ . Just look at the links above, price isn’t the impediment (we’re cheaper than the OECD average), fast speeds are available, so why so many dial and low speed plans? No need for them?

For all those who did comment and weren’t referenced, your input did help, again many thanks

Just some musings, based on no facts but…. Is Goggle heading for trouble?  Despite all their product development efforts & a significant amount of hype, they still only have one revenue stream, advertising.

On top of that the word is that they are loosing staff in large numbers due to growth pains.

Finally, look at their strategic stance or lack there of. Who are they strategically aligned with? Perhaps more importantly who have they rankled? MS, Yahoo, Apple, Broadcasters, news companies….Wouldn’t a more prudent stance be to take on just one of these giants (by partnering with their enemy) at a time??

When the market realises that there are no new revenue streams, coupled with a large list of enemies what do you think that will de to the sharp rice? And without that kind if capital, how will they get out this hole? There are parallels to the dotcom boom/ bust companies here (IMHO).

Thoughts?

 
Before i start, let me just say i’m not a engineer, so if i get some of the technical bits wrong, forgive me. But i genuinely think i’ve got the ramifications correct!

There’s been a fair amount of debate about how NZ gets better faster broadband. This isn’t a simple proposition and much of it has been made even more complex because of political policies, poor press leading to general acceptance that Telecom is ‘bad’ (just look at the sensationalist title to this) , ignorance and a real clouding of issues. 

So lets separate out the issues. Jim Donovan provides a nice synopsis of the issues as Rod Drury sees them. In my opinion there is a lot of issues tied up even in this.

Firstly can we accept the fact that Telecom is a public company and as such will try its best to make a profit for its shareholders, (which incidentally includes just about everyone in NZ with a managed fund, the point being you are doing yourselves out of your retirement dosh!). The implications of this are that they are legally obliged to invest their shareholders money to get the best return possible…which may not always be what people think is ‘good’ for the country as a whole.
Having multiple international trade routes is different from national data speeds. It’s a damn good idea and should just happen ala Google.

Next, lets address national data speeds. There's a lot of apples with pears comparisons with other nations out there. These nations don’t have out population levels or distribution, so doing this isn’t that valuable. Benchmarks are good, but how about making them meaningful (as opposed to a political weapon).

Lets look at broadband. Everyone is talking about fast ‘broadband’, but what they really mean is fast internet connections - give me the webpage i want faster, upload my stuff faster…. Semantic, but important difference.

Broadband as in common use means ADSL connection. ADSL is effectively compressed data travelling down the same copper as you use for a phone line.  Broadband in other countries means other things like cable, Fibre and other technologies. The whole broadband thing became quite topical when the government noticed that people might be pointing the finger at them for our slow movement down the OECD averages for income and wealth. They also noted that the countries moving up that list had higher penetration of faster internet technologies than us and viola, it became an election issue. If we take a stick to Telecom, make them the bad guy people won’t point at us anymore. This conveniently neglected other things like company tax, RnD, incentives and funding for start ups, tax breaks for international tech companies etc. Anyways, the end result was that in a knee jerk reaction to get the monkey off its back Telecom agreed  to invest in its fixed line business to the tune of 1.4bn. The point of this investment is to shorten the loop between the point where the core network (fibre) stops and the copper (last 2km - the bit to your home) starts. This shortening reduces the distance impact and will provide greater speeds (10mbps) to the home and …. no one will be happy with the result. It still won’t be fast enough (here for religious screaming from the left, here for business impact)

This type of disappointment will mean more Telecom bashing, closely followed by the realisation you need to reduce the loop to about 800m. That means more cabinets (i’m told 3 times as many, and another $700mill). And get this, this additional investment will only give data speeds of up to 20mbps… more disappointment !!! Which gets you to the point where you realise you need Fibre to the home. I heard that the last time Telecom looked at that it was gonna cost circa $10bn to deliver. So that’s just not going to happen (as Paul Reynolds has already said).

Or, you try a different approach.

Think about the world we live in, most people have telephone they carry around with them (called a mobile), notebook sales outstrip desktops, pda’s, ipods, Wifi in the home… its all about untethering the cable…or simply being mobile. Why then are we trying to solve the issue with redundant technology when the requirement is just for fast internet speeds. 

Here’s my hypothesis. The network you think of as mobile, isn’t really mobile. It’s a fixed backhaul network with cell towers attached at the end to deliver the last mile.  If you think about it, its identical to your home wifi network and we love those!

 {mosimage}

Why then don’t we leverage the fibre to the cabinet programme, turn all those cabinets into a cell site and start thinking about fast mobile data technologies like LTE. I know its not a ratified standard (others are tho and they are quite quick!), but it is already demo’d as doing 150mbps. That’s 15 times what cabinetisation is gonna deliver to the home…. Isn’t it about fast internet, not copper or fibre. I know there is a pricing issue, but scale will bring that down….

Thoughts?

I was stoked to see this piece from Telecom CEO Paul Reynolds in the NZ herald. 

Paul basically takes exception to another formula based whinge trotted out by Chris Barton and does so with  a fact based counter. 

Nice work Paul!! 

PR from Telecom has been woeful for way too long. Yes you've done what any public company would do t maximise profits, sometimes this has annoyed people. But the worst thing has been the limp wristed "no comment" approach to the public shellacking.  Get some back bone!

Good on the herald for trying to put a balanced view out there too.  

I’ve been wearing a pedometer for the last couple of days. The point of this is to measure exactly how much (or in my case how little) exercise you do on a daily basis.  And then motivate you to do  100 000 steps a day.

The target is 10 000 steps (8km or 5 miles). If you do this amount of steps you are supposed to get physical and mental health benefits (more here on the official NZ website, and here). Things like better spinal health, less fat, less stress, less heart disease etc…

As a knowledge worker who regularly eats lunch at his desk, who’s main activity is typing and walking to the coffee machine, i’m currently clocking up just 4000 steps on days when i don’t go to the gym or train.  Thats appalling!

While I do other stuff to keep fit, i know lots who don’t.

So the call to action, if you do read this blog, quietly reflect on how much exercise you do on daily basis. Give your belly a pinch while no one is looking, bit pudgy? Does your back ache? Is your belt out a notch from last year? I genuinely like having readers, you are what makes blogging worth while for me. So i ask you to think about putting a little walk into your day, every day so you can stick around.

In case you are interested, for those days when i don’t train & clock up just 40% of my daily quota, my daily routine looks something like this;

Spend 45 mins in the morning running round getting myself and kids ready.

Walk to car / bike and drive to work, walk to desk.

Work,

walk to coffee machine a couple of times,

walk to sandwich bar, buy lunch

put a few bathroom breaks in there

Walk to car / bike and drive home,

Run round after kids some more and while fixing dinner….

Sound familiar?

And no it has nothing to do with Vista....

[youtube]http://youtube.com/watch?v=MbGMN5hTe5w[/youtube]

BUT, it does have everything to do with Microsoft Mesh and MS's S+S strategy. Gianpaolo from the development team outlines a simple S+S example here.

I love Office 2007, the interface is clean, efficient and now very familiar. Far, far, far superior to any web based productivity tools I tested. The problem of course was collaboration and anywhere access. How do I share documents with others and/or how do I access my docs from anywhere. Now I use Office Live workspaces in conjunction to Office. The combination of the two is very appealing:

I use Office (Word, Excel, Powerpoint) locally to author a document, presentation or spreadsheet and Office Live workspace in the cloud to collaborate with others and as an anywhere access store.

MS's view of interconnectedness between offline and online worlds, (on premise and cloud computing) requires some sort of synchronisation. This framework is essential for them to retain their incumbent desktop business while paying homage to the growing movement toward SaaS & into cloud computing.

Couple this with some IP based unified communications elements and you get all the functions depicted in the future piece. I've watched that video twice, and possibly like many of you found it to be a little surreal. But have a long think about the elements to achieve that.

Ubiquitous networks, unified communications (yip MS is into Telco, more in this bit), shared workspaces, cloud based storage and fileshare. Not that furturistic really...