Who knew that IBM's sales team was so bad? Or Oracle's? Or Tibco's? In a string of earnings calls, each of these titans of enterprise software put their respective sales teams to the sword, blaming them for the companies' poor earnings reports. 

If only it were that easy.

Shooting The Sales Messenger

While we've talked about the decline of legacy software vendors for years, it's only now that the rise of cloud and open source are showing up in the earnings reports of legacy IT vendors. First it was Oracle, signaling an end to the traditional enterprise software licensing model. Then Tibco. Now IBM.

As IBM chief financial officer Mark Loughridge argued,

We had solid profit performance in January, but as the quarter ended hundreds of millions of dollars of very profitable software and System z mainframe deals fell short of the goal line. On the software side of the house they had a very good listed deals and I think this was just pure execution. We should have closed those on a sales side.

It would be easier to believe this if similar results (and excuses) weren't popping up across the legacy IT vendor landscape, and this despite a flat to improving spending outlook by CIOs, according to recent Barclays survey data:

Perhaps the problem isn't the sales teams' execution - a "lack of urgency we sometimes see in the sales force" as Oracle president Safra Catz opined - but rather the very foundation for legacy enterprise software sales: the software license.

It's The Data, Stupid

As Redmonk analyst Stephen O'Grady persuasively argues, the value of software as software has been declining for years. Value has been shifting to data, and software has either become free (open source) or distributed services made available over the web (cloud). Software revenue growth for the big vendors, not surprisingly, has slowed to a trickle, according to IDC data.

This shifting emphasis away from software sales, toward data-based services, has crowned Google as the market capitalization leader among its "peers," a trend that will likely continue for many years:

In fact, as O'Grady highlights, among the PWC global top-100 software vendors, none of the top-20 was founded after 1989. He concludes: "The data is clear: while there is substantial money in software, the difficulty of employing it as a primary revenue mechanism is increasing."

A Flight From Software To Cloud

For this reason, we've seen IBM and others diversifying out of software, bulking up in services, differentiated hardware, and more, as PWC's segmentation of software revenue among the world's top-20 software vendors indicates:

Source: PWC, 2013.

Such a shift won't happen overnight, and will be painful along the way. Very painful.

For example, SAP has been struggling to become a cloud-friendly company, and it's having deleterious effects on its earnings. As Wells Fargo analyst Jason Maynard spotlighted in a recent SAP research note, "increasing demand for cloud solutions is creating a negative drag on software license revenue growth."

Having lived through this at Novell, when we had to replace super high-margin NetWare revenue with lower-margin, lower-priced SUSE Linux revenue, I can state with some certainty that it's a long, tough road (fortunately, one that SUSE seems finally to have completed). Still, some companies, IBM in particular, have managed to make the transition, though no legacy IT vendor has gone to the lengths that Google, Facebook, Salesforce and other new-breed "tech" companies have, essentially making the sales function an automated credit card transaction over the web.

This friction-free, license-free model is the future. 

In this new world, purchasing power moves away from CIOs to developers, in the case of open source, and to line of business executives, in the case of cloud. Where it's not moving, and likely never will again, is to the top lines of the legacy IT vendors. Software has become a service, not a big revenue driver. That fact won't change, and shooting the sales messenger won't help.

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IBM has no stomach for low-margin businesses, which is why Big Blue may be ready to dump its commodity server business — i.e., servers that run on Intel-compatible "x86" processors. If the reported talks with Lenovo lead to a sale, the move would mark IBM's final break with the low-end computer business.

A Win-Win

The deal would be a win-win for both companies. Lenovo, which bought IBM's PC business in 2005 for $1.75 billion, would immediately become the third largest maker  of x86 servers, behind market leader Hewlett-Packard and runner-up Dell. Thanks to its market clout in its homeland, the Chinese company has risen to become the second largest PC maker worldwide, according to the latest numbers from IDC. 

Adding x86 servers to its portfolio makes perfect sense for Lenovo, which has shown in PCs that it can do well in a low-margin, commodity market. For IBM, the opposite is true. The company's strength in hardware is in selling expensive — and profitable — mainframes.

IBM's mainframe business is the reason the company leads the global server market, at least in revenue terms. To give you some sense of how expensive these systems are, IBM's "System z" mainframe represented more than 12% of all server revenue worldwide in the fourth quarter. Because of a refresh in the product line, along with the introduction of new products, such as the zEnterprise, revenue from IBM's mainframe business rose almost 56% year over year in the quarter, according to IDC.

"Although revenue results for System z are traditionally heavier in the fourth quarter, this accelerated acquisition shows the breadth and depth of the IBM mainframe installed base," Jean Bozman, analyst for IDC said in a statement.

Lenovo would be a good buyer for IBM, because it doesn't compete in any of the markets IBM cares about, namely software and IT services. That wouldn't be the case if HP or Oracle were the buyer.

Disruption In Server Market

IBM may also have decided it wants no part of the disruption heading for the server market like a freight train. The increasing number of companies adopting cloud computing will mean fewer server sales, Larry Dignan points out at ZDNet. In addition, Internet companies with large server farms, such as Facebook and Google, buy customized white-box servers, which can't be good in the long term for traditional sellers, like HP, Dell and IBM.

While no one outside of IBM or Lenovo know how much the business would fetch, someone familiar with the talks told Bloomberg that the price would range from $2.5 billion to $4.5 billion, depending on the assets and liabilities included.

Lenovo Is Fired Up And Ready To Go

Not everyone agrees that IBM would be doing itself a favor by selling its x86 business. Gartner analyst Sergis Mushell says that without x86, IBM only non-mainframe servers would be its lineup of machines that run its Power processors — and that demand for those products is shrinking.

In other words, IBM would miss out on the opportunities to build systems based on x86 "while [its Power] architecture's ecosystem is shrinking," Mushell said. "Do you see how it would not make a lot of sense?"

Lenovo, meanwhile, is hungry to move beyond the PC market. The company announced last year a partnership with EMC in which Lenovo planned to introduce x86 servers that would include EMC storage systems. As part of the deal, Lenovo agreed to sell EMC networked storage products in China.

Given the jumpstart it would get from owning IBM's x86 business, Lenovo may be willing to make an offer that's hard for IBM to refuse.

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In less than 20 years, experts predict, we will reach the physical limit of how much processing capability can be squeezed out of silicon-based processors in the heart of our computing devices. But a recent scientific finding that could completely change the way we build computing devices may simply allow engineers to sidestep any obstacles.

The breakthrough from materials scientists at IBM Research doesn't sound like a big deal. In a nutshell, they claim to have figured out how to convert metal oxide materials, which act as natural insulators, to a conductive metallic state. Even better, the process is reversible.

Shifting materials from insulator to conductor and back is not exactly new, according to Stuart Parkin, IBM Fellow at IBM Research. What is new is that these changes in state are stable even after you shut off the power flowing through the materials.

And that's huge.

Power On… And On And On And On…

When it comes to computing — mobile, desktop or server — all devices have one key problem: they're inefficient as hell with power.

As users, we experience this every day with phone batteries dipping into the red, hot notebook computers burning our laps or noisily whirring PC fans grating our ears. System administrators and hardware architects in data centers are even more acutely aware of power inefficiency, since they run huge collections of machines that mainline electricity while generating tremendous amounts of heat (which in turn eats more power for the requisite cooling systems).

Here's one basic reason for all the inefficiency: Silicon-based transistors must be powered all the time, and as current runs through these very tiny transistors inside a computer processor, some of it leaks. Both the active transistors and the leaking current generate heat — so much that without heat sinks, water lines or fans to cool them, processors would probably just melt.

Enter the IBM researchers. Computers process information by switching transistors on or off, generating binary 1s and 0s.  processing depends on manipulating two states of a transistor: off or on, 1s or 0s — all while the power is flowing. But suppose you could switch a transistor with just a microburst of electricity instead of supplying it constantly with current. The power savings would be enormous, and the heat generated, far, far lower.

That's exactly what the IBM team says it can now accomplish with its state-changing metal oxides. This kind of ultra-low power use is similar to the way neurons in our own brains fire to make connections across synapses, Parkin explained. The human brain is more powerful than the processors we use today, he added, but "it uses a millionth of the power."

The implications are clear. Assuming this technology can be refined and actually manufactured for use in processors and memory, it could form the basis of an entirely whole new class of electronic devices that would barely sip at power. Imagine a smartphone with that kind of technology. The screen, speakers and radios would still need power, but the processor and memory hardware would barely touch the battery.

Moore's Law? What Moore's Law?

There's a lot more research ahead before this technology sees practical applications. Parkin explained that the fluid used to help achieve the steady state changes in these materials needs to be more efficiently delivered using nano-channels, which is what he and his fellow researchers will be focusing on next.

Ultimately, this breakthrough is one among many that we have seen and will see in computing technology. Put in that perspective, it's hard to get that impressed. But stepping back a bit, it's clear that the so-called end of the road for processors due to physical limits is probably not as big a deal as one would think. True, silicon-based processing may see its time pass, but there are other technologies on the horizon that should take its place.

Now all we have to do is think of a new name for Silicon Valley.

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Magicians work their performances with a combination of talent, slight-of-hand and a lot of misdirection. On stage, a well-orchestrated misdirect is enough to pull off the best illusions. In the corporate world, it can sometimes work well, too, as Oracle seems to have discovered with their school-yard baiting of IBM - a move that is distracting some away from Oracle's missed third-quarter earnings.

To see the misdirect in action, let's briefly look at the timeline of events:

• Mar. 20: On Oracle's third-quarter call, the company reports a significant earnings miss, which initially drove the company's stock down 8% in trading. Executives on the call noted a 2% drop in new software sales and Internet-based software subscriptions in the quarter, a problem they attributed to a rapidly expanding salesforce (i.e., blame it on the new sales folk).

(See also Oracle's Big Miss: The End Of An Enterprise Era?)

• Mar. 26: Oracle announces a new SPARC T5 line of mid-range servers (along with some mainframe M5 boxes), which starts yet-another line of questioning about the viability of using expensive multi-threaded servers in an age where Intel dominates single-threaded commodity servers and ARM-based servers are on the horizon. It's a familiar question, since some were asking it when Oracle pushed out its T4 line in 2011. But such questions are soon forgotten, because…

• Still Mar. 26: During the SPARC announcement, Oracle CEO Larry Ellison, well known for his genteel manners and discretion, throws down some smack talk on IBM's more expensive server line, with the stats to back up their claims, claims such as "[t]he SPARC T5-8 server delivers 1.4 times better performance than the next best single system result, the 32-processor IBM Power 595, at one-fifth the price/performance." Wait for it… wait…

• Mar. 27: IBM Marketing Manager Steve Sibley chomps at the bait, firing off a response to Business Insider that Oracle's comparisons are wildly off the mark, since they are comparing brand-new Oracle boxes to IBM setups that are completely different configurations and also three to five years old. Sibley also reminded BI that this isn't the first time IBM's had Oracle pull down wild claims in advertising and public statements about the performance of its servers.

(Check out Oracle Has Problems Telling The Truth In Its Advertising)

• Mar. 28: Oracle doesn't back down, as John Fowler, Oracle's executive vice president of systems, emails Business Insider: "IBM customers are being wildly over-charged for the performance they're getting."

Note, please, that in all of this hullaballoo, no one is talking much about Oracle's missed earnings, and any conversations about Oracle's hardware are in the context of comparing them to IBM's older hardware products - right where Oracle wants those conversations to be.

"A la peanut butter sandwiches!", as The Amazing Mumford would say.

If this were a one-time thing, it would be merely something of note. But a pattern seems to be forming with Oracle and their product announcements: it's not enough to just hold up their own hardware and software features, but they habitually have to take pot-shots at anyone else in the space as well. That's all part of doing business, of course, but Oracle appears to just make things up or cherry pick data to create a scenario that makes them look the best.

Sooner or later, though, such tactics may wear thin on potential customers and even existing customers. If you treat marketing as one big magic trick, how long before people start to wonder if what you have to offer is real, or an illusion?

The meek may inherit the earth, but at this rate, DevOps will inherit the enterprise. At least, that's one lesson to take from a Puppet Labs survey of over 4,000 IT operations and development professionals. Whereas developers used to be second-class citizens within the enterprise, today they're taking on new authority and forcing a change in mindset as to how software is developed and deployed.

(DevOps, for those not in the know, is a relatively recent style of collaboration between software developers and IT departments intended to speed the deployment of new applications and services.)

This enterprise shift reveals itself in a number of ways. As 451 Research analyst Jay Lyman illustrates, DevOps communities around Puppet and Chef, two of the industry's most popular configuration management tools, have been booming, as have the commercial opportunities for Puppet Labs and Opscode, the two respective companies behind these tools. But there is one particular sign that DevOps is making waves in the enterprise, Lyman notes:

Further evidence of these tools and practices going mainstream lies in expanded integration and support for Windows management and Microsoft environments, which represent a growing number of customers for CFEngine, Opscode and Puppet Labs.

Small wonder, then, that Puppet Labs found a 26% increase in the rate of DevOps adoption by organizations of all sizes, compared to 2011, with 63% of organizations now indicating they use DevOps practices. This could be easily discounted — "Well, of course a DevOps-oriented vendor survey would find lots of DevOps adoption" — except that one would expect the numbers to actually be higher. Given that Puppet Labs presumably sells to the converted, why isn't the number 100%? Presumably because even among those interested in Puppet Labs configuration management tools, the ambition to deploy DevOps practices outpaces real-world adoption of them.

But that's changing at a 26% clip. More revealingly, such DevOps adoption translates into a 75% jump in job listings: 

Why is DevOps reshaping enterprise IT? Quite simply, because it works. Because IT operations and development are better in collaboration than in competition. As the survey uncovered, high-performing, DevOps-savvy organizations deploy code 30 times faster with 50% fewer failures. And, strikingly, the longer DevOps practices are followed within an organization, the lower that organization's app failure rate and the faster its recovery from failure:

Source: Puppet Labs

While some of DevOps' rise can rightly be credited to a startup ethos and the evangelism of companies like Puppet Labs, it also gets a boost from IBM, ostensibly the most fuddy-duddy company on the planet. RedMonk analyst Donnie Berkholtz notes:

IBM’s people really get it. They understand trends that are happening at the frontlines of tech today in startups and in open-source development. IBM is way out in front on enabling DevOps in big enterprises....A lot of my experience with enterprises is that they’re slow-moving and often lagging trends by years, to the point where it’s nearly laughable, but in this case IBM is definitely a front-runner.

Embedded in that comment is perhaps the biggest reason for the rise of DevOps within the enterprise: it mirrors the rise of open source. Or, rather, follows it. Open source puts developers in charge of their IT. Hence, as we find a massive spike in demand for Linux professionals, and as we see the top job trends dominated by open-source technologies, we should expect DevOps to rise along with it, both in the startup and in the enterprise, with significant benefits for all.

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Microsoft has been accused of bribing officials in China, Italy and Romania to receive favorable treatment. That's not really news. Given the long list of companies accused of bribery in these countries, particularly China, it's actually more newsworthy to report on who isn't allegedly doling out bribes.

After all, some pretty amazing brands are under fire for alleged bribery in China. Rolls-Royce, The Wall Street Journal, IBM, Siemens, Wal-Mart, Hollywood and many tech firms have all been accused of bribery. Some may even be guilty.

Or not. As Microsoft Vice President & Deputy General Counsel John Frank notes, "It is also important to remember that it is not unusual for such reviews to find that an allegation was without merit."

Just Doing Business?

My hunch, however, is that none of these corporations would risk their reputations over a few yuan. Or even a billion yuan. More likely is that isolated individuals within these corporations may have felt the pressure of doing business in a culture that accepts bribery as a default, where even a front-row seat in one's elementary school class is up for sale, according to a report by The New York Times. 

Or maybe they simply didn't know better?

I don't mean that in any naive way. While attorney Dan Harris makes it clear that bribery is not a requirement for succeeding in China, for a newbie this might not be readily apparent.

As an example, several years ago my wife and I were driving to church in Costa Rica, where we were vacationing. I was speeding (it happens), and got pulled over. I don't speak Spanish, so was struggling to understand the officer as he explained how much I owed, and where to pay it. Finally it became clear that I'd owe something like $100, and would have to pay it at a bank (or post office or something - I couldn't understand him very well) before leaving the country. I had no idea where I could find a bank, or how to pay the ticket, but he very helpfully explained to me in broken English: "You pay $100 at bank. Or you pay me $50. You choose." I'm not very bright, so it took me repeating him a few times ("So, if I go to the bank, I need to pay $100, but I can pay you $50 right now and be done with it?") to finally grasp his meaning, pull out the $50, and drive on.

Was I dishonest? I suppose so. But I wasn't really trying to avoid a $100 fine. I simply had no idea how to find a bank (we were in a remote coastal area), and didn't think I'd be able to do so before catching our flight a day later. I wasn't trying to evade the law: I was trying to pay the ticket in the only way I thought feasible.

It's Complicated

I'm in no way trying to defend bribery or dishonesty in any form. I just wonder if so many good companies could be caught up in intentional, illegal activity.

Yes, even Microsoft, which has a history of competing hard and running afoul of antitrust measures, and more recently has been accused of buying favor with the European Parliament by giving away free software licenses:

Corporate perk or monopolist bribery? - bit.ly/GQqfkG European Parliament behaving badly; #microsoft up to its old tricks #eu

— Glyn Moody (@glynmoody) March 23, 2012

I know a few of the Microsoft executives who would be involved in acquiescing to bribery in China or elsewhere, and I simply don't believe them capable of it. These are good people. These are not criminals.

Yes, good people sometimes do bad things. But I struggle to believe that the companies accused of bribery in China - some of the best brands in the U.S. and Europe - would bless bribery in China or elsewhere. It's possible that a few bad actors within these companies succumbed to the temptation of buying favor, and it's also possible that these or others simply thought there was no other way to do business in China. 

Again, Dan Harris points to a better way:

"I am convinced that there are companies that almost want to pay bribes so they can act like they 'really know the system.'  I am also convinced that there are companies that make clear from day one that they will never ever ever under any circumstances pay a bribe so don’t even bother asking.  Which of those two types of companies becomes most susceptible to being hit up for a bribe?  I am not saying that all companies can function in China without paying a bribe at some point, but I am saying that most foreign companies can and do function in China just fine without ever paying a bribe."

"Most foreign companies can and do...", but even an expert China watcher like Harris acknowledges some may not be able to escape demands for bribes in China.

Which, of course, means they shouldn't be doing business there. That's the solution, but the temptation to make it work, to live within the system, may be too great for some companies. That's a pity, albeit an understandable one.

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IBM's decision to throw its considerable weight behind OpenStack has some folks declaring victory for the open source cloud consortium. The hitch? Amazon already claims a considerable lead, with more than 70% of the market, according to Forrester's James Staten, and as one prominent Amazon backer declares, the lead grows daily.

Can Amazon Withstand Sustained Cloud Computing Competition?

The question is whether Amazon can withstand a sustained, concerted attack by nearly everyone else in the cloud computing industry.

So far, according to Adrian Cockroft, director of architecture for Netflix, Amazon Web Services' biggest customer, the answer is an emphatic "Yes." In a Twitter exchange last week, Infoworld's Eric Knorr asked "Is the choice really between OpenStack and AWS? What about other cloud solutions?" Cockroft's response was clear:

@ericknorr that's not the choice. A barrier for people currently using AWS is the feature gap to anything else. OpenStack not closing gap.

— adrian cockcroft (@adrianco) March 14, 2013

When asked which features, in particular, AWS had that OpenStack couldn't match, Cockroft insisted that there is "too much to list," but "Availability Zones and Autoscale Groups" are two features that stand out. Furthermore, Cockroft indicated that OpenStack's six-month release cycle cripples its ability to catch up with Amazon, which rolls out new features (and price drops) on a continuous basis.

In other words, "Abandon all hope, ye who enter here."

Has Amazon Already Won? Yes and No.

But has Amazon already won? If you look at the absolute number of jobs being created, relative to OpenStack or Cloudstack, the answer is yes. Ditto if you go off general interest, as measured by Web searches:

But if you look at relative job growth, suddenly OpenStack has a fighting chance.

Perhaps even more tellingly, a foray into the code contributions for OpenStack suggest a truly dynamic, growing entity, one that is no longer Rackspace's pet project, but rather a true community effort. The most recent data I could find is a year old, but already shows growing influence by Red Hat and others.

Does this matter? Absolutely.

Big Players Will Make A Big Difference

However, I suspect that OpenStack will gain prominence in tandem with a few of its primary supporters gaining outsized influence due to these code contributions. Linux took off as IBM invested $1 billion (and then much more) and Red Hat, in particular, invested armies of engineers to make it into an enterprise-grade operating system standard.

The same will hold true of OpenStack. Right now it's making waves by being the open, community standard. That's nice, but insufficient and somewhat misleading, as Gartner's Kyle Hilgendorf has established. Ultimately, enterprises don't care about community and openness unless the product itself is rock solid.

Which is one reason that Microsoft and Google also can't be counted out. Microsoft holds sway with CIOs, and has been actively welcoming open-source technologies to its Azure cloud service. Google, for its part, was building clouds long before it was cool, and has so many hooks into developers with its various software and services, from Android to Maps to YouTube to Apps, that it cannot help but be a major player. Google Compute Engine's performance compares well against Amazon, too, but it's the ease developers will have tying into Google's services that truly favor it.

Has Amazon won Round 1 of the Public Cloud wars? No question. But some serious competitors are looming, each with attributes (Microsoft, enterprise fealty; OpenStack, community; Google, popular developer services) that give them a real chance to cut into Amazon's significant lead.

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The Hadoop market is getting interesting. Last year it was a death match between startups vying to own the heart of the project. Today it's a veritable smorgasbord of big-brand vendors getting involved to ensure they claim a big piece of the Big Data pie. Unlike American youth athletics, not everyone will get to take home a trophy.

Hadoop plays a key role in the burgeoning Big Data market, and represents a $13 billion market by 2017, according to Markets and Markets. (IDC pegs the market much, much lower at $812.8 million in 2016, but its numbers don't seem credible to me as they don't even seem to include Cloudera's sales.) Given that Big Data is hot, and Hadoop's data processing engine sits at its core, there's going to be a lot of money trading hands for Hadoop-related products and services.

Not everyone is going to collect.

SiliconAngle's John Furrier has challenged me on this, arguing that Hadoop is "not a winner take all market." While I, too, can see multiple winners in Hadoop, just as there have been in Linux (e.g., Red Hat dominates license/services revenue, but IBM, HP, and others make arguably more with related hardware, complementary software products, and professional services), markets don't tend toward entropy. They trend toward consolidation.

Today, the Hadoop ecosystem increasingly represents entropy:

• Cloudera, Hortonworks, and MapR remain the early favorites, but with very different approaches. Hortonworks positions itself as the 100% open source player; Cloudera somewhat does the same, but adds in complementary, proprietary bits, mostly around managing Hadoop, to add value to Hadoop (and its top line revenue); and MapR provides a hybrid open source/proprietary Hadoop distribution that swaps out HDFS for its proprietary NFS storage layer.
• EMC Greenplum has been involved with Hadoop for several years, and is set to release a new distribution of Hadoop called Pivotal HD. I've labeled Pivotal HD proprietary, but EMC's Hadoop team has taken issue with this characterization, arguing that PivotalHD is 100% open source, with complementary functionality (like HAWQ) available as add-ons. Point well taken, and I apologize for my misunderstanding. I was wrong, perhaps not surprisingly getting confused by Pivotal HD's product page, which says little about open source. But what seems clear is that customers won't be confused by EMC's value proposition: Hadoop with an advanced SQL query engine to make it easier and more powerful to use.
• Intel just got into the game with its own Hadoop distribution. Basically, you can think of it as Hadoop on (Intel Xeon™ processor, Intel SSD, and Intel 10GbE networking.hardware) steroids.
• For those who don't want to run Hadoop within the datacenter, Amazon offers Amazon Elastic MapReduce (EMR). As of April 2012, EMR was powering over 1 million Hadoop clusters. Presumably this number is much bigger today.
• Many, many others including IBM BigInsights, a range of startups, and more.

Will all of these companies make serious bank on Hadoop? No. Will some of them? Sure.

Ultimately, the winners in Hadoop will be those that invest most heavily in its success, as they will be perceived as the companies best positioned to help would-be customers succeed with Hadoop's complexities. But how they invest is up for discussion. Code to Apache Hadoop? Value-adding extensions?

Success isn't about open source purity, as Gartner's Merv Adrian posits: it's about making customers successful. As we saw with Linux, where Red Hat is both the top contributor to the Linux kernel and the company that harvests the most revenue from distributing Linux, contributing code is a great way to signal to the market that you're a leader and capable of getting code fixes to support customers. Code matters.

But code contributions are not the only way to demonstrate leadership and attract customers. Ultimately, companies that make it easier to get value from Hadoop will win big. There may be more than one such company. Indeed, there almost certainly will be. 

But there won't be 20 of them. Or even 10. Enterprise IT is simply not going to be able to manage a polyglot Hadoop distribution ecosystem. That's not the way markets work. No one wants to be "long tail" vendor, and customers don't want to buy from them, either, as Hugh MacLeod humorously points out on Gaping Void:

Source: GapingVoidArt. Used with permission.

The Hadoop market over the next year is going to be hugely interesting. And bloody.

Image courtesy of Ehab Othman / Shutterstock.

Executives with a capital "C" in their title generally don't have a clue on how to adjust to the social, mobile, and cloud-based business world. Now IBM wants to help these Luddite execs adapt -- by plunking them down into a new lab where it will show them what the IT tools at their disposal can actually accomplish.

IBM's new Customer Experience Lab aims to deploy 100 hand-picked specialists — industry titans from the world of machine learning, analytics, and a slew of other "Big Data" fields — as a consulting consortium aimed at aiding C-suite executives.

"Take for example a CMO whose life has changed quite a bit as a result of social and mobile in the last couple years," explains Clay Williams, senior manager of "front-office innovation" at IBM. "The goal here is to bring the headlights that IBM research has to shine and show them further down the road… so that IBM can help them chart the path forward."

In other words, IBM wants to provide some tools, and some advice, to help top executives learn how not to screw things up in a landscape they have no hope of understanding on their own. After all, a CFO may be well-versed in the complexities of financial-based business models, but isn't going to have the slightest idea of how to employ data mining and machine learning to better understand a single customers needs.

IBM knows that, and it insists it isn't looking to educate these individuals. "It's not so much teaching, but delivering these new technologies," Williams says. "It's built around us working in partnership."

"Big Data" Tools

With more than $6 billion going into research and development each year, IBM is one of the very few global companies capable of offering up an expensive, need-based Big Data consulting service.

But what exactly will it look like? Well, the new IBM lab aims to give business leaders the opportunity to work alongside those 100 experts in order to jointly create new business strategies based on what the companies' own data tell them.

For interested companies, IBM will pinpoint a C-level candidate exec and help craft new business strategies for him or her. Or, if you prefer the original IBMspeak: "From nomination to partnering to understanding the client problem and finding the right research team, then what we do is look at proof of concept model," Williams says. "We see if they are appealing, rapidly prototype some of those ideas and then go to a full solution process."

IBM outlines three generic sorts of breakthroughs it has identified for potential clients to leverage:

• Customer insight: Applying advanced capabilities such as machine learning and visual analytics to predict differences in individual customer behavior across multiple channels. 
• Customer engagement: Using deep customer engagement to drive insight and continuously deliver value by personalizing engagement, versus transactional experiences.
• Employee engagement: Embedding semantic, collaborative, and multimedia technologies to foster employee engagement and insight – in person and online.

Mobile Banking? Great, But What's Next?

Williams offers an example from banking, both because that's an area where Big Data technologies can be particularly helpful, and because it's the sector in which two of the IBM lab's first clients — British mutual institution Nationwide Building Society and Mexican superbank Banorte — happen to operate.

"If you think about phase 1 of enabling [mobile] devices for banking, it was largely about parity with web-based banking," he says — for instance, offering the ability to transfer funds or pay bills via mobile apps. Williams says IBM aims to go beyond that. If a bank wants to develop a plan for individual, social network-based experiences down the line, IBM can bring in a machine learning expert to parse how customers are interacting with businesses across various channels and develop algorithms for predicting behavior. "Now they're are asking the deeper question: 'What's going to happen next?'"

And that's the question IBM's customer-experience lab wants its would-be clients to be asking. It's supposedly the key with which international-scale business can craft strategies that fit the needs of individual customers -- though exactly how you get there from here still remains a bit fuzzy. One thing is for sure: IBM is convinced that it depends on crunching mounds of data. Oh, and on paying those consulting fees.

The technology industry has been excluded from the government's definition of what constitutes the nation's critical infrastructure, giving them a free pass from regulations. While this may be good for IT businesses, telecom companies like AT&T and Verizon Communications are crying foul.

Information technology is crucial to business, and according to these telecom companies, IT is just as important in securing power plants, telecommunications and water filtration systems. Which is why they want IT companies to be listed as part of the nation's critical infrastructure, something IT vendors are resisting because they don't want to be saddled with more government regulation.

The very political situation raises many questions, and has few answers.

Obama's Executive Order

Currently, IT - think companies like Microsoft, IBM, Apple, Oracle, Cisco and more - is excluded from the government's definition of critical infrastructure, as defined by President Obama in an executive order issued last month. In directing the Secretary of Homeland Security to identify critical infrastructure at the greatest risk of attack, the order says the Secretary "shall not identify any commercial information technology products or consumer information technology services under this section."

This exclusion, the result of heavy lobbying by the IT industry, is not sitting well with telecom companies, such as AT&T and Verizon. They believe technology vendors are as important as the network operator in building adequate security to fend off cyberattacks from terrorists.

"The Internet ecosystem is far more interconnected and dependent on a host of players than it was even five years ago," a Verizon spokesman said.

Fighting Regulations

While the government battles terrorism, telecom and IT companies are trying to fend off regulations. The executive order sets the groundwork for cybersecurity legislation from Congress. So far, the IT industry has been excused, and the telecom industry wants it to share whatever regulatory burden results from current negotiations between the White House and Congress.

"The telecom community is concerned the tech industry is going to get a free pass here," David Kaut, a Washington analyst with Stifel Nicolaus & Co. told Bloomberg. "You have an ecosystem and only the network guys are going to get submitted to government scrutiny."

Telecom companies have a point when it comes to critical infrastructure. Hackers who break into the Windows computer of a telecommunications company could wind their way into control systems and shutdown wireless or landline service for hundreds of thousands of people. But is regulating IT security directly the best way to prevent such a breach? I don't believe so.

Instead of more regulations, the government should focus on requirements for companies directly involved with maintaining the nation's critical infrastructure. As IT customers, these companies, which include utilities, financial institutions, defense contractors and manufacturers, are in a much better position to get the security they need built into the products they agree to buy. If an IT company such as Microsoft, Oracle or IBM cannot meet the requirements, than another one will.

"Commercial products and services often are the weakest link, but regulating them directly means imposing costs that many users won’t be able to shoulder," Stewart Baker, a partner at law firm Steptoe & Johnson and a former assistant secretary for policy at DHS, said. "So you end up imposing costs on everyone to protect a portion of the economy."

Political Talks

This issue is sure to come up during negotiations underway between the White House and congressmen supporting a cybersecurity bill introduced in the U.S. House Intelligence Committee. The bill emphasizes sharing threat information between businesses and government, while the Obama administration also wants minimum security standards set for the most critical companies.

For telecom companies to get what they want, they will have to convince the Republican majority in the House, which adamantly opposes more government regulation, to broaden the cybersecurity bill to include the IT industry. That's unlikely, so telecom and other critical infrastructure companies should be prepared to take full responsibility for securing their systems.

Image courtesy of Shutterstock.

With IBM tossing its might behind OpenStack, the open source software used to run cloud-computing installations is in a strong position to become the dominant platform in the industry.

OpenStack Rising

IBM announced Monday that it will make OpenStack the foundation of its cloud services and software. In backing the open source project, Big Blue joined other tech heavyweights behind the technology, including Hewlett-Packard, Dell, Cisco, Red Hat and Rackspace.

"IBM is the big fish in the sea and for them to make the level of commitment that they did today is a big deal," said James Staten, analyst for Forrester Research. "That's the kind of heft OpenStack needs."

The announcement is likely to send OpenStack's two main competitors VMware and CloudStack, another open source cloud computing platform, into a battle for second place.

“OpenStack has won the race to become the standard, and it has done it rapidly,” Ann Winblad, a venture capitalist and a managing director of Hummer Winblad Venture Partners, told AllThingsD.

IBM And Open Source

IBM has conducted a long love affair with open source software. In 2000, it backed Linux and a year later committed $1 billion to the development of the operating system. IBM's support helped drive Linux into large organizations and made it a viable competitor against Microsoft as a server platform.

"IBM could have the same impact on OpenStack as it did on the Linux world," Staten said.

IBM recognized years ago that open source code fit its business strategy a lot better than proprietary technology. The company draws most of its $100 billion in annual revenue from providing IT services. By basing a lot of its own technology on the code from various open source projects, as well as industry standards, IBM is able to work its hardware and software into what enterprise types call "heterogeneous computing environments" — the combinations of patched-together technology from a variety of vendors typically found in large companies, the segment of the tech market IBM is strongest.

"IBM has really great credibility in the open source community," Gary Chen, analyst for International Data Corp., said. "They really do understand open source."

IBM's First OpenStack Product

IBM followed its announcement with the introduction of its first OpenStack-based product, SmartCloud Orchestrator. SmartCloud is the brand name for IBM's platform for running cloud installations in customers' or IBM's data centers or in a combination of both. Orchestrator is a service customers use to configure the computing, storage and networking resources for cloud applications.

One unanswered question is how IBM will integrate its current SmartCloud code base with OpenStack. In an interview with NetworkWorld, Robert LeBlanc, a senior vice president of software for IBM, waxed mystical in describing how Big Blue will handle the transition.

"We're on a continual journey," LeBlanc said. "But we think this is a major step in that journey."

Cloud Standards

IBM clearly wants to influence OpenStack's technological direction and efforts to develop industry standards for cloud computing, which is still a relatively immature architecture. IBM has formed a 400-member Cloud Standards Customer Council to help push other tech vendors in a direction favorable to IBM. The company says it has more than 5,000 customers running private clouds on its platform.

IBM is also a major player in standards bodies, such as the World Wide Web Consortium and the Organization for the Advancement of Structured Information Standards (OASIS).

While standards are key to making different technologies work together, they won't help companies make the cultural changes necessary to adopt cloud computing and make it work. Delivering applications as a Web service dramatically changes the role of IT departments and affects how employees interact with software, too.

Because of its success in professional services, IBM is in a strong position to help companies make those cultural changes, but it won't be easy. "A lot of enterprises are not ready to hear it," Staten said.

Nevertheless, the momentum in the tech industry is behind cloud computing. The public cloud service market alone is expected to grow 18.5% this year to $131 billion worldwide.

With that much money on the table, IBM plans to become a major player in the market and is betting that OpenStack can help it achieve that goal.

Image courtesy of ShutterStock

Remember when "Other" was just a rounding error in market share reports? Now in the server market, it just might be the main event, as Facebook's Open Compute project, cloud computing, and other trends drive buyers to no-name server vendors instead of IBM, HP, and Dell. Time to short the incumbents?

According to new research from Gartner, server veterans like IBM and HP took a beating last quarter, with shipments plummeting 11.5% and 5.9%, respectively, contributing to an overall 0.2% server shipment slowdown. Meanwhile, so-called "whitebox" vendors that make up the "Other" category saw a 22% rise in revenues, and now account for 35.2% of global units shipped. IDC's market data showed largely the same incumbent malaise, with "Other" pumping revenues 14% year-over-year.

It used to be that such whitebox vendors like Quanta Computer, Wistron and Compal Electronics, all based in Taiwan, could be counted on to quietly build products for their name-brand American partners like Dell. No more. As Chris Gonsalves reports, companies like Google and Rackspace have looked to tailor servers to their requirements by going direct to Taiwan's leading ODMs, which has encouraged these vendors to start selling directly to more traditional enterprise accounts.

It's only going to get worse for the incumbents.

Cloud: Friend or Foe?

After all, the whole focus of cloud computing is to commoditize the server, making it a compute resource enterprises rent rather than buy. While not all workloads will move to the cloud, a big percentage will. In the cloud, enterprises simply aren't going to care whose logo sits on a box they can't even see.

And for those who do persist in managing their own datacenters, things like Facebook's Open Compute project may drive enterprises toward designing in lots of "Other." While Open Compute may not matter to most mainstream enterprises, as Mark Hachman points out, it's one more pressure point that incumbent server vendors could do without.

(See also The 5 Big Questions Dell Will Have To Answer To Survive.)

Ironically, the very thing that most threatens legacy server vendors could also save them, and then ruin them anyway: cloud.

IBM just announced it's getting behind OpenStack in a big way, basing all of its cloud services and software on an open cloud architecture. HP and others have also committed to OpenStack or other cloud platforms. Rather than be cannibalized by the public cloud, these server vendors are trying to extend their brands to private clouds, allowing enterprise customers to rent what they used to buy.

The problem, however, is that these vendors might be too successful. 

A Catch-22 in the Cloud

While public clouds like Amazon's AWS have been on a tear, they've still largely been relegated to test and development workloads. What happens when IBM and HP help make CIOs comfortable with the cloud? It's possible that those risk-averse CIOs will stick with the tried and true incumbents. 

But it's just as possible that once enterprises get comfortable with running mission-critical workloads on a private cloud that carries a shiny Dell logo, they'll take the next step into the public cloud, projected to be a $131 billion market by 2017, according to Gartner. Amazon has long argued that the real benefits of cloud computing are lost when trying to replicate them in private cloud deployments. While it's possible that IT will effectively mimic the public cloud, it's just as possible that developers and line-of-business executives will take their CIOs newfound enthusiasm for the cloud and run with it...straight to Amazon, Rackspace, or another public cloud provider.

In so doing, they'll inadvertently be growing "Other's" share of the global server market... and legacy server vendors' desperation to embrace the very thing that may kill them: the cloud. 

Image courtesy of Shutterstock.

Guest author Steve Hamm is a strategist, writer and videographer in IBM's corporate communications department.

Last September, when Typhoon Sanba smashed into the Korean peninsula, it packed winds so strong that they sent rocks flying through the air like missiles and caused massive power outages. “Hwangsa” storms, carrying dense clouds of yellow dust from China’s Gobi Desert that are sometimes loaded with heavy metals and carcinogens, sweep across the peninsula from West to East.

9.3 Petabytes Of Storage For The KMA

Menaced by such destructive weather phenomena, South Korea is upgrading its national weather information system with the goal of understanding weather patterns better and predicting better the location and ferocity of weather events. The upgrade being installed by the Korean Meteorological Administration increases the agency’s data storage capacity by nearly 1,000% to 9.3 petabytes, making it Korea’s most capable storage system.

The KMA project dramatically illustrates today’s big data phenomenon and its impact on weather forecasting. Thanks to the rapid spread of sensors and satellites, and to the increase in computer number-crunching speeds, it’s possible to forecast weather changes more accurately and with improved detail – potentially saving thousands of lives and safeguarding property. 

Increasing evidence of climate change worldwide is prompting governments and scientists to take action to protect people and property from its effects. But to take effective action, they need to know understand a lot more about the weather – everything from what’s going to happen tomorrow to what’s coming next year. For instance, leaders of the city of Hoboken, N.J., in the United States, which flooded badly last fall during Hurricane Sandy, are considering building a wall around Hoboken to keep the tidal Hudson River at bay. The problem is, if they don’t build high enough the wall could end up turning the city into a giant bathtub rather than keeping rising waters out.

Listen To Deep Thunder

IBM Research scientists are working to bring the most sophisticated data analytics to bear on weather forecasting. Their long-term weather analysis project, called Deep Thunder, combines data with sophisticated mathematical algorithms and computing power.

The scientists established at test bed in the New York City metropolitan area, where they set up a three-dimensional grid of thousands of blocks. That makes it possible for them to run calculations that produce very precise weather forecasts for a particular locale. Using this capability, the team was able to predict with remarkable accuracy the snowfall totals in New York City during the mammoth snow storm that blanked the northeastern United States in February – and also to predict accurately when the snowfall would start and stop.

Blame It On Rio

The IBM Research team is putting their algorithms to work on behalf of cities around the world. For instance, Rio de Janeiro, because of its climate and terrain, has recurring flooding and landslide problems in many hilly neighborhoods. The researchers used data describing the physics of the atmosphere to create a mathematical model of how storms are likely to unfold in Rio. With it, they can predict up to 40 hours ahead of time how much rain will fall in a particular location — with 90% accuracy.

In recent months, the Deep Thunder team, lead by Lloyd Treinish, has developed new techniques for ingesting many more measurements from weather sensors. The team is also extending its technology to new applications, including agriculture and wind farming.

For detailed and super-accurate weather information to have maximum impact, it has to be accessible by a large number of people. That’s why IBM has created iPad and cloud applications that deliver the power of Deep Thunder to people’s hands wherever they may be. Hopefully, by the time Rio hosts the summer Olympics in 2016, practically everybody who attends will be able to get their hands on Deep Thunder data so they know exactly what to expect when they venture out to the various game venues.

Note: This post originally appeared on IBM's Smarter Planet blog. IBM provided the storage hardware and software for the KMA project. 

Image courtesy of Shutterstock.

The next "space race" might be the race to develop a synthetic model of the human brain - one that Google and Microsoft will participate in, if a report is true.

And instead of trying to beat the Russians, this time the Americans will be racing against the Europeans, who have already announced their plans.

The New York Times reported Monday that the Obama Administration is close to announcing the Brain Activity Map, which scientists quoted by the paper say could be on the scale of the The Human Genome Project, a $3.8 billion project to map the human genome that, the Times reported, returned $800 billion in jobs and other benefits. 

The Brain Activity Map would attempt to document how the brain works, from the tiniest neurons up through how possibly the different regions of the brain communicate with one another. If the project succeeds, the Brain Activity Map might give us an understanding of how the human brain "computes" data through its complex web of neurons. It might also help scientists solve brain-related diseases like Alzheimer's.

Holy Grail

Modelling the human brain, and figuring out how it works, has long been one of the Holy Grails of supercomputing, prompting fears of a "technological singularity," where successively advanced artificial intelligences design ever more refined versions of themselves, leading to a future where humans become increasingly irrelevant.

On a more realistic scale, learning how people think could allow services to begin anticipating their needs, a problem companies like Google and Microsoft would be interested in solving. The Times reported that a Jan. 17 meeting at CalTech was attended by the National Institutes of Health (NIH), the Defense Advanced Research Projects Agency and National Science Foundation, plus Google, Microsoft, and Qualcomm.

Google representatives did not return an emailed request for comment, possibly because of the U.S. President's Day holiday. A Microsoft Research representative said that the company declined to comment.

Two of the foundations of the Times report were public statements: a tweet by NIH director Francis S. Collins, and a mention of the efforts to map the brain by President Obama in his State of the Union address:

“Every dollar we invested to map the human genome returned $140 to our economy," Obama said, according to a transcript of the speech. "Every dollar. Today, our scientists are mapping the human brain to unlock the answers to Alzheimer’s. We’re developing drugs to regenerate damaged organs, devising new materials to make batteries 10 times more powerful. Now is not the time to gut these job-creating investments in science and innovation. Now is the time to reach a level of research and development not seen since the height of the space race. We need to make those investments.”

Collins then tweeted: "Obama mentions the #NIH Brain Activity Map in #SOTU".

The Other Horses in the Race: the EU

Funding for the U.S. effort could last as long as 10 years, and possibly top $3 billion over that time. But the bar was set earlier by a massive collaboration among more than 80 European research agencies, which won an award from the EU of one billion euros ($1.34 billion) to develop a computer simulation of the human brain, known as The Human Brain Project.

That will partly cover the intriguingly named “Neuropolis,” a building dedicated to ”in silico life science” that will serve, at least in part, as the computer infrastructure behind the effort. The Swiss Confederation, the Rolex Group, and various third-party sponsors are backing this part of the effort.

"The HBP will build new platforms for “neuromorphic computing” and “neurorobotics,” enabling researchers to develop "new computing systems and robots based on the architecture and circuitry of the brain," according to the The Human Brain Project.

Other Horses: IBM's/DARPA SYNAPSE

The Defense Advanced Research Projects Agency, responsible for the initial funding and challenges to design self-driving cars and other public-private partnerships, has worked with IBM to develop SYNAPSE (Systems of Neuromorphic Adaptive Plastic Scalable Electronics), whose ultimate goal is to build a "build a cognitive computing architecture with 10¹⁰ and 10⁶ synapses" - not a biologically realistic simulation of the human brain, but one where computation ("neurons"), memory ("synapses"), and communication ("axons," "dendrites") are mathematically abstracted away from biological detail.

A Network of Neurosynaptic Cores Derived from Long-distance Wiring in the Monkey Brain: Each brain-inspired region is symbolically represented by a picture of IBM's SyNAPSE Phase 1 neuro-synaptic core. Arcs are colored gold to symbolize wiring on a chip. (Source: Dharmendra S Modha)

Using 96 Blue Gene/Q racks at the Lawrence Livermore National Laboratory, the most powerful supercomputer in the world, the team achieved 2.084 billion neurosynaptic cores containing 53¹⁰ neurons and 1.37x10¹⁴ synapses, according to the blog of Dharmendra Mohda, the leader of IBM's Cognitive Computing division. That's only 1,542 times slower than real time.

IBM assembled its diagram of the interconnections inside the cerebral cortex of the macaque, a small monkey, as an early model of how the brain works.

IBM's Watson, of course, is another example of how a computer can interact with humans, absorbing the reams of unstructured data and winning Jeopardy, among other things. 

Google

Google itself last year sat down to try and develop its own neural network, and then presented it with data from its own network. The result, as was somewhat widely publicized, was that the network ended up constructing an internal image of a cat, and then spent its computational efforts deciding which YouTube videos were and were not cats. 

So how could Google or Microsoft benefit from a federal partnership? On the surface, they might receive federal funding for research. Cognitive computing on the order of what IBM is hoping to achieve, for example, can take millions and millions of dollars, even if the computing resources are already available. (The Times reported that the CalTech meeting was designed to determine if sufficient computing resources were indeed available; the answer is yes, the paper reported.)

Thinking the way that humans think would allow Google or Microsoft to anticipate even more what their users want, and to provide them with that data. Both companies can do that to some extent through data accumulated from millions of users; if the most common "t" word I search for is Twitter.com, Google can start pre-loading the page in the background. But thinking like a human thinks, and making the seemingly random associations that humans make thousands of times faster than we make, could mean everything from artificially-crafted memes to pre-processed sound bites for politicians.

Cognitive computing might not be the singularity, but it's an important first step. And the race is on.

Image Source: DARPA

There's been a lot of talk about why the proposed Dell buyback doesn't add up. Some of it dates back more than two years, and the arguments all center on one thing – money. 

The problem, as critics see it, is that going private robs Dell of critical cash at the time it most needs to spend that cash to acquire companies that diversify its lineup. It's a valid point, but that doesn't mean it's the only way to look at the situation. Even with a cash crunch, pulling Dell off the public market might be exactly what the company needs to avoid prying eyes that could toast its chances for future success.

Source: Dell.com The IBM Ideal

When IBM sold its PC business to Lenovo in 2004, everybody won. IBM pulled in some needed cash, exited a low-margin business and focused on the enterprise. Lenovo got instant credibility and brought efficiencies to a market that still had years of oomph.

Nearly everyone predicts that Dell wants to do the same with its buyback, but today's market is fundamentally different. PC sales are dropping, and Dell's share of that market is falling even faster. Plenty of PC manufacturers would be willing to fold Dell's brand into their lineup, but not at the premium investors would ask. Time isn't on Dell's side. The longer it waits to offload its PC business, the worse the deal will get. Going private would at least shield the company from having to make those details pubic.

The HP Boondoggle

Dell is smaller and more dependent on PCs than is HP, but the two companies line up well enough to illustrate how  a reinvention of Dell might work. 

HP is an absolute wreck. Investors are shaky, key executives are fleeing, and even Meg Whitman's rosiest turnaround scenario offers years of bleeding to come. HP has product problems, legal problems and PR problems, and it's headed for a fire sale. Seven out of the ten first-page results on a Google News search for "HP" were negative. HP is floundering in full view, and all the negativity is making it difficult for the company to manuever. 

So why didn't HP go private?

According to Gartner Senior Research Analyst Chris Gaun, "HP has a larger market capitalization, and going private might not have been an option." Raising $15 billion for a Dell buyout is pushing the envelope. $34 billion for HP would be in a completely different zip code. Gaun also points out other complications, such as the Autonomy investigation, which would add substantial risk and complexity to any buyout. HP is too big and too messy for a buyback.

HP CEO Meg Whitman claims low-margin PCs are essential to HP's survival as a full-spectrum technology provider. Lets' say Dell agrees. Going private still makes sense. 

According to Reticle Research Principal Analyst Ross Rubin, a buyback could benefit Dell, regardless of its goal. "Going private would insulate Dell from investor scrutiny and the expenses of running a public company. It would have more flexibility to continue the low-margin PC business if, like HP, it continued to see it as part of a solution - or spin it out and take the revenue hit, as HP was considering."

Source: Shutterstock Protecting The Brand

Even the high-margin products and services Dell wants to protect are being pushed toward commodity status. In the end, Dell will be trading on its name. Insulating that name from controversy that might cheapen it could be worth some belt-tightening.

Michael Dell photo from Dell. 

SAP has taken a big step ahead of rivals IBM, Microsoft and Oracle with the announcement on Thursday that its in-memory database called HANA is now ready to power the German software maker's business applications. The pronouncement is sure to darken the mood of competitors, who one analyst says will need several years to match what SAP has accomplished.

What SAP has done is to provide one database that can perform both business analysis and transactions, something its rivals are able to provide only by using two databases, according to Gartner analyst Donald Feinberg. "It's the only in-memory DBMS (database management system) that can do data warehousing and transactions in the same database. That's where it's unique."

For SAP customers, HANA-powered applications can speed up the sales process dramatically. For example, today when salespeople for a large manufacturer takes a large order from a customer, they may not be to say on the spot exactly when the order will be fulfilled. That information often comes hours later after the numbers are run separately through forecasting applications.

HANA To Power SAP's Business Suite

With HANA running SAP's enterprise resource planning applications - called Business Suite - salespeople will be able to take the order and get forecasting information in seconds. "This changes the way they do business. It really does," Feinberg said. "And that's the kind of value proposition that HANA brings to the table because of the fact that it's an in-memory database."

During a multi-site news conference in New York, Palo Alto Calif., and Frankfurt, Germany, SAP demonstrated HANA's speed using its manufacturing resource planning software. In Palo Alto, Hasso Plattner, SAP co-founder and board chairman, said the database will eventually be available in all products, whether on-premise or in the cloud. "All SAP products will go HANA," he claimed.

Competitors Racing To Catch Up

Oracle and IBM are expected to match SAP in time. Microsoft has announced that it is working on the same technology for the next version of MS SQL. "I do believe that every other vendor is going to go in that direction, but it's going to take them two to five years to do it, which gives SAP a huge head start," Feinberg said.

SAP is expected to make HANA generally available for business Suite over the next six months to a year. In the meantime, the technology will be available through what SAP calls "Ramp Up." That means customers can get the new product if they agree to put it into production with SAP's help. This gives the vendor the opportunity to work out any kinks and to establish a number of customer references.

HANA, was first made generally available as a standalone database in mid-2011, and SAP now claims to have almost 1,000 customers. The company believes those numbers can rise even faster once HANA powers all of its products.

At the same time, SAP promises to support customers that stick with the traditional databases currently running SAP applications, whether the databases are from competitors or the company's own Adaptive Server Enterprise (ASE).

In-Memory Databases

Many companies today offer in-memory databases for a variety of tasks. The databases are much faster than traditional technology because all data is stored in system memory where it can be accessed quickly. Standard relational databases write and read to disks, which is a much slower process. (http://www.mcobject.com/in_memory_database)

In unveiling HANA for Business Suite, Plattner took a dig at Oracle Chief Executive Larry Ellison, who predicted SAP's six-year effort to power its business applications with HANA would fail.

"I have to admit. I enjoy that he is not smiling," Plattner crowed. "And I know that there is a weekly meeting [at Oracle] which has the word HANA in it."

Those meetings are likely to go on for a while as Oracle and other vendors race to catch up.

Image courtesy of Shutterstock.

IBM spends over $1.5B every quarter in research and development (R&D) expenses. SAP? Closer to $700M. Oracle? Assuming we don't count the tens of billions it spends buying other companies, its actual quarterly R&D budget comes in just over $1B - around $900M. Microsoft, which has printed billions of dollars in profit each quarter for eons, spends more than them all, topping $10B each year.

And yet not one of these companies is responsible for the biggest advances in enterprise technology in the past decade.  Cloud computing, Big Data, mobile... they're all being invented elsewhere, not by the enterprise behemoths.

Maybe they're doing it wrong?

Lots Of R, Little D

Take the cloud, for example. Microsoft claims to invest 90% of its R&D budget on cloud computing, but it is Amazon, Microsoft's penny-pinching, book-retailing neighbor, that sets the terms for innovation in cloud computing. Amazon launched EC2 back in 2006, when it was spending a measly $132M or so each quarter on R&D. 

Even if we dismiss Amazon, where else are we seeing other cool advances in cloud computing? Netflix, for one, which just released Janitor Monkey to help Amazon Web Services (AWS) users dispose of their unused AWS resources, and the video company previously released Chaos Monkey, which helps enterprises plan for and architect around cloud failure.

Notice the word I used? "Released." It means these tools were open sourced, not put out for sale. That's how innovation seems to happen in the 21st Century.

In large part innovation comes with an open-source license because it's a by-product of businesses that heavily rely on technology, but don't actually sell technology.  It's 'trickle-down innovation' from the web business community.

VMware's Brad Hedlund spotlighted this trend back in 2011, when the enterprise awoke to discover it had problems that the web giants had already solved:

As properties such as Yahoo!, Google, Facebook, Amazon became great successes, their architects and software engineers realized that they had moved mountains...The tremendous problems of efficiently running large scale applications on low cost infrastructure had been solved... At the very same time, enterprise IT begins to encounter some of the very same problems solved by the large web provider, such as scalable data warehousing and analytics (so called “Big Data”). Additionally, the software driven distributed systems that solve problems of infrastructure efficiency and management at very large scale could also be applied to infrastructure at a smaller enterprise IT scale (why not?). And finally, the cost savings of an application infrastructure designed to operate on low cost commodity hardware can be realized at any scale, large web or enterprise IT.

Filling The R&D Gap

Companies like Cloudera, DataStax and others stepped into this gap, taking the open source (or, in the case of some of Google's research, open knowledge) projects from the web and applying them to the enterprise in the form of Hadoop, Storm, NoSQL databases, etc.  All of it developed at a comparative pittance to enterprise incumbents' R&D budgets.  All of it available free of charge on commodity hardware. 

As an industry, we're richer for such open source innovation.  Ironically, so are the enterprise IT vendors, who are investing tens to hundreds of millions of dollars in Hadoop and other open source data and cloud innovations, even as they continue to sink tens of billions of dollars into their homegrown R&D. Maybe it's time for them to reevaluate how they do R&D.  Maybe, like Facebook or Twitter, they should release their R&D on GitHub as open-source code.  At the least they could, like Google, centralize their research on the web, making it easily available to all.

Maybe, just maybe, they'd realize that it doesn't actually matter how much money a company spends on R&D.  What matters is whether it can execute and turn ideas into winning products, as Brad Reed argues, and whether it can help foster community around promising open source efforts.  

This is what new enterprise IT - Facebook, Twitter, Google and Yahoo - demonstrates.  It remains to be seen if IBM, Microsoft and other traditional IT vendors are paying attention.  Unless they do, they'll lose relevance as a new breed of innovative startups emerge to claim the strategic largesse of CIOs' budgets.

IBM believes technology's future lies in cognitive computing, which essentially means making computers think more like humans do. To IBM, that includes giving computers sensors that enable it to touch, see, hear, taste and smell - sensory input as one more piece in the puzzle to help solve problems.

IBM's Five in Five

IBM's progress toward cognitive computing is seen in the company's annual end-of-year predictions. Rather than its usual practice of prognosticating on where five technologies will be in five years, this year's Five in Five focuses on innovations that make it possible for computers to experience each of the five senses.

The projections mark the very beginning of what will be a long journey toward cognitive computing. The first step in building machines ablet to behave, think and interact like humans is to give them the same sensory abilities. That way computers can understand their environment, learn from it and act upon it. For example, if a robot could hear a train's whistle and feel the vibration on the tracks, it might be able to figure out that a locomotive is coming and get out of the way.

The Five Senses

Touch: IBM also expects smartphones and tablets to communicate using haptics, nonverbal communication that enables people to experience how an object feels. Haptic feedback is already use to for many things, including to provide tactile sensation when typing on a glass keyboard, but that's only the beginning. Eventually, devices pointed to an ecommerce site could vibrate to simulate the feel of a fabric’s weave, for example. (Click on the images to download the infographics.)

Sight: Vision will get an upgrade, too. IBM believes computers will be able to identify images and understand what they mean without the use of tags. This will lead to systems that can help doctors analyze X-ray pictures, magnetic resonance imaging (MRI) machine, ultrasound or computerized tomography scans.

Hearing: There will also be improvements in computers' ability to hear and understand sound. Greater sensitivity to sound pressure, vibrations and waves could lead to more-accurate landslide warnings, for example.

Taste: Computers with virtual taste buds will be able to calculate flavor, according to IBM, helping chefs improve recipes or create new ones. The systems will break down ingredients to their respective chemicals and calculate their interactions with neural sensors in a person's tongue and nose.

Smell: And, finally, according to IBM, computers will have an acute sense of smell in order to diagnose from a person's breath a coming cold, liver and kidney disorders, diabetes and tuberculosis. Similar to how a Breathalyzer detects alcohol, the computer will be able to check for molecular biomarkers pointing to diseases.

IBM believes it can blend the sensory innovations in computing with mobile devices, cloud computing and social media to create, "an unbounded set of possibilities in terms of what we can do," Kerrie Holley, an IBM research fellow, told ReadWrite.

How We'll Use Cognitive Computing

In time, cognitive computing will be able to do what people don't do well, such as understand the interactions of changing elements in huge systems. Examples include the global economy or weather patterns. With the help of a thinking, sensory-aware machine, we'll be able to cut through the complexity of these systems, helping us make more-accurate predictions and anticipate the consequences of particular actions.

In addition, cognitive systems can help us separate our personal prejudices and egos from the facts in trying to solve a problem.

"The machines will be more rational and analytic," Bernard Meyerson, chief innovation officer at IBM, said in a blog post. "We’ll provide the judgment, empathy, moral compass and creativity."

Think of it this way: The human-digital relationship will mirror the extraordinarily effective partnership enjoyed by Captain Kirk and Mr. Spock on Star Trek. 

Not surprisingly, IBM execs believe they will soon be selling servers and supercomputers that process data much faster than today's technology allows. But they’re talking about much, much faster.

Rather than use electricity to move data between processors, IBM is preparing to use light, giving high-end customers enough power to keep pace with the growing information flowing through data centers.

IBM's Tiny Milestone

After more than a decade of research, IBM scientists have put nanophotonics technology onto 90 nanometers of silicon and integrate it with ordinary microprocessors.

That last part is critical. If IBM can integrate the new optical technology with ordinary processors, it avoids a layer of manufacturing expense and complexity, and it can make the new systems in conventional factories.

IBM is attacking a bottleneck in data centers and supercomputers. Moving data as electrical impulses - even over the comparatively small distances between chips - chokes off performance.

Solving the problem now means adding more processors, which raises costs.

Practical Nanophotonics

A proof-of-concept just two years ago, IBM’s nanophotonics system is a transceiver that receives electrical impulses from one chip, converts them to staccato light signals, and transmits those to another transceiver sitting alongside another processor. The receiving transceiver reverses the process.

Even with the conversions, the process creates a much higher chip-to-chip data flow - 25 gigabits per second per channel -and can also be used for chip-to-memory communications, another common bottleneck.

Just as with the far bigger fiber-optic systems used for global telecommunications, each beam of light can carry multiple data streams, each on a different wavelength of light. While not a feature on the current proposal, this would make it possible to send terabytes around otherwise conventional electronics with almost literally blinding speed.

"The technology is very universal, very flexible and versatile," Solomon Assefa, a nanophotonics scientist for IBM Research, said.

Short, Sharp Signals In Data Centers

IBM is preparing to put nanophotonics in servers, data centers and supercomputers, Assefa said. The technology is also expected to play an important role in exa-scale computing, a benchmark expected to be reached before the end of the decade. Today's supercomputers are measured in petaflops, equal to 1 quadrillion calculations per second. An exaflop is 1,000 times faster.

There will be millions of transceivers needed for an exa-scale system, he said.

Martin Reynolds, an analyst for Gartner, said IBM's technology appeared flexible, but noted that it's destined to remain in high-end systems for a while.

"The device has to have optical power [i.e. light] fed to it, as there is currently no practical way to generate light on the silicon," Reynolds said. "This demand requires sophisticated and expensive packaging techniques that, for now, constrain these devices to high-end systems."

So it will be some time before nanophotonics make its way into laptops or tablets. In the meantime, IBM hopes to beat competitors by getting it into data centers and supercomputers first.

The ReadWrite DeathWatch is known for serving up plenty of doom, gloom and grumpiness. But for the Holiday Season, we're taking a slightly different tack - highlighting companies and technologies that Cheated Death. Companies that might have died, but didn't.

At the plate this week is ARM Holdings, a company that was never going to go out of business, but very well might have settled for a comfortable position in a single market. Instead, it built on the low-power processing that gave it dominion over all things mobile, and now it's poised to attack Intel on the chip giant's own turf.

Where ARM Was

From its founding in 1990, Advanced RISC Machines (later changed to ARM Holdings) was a different kind of processor company. Unlike fellow chip designers IBM and Intel, ARM didn't actually manufacture or sell the chips it created. Instead, like (pre-Nexus) Google and (pre-Surface, pre-XBox) Microsoft, ARM licensed its designs and its relationships with foundries to semiconductor companies. It even

Where ARM Is Now

ARM technology powers more than 90% of cell phones and 80% of digital cameras. It has a less-dominant but still substantial position in embedded devices, such as toasters, TVs, pacemakers and everything else in the Internet Of Things.

And then there are the tablets. The iPad uses an ARM chip. So do the Samsung Galaxy Tab, the Kindle Fire and the Google Nexus. Even Microsoft hedged its bets with the Surface RT, the lower-cost, lower-power sibling to the Intel-based Surface Pro. Theres a war going on, and ARM is selling everyone guns. If a device doesn't have a keyboard, there's probably an ARM design inside.

New Platforms

It's good to be king, but where do you go once you've cornered a market? You find another market. Instead of resting on its laurels and waiting for its lead to erode, ARM has spent the last year recruiting allies that bring the fight to Intel's doorstep.

While the Surface RT got less-than-glowing reviews, Microsoft's tentative support could eventually lead to more head-to-head competition for Windows devices.

There's also been talk of a shift toward ARM-based Macs, though you shouldn't hold your breath. Consumer Macs and Windows PCs are both on the long-term horizon, particularly in the ultraportable market, but power-gulping Intel chips still outperform ARM by a wide margin, and performance is still important for many computing applications. Surprisingly, then, the far more likely near-term expansion for ARM is in the datacenter.

March Of The Wimps

According to a Gartner report, energy accounts for 12% of all datacenter expenditures, and that percentage is growing. Huge arrays of low-power, cooler-running chips are a natural fit, and ARM's minions are rushing to own the microserver market. Samsung has licensed ARM's 64-bit server chip designs for a 2014 release, and struggling AMD is pinning much of its recovery hopes to ARM-based Opteron chips the same year.

Can ARM Stay On Top?

Intel sees the opportunity in mobile and embedded devices, and it haven't conceded anything. It continues to push its low-voltage Atom processors toward those markets, and its 14nm Airmont chip (also scheduled for a 2014 launch) could be very competitive. Intel also claims to be focused on the microserver market, though that may be causing some internal conflict.

One way or another, ARM will likely lose at least some of its mobile and tablet market share to Intel. The question is where. An Apple move on the iPad or iPhone would be surprising, as would a Samsung defection on anything running Android. Intel's immediate fortunes in the space are probably tied to Microsoft, as always.

Meanwhile, any losses ARM suffers to Intel in its core markets should be more than offset by the overall rising tide and ARM's potential to attack Intel's core strengths.

To see more ReadWrite DeathWatches, check out the ReadWrite DeathWatch Series, which collects them all, the most recent first.